Geely had previously acquired a 49.9 percent controlling stake in Malaysian automaker Proton a year ago.
Li is from Zhejiang, a coastal province south of Shanghai. Late a year ago, Geely had asked Daimler to issue additional shares so it could buy them, but that request was rebuffed.
Daimler is the world's oldest automaker, with brands including Mercedes-Benz and Smart cars, as well as heavy trucks.
"We are delighted, with Li Shufu, to have won over another long-term investor who is convinced of Daimler's innovative prowess, strategy and future potential", the spokesman said in response to a request for comment.
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Its shares ended the day 4.4% higher as the bank said it was aiming to more than double its dividend for 2018 to 6.5p per share. Revenues were £21.1bn and bonuses awarded to staff were flat at £1.5bn.
Geely's expansion comes only weeks after a $3.9bn move to become the biggest shareholder in truckmaker Volvo AB.
With revenue exceeding RMB 270 billion (about US$43 billion) in 2017, the Zhejiang Geely Holding Group is China's largest privately owned automotive manufacturing company.
With Li's backing, Volvo recently outlined plans to create a brand of upscale electric cars, called Polestar, that is meant to compete with Tesla.
Chinese investors in German technology companies have tended to take a consensual approach, buying incremental stakes in companies such as robotics firms Kuka and Kion, typically after long consultation with management and other stakeholders.
The rumour mill has been working overtime since Daimler refused to sell a chunk of its stock at a discount to Geely Chairman Li Shufu a year ago, suggesting he might instead buy the stock on the market if he was so keen.
Global motor manufacturers are seeking to strike deals in China, the world's largest auto market, but centred on electric cars in order to get an increased foothold in a segment set to grow rapidly in the coming years.