Inner Mongolia Yili Industrial Group Co. Ltd., a Chinese dairy giant, announced plans on December 18 to produce 47,000 tons of baby milk powder annually in New Zealand after buying all of the shares of a dairy company in that country.

According to the company, the total investment of the proposed project in South Canterbury, New Zealand, will be more than NZ$214 million ($174 million), while production is expected to begin in June 2014.

The project is part of Yili's global expansion strategy, and the announcement comes after the company purchased all of the shares of Oceania Dairy, a New Zealand company.

The import tariff on New Zealand dairy products will be reduced to zero by 2020, based on the free trade agreement between China and New Zealand.