Mercedes-Benz has set up a new research and development center in Shanghai as the German premium carmaker revs up its localization efforts in the world's largest vehicle market.

This is the latest development from the Stuttgart-based company to deepen its commitment to the Chinese market, where it sold more than one-third of its global deliveries last year.

"China has become a crucial technology hub and a primary driver of the industry's transformation," said Hubertus Troska, a Mercedes-Benz Group AG board member responsible for China. "Additionally, our customers in China appreciate new technologies like almost nowhere else in the world. There is no doubt that a strong R&D presence in China will be a key contributor to our ambition of 'Leading in Electric Drive and Car Software'."

Starting with the localization of the E-Class model in 2005, Mercedes-Benz has been on its R&D journey in China for more than 15 years. Now, R&D China is the group's most comprehensive R&D hub outside of Germany, covering advanced design, intelligent connectivity, electric mobility, automated driving, localization and whole vehicle testing.

It came within months of Mercedes-Benz putting into operation its expanded R&D center in Beijing last October. The facility in the capital city, called R&D Tech Center China, is backed by an investment of 1.1 billion yuan ($172.8 million).

Beijing serves as the main hub of Mercedes-Benz R&D operations in China. Meanwhile, the company stated that the R&D Center Shanghai will help it explore great potential in innovation. Utilizing state-of-the-art software and hardware integration technologies, the R&D Center Shanghai will accelerate the carmaker's connectivity and automated driving development process in China.

The carmaker also aims to attract hundreds of tech talents to accelerate its competence in the field. Experts in fields like software engineering, artificial intelligence, cloud technologies as well as vehicle testing will further unlock innovation potential.

"We look forward to welcoming the brightest minds to jointly promote the transformation of the industry," said Hans Georg Engel, senior executive vice-president of Daimler Greater China, head of Mercedes-Benz R&D, program management, procurement and supplier quality in China, adding "our people are the driving force behind our strategy of 'Inspired by China, Innovating in China'".

Engel also stated that the expanding local R&D network is bringing the company's technological capabilities in the country to a new level, and enable it to significantly increase speed and efficiency of its R&D activities.

The local R&D team, with the support of top-tier facilities, has strong capability of vehicle development and testing covering various aspects and functions, ranging from design and vehicle architecture to software and hardware testing and validating.

In the past, automotive parts sourced locally had to be sent to Germany for such testing and validation, which would involve a lot of coordination, arrangement and logistics.

The company expects more future products from Mercedes-Benz to be comprehensively engineered, tested and verified in China, which will further speed up the pace for the company to launch new models in the market.

The EQE, Mercedes-Benz's forthcoming electric model, is an example of this, with almost all of its testing and validation for the locally-produced model done in China, thus saving valuable time.

Besides its capabilities, the local team has a deeper understanding of local customers and regulations. A big part of its R&D team's work is to understand their demands and meet them through engineering and design, Engel said.

One example is the onboard voice commands. Since there are a large number of dialects across China, Engel said Mercedes-Benz has worked with regional voice recognition companies to come up with localized solutions.

China plays a significant role in the company's global R&D network. Its R&D team in China comprises over 1,000 people, which is more than triple the figure in 2014. Mercedes-Benz is adapting its internationally developed solutions for models launched in the Chinese market.

Mercedes-Benz recently became the first carmaker to introduce Level 3 autonomous driving technologies, which have been certified in Germany, and is in talks with Chinese and US authorities about introducing the technology into the markets.

In terms of electrification, the company has been accelerating its work to advance frontiers in its goal of going all-electric by 2030 where market conditions allow. To reach the goal, it means the company needs to reform and transform within the next seven to eight years. For this reason, it has also developed and successfully launched its new dedicated electric car platform.

Speed is one of the golden tenets in R&D, paired with starting early and staying ahead, Engel added. In China alone, Mercedes-Benz had launched four all-electric models by the end of 2021. This year, the brand plans to introduce 21 new products with various powertrain offerings, including eight battery-electric vehicles and plug-in hybrids in China, which will start with the EQE and EQS SUV.