German sports car maker Porsche is setting up a research and development facility in Shanghai this year, because vehicles developed in Germany do not necessarily best meet the demands of Chinese customers, said a senior company executive.

Jens Puttfarcken, president and CEO of the carmaker's China operations, said some engineers have arrived in Shanghai from Germany and they will be joined by more in coming months.

"China is a very dynamic market, so dynamic that we have found some research and development work cannot be done in Germany," said Puttfarcken on Tuesday.

"That is because they cannot understand—and more importantly—cannot do the testing because the eco-system and technology required are not available in Germany," he said.

Puttfarcken said the engineers in the Shanghai R&D facility will work on such things as autonomous driving, connectivity, electrification and charging.

They will work in close cooperation with the research and development team in Germany so that they would integrate those solutions worked out locally in China into vehicles made in Germany.

Porsche now has 16 electric and plug-in hybrids models in China, the world's largest market for such vehicles.

Its electric cars and plug-in hybrids accounted for 18 percent of the carmakers' 95,000 vehicles sold last year, said Porsche.

Its first electric model, the Taycan, saw its deliveries reach 7,315 units, and over 72 percent of the buyers did not own a Porsche before, said the carmaker.

Porsche has not yet plans to produce vehicles in China though, saying the production capacity in its home country is big enough and Chinese customers have a passion for German engineering.

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