Volkswagen builds China transmission plant

German auto giant Volkswagen AG has laid the foundation stone for a transmission plant in the northern Chinese city of Tianjin, in its latest move to consolidate its leading position in the world's largest car market.

The Tianjin plant has been designed to produce up to 450,000 transmission units annually from 2014, with projected investment of 230 million euros ($A281.12 million) in the first phase, the company said.

"Our new transmission plant is further confirmation of the inseparable bond between China and Volkswagen," Jochem Heizmann, head of Volkswagen's China operations, said at a ceremony in Tianjin.

"Tianjin will become a cornerstone of our Chinese production network and a driving force for the economy in the entire region," Heizmann said.

Philipp Roesler, Germany's minister of economics and technology, attended the ceremony.

Roesler was travelling with Chancellor Angela Merkel, who also visited Tianjin on Friday on the second leg of a two-day trip to China.

The new Tianjin plant is expected to employ more than 1500 people and offer training in tooling technology and other specialised skills, Volkswagen said.

Earlier this year, the company said it planned to invest some 14 billion euros by 2016 to develop new models and expand production in China.

Volkswagen said its sales soared by 18 per cent to 2.26 million vehicles in China last year, despite slowing growth in the market.

Its two joint-venture companies produce more than 20 Volkswagen, Skoda and Audi models in China.

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