(Yicai Global) Nov. 30 -- Mengniu Dairy, China's second biggest producer of milk-based goods, has opened the doors to its new factory in Indonesia as it looks to start a global expansion plan.

The USD50 million Mengniu YoyiC factory opened in Cikarang yesterday, the Inner Mongolia-based firm said in a statement the same day. The plant is the first opened by a Chinese dairy firm in Southeast Asia.

Mengniu's overseas business has been growing at around 30 percent a year in recent times, Chief Executive Jeffrey Lu said at the opening ceremony. Southeast Asia is just the first step of the firm's exploration of the global market, and Africa, South America, Europe and the United States are all to come, he added.

The announcement came the same day Mengniu's rival, Chinese dairy leader Yili Industry Group, announced plans to buy a 96.5 percent stake in Thailand's leading ice cream producer for USD80.6 million.

Southeast Asia is home to 600 million people, so there is a huge demand for dairy, said Song Liang, an independent analyst in the sector. The amount of dairy imports in Indonesia, Thailand and other countries in the region has grown rapidly in recent years, making it an attractive pull for Chinese dairy makers, he added.

The overseas business of China's dairy producers was mainly focused on ensuring the supply of raw materials in the past, but now these companies are looking to integrate into local markets, Song said. He predicts that Mengniu, Yili and other dairy titans could push their annual sales as high as CNY100 billion (USD14.4 billion) if they continue their expansions.

The decision to invest and build the plant in Indonesia took a lot of consideration, Ji Xiaodong, head of Mengniu's public affairs, told Yicai Global. The country is Southeast Asia's most populous, with 264 million people, and its economy grows at a stable 5 percent -- its dairy market also has bright prospects, he added, saying internationalization is at the forefront of Mengniu's strategy.

The new plant will cover 15,000 square meters and produce 260 tons of yogurt a year, with the value of annual output around USD160 million. It will mostly produce YoyiC probiotics drinks and other yogurts, and the first batch should hit the local market in December.

Editor: James Boynton