This week it opened its first Asia-based research and development centre for fresh dairy products in Shanghai. It has spent €2.5 million on the 1,600-square metre facility in Zhangjiang Semiconductor Industrial Park in Pudong New Area.
Peng Qin, Danone's China chairman, has previously told Reuters that China should overtake France and Spain in the long term to become its largest market.
Danone is aiming to double its sales in China's to 15 per cent of total revenue by 2015.
The company has just paid 72.21 million yuan (US$8.9 million) to increase its stake in China's Bright Dairy in Shanghai, the second time it has done so this year. In March it boosted the stake from 3.85 percent to 9.7 percent.
Danone bought 1.85 per cent of the shares of Bright Dairy, one of China's top three diary producers, according to the Chinese firm's statement to the Shanghai Stock Exchange.
"China is part of the new frontiers for Danone because of its size," said Franck Riboud, chairman of the world's sixth-largest food group. "We may further increase our stake if an opportunity arises."
China's domestic dairy production currently stands at just over 24 million metric tonnes of liquid milk per annum and is growing by 20-25 per cent each year.
Yet it still requires significant imports to meet rapidly rising demand driven by increasing disposable income and the growing awareness of the nutritional benefits of dairy products.
Both production and sales of yoghurt and fermented milk drinks have been growing by over 40 per cent per annum over the last two years, with the market reaching 821,000 tonnes in 2004, according to data from Leatherhead Food.
Danone China, which has maintained an annual sales growth averaging 10 percent over the past five years, will continue to expand between 10 and 15 percent this year, Riboud said.
The leading supplier of bottled water and biscuits in the market, it is also leading supplier of bottled water in Indonesia, and leader in biscuits in India and Pakistan.