BEIJING, Aug. 13 (AP) -- China's biggest domestic automaker, Chery, says it will open a factory in Iran, expanding its fast-growing foreign ties soon after the announcement of ventures with Chrysler and Fiat.

The US$370 million (£á270 million) plant in Babol in northern Iran will be developed with Iran's biggest automaker, Khodro Co., and Canadian investment firm Solitac, Chery Automobile Co. said on its Web site.

The factory will assemble Chery's compact S21 sedan, also known as the QQ6, from kits supplied by Chery, the statement said. They are to be sold in Iran and surrounding countries.

The venture "can strengthen Chery's competitiveness in Iran or even in the entire Middle East market so as to build up Chery into a 'Chinese brand in the world market'," Chery president Yin Tongyao said in the statement, dated Friday.

Chery, based in the eastern city of Wuhu, signed a deal last month with Chrysler Group to make cars for export to the United States and other markets. Last week, Chery and Fiat Group unveiled a deal to produce Fiat and Alfa Romeo models for sale in China.

Chery said it would own 30 percent of the Iranian factory, with Khodro holding 49 percent and Solitac 21 percent.

China's small but ambitious automakers are eager to expand abroad and have been forging ties with foreign partners in hopes of improving their technology and market access.

China overtook Japan last year to become the world's No. 2 vehicle market after the United States.

China's automakers exported 325,000 vehicles last year, about 80 percent of them low-priced trucks and buses to developing markets in Asia, Africa and Latin America, according to the government.

Chinese producers are eager to expand to U.S. and European markets, but industry analysts say they lack the technology to meet environmental and safety standards on their own.

Last year, Chery reported sales of 310,000 cars, about 40,000 of which were exported. Its target this year is 390,000 cars, with 70,000 sold abroad.

Chery also assembles vehicles with partners in Russia, Ukraine, Egypt, Uruguay and Indonesia.