A subsidiary of Rolls-Royce signed a deal with China's leading engine maker Yuchai on Friday to set up a joint venture.
Germany's MTU Friedrichshafen and Yuchai Corp. based in Yulin City, Guangxi Zhuang Autonomous Region, each holds a 50-percent stake in the new venture, MTU Yuchai Power Co., Ltd.
Using MTU's S4000 engine technology, the new plant will start production in 2017 with a capacity of 1,500 engines per year.
The Chinese market is MTU's third largest and the company will build the assembly line and establish a quality assurance system, said Ulrich Dohle, CEO of Rolls-Royce Power Systems AG.
Yan Ping, chairman of Yuchai Corp., said the venture will focus on engines for generators or oilfield purposes rather than engines for road use.
Engine parts will be gradually manufactured in China, said Yan.
Guangxi Yuchai Machinery Co., Ltd was floated on the New York Stock Exchange in 1994 as China's first engine manufacturer listed abroad.
