In this study we examine the incentives for listed family controlled firms in China to establish political connections and their organizational structure as measured by shareholding concentration and composition of board of directors. We hypothesize and find that listed family firms are more likely to establish political connections when the local markets are less developed and the governments are more powerful in allocating economic resources. In particular, firms are more likely to build political connections when local governments suffer from severe budgetary deficits, when they tend to rely on discretionary charges and administrative penalties for raising revenues, and when they have more leeway in granting business subsidies. We also find that controlling shareholders of family firms with political connections tend to concentrate their shareholding and dominate the board of directors so that they can make deals with government officials in secrecy and enjoy the benefits exclusively among themselves.