The 47,000m² of the facility will take charge of drug discovery, translational research, clinical development, regulatory affairs and external scientific research programs.
The first phase of construction is scheduled to be completed by 2014.
Merck Research Laboratories president Peter S Kim said the new facility would be a key milestone in their growth strategy.
"By strategically locating in China, we are able to complement our existing R&D capabilities, and facilitate new collaborations with scientists in the region and across emerging markets," Kim added.