China's second largest beer maker has agreed to invest 40 billion yuan ($5.3 million) to establish its first overseas plant in Thailand.

According to a statement released to the Shanghai Stock Exchange, Tsingtao Thailand is expected to produce 40,000 kiloliters annually during the first phase of the project.

Thailand's beer market is growing fast, seeing annual growth of 12% since 2002, reaching 210 million liters in 2006. Thailand expressed a positive attitude to Tsingdao's investment.

It is believed that Tsingtao's purpose is to expand in Southeast Asia and later, European and Oceania market. The geographical position of Thailand is important strategically for entering these markets.

According to the third-quarter financial report, the company posted a 52 percent jump in profit year-on-year to 328.6 million yuan with sales rising 15 percent to 4.2 billion yuan.