Chinese company China Automotive Systems, Inc (CAAS) inaugurated on Monday, in Brazil, its first factory overseas, according to Brazilian online portal Automotive Business.

China Automotive is due to invest 20 million reais (US$5.7 million) on the plant, located in Guarulhos, in the São Paulo metropolitan area. The factory – if operating three shifts per day – will be able to produce up to 700,000 steering systems for cars, the portal said.

The manager of the Guarulhos factory, Euclydes Borgo Jr, was quoted as saying the company decided to invest in a plant in Brazil due to the requirement in that market there should be a minimum of 65 percent local content in vehicles. CAAS’s first client for the output of the new Brazilian plant would be Fiat.

According to the report, CAAS already exports automotive components to clients in several markets outside China, including in the United States, Russia and India.

The Chinese company established its first commercial office in Guarulhos in 2012. The aim was initially to sell steering systems imported from China.