The proposed joint venture, which is still to be officially signed off by Chinese authorities, includes the production of JLR- and joint venture-branded vehicles, engine manufacturing, vehicle distribution, and the establishment of a new R&D facility in China.
In a joint statement, JLR CEO Dr Ralf Speth and Chery CEO Yin Tongyao said both companies saw tremendous upside from the joint venture deal.
"Demand for Jaguar and Land Rover vehicles continues to increase significantly in China and we believe that JLR and Chery can jointly realise the potential of these iconic brands in the world's largest car market.
"Our ambition is to leverage the respective strengths of our two businesses – in research and development, technological innovation, manufacturing excellence and local consumer knowledge – to offer Chinese customers the most advanced, highly efficient products featuring the very latest technologies."
In 2005, China accounted for just one per cent of total Jaguar and Land Rover sales. Last year it was JLR’s third-largest market, with sales increasing 60 per cent over the previous year.
Chery is now the sixth-largest passenger vehicle manufacturer in China and is the country’s largest vehicle exporter, shipping cars to more than 60 countries, including Australia.
The announcement comes less than one week after JLR confirmed it would ramp up production of its Land Rover Freelander 2 and Range Rover Evoque SUVs in the UK to meet unprecedented global demand for the urban-styled models.