Dairy company Fonterra opened a new innovation center in Shanghai on May 17 that will focus on developing products for the Chinese market.

"Innovation underpins our entire global strategy and is critical to the integrated milk business we are building in China," said Fonterra CEO Theo Spierings.

He said demand for dairy nutrition in China is expected to double by 2020, and it is estimated the country will be consuming more than 70 billion liters of milk every year by 2020 as people change their ways of consuming dairy.

Fonterra plans to develop two large dairy farms in Hebei province with an investment of $76 million.

It will give Fonterra a hub of five farms in the area with about 15,000 milking cows producing 150 million liters a year.