Rolls-Royce Power Systems and Guangxi Yuchai Machinery Company Ltd (GYMCL) have agreed to form a Chinese joint venture company to manufacture Rolls Royce’s MTU series 4000 diesel engines.

The firms said they will share the costs equally, with each company investing RMB75 million ($11.7 million).

The new company will be based at GYMCL’s primary manufacturing plant in Yulin City in Guangxi province. Production of up to 1500 engines per year is expected to begin in 2017.

The engines will feature power ratings from 1400 kW to 3490 kW, and will comply with China’s Tier 3 emissions standards.

The companies said they aim to target China’s ‘off-highway’ market, particularly in power generation and on-site power for oil and gas applications. Post-2020, they plan to expand their sales area to selected Southeast Asian countries such as Vietnam, Thailand and Malaysia.