The representatives of Hohhot municipal government ( L), Hohhot Economy&Industry Park(C) and Tetra Pak International SA (R) sign the contract.

Food packaging giant Tetra Pak International SA plans to invest 60 million euros (US$79.97 million) in a packaging material plant in Hohhot, capital of Inner Mongolia Autonomous Region, to boost production capacity in one of its largest markets.

The new plant will begin construction in the middle of this year and is set to start operations in the fourth quarter of 2008, it said in a statement. The new plant has a capacity of eight billion packages annually and will produce carton package materials including the Tetra Brik Aseptic and Tetra Fino Aseptic.

With this Hohhot plant, the Sweden-based company's total investment in China will total 250 million euros.

"This factory will primarily serve our customers in the north, freeing up capacity in our southern factories for customers in adjacent regions," said Hudson Lee, Tetra Pak China's managing director. "With a larger production footprint, we will offer faster delivery and increased flexibility for customers all over China."

Tetra Pak estimates the Chinese dairy industry to grow an average of 15 percent over the next five years.

The packaging company runs four other factories in the country, one each in Shanghai, Beijing, Kunshan in Jiangsu Province and Foshan, Guangdong Province.