Jaguar Land Rover, the British car manufacturer, is investing $1.73 billion in a joint venture with Chinese Chery Automobile Company to build a new factory outside Shanghai.
The facility is set to open by 2014, and will be used to build Land Rovers and Jaguars as well as joint-branded cars targeted to the Chinese market, the Associated Press reported.
The company said the Chinese government has approved the new partnership.
"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 recognizing the potential of our joint venture in the fast-growing Chinese market," the two companies said in a joint statement, BBC News reported.
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"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," it added.
Jaguar Land Rover said that the China plant is in addition to their British manufacturing facility, which they have no intention of closing, according to BBC.
“China is now our biggest market,” Ralf Speth, chief executive officer of Jaguar Land Rover, told reporters after the groundbreaking ceremony for the factory in Changshu, Jiangsu province, Bloomberg Businessweek reported. “The Chinese economy has grown at a phenomenal rate in recent years and by any western standard, and I’m convinced that it is set to continue to grow at an astounding rate into the future.”
The announcement did not specify the factory's production capacity, Agence France Presse reported, but China's Xinhua news agency reported last month that it will produce 130,000 vehicles a year.
“Both parties need each other,” Bill Russo, president of Synergistic Ltd., told Bloomberg from Beijing. “JLR needs to be localized because, quite frankly, their competition is localizing. It gives Chery an opportunity to really upgrade its capabilities in a time when it really needs that.”
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