ZF Friedrichshafen is investing EUR60m (US$61m) in a new plant in Rizhao city, Shandong province, China, to strengthen its position in the local automotive supply chain.

According to a deal signed with city government, the new plant is scheduled to begin production of airbag cushions and other passive safety products by the end of 2022. The factory covers an area of 14,000 sq m and will also have research and development (R&D) facilities.

The products will be mainly for China with potential for exports to South Korea, Thailand, US, Japan and Vietnam.

The company expects the plant to generate annual sales of CNY1bn (US$149m) within three years.

ZF has 50 factories in 20 cities across China, including eight dedicated to producing passive safety systems such as airbag and steering wheel modules and seatbelt systems.