CHINA’S third-largest auto firm, Shanghai Automotive Industry Corp. (SAIC), said Sunday it would pay US$59.7 million to buy 10 percent of a South Korean venture between General Motors Corp. and Daewoo Motor Co., becoming the first Chinese car- maker to expand abroad.

　　The investment by Shanghai Auto, which already shares a US$1.5 billion car-making venture with General Motors in China, will mark the fourth venture between the Shanghai-based vehicle maker and the Detroit-based automaker.

　　“This is a very meaningful step by Shanghai Auto to go abroad,’’ said Zhang Yu, who tracks China’s car industry at Automotive Resources Asia Ltd. in Beijing.

　　“The investment will bring benefits in the long run.’’

　　The Chinese Government has chosen three companies, including Shanghai Auto, to be “pillars’’ of the country’s auto industry to concentrate efforts on competing with bigger foreign rivals.

　　Lower import tariffs, agreed by China when it entered the World Trade Organization last year, are also prompting Chinese carmakers to consider investing abroad as competition intensifies at home.

　　The investment “will enable Shanghai Auto’s capital, product, management and human resources to all become integrated into the global marketplace,’’ said Shanghai Auto President Hu Maoyuan at a press conference in Shanghai.

　　“It will enable us to improve our company’s management and operating skills, greatly expand our design capability and improve our competitiveness.’’

　　With its investment, Shanghai Auto got a seat on GM-Daewoo Auto & Technology Co.’s 10-member board of directors, and would take part in all of the Korean carmaker’s “important management decisions and corporate strategies,’’ said General Motor’s China Chairman Phil Murtaugh.

　　Those strategies could include Shanghai Auto using GM-Daewoo as an agent for exporting its car parts all over the world, Hu said.

　　General Motors said in June it would pay US$251 million in cash for a 42.1-percent stake of GM-Daewoo Corp., leaving its partners to spend about US$149 million for 24.9 percent of the venture.

　　Daewoo’s creditors, led by Korea Development Bank, will own the remaining 33 percent of the new company.

　　Of the stake held by partners, 14.9 percent would go to Japan’s Suzuki Motor Corp., itself one-fifth owned by General Motors, for about US$89 million, the companies said in June.

　　Daewoo Motor was formerly Korea’s second-biggest carmaker behind Hyundai Motor Co. before its parent Daewoo Group collapsed.

　　Daewoo now also lags behind Kia Motors Corp., an affiliate of Hyundai Motor, in its home market.

　　Shanghai Auto, which has domestic A shares listed on the Shanghai Stock Exchange, earned 7.3 billion yuan (US$882 million) profit last year.

　　The company is aiming to expand production to one million cars by 2007, half of which will carry its own brand, according to its press statement.

　　The firm is also in talks to take over two smaller carmakers, one in eastern Shandong Province and the other in eastern Anhui Province.

　　“We are in talks to raise our stake in SAIC Chery Automobile Co., as well as buy shares of Yantai Body Co., and play a more active role in consolidating China’s automobile industry,’’ Hu said.

　　General Motors might also take part in the partnership, according to Hu.

　　Besides making Buick passenger cars in Shanghai, General Motors and Shanghai Auto make small trucks and vans in Liuzhou in southern China’s Guangxi.

　　The two companies are also in talks to set up a venture to provide customers with car loans, said Shanghai Auto’s Hu.

　　Under new rules issued last week by China’s central bank, finance companies such as General Motors Acceptance Corp. can grant yuan-denominated car loans.

　　(SD-Agencies)