Abstract:To propose the new prediction method of Kernel Fuzzy C-Means (KFCM) for business failure. Fuzzy C-Means (FCM) algorithm fails to deal with non-spherical clusters and incomplete data, while the kernel method can map the low-dimensional data into highdimensional feature space which is easier to be separated. Therefore, kernel method is integrated with the FCM to solve the problems of FCM. To fully reflect the performance of different kernel functions, KFCM respectively adopts three kernel functions which include Gaussian, Polynomial, Sigmoid kernel. The paper employs the financial data from Chinese quoted companies to predict the business failure. The prediction outcomes of three KFCMs are not only made a comparison to each other, but also compared with the standard FCM. It can show that KFCMs have better classification accuracy than FCM, but each of them has its advantages for normal and failing companies.