China's largest domestic compounder Guangzhou Kingfa Sci & Tech Co. Ltd. has announced plans to build a production and R&D base in Kunshan, Jiangsu province.

Kingfa will invest 638.8 million yuan ($94.3 million) in cash in the wholly owned subsidiary. Based on the amount of investment, some analysts speculate that the Kunshan base will have larger capacity than Shanghai Kingfa and even catch up with the headquarters plant in Guangzhou.

The move to build a large production base in Kunshan, about an hour from Shanghai, illustrates the significance of the regional market in Yangtze River delta and East China.

Kingfa commenced its first compounding in North China in March, with 100,000 metric tons of annual capacity at the Tianjin site.

Analysts estimate that Kingfa's 2010 output will reach 550,000 metric tons, more than 25 percent higher than the previous year.