Chinese dairy producer Inner Mongolia Yili Industrial has announced plans to invest around CNY2bn ($327m) in its Oceania Dairy production base in Waimate, South Island, New Zealand.

So far, the company has already invested around CNY1.2bn in the production base, which is said to be the largest integrated dairy production base in the world.

The move comes in response to increasing demand of Chinese customers for overseas dairy products as the reputation of local brands was damaged in the melamine-tainted baby formula scandal in 2008, Xinhua reported.

The proposed investment will be utilised in the construction of a raw milk processing plant, a UHT milk plant, a milk powder plant and a packaging plant on the base.

Meanwhile, Yili will research on nutritional enhancement and improve dairy products quality, under an agreement with Lincoln University of New Zealand.