German auto parts supplier ZF is to build a plant in the coastal city of Rizhao, Shandong province, as it is further expanding its footprint in China.

Investment in the plant, which is expected to go operational by the end of 2022, will reach 60 million euros ($60.92 million), according to the deal ZF inked with local authorities on Friday.

Covering 14,000 square meters, the plant will produce and sell airbag cushions and other passive safety products. It will also conduct relevant research and development.

ZF said the products will mainly meet domestic market demand with potential export markets including Thailand, South Korea, the United States, Japan and Vietnam.

In three years, the plant's annual sales is expected to exceed 1 billion yuan, said ZF.

"China is the world's largest automotive market and a dynamic, resilient and attractive market. We remain confident in the Chinese market," said Holger Klein, a member of ZF's board of management.

"As a multinational company, we are an integral part of China's social and economic fabric. We are doubling down on China, which is becoming our home room to global products and functionalities," said Klein, who is scheduled to serve as ZF chairman and CEO in 2023.

Since entering the Chinese market in 1981, ZF has established around 50 production facilities in more than 20 cities across China.

"We will continue to cultivate the Chinese market, enhance innovation and development capability, promote digital manufacturing, stay close to and lead the market and technology trends, while firmly assuming social responsibility and making contributions to China's sustainable development," said Renee Wang, president of ZF China and senior vice-president of ZF Operations Asia Pacific.

Rudolf Stark, executive vice-president of ZF's Passive Safety Systems Division, said that occupant safety is a fundamental technology for road safety.

The launch of this project marks ZF's increased investment in safety systems and a new milestone in the development of ZF's passive safety program in Asia Pacific.

ZF's passive safety division in Asia Pacific currently operates eight plants in China.

Their main products include steering wheel products, airbag products and seat belt products. Sales in 2021 reached 4.8 billion yuan in China.