The joint venture will manufacture Mercedes-Benz vans, a report in Shanghai Securities News said.
DaimlerChrysler, the German-US car company, is a latecomer to manufacturing in China, which is the world's second-largest car market after the United States, with seven million new vehicle sales a year.
But before its merger with Daimler Benz AG in 1998, Chrysler became the first Western company to produce vehicles in China since the 1949 communist revolution when it opened a joint-venture Jeep factory in Beijing in 1983.
That factory has since closed, but the joint venture continues to produce Jeeps for sale in China at another plant in the suburbs of Beijing.
It is DaimlerChrysler's only other car plant in China.