The new facility will be based in the Chengdu High-tech Industrial Development Zone (CDHT), where a ground-breaking ceremony was held on Monday, the CDHT said in a press release.

The new base will target a vast group of potential customers in the fast-growing western region, the press release said.

It said the Dutch electronics giant reached a deal with the city government of Chengdu toward the end of last year to build its new facility there.

The new facility will optimize the allocation of production, warehousing and logistics resources, as well as control production efficiency, improve product and service quality, shorten delivery time and provide more customized products to meet the unique requirements of different consumers, the press release said.

The site is expected to start production next year, the press release said.

Philips chose Chengdu for its second regional headquarters in China last year. The company moved its headquarters from Hong Kong to Shanghai in 1996.

Chengdu, a major city in west China, will also be the venue for next year's Fortune Global Forum.

Philips specializes in manufacturing televisions and small appliances. It has also started producing medical equipment over the last decade, such as magnetic resonance scanners and lighting systems.