Jaguar Land Rover has signalled the importance of China to its growth prospects by starting the construction of a factory outside Shanghai.

JLR and its Chinese partner, Chery, formally laid the foundation stone for a plant in Changshu, near Shanghai, as part of a 10.9bn yuan (£1.1bn) investment that will include a new research centre and an engine production facility. The firm's owners, Tata, also own a JLR assembly plant in India but the Chinese venture is the company's first full-blown sortie into overseas manufacturing, reflecting stellar growth in the car firm's third largest market.

The business posted a 58% increase in Chinese sales in the second quarter, boosted by demand for the recently launched Range Rover Evoque model.

As well as producing existing JLR models, when the plant opens in 2014 it will produce vehicles specifically tailored for the Chinese market, now the world's largest automotive market.

In a joint statement, JLR and Chery said: "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."

JLR employs 24,000 people in the UK but its overseas ambitions have caused disquiet at Unite. The union's former general secretary Tony Woodley has expressed concern that the company's growth ambitions are tailored for Brazil, India, Russia and China and not the UK.

Speaking in September, JLR chief executive, Ralf Speth, said the firm's immediate manufacturing ambitions lie outside the UK, saying the firm needs to "go where the markets are". He said JLR was proud to have added 8,000 manufacturing jobs in the UK in recent years, owing to demand from the US and China.

"Two and a half years ago we discussed closing plants here in the UK and I am happy we did not do so," said Speth. But he refused to commit himself to further expansion in the UK.