Fonterra is investing $US40 million ($NZ47 million) in developing a third dairy farm in China.
The 40ha property in Yutian County, in Hebei Province, is expected to increase the co-operative's overall milk production in China to about 90 million litres.
In May, Fonterra announced it was in the final stages of buying land to develop a pilot dairy farm in Brazil, as part of its strategy to establish "best practice" dairy farms in the fast-growing economies of Asia and Latin America.
It has also been conducting a feasibility study into a joint venture dairy farm in India.
Demand for milk in China was expected to triple over the next 10 years and much of the demand was for liquid and fresh milk products, Fonterra China president Philip Turner said in a statement.
The co-operative's pilot farm project, established in Hangu in 2007, demonstrated that high-quality local milk could successfully be produced profitably, Fonterra International Farming Ventures chief operating officer Peter Moore said.
The construction of a second farm in Yutian County was also progressing well and the announcement of the third farm investment agreement was the next step in Fonterra's plans to build a hub of farms in Hebei Province in the next five years, Mr Moore said.
The new farm will house about 3200 cows, which were expected to produce about 28 million litres of milk a year.
It will employ about 100 local staff.
Construction will start in November and is expected to be completed by late next year.
Good progress had already been made on Fonterra's first farm in Yutian since the investment agreement was signed late last year, Mr Moore said.
The first 1140 heifers were transferred to the farm in June and another 3000 were expected to be delivered from New Zealand in October.
Milking was on track to start in November, he said.
German investors recently bought their eighth South Island farm in six months, acquiring the 1400ha Glencairn dairy property at Dipton for $33 million.
Aquila AgrarInvest II, which manages funds for more than 1000 small investors, and institutional investors NZ Milchfarm Investments and Alceda Star have spent more than $70 million on the farms - seven dairy units and one sheep farm, which will be converted to dairying following approval from the Overseas Investment Office.
