DAIMLER AG and China's Beiqi Foton Motor Co are forming a joint venture to produce medium and heavy-duty trucks and technology in China.

The venture will also explore other opportunities to expand the production and sales of Foton models in international markets.

Daimler said in a statement yesterday that a letter of intent was signed yesterday to set up the equally-shared venture. It did not provide financial details.

The new joint venture is expected to benefit from Daimler's technologies, specifically the Mercedes-Benz heavy-duty engine technology, and use Foton's Auman brand as a platform for international growth in the lower-end commercial vehicle segment, the statement added.

"The new joint venture will benefit from the outstanding strengths of the two companies." said Ulrich Walker, chairman and chief executive officer of Daimler Northeast Asia.

"Daimler's technology expertise, global scale and leadership in the high-end truck segment, complement Foton's broad distribution in China and leadership in the low-end truck segment."

Overseas car makers have been seeking exports from China at competitive pricing because of low labor and production costs. Beiqi Foton is China's biggest light commercial vehicle maker and exporter. It is owned by the Beijing Automotive Industrial Holding Company.

The move shows Daimler is increasing its cooperation with BAIC as it expands ambitiously in China.

With this new joint venture, Daimler will now have two commercial vehicle joint ventures and one passenger car joint venture in China, in addition to wholesale and financial services operations.

"This new joint venture will be the first Sino-European commercial vehicle operation aiming at expanding production in international markets," said Wang Jinyu, president of Foton.

Daimler produces Mercedes-Benz E and C-Class sedans at its joint venture in Beijing.