Oatly Group AB, the Swedish original and largest oat drink company, opened its first factory in China on Thursday, given the market's increasing demand for healthy and plant-based food, as well as its strategic importance.

Located in Ma'anshan, Anhui province, the new production facility is part of a wider initiative from Oatly to build factories fit for its global market layout. Apart from producing the company's line of oat drinks, the factory will also have a research and development capacity that can make improvements in existing products and lead to other innovative oat-based products.

The facility is one of six around the world, as Oatly expands to further its mission of growing the plant-based category and shifting the food system toward one that's built for planetary and human health.

Eager to educate consumers about the plant-based milk category, the Swedish firm has established a new Chinese character representing "plant-based milk", creating a new category for the grocery aisle, surging demand, and converting more milk drinkers into oat drinkers.

"To meet the demand and to lead the shift to a more plant-based future, Oatly needs to continue to grow and expand our production capacity with factories closer to our consumers," said Toni Petersson, Oatly's CEO.

He said the Chinese market is an important part of the Nasdaq-listed company's global expansion, and the Chinese people play a big part in shifting toward a more sustainable and mainstream plant-based consumption.

"Following the debut of our first factory in Asia in Singapore this July, the opening of the first factory in China provides more capacity for Oatly in Asia, supporting the global expansion and meeting the increasing market demand," said David Zhang, Oatly's Asia president.

"With the opening of this new factory, we are extending the advanced oat drink production process from Sweden to China, making plant-based diets accessible to more consumers," he added.

Oatly's Ma'anshan production facility has the potential to produce an estimated 150 million liters of oat-based products annually at full capacity, according to the company.

Guo Xin, a marketing professor at Beijing Technology and Business University, said the growing acceptance of plant-based foods reflects the diversified needs in today's consumption environment, especially in top and second-tier cities.

"China will become a huge market for plant-based products, considering it has the largest population in the world, and enjoys great demand for animal-alternative proteins," she said, adding that as incomes continue to rise and consumption modes get upgraded, both global and domestic players will deploy more resources in this area in the coming years.