The centre, to be located in the town that houses Volvo headquarters, will start operations by the end of this year to design parts for the next generation of small family cars for both firms, Geely said in a statement on Wednesday.
“Our group has ambitious goals to increase the competitiveness of our brands,” Geely chairman Li Shufu said.
“Geely will continue to improve its product quality in the years to come and can learn from Volvo Cars,” he added.
Li offered assurances the centre would not jeopardize Volvo’s “brand integrity” and product development. Geely bought the firm from Ford in 2010.
Both companies have started recruitment of around 200 engineers from China and Sweden to staff the centre, the statement said.
Geely, one of China’s largest private automakers, said earlier this month it had acquired the maker of London’s black taxis for 11 million pounds ($17 million) after Manganese Bronze Holdings collapsed into administration.
Geely recorded 15 percent annual growth in domestic sales to 483,000 vehicles in 2012 and has targeted 16 percent growth this year to 560,000 vehicles.