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German tech company Continental will open a research facility in Southwest China's Chongqing in 2018 to meet carmakers' rising demands in the western part of the country.

The 280 million yuan ($41.21 million) research and development center, which began construction with a groundbreaking ceremony on June 8, will mainly focus on electrical, mechanical engineering, software development as well as test capabilities for automotive electronics and new energy vehicles.

"The automotive industry has been developing rapidly in Western China. Chongqing is the most important automotive city in this region, and the Chongqing R&D center will help us forge even closer links with our customers," said Enno Tang, president and CEO of Continental China.

The research facility's phase one project, covering 15,000 square meters, is scheduled to be finished by the end of 2018.

Continental said the center is expected to hire 400 engineers by 2020 and 1,000 by 2025.

Founded in 1871, the technology company offers solutions for vehicles, machines, traffic and transport. Continental generated sales of 40.5 billion euros ($45.4 billion) in 2016 and currently employs more than 227,000 people in 56 countries.

Continental's Corporate Technology Officer Kurt Lehmann said the company is focused on developing and shaping the environment of future mobility by increasing its R&D expenses, which grew to more than 2.8 billion euros in 2016.

"We are expanding our worldwide network of research and development centers, in which China definitely is one of the most important parts," said Lehmann.

Since starting to do business in China in 1994, Continental has built 27 production locations and 17 R&D centers in China, serving major carmakers across all vehicle segments in the country.

The company also develops and produces materials, functional parts, components and systems for railway, machinery, mining and other industries.