Bosch and Siemens Home Appliances Group (BSH) said on Wednesday that it plans to build a new refrigerator production base in China.

The announcement underlines the Germany-based company's ambition to further expand in China's growing high-end refrigerator market.

The company said it will invest about 900 million yuan ($137 million) to build its second Chinese production facility in Chuzhou, Anhui province. The factory will have a production capacity of more than 5 million refrigerators annually. Construction will start on March 1 and finish in December. The factory is scheduled to become operational in 2013.

The company already has one factory in Chuzhou, which opened in 1996 and has an annual capacity of 2.8 million. It will focus on producing high-end refrigerators, including side-by-side and multi-door products, under the Siemens brand.

"The base will solve the problem of undercapacity in refrigerator products that we faced last year. It is also part of our strategy to strengthen manufacturing of high-end products, in response to the booming demand for high-end products in the nation's refrigerator market," said Roland Gerke, president and chief executive officer of Bosch and Siemens Home Appliances (China) Co Ltd.

BSH's refrigerator sales in China increased 25 percent year-on-year in 2010, with high-end products accounting for 40 percent of the sales. The new production base will support an expected 20 percent annual sales growth over the next five years, mainly driven by high-end products, Gerke said.

"Chinese consumption of refrigerators is set to register rapid growth, as consumers in large cities seek to upgrade their home appliances and as the ongoing urbanization process enables more consumers to purchase high-end home appliances," said Gerke.

According to a January report by China Market Monitor Co Ltd, a leading consultancy in China's home appliance industry, sales of side-by-side refrigerators rose 82 percent in 2010, while the multi-door variety increased by 105 percent in major cities, far exceeding the 24.85 percent increase in the market as a whole.

Jiang Feng, director-general of the China Household Electrical Appliance Association, said in a speech in January that "the era of high-end home appliance consumption" has arrived in China's first- and second-tier cities. The consumption of high-end home appliances will accelerate, prompted by preferential government policies and the growth of the country's high-income group.

To strengthen the research and development (R&D) of its high-end refrigerator products, BSH will also unveil a new cooling-development center in Nanjing on Feb 28, the company said.

BSH will invest a total of 60 million yuan in the center over three years and add 5 to 6 million yuan annually after the initial investment, making China the company's biggest R&D base outside Germany.

BSH has invested a total of $500 million dollars in China since it entered the market in 1995 and Gerke said the company will invest another $460 million dollars in the country by 2015.