Sony and Ericsson agreed to merge their mobile phone units in April. Both companies are in the midst of integrating their handset operations in the United States.
Setting up the subsidiary is the first step to introducing Sony Ericsson products in China, Sony Ericsson spokeswoman Utako Higuchi told The Associated Press.
She said that the venture has yet to be approved by the Chinese authorities, but she expects the Beijing office to be up and running by the end of May.
Sony has a cell phone factory in Beijing, while Ericsson operates manufacturing facilities in Beijing and Nanjing.
According to the report, while Sony Ericsson's Beijing unit will focus on making GSM mobile phones for the Chinese market, it will also be a platform for introducing third-generation (3G) handsets when the technology is introduced to China by 2004.
Fran Foo reported from Singapore.