Continental has begun the construction of a new R&D centre in the Chinese city of Chongqing to meet rising demand from automakers in the south-west of the country.

The new CNY280m (US$42m) R&D centre is scheduled to begin operations in 2018 and will focus on electrical and mechanical engineering, software development and will also have testing capabilities for auto electronics and new energy vehicles.

Enno Tang, president and CEO of Continental China, told local reporters Chongqing is the most important automotive production hub in South-west China and the company's new R&D center will help it "forge even closer links with our customers".

The first phase of the project, covering 15,000 sqm, is scheduled to be completed by the end of 2018. By 2020 the centre is expected to have 400 engineers in place, rising to 1,000 by 2025.

Continental recently signed a strategic cooperation agreement with Baidu, one of the biggest internet companies in China, with the goal of establishing a "comprehensive strategic cooperation in the areas of automated driving, connected vehicles and intelligent mobility services".

Continental currently has 27 production facilities and 17 R&D centres in China, serving most automakers in the country.