CHENGDU - Chinese and French companies on Tuesday agreed to set up a joint venture to develop cabin entertainment systems for China's homegrown C919 passenger planes.

The joint venture will be set up in the southwest city of Chengdu in the third quarter this year with an initial investment of 300 million yuan ($48 million), according to the deal signed between the France-based Thales and China Electronics Technology Avionics Co Ltd in Chengdu.

The new company will provide cabin entertainment systems for the C919 and other China-made business and large passenger jets, according to sources with the companies. In the long run, the new company is expected to develop into a global leading inflight entertainment system provider.

Test flights of the C919, China's first self-developed passenger jet, are scheduled for 2014 and aircraft is expected to hit the market two years later. So far, at least 235 orders have been placed for the single-aisle jet.