VW will soon build its seventh production facility in China.

Volkswagen will strengthen its foothold in the Chinese market with another vehicle factory, a new report finds. Volkswagen, Europe's largest automaker, currently operates six vehicle production facilities in China.

According to Reuters, VW's seventh Chinese factory will be built in the country's western province of Xinjiang. The new plant will be a relative bargain with a price tag of $394 million, although it will have a production capacity of just 50,000 units per year.

VW CEO Martin Winterkorn will reportedly sign the deal during Chinese Premier Wen Jiabao's scheduled April 23 visit to Germany. The deal will also include a 25-year extension of VW's joint-venture with China's FAW Automotive Company Ltd.

VW, one of the largest foreign automakers operating in the world's largest auto market, plans to invest more than $18 billion in China in the coming years.