The two firms have formed a joint venture company, called Chery Jaguar Land Rover Automotive Company Ltd, and now have a licence to manufacture JLR vehicles and new models at a new factory, which is to be constructed in Changshu, near Shanghai.
As well as building cars, the factory will include a research and development centre and engine production facility.
Talking at the announcement of the deal in Jiangsu, China, Dr Ralf Speth, Jaguar Land Rover Chief Executive Officer, and Mr Yin Tongyao, Chairman and Chief Executive Officer of Chery Automobile said in a joint statement: "We are delighted to have reached this milestone, achieved thanks to the understanding and foresight of the Chinese authorities and we want to thank them for recognising the potential of our joint venture in the fast-growing Chinese market.
"Together, we will now begin working in close collaboration on our partnership plans to harness the capabilities of our respective companies, to produce relevant, advanced models for Chinese consumers."
The firms announced that as well as building current JLR cars, tipped to begin with the Land Rover Freelander and Range Rover Evoque, the partnership will also produce models for a domestic brand, tailored specifically to local customer demand.
The new factory is scheduled to be completed in 2014, as JLR bids to consolidate its rapid expansion in the Chinese market. The firm’s sales rose 80 per cent during the first 10 months of the year to October 2012.