With the fast-changing business environment in China, foreign companies have faced more and more challenge. To make the best benefit from the change, forming new business units becomes one of the solution for companies which already have set up joint ventures in China. Launching a new business unit is very complicated and involves each parties to put effort for analysis, communication, negotiation and continuous improvement to ensure the success. This thesis has derived a decision process starting from strategy forming, analysis and internal discussion to agreement negotiation and continuous improvement to increase the possibility of the success of a new business unit. Due to the limitation of the research, the thesis has focused on the analysis more from the perspective of the foreign company and less focus on the domestic company. The tools and key factors affecting the result of the new business unit have been summarized and analyzed for each stage of the decision process. In addition, recommendations for the case have also been made. The findings of this thesis can be useful to foreign firms in the manufacturing industry facing similar situation in China or other host countries.

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