The deal, if materialized, will help the JV sell medium- and heavy-duty trucks in China and in overseas markets under Foton's Auman brand, the Reuters report said. Daimler will invest in terms of cash while the Chinese partner will inject its heavy truck assets into the venture.

The JV is awaiting the government approval which it expects to secure in the next 12 months and, about two years after the establishment of the China JV, the two companies will possibly build another in Russia, with more to follow in developing markets such as South Asia and South America in the next three to five years.

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

Daimler also said it will reconsider buying stakes in Foton if the Chinese government adjusts its auto industry policies in future. Daimler failed in its attempt to take a 24% stake in Foton last year when this effort did not win authorities' approval.