Toyota's new Chinese forklift factory is ready to begin production, a move Toyota hopes will bolster its ambition to secure a niche in China.

Despite a relatively small initial investment (USD1.2 million), the factory is a key manufacturing base for Toyota, according to a China Daily report.

"The major reason for us to set up such a facility here is the forklift industry's fast growth and big potential," said Tadashi Ishikawa, Toyota Industries Corporation (TIC) president.

TIC senior managing director Tatsuo Matsuura said the factory entered trials in April and was expected to produce 300 units by the end of this year. Starting with one to three tonne IC forklifts, the factory would see its annual output raised to more than 1,500 units in the next two years.

Toyota said it would further expand its investment in the factory if market response was encouraging. "Our target is to take a 10% market share in China by 2008," Mr Matsuura said.

Chinese-built forklifts would supply the Chinese market through Toyota Material Handling (Shanghai) Co Ltd's dealership network, established this year. The network also distributes Toyota's imported forklifts. The report said demand for forklifts had grown from 23,500 units in 2001 to around 40,000 units this year.