Chinese automaker Foton Motor Group has agreed to set up a new joint venture with Charoen Pokphand (CP) Group to produce vehicles in Thailand for sales across the ASEAN region.

The agreement, which was signed at the second Belt and Road Forum for International Cooperation in Beijing, involves an initial combined investment of THB500m (US$16m).

Additional investments will be made by the two companies to build facilities for the assembly of Foton vehicles as well as local and regional sales and marketing operations.

The new company will make a broad range of vehicles, including passenger vehicles, pickup trucks and other commercial vehicles, with Foton providing the production technology, products and the brand.

CP will take responsibility for providing vehicle finance and establishing customer relations.

Foton has struggled to develop much of a presence in Thailand despite entering into a local assembly and distribution agreement with locally owned United Motors Company several years ago.

After failing to make a significant impact in the local market, Foton took charge of day to day operations at United Motors in 2016 and focused on heavy truck assembly while hiring Bangchan General Assembly Company (BGAC) to assemble its pickup trucks.

The new agreement with CP means that Foton will end its business relationship with BGAC and United Motors.

CP already has a joint venture with China's SAIC Motor, called SAIC Motor-CP Company, which was established in 2012 for production and distribution of MG cars.

These are assembled at a 100,000 unit per year capacity plant in Chon Buri province and local sales approached 24,000 units last year.

Foton president Gong Yue Qiong said he was positive about the future growth prospects for his company in south-east Asia, adding that he is targeting a top three position in Thailand, currently held by Toyota, Isuzu and Honda.