Yashili International Holdings, which makes and distributes infant milk formula products in China, has got Overseas Investment Office approval for its proposed 1.1 billion yuan ($212 million) milk processing plant in Pokeno.
The company has three years to build the plant before its consent lapses, which will also impose "certain ongoing reporting responsibilities on Yashili New Zealand," chairman Zhang Lidian said in a statement to the Hong Kong stock exchange. Yashili New Zealand is still waiting for land use and resources consents and is holding a tender for the dryer component of the facility, he said.
Yashili flagged the New Zealand investment in January after the Chaozhou City, Guangdong-based company's board signed off on a project to set up a local manufacturing facility to process up to 52,000 tons of finished and semi-finished products including base milk powder by the second half of next year.
The company said it will spend 950 million yuan on acquiring land and building the plant, and a further 150 million yuan as working capital for a New Zealand subsidiary.
Yashili already sources milk powder from New Zealand, which it uses to market its own product with slogans such as "Genuine New Zealand, Love from Yashili" and "100 per cent imported from New Zealand's milk source".
Chinese investment in New Zealand has been a heated topic in recent years after bids to buy large tracts of farm-land forced the government to announce a U-turn on its plans to free up overseas investment and a High Court ruling made the OIO impose a more rigorous analysis of foreign purchases.
Yashili was set up by the Zhang family in 1983, and still retain control. US private equity firm Carlyle Group bought a stake in the Chinese company in 2009 to ramp up its research and production, and raised HK$2.7 billion when it floated a minority share in Hong Kong the following year.
The company boosted annual profit 53 per cent to 468.5 million yuan in calendar 2012 on sales of 3.66 billion yuan.
The shares fell 3 per cent to HK$2.63 in trading yesterday, and have climbed 29 per cent this year.
Chairman Zhang Lidian is on the Chinese committee of the International Dairy Federation, and serves as a representative for the Guangdong province in the National People's Congress, according to Yashili's website.