A customer smiles after test driving a Car2go North America LLC vehicle in San Diego, California. Daimler and the Chongqing authorities have signed a letter of intent that will put several hundreds of its two-seater smart cars on the road within a year. [Photo/Agencies]

It was announced recently that the world-famous auto brand Daimler with its Car2go car-sharing service brand plans to launch its first operation in Asia later this year.

But what is most noteworthy is the choice of city: western China's Chongqing municipality.

Many have long argued the need for major investment by established Western brands across China's relatively undeveloped areas, and Daimler with its flagship, iconic Mercedes brand hits the spot.

Daimler and the Chongqing authorities have signed a letter of intent that will put several hundreds of its two-seater smart cars on the road within a year.

Car2go claims more than 1 million customers and 400,000 weekly rentals in Europe and North America, where it is one of the leading providers of station-independent car sharing services.

But why has Daimler with its Car2go brand chosen the Chinese mainland and Chongqing for its first venture in Asia?

One obvious reason has to be population, which was just under 30 million according to the 2010 census.

Daimler's decision was almost certainly influenced by the fact that Chongqing is a manufacturing center and transportation hub.

And in July 2012, the Economic Intelligence Unit described Chongqing as one of China's "13 emerging megacities".

Another factor is the establishment of new economic zones across Chongqing as the city aims to surpass Tianjin and even Shanghai and become one of the most attractive cites for overseas investors on the mainland.

The establishment of the Liangjiang New Area and Chongqing New North Zone in the past three years was a major boost for investment in the city and western China. Chongqing is regarded as "the gateway to western China".