Effective collaboration is crucial to the success of Collaborative Virtual Enterprise (CVE), an emerging business paradigm driven by the increasing trend of globalization. In this paper, we adopt a service-oriented architecture for enterprise integration and collaboration based on Web Service standards. In order to tackle the technical challenge associated with the dynamic formation of business workflows, a service composition framework is presented and analyzed in this paper. Comparing with existing composition systems, our framework enjoys two major improvements: (1) the description of each Web Service is enhanced with rule-based modeling of the essential business logic behind the service interface; and (2) the di-vide-and-conquer strategy is explored in our framework to handle complex service composition tasks through a hierarchi-cal composition architecture. A PC manufacturing prototyping system further presents a concrete demonstration of our framework in practical applications.