Inner Mongolia Yili Industrial Group, China's biggest maker of dairy products, will build a 208 million yuan (US$26 million) factory to make milk powder in northwest China's Xinjiang Uygur Autonomous Region.

The plant will make 250,000 tons of mid- and high-grade milk powder a year, Yili said. The facility will be built over 15 months. Yili and rivals such as China Mengniu Dairy Co are increasing production capacity to meet soaring domestic demand for dairy products. China's annual dairy consumption has tripled to 28 million tons since 1999.