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Recent years, foreign manufacturers have extended their manufacturing footprint to include China. According to the World Bank China has overtaken Japan as the world’s second-largest economy since 2010. China’s growth is largely funded by a continuous manufacturing boom where both domestic industries and infrastructure have developed extensively, facilitating foreign-owned manufacturing companies to locate production in China. An important issue of common interest to all manufacturing companies in the course of localising production to China is how to develop an efficient supply base.The purpose of the thesis is to identify the factors related to local supply base development that affect production localisation in China. An identification and analysis of factors for foreign manufactures to consider when developing the supply base for their China production facilities is presented.The thesis work is executed based on a comprehensive literature study and interviews with twelve manufacturing firms (comprising eight foreign manufacturers and four local supplier companies) in China from April to July, 2012. The thesis investigates factors of importance to supply base localisation in China. The analysis of the empirical and theoretical findings constitutes the bases for increased understanding supporting foreign manufactures, especially for those small and medium firms, in their development of a supply base and sourcing strategy for production in China.