Schalke have entered a strategic partnership with Hebei China Fortune and will help the Chinese Super League club to develop players.
The deal, reportedly worth €20 million, was announced on Thursday and will run for five years.
In a statement on their official website, Schalke said they "are to enter into large, long-term and economically attractive partnership with Hebei China Fortuna FC."
"Unlike any other Bundesliga team we can offer an immense knowhow when it comes to building youth talent, and we will offer support to our Chinese partner in all departments," Schalke marketing executive Alexander Jobst said.
"It's a transfer of knowledge, and we are excited that our youth development will be appreciated in China."
The Bundesliga club, who have brought through star players including Manuel Neuer, Mesut Ozil and Leroy Sane, will send two coaches for each of Hebei's 10 youth teams, kicker reported.
The club will also become the third German side to set up an office in China, with kicker saying it would be opened in Shanghai later this year.
Schalke are set to tour China for a third consecutive year in the summer, and will play two friendlies between July 2 and July 12.
