The Atlanta-based firm said yesterday once the work is complete, production of xanthan gum at the Shandong Province facility will increase to 12,000 MT.
Opportunities for global ingredients players have opened up in China on the back of a soaring Chinese food industry that has witnessed a four fold increase in sales in a decade.
Valued at under 100 billion yuan in 1991, sales reached well over 400 billion yuan just ten years later.
Driving the market is the increased spending power, and changing eating habits, of China's 1.3 billion people. They are transforming the country's food sector, both domestically and in foreign trade.
The lastest investment from CP Kelco follows hot on the heels of the firm's entry into Chinese gum production, ushered in at the end of 2005 when the firm bought Gold Millet, the second largest producer of xanthan gum in China.
At the time, the US firm said the acquisition would boost production capacity for the product (xanthan gum) by about 15-20 per cent.
The hydrocolloid firm currently has three factories globally that produce xanthan gum: its initial plant in San Diego, California, a plant in Okmulgee, Oklahoma and one in Knowsley, UK.
"These plants are currently operating at full capacity and we also need to supplement production by buying some of our volume from outside.
This acquisition allows us to continue the expansion of our business by producing internally. We would have had a general sales constraint on our business had we not found the extra capacity," said Mike Size, the company's business unit director for biogums.
Prior to the acquisition, CP Kelco purchased some of its xanthan gum from Gold Millet to supplement its overall global supply.
"Demand for xanthan gum and other hydrocolloids is developing quite attractively in China. But the demand there has a different quality and cost balance, based on wider specifications and lower price,"Size told FoodNavigator-USA.com recently.
"Our presence locally will help us to have a better understanding and better opportunities in the Chinese market," he added.
Hydrocolloids are used extensively by the food industry to texturise and stabilise food products from dressings to ice cream.