Leo Burnett will manage the 40-person independent unit, which was created last year to drive the Coca-Cola brand in China in the lead-up to the 2008 Olympics.
Red Lounge China is led by its managing director, Wasim Basir, and the chief creative officer, Bere Mitchell.
The unit has sourced staff from agency partners in China, as well as employing 35 new people from around the world.
Leo Burnett will take control of Coca-Cola creative, and the unit will work to develop integrated marketing support for the brand across above- and below-the-line media. The creative may be rolled out into other global markets.