SINGAPORE -- Malaysian automaker Proton Holdings and major Chinese shareholder Zhejiang Geely Holding Group upgraded their partnership Saturday with plans for a new car factory in China and cooperation on electric vehicles.

As visiting Malaysian Prime Minister Mahathir Mohamad looked on, the two car companies signed an expanded partnership agreement at Geely headquarters in Hangzhou, China. Geely and Proton will form a joint venture that will assemble cars in China for the Chinese market.

"Today is a very special day for us as we are here in Hangzhou to build the first plant outside Malaysia, in the biggest automotive market in the world," Proton Chairman Syed Faisal said.

Geely, the parent of Swedish automaker Volvo Cars, will provide Proton with technology for electric cars and other so-called new-energy vehicles that will help build its competitiveness as an exporter -- long a goal of the Malaysian government's plans for its auto industry. "New-energy vehicle," in China, is a term encompassing electric cars and hybrids.

Proton, Malaysia's first automaker and a Mahathir pet project, has struggled financially in recent years and took a capital injection from Geely last year that left Chinese automaker with a 49.9% stake. Malaysian conglomerate DRB-Hicom owns the rest of Proton.

Under the expanded partnership, Proton will also gain access to Geely's research and development and quality control methods.

The 93-year-old Mahathir, now reprising his role as prime minister after a long absence from politics, faces the challenge of reinvigorating Malaysia's economy with new, high-tech industries. This goal is seeing him reach out to powerful multinational corporations that can help Malaysian companies gain competitiveness.

Mahathir met on Saturday with Alibaba Group Holding founder and Chairman Jack Ma at the Chinese e-commerce giant's headquarters in Hangzhou.

Mahathir has also proposed establishing a new Malaysian national automaker, although some have questioned whether the country needs another one.