Daimler AG announced the opening of a new research and development center in Beijing's southern Yizhuang region on Oct 20. Senior executives claim its role will not only help the German carmaker compete with rivals in the Chinese market, but in Western markets too.

The R&D center is the result of a 1.1-billion-yuan ($172.03 million) investment and will employ around 1,000 engineers. It will focus on future electric models and products, and localization in China, according to the company.

In reference to the opening, Hubertus Troska, a member of the board of management at Daimler AG who is responsible for China, said that he and the board not only recognize how strong the Chinese auto market is but how many new competitors there are.

In an era of automotive transformation, multinational manufacturers such as Daimler face stiff competition not just from traditional rivals, but newcomers such as Tesla and China's homegrown electric vehicle startups.

Hans Georg Engel, senior executive vice-president of Daimler Greater China who heads up R&D at Mercedes-Benz Cars, said: "Our new R&D Tech Center China brings our technological capabilities to a new level. It also enables us to significantly increase speed and efficiency of our R&D activities."

The 55,000-square-meter facility will be used to carry out testing in several areas, including electric powertrains, charging, ride, comfort and durability. The center's eDrive lab is equipped with two test chambers that can simulate temperatures ranging from -30 C to 50 C.

Daimler is not the only multinational carmaker with a sizable R&D budget in China. Late last year, Volkswagen inaugurated an R&D center in Anhui province dedicated to e-mobility.

Similarly, BMW operates R&D facilities in Beijing, Shanghai, and Shenyang in Liaoning province dedicated to the brand's localization in the Chinese market.