China Shanghai Automotive To Take 10% Stake In GM Daewoo

SHANGHAI -October 13, 2002 Dow Jones is reporting that Shanghai Automotive Industry Corp. Sunday said it will become the first Chinese automaker to take an equity stake in a foreign car company, after it agreed to buy a 10% share in a South Korean venture created by General Motors Corp. .

China's third-largest automaker said it is investing $59.7 million to acquire the share in the venture, GM Daewoo Auto & Technology Co.

SAIC President Hu Maoyuan told a news conference his company will be represented by one member of GM Daewoo's 10-member board of directors.

"SAIC is proud to be the first Chinese automotive company to take an equity stake in a foreign automaker," Hu said.

GM and Daewoo creditors agreed on April 30 on the establishment of GM Daewoo, and the deal is expected to close shortly, GM said in a statement.

GM will hold a 42.1% stake in GM Daewoo, while Japan's Suzuki Motor Corp. will take a 14.9% stake and Daewoo creditors will have a 33% stake, GM said.

The U.S. automaker offered several companies the opportunity to invest in GM Daewoo, but "only SAIC and Suzuki decided to go in with us," said Philip Murtaugh, chairman and CEO of GM China Group, at the news conference.

GM formed GM Daewoo out of the former Daewoo Motor Co. after it collapsed several years ago. The U.S. company purchased three of the Korean auto company's main production facilities for $251 million.

SAIC's participation in the new company "will help GM Daewoo participate more fully in China's rapidly growing vehicle market," said GM Daewoo President and CEO Nick Reilly in the statement.

SAIC sold more than 319,000 vehicles and posted a profit of nearly 7.3 billion yuan ($1=CNY8.28) last year, the statement said.