Mahindra-owned SsangYong is reportedly exploring a joint venture operation in China that would involve local production of its SUVs to supply the Chinese market.

Bloomberg reports that the Korean company is talking with the Shaanxi Automobile Group and has signed a letter of intent with the Shaanxi to study a possible joint venture and local production plant.

The news agency noted that Shaanxi Auto produces heavy and special-purpose trucks, including military trucks under the Yanan nameplate. However, it's vehicle-making expertise in China allied to an established supply chain makes it a good potential partner for SsangYong.

"The joint venture, which will be SsangYong's first overseas production base, will serve as a new growth engine," Ssangyong Motor Chief Executive Officer Choi Johng-sik said in the statement.

SsangYong has some history in China, having been formerly controlled by SAIC before an acrimonious break-up that included allegations of widespread intellectual property theft by the Chinese parent. Bankruptcy followed before SsangYong was eventually purchased by Mahindra in 2011. In recent years, SsangYong has expanded its sales and returned to profitability, helped by strong export demand for its Tivoli compact SUV.