The companies have applied for regulatory clearance to establish the joint venture, the people said, declining to be identified because the deal has not been finalized.
The partnership may be officially announced as early as April at the Beijing auto show, they added.
JLR's owner, India's Tata Motors, said in May it had shortlisted unidentified partners in China to fuel expansion in the world's largest auto market.
It is required by China overseas carmakers to work with local manufacturers, who must own at least 50 percent of joint ventures, to set up production. Locally built vehicles are cheaper because they are not subject to import duties.
"It's a smart move by Tata Motors," said Juergen Maier, a Vienna-based fund manager at Raiffeisen Capital Management. "It makes sense for Tata to have local production in China as it helps reduce the prices as well as cater supply more closely to the Chinese demand."
Jin Yibo, a spokesman for Wuhu, China-based Chery, said he had "no information to disclose" when contacted Thursday by phone.
Paul Chadderton, a Jaguar Land Rover spokesman based in Whitley, England, said there was "no news at this time" on the company's plans to produce cars in China.Automobile News
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