Digital Equipment is close to forming a joint venture with China Aerospace Corp to develop and manufacture a network computer (NC) range on the mainland.
China Aerospace and Digital have signed a memorandum of understanding.
It has been agreed that Digital will offer design and engineering resources, while the mainland corporation will be involved in manufacturing, distribution and application development.
China Aerospace specialises in science and technology projects. Its headquarters are in Beijing and it employs 270,000 people.
It has set up more than 50 Sino-foreign joint ventures in China and more than 20 in the United States, Canada, Australia, Russia, Hong Kong and Macau.
The two firms have been partners since 1994, when their Huadi joint venture to distribute Digital workstations was formed.