BEIJING, August 7, 2008 (AFP) - German car maker Daimler said Thursday it had signed a letter of intent to produce medium and heavy-duty trucks in China, a deal reportedly worth two billion yuan (290 million dollars).

The European luxury auto maker will form a 50-50 joint venture with China's Beiqi Foton Motor Co. to produce and sell Foton's Auman brand trucks using Mercedes-Benz engines, Daimler said in a statement.

The joint venture, which expects to win government approval within a year, will explore opportunities to sell the trucks in international markets, primarily in developing countries, Daimler's spokesman Trevor Hale told AFP.

He declined to provide any financial details about the deal.

But Wednesday's 21st Century Business Herald reported it may involve a total investment of two billion yuan, with Foton providing cash, land and production facilities and Daimler giving technology and cash.

'Today's agreement is a milestone in the commercial vehicle industry,' said Ulrich Walker, chairman of Daimler Northeast Asia, in the statement.

'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 lower-end truck segment.'

The deal comes after Shanghai-listed Foton Motor scrapped plans to sell a 24 percent stake to the German automaker late last year after failing to win government approval.

The joint venture with Beiqi Foton, the largest commercial vehicle manufacturer in China, will be the second commercial vehicle partnership Daimler has in the country, according to the statement.

Fujian Daimler Automotive, Daimler's joint venture with Fujian Motor Group and China Motors Corp., will begin producing Mercedes-Benz transport vans next year.

The German company also has a joint venture with Foton's parent, Beijing Automotive Industry Holdings Corp., which makes Mercedes-Benz sedans.