The Swedish-based manufacturer plans to set up a joint venture in the first half of next year with China National Heavy-Duty Truck Corp. (CNHTC) and reach annual sales of 10,000 trucks in five years.
Volvo contributes its advanced technologies of truck manufacturing to the venture, to be based in Jinan, East China's Shandong Province.
Around 40,000 heavy duty trucks are currently sold in China every year. That's expected to grow quickly as the country invests more in road construction.
Last month Volvo entered into an alliance with Mitsubishi Motors of Japan. The two companies combined account for more than 30% of the Asian market.