The Chinese appetite for luxury automotive brands, including Cadillac, has become so great that
The Chinese National Development and Reform Commission signed off on the plant, which will be located in Shanghai's Jinqiao district, GM said in a statement. Construction is to begin in June.
GM said the planned production capacity for the factory is 150,000 vehicles.
"We want to build where we sell. That is very important to us," said Alan Adler, a GM spokesman in Detroit.
The draw is
"If Cadillac can capture even a small share of that growth, it will be a very large number," said Michael Robinet, IHS' managing director.
GM already has a strong presence in China, with a market share of 15.2%, according to Daniel Ammann, the automaker's chief financial officer and senior vice president.
However, in a very important sense, the company is still playing catch-up to European luxury brands in China, he said.
"The luxury side of the market has expanded exponentially in China," Robinet said, adding that Audi was the first to establish a strong foothold there, followed quickly by BMW and then by Mercedes-Benz.
Also actively competing for Chinese luxury sales, Robinet said, are Jaguar and Land Rover.
The new factory in China is what will give Cadillac a chance to compete on a more equal footing, he said.
Daniel Francis Akerson, GM's chairman and chief executive, has repeatedly talked about the importance of the Chinese market, most recently during the company's first-quarter earnings teleconference last week.
Akerson said the company has a "drive targeted to triple Cadillac's annual sales in China to 100,000 units by the end of 2015."