Since the adoption of reform and opening policies, China has attracted foreign investments in varieties of forms, which in turn produces a strong impact on labor relations in this country. In this context, learning from the proven experience of the developed nations, and establishing a labor legislation system in line with China's own special situation, constitute a precondition for the healthy development of foreign invested businesses with a harmonized labor relation. The paper also discusses other related issues, including setting up a mechanism to handle the labor relations inside the enterprise, advocating industrial democratization, and exploring the means and forms to forge a sound relation between the labor and foreign investors .