Goldsun Group, Taiwan's largest concrete supplier, will invest 1.2 billion yuan (US$144 million) to build two cement production lines in Yongding of East China's Fujian Province.

The company said the move is an important step in expanding its business in the mainland cement market.

With an expected annual output of 3 million tons, the new plant is to become the group's largest cement production base on the mainland.

Construction of the project's first production line began last week and will be operational in the fourth quarter of 2006.

The project signals the start of the group's transition to high-end cement products for its development in the mainland market. The group also plans to establish its sales network in southern Fujian, said Shiaw-Shinn Lin, Goldsun's board chairman.

Goldsun has been investing in the mainland since 2002. It has another six cement factories and a concrete plant in Suzhou of Jiangsu Province, said Lin.

"In recent years, more and more of Taiwan's cement enterprises have gradually transferred their production to the mainland," said Li Chunsheng, general manager of Goldsun (Fujian) Cement Corporation.

Besides Goldsun, a number of Taiwan's large cement makers such as Taiwan Cement Corporation, Asia Cement Corporation, Chia Hsin Cement Group and Universal Cement Corporation have operations on the mainland.

For instance, Asia Cement Corporation, Taiwan's second largest cement enterprise, has so far invested more than US$140 million in Shanghai, as well as Jiangxi and Hubei provinces. In addition, the company has decided to build five more cement factories to further expand its domestic production, which is expected to reach an annual capacity of 20 million tons on the mainland, even higher than the total annual sales volume of the whole Taiwan cement market.

China has many large-scale infrastructure construction projects, which makes it in great need of large quantities of cement, Lin said.

China has become the largest cement products market and also the largest cement producer in the world.

"However, the technical levels of the mainland's cement enterprises are rather limited," Lin said.

Statistics show there are currently more than 6,000 cement enterprises in China. But 80 per cent of their production is still focused on low-standard cement products.

Low-standard cement does not meet the needs of many important infrastructure projects. This provides a good opportunity for Taiwanese cement enterprises to enter the mainland market as they have comparatively higher technical levels, said Lin.

He said the drying kiln-revolving production process adopted at Goldsun's two new production lines in Fujian make them the most advanced in the nation.

"Because Taiwan's cement market is quite limited, cement production on the island has been growing more and more saturated in the past few years," said Li.

"The slow development of Taiwan's economy in recent years has also seen many Taiwanese enterprises swarm to the mainland," said Ge Xiaojian, general manager of Fujian Cement Co Ltd.

According to Lin Weiguo, vice-director with the Taiwan Affairs Office of Fujian Provincial Government, the environmental protection measures used by the Taiwanese cement enterprises in Fujian lead the field, and are worthy of the attention of the province's other cement factories.

Lin also said the Chinese mainland is currently going through a golden period and the country was in dire need of high-quality cement for its infrastructure projects, adding that the influx of Taiwanese investment should not hurt the mainland cement market.

It is predicted that the mainland's high-quality cement output will increase to 120 million tons in 2005.

Competition between Taiwanese and mainland cement enterprises is good for the development of the cement industry, and will help optimize product structure in the domestic cement market and upgrade the whole industry, said Shiaw-Shinn Lin.