Finland-based Nokia Oyj (NYSE: NOK) and Chinese smartphone marker Xiaomi on Wednesday announced that they signed a patent agreement to develop new technologies and explore opportunities.

Under the deal, the two companies inked a cross license to each company’s cellular standard essential patents. Nokia will also provide network equipment to Xiaomi. The two company will develop technologies that focused on the data center, augmented reality, virtual reality and artificial intelligence.

"Xiaomi is one of the world's leading smartphone manufacturers and we are delighted to have reached an agreement with them," Nokia Chief Executive Rajeev Suri said in a statement.

Nokia has accumulated a lot of patents when the company dominated the mobile phone business. The company generates money from its patent business.

Xiaomi is one of the fastest emerging smartphone makers in China. But it faces huge competition from other rivals such as Oppo and Vivo. The company now is looking for opportunity to expand its business globally.

"Xiaomi is committed to building sustainable, long-term partnerships with global technology leaders. Our collaboration with Nokia will enable us to tap on its leadership in building large, high performance networks and formidable strength in software and services, as we seek to create even more remarkable products and services that deliver the best user experience to our (product brand) Mi fans worldwide," Lei Jun, chairman and CEO of Xiaomi, said in a press release.