Fuelled by rising interest worldwide in environmentally friendly products, demand for Eatware goods, which hit the market only in late 2006 after years of research and product development, has been explosive, owner Jonathan So said.

"Our challenge is that we can't produce enough yet to meet customers' demand," he told Reuters in an interview.

The company has invested HK$100 million (US$13 million) on research and marketing, and owns two plants in China's eastern city of Nantong with total capacity of 350 million units a year.

Eatware, which sells containers to McDonald's Corp and Starbucks suppliers, is now building two more plants in China that would triple its capacity to 1.2 billion units annually by May 2008.

It also plans to build an additional four factories in 2009 with three in China and one in Motocello, Mississippi, in the United States.

"We are also considering investors' requests to set up factories in the UK, Spain and the Middle East by the way of franchise," So added.

Eatware has orders worth about HK$100 million on hand, most for exports. It hopes to float shares on Britain's Alternative Investment Market in the second quarter.

NOT A NEW CONCEPT

Biodegradable food packaging is not a new concept.

In China alone, there are dozens of firms making similar products, although So said none was truly 100 percent biodegradable, relying instead on chemicals to make fibres resistant to oil and water.

So said Eatware's products were made from 100-percent organic ingredients.

Several firms, including global traders Cargill and Archer Daniels Midland, are producing or experimenting with biodegradable packaging made from materials such as fermented corn starch and sugar cane.

Some estimates put the cost of these bio-packages at two to three times their traditional plastics-based counterparts.

"Our products are now 10 to 15 percent more expensive than plastic or styrofoam foodwares. But when we expand to the seventh or eighth plant, I can foresee our cost will be lower than those who use styrofoam," So said.

There is growing resistance worldwide to styrofoam and plastic packaging, which forced McDonald's to abandon its traditional styrofoam burger boxes years ago.

Global consumption of single-use disposable food and drink containers such as lunch boxes, cups and bowls is estimated at 438 billion units a year.