Few people took Chery Automobile seriously when it was established, a little more than a decade ago, in the city of Wuhu, in Anhui Province, China. Chery was a newcomer in a small area that had little tradition of manufacturing and was far from the country’s traditional centers of auto production, in Beijing, Changchun, Shanghai, and Wuhan. When the start-up failed to find buyers for a motor engine it had developed, there was little choice but to manufacture a car of its own so that the engine could find a home. After this first car had been built, bureaucratic obstacles prevented the company from selling it. As chairman and chief executive officer Yin Tongyao puts it, “Chery kept hitting the wall over the past decade. Every time we hit a wall, we just reoriented and moved on.”

Chery truly has moved on. In 2007, it sold 381,000 passenger cars, generating $2.86 billion (20 billion renminbi) in sales and ranking fourth in the domestic passenger-car market. (The top three are brands associated with joint ventures between Chinese and foreign automakers; Chery is an independent manufacturer.) The company is among a handful of Chinese carmakers that have proprietary technology to build core...