Shanghai Industrial Holdings (SIH) yesterday announced plans to spend about $850 million on a new tobacco factory in Tuen Mun and to buy control of a mainland dairy business while its parent company revealed plans to buy a large stake in the mainland's biggest brokerage. Chairman Cai Laixing said yesterday after SIH's annual meeting that the $850 million included the cost of construction and equipment for a new factory at premises owned by its parent, Shanghai Industrial Investment (Holdings) (SIIC). The red chip earlier said it had paid $51 million for land at a nearby godown site in Tuen Mun. Including the $340 million that SIIC paid for the factory, the total cost of relocating the tobacco plant run by its subsidiary, Nanyang Brothers Tobacco in To Kwa Wan, would reach $1.2 billion, Mr Cai said. Managing director Zhuo Fumin said the listed company would consider acquiring the factory premises from its parent in the future. Mr Zhuo said it would also, in due course, acquire a 51 per cent stake in Bright Songhe Dairy for about 100 million yuan (about HK$93.1 million) from its joint venture partner Shanghai City Dairy. It already has a 50 per cent stake in Shanghai Bright Dairy & Food, a joint venture with Shanghai City Dairy, to manufacture and sell dairy products and non-carbonated drinks. In response to criticism of asset injections as a means of expansion by red chips, president Chen Weisu argued that this method was not unique to China and that such acquisitions were the engine of growth for the world's 500 largest companies. Mr Chen, who is also an executive director and vice-president of SIIC, said the firm was finalising a deal to buy 17 per cent of the mainland's largest brokerage, Shenyin & Wanguo Securities, from the Shanghai Finance Bureau through a Shanghai-based vehicle. It already holds more than 1 per cent of Shenyin & Wango indirectly. No purchase price was revealed. Following the deal, SIIC will replace the Industrial and Commercial Bank of China as Shenyin & Wanguo's largest shareholder with more than 18 per cent. Mr Chen said the acquisition was in line with the company's attempts to expand in the financial industry.