Weir Group has agreed to embark on a joint venture with Shengli Oilfield Highland Petroleum Equipment to provide high-pressure pumps to the developing shale gas industry in China.
Glasgow-based Weir, the world's largest manufacturer of pumps for the mining industry, will own 60% of the venture.
Based in the Shandong Province, it will start operating next year.
Shale gas is an "unconventional" source of natural gas, released from rock formations by hydraulic fracturing.
Weir's chief executive, Keith Cochrane, said: "Our partnership with Highland, with its extensive customer relationships and market knowledge, will be a key enabler for production from China's shale gas reserves."
Highland, which was established in 1992, provides drilling and production equipment and services, mainly for the oil and gas industry.
Weir has been developing its footprint in China over a number of years.
It owns two subsidiaries in the Jiangsu Province - one focused on the mining industry and the second in the power sector - along with a sourcing operation based in Shanghai.
The group anticipates investing £3.9m in the first two years of operation.