General Electric Co is buying a 15 percent stake in Shanghai-listed China XD Electric Group for about $535 million, giving the largest US conglomerate a foothold in China's vast electricity infrastructure market and access to XD's technology.

The two companies have also agreed to form a joint venture to distribute GE's electrical grid solutions to XD's local customers. XD will control 59 percent of the joint venture, with GE owning the rest, a source with direct knowledge of the matter told Reuters.

Strapped for growth in their home markets, US and European companies have been continuously trying to access China's vast and rapidly growing economy.

This deal signifies a shift in China's industrial sector, as it evolves from a low-cost manufacturer to having technology of its own that can be exported. Under the deal, GE will use XD's technology to build the old legacy transformers, which will then be sold using GE's global sales network.

The joint venture gives GE access to equipment such as large transformers and breakers that modify and switch power within the grid, said Bob Gilligan, president and CEO of GE's digital energy business.

China has developed technology used on a large scale for a competitive portfolio of products, Gilligan added.

The deal has been in the works for almost two years, the source said.

XD Electric is one of China's largest primary equipment providers and offers a broad range of products and exports products to more than 40 countries.

Reuters