AKZO Nobel NV, the world's largest producer of paints, launched a 23-million-euro (US$33.9 million) plant for protective coatings in eastern China yesterday, to meet rising demand and expand market share.

The plant in Suzhou, about 80 kilometers west of Shanghai, has initial annual capacity of 15 million liters, with laboratory facilities.

The capacity will be increased in steps over the next 10 years to 50 million liters eventually, said Bill McPherson, general manager of marine and protective coatings at Akzo Nobel, which has supplied protective coatings products for some of the stadiums for the Beijing Olympics such as the Water Cube.

The Dutch company, which owns household paint brands such as Dulux and competes with American firm PPG Industries Inc, is counting on China's fast growing coatings market for expansion.

Akzo Nobel said China's demand for coatings was growing at a rate of over 8 percent per year and has further potential as the nation's spending on coatings on a per-household basis is only a tenth of that of the United States.

"China is clearly fundamental to our global strategic vision," said Leif Darner, an Akzo Nobel board member.

"Last year we outlined our new ambition to achieve revenues in China totaling US$2 billion by 2012 and this investment will contribute in reaching this goal."

The company had China sales of US$1.03 billion last year, excluding that of Imperial Chemical Industries Plc. Akzo Nobel early this year completed its US$15.9-billion purchase of Britain's ICI.

The new facility added to Akzo Nobel's 24 plants in China.

Akzo Nobel's investment in China totaled nearly US$400 million to date, and it has said it would invest 250 million euros in a new project in Ningbo, Zhejiang Province.