PSA Peugeot-Citroën and Chinese carmaker Hafei today signed a memorandum of understanding to start a feasibility study of a 50-50 joint venture creation. The new venture will manufacture a range of small people movers for the Chinese market with the cars constructed at Hafei's plant in Shenzhen.

PSA Peugeot-Citroën currently operates in China through another joint-venture with Dongfeng Motors, the third largest carmaker in China. Pictured above is the C-Triomphe, a sedan version of the Citroën C4 that’s already produced in China by Dongfeng. Last year the group sold 201,300 vehicles in the rapidly expanding market and for the first five months of this year it has moved 87,100 units.

There are no plans to export any of the vehicles outside of China but the establishment of such ties lays the groundwork for future projects that could one day see Chinese built cars sold in Europe wearing Peugeot or Citroën badges.