Headquarters relocation of Chinese domestic firms within China is a new economic phenomenon in recent years. Domestic firms’ headquarters relocation has a tremendous influence on the economy of the cities and these firms. We believe this phenomenon can be explained by the classical economic rules. The purpose of this dissertation is to find the factors explaining headquarters relocation from the perspectives of internal and external areas of the Chinese firms. On the basis of relevant literature review and our case study of headquarters relocation, a model, which can be used to evaluate the situation of firms that plan to relocate their headquarters, is developed. Two types, seven internal factors and seven external ones, are integrated in our model. To test this model, we have developed two hypotheses, made a questionnaire within Zhejiang province of China and interviewed two managers. The result from the survey indicates that the thirteen factors listed in the questionnaire were considered important. Four factors are the core factors. Meanwhile, the result also shows that, “the different wishes of the most staff to the headquarters relocation”(the staff’s opinions toward relocation differed), need not to be considered to most firms when they make a decision of headquarters relocation. This is a weak factor. Hence, we revise our model to remove this factor. On the other hand, we can see the general analysis of the four core factors in headquarters relocation available still in firms of different industries.