Korea move for Chinese carmaker

Yet there is one Chinese-owned brand already gaining a foothold. Shanghai Automotive Industries, the largest of China's burgeoning number of car companies, has quietly acquired a controlling interest in Korean manufacturer SsangYong.

“SsangYong is owned by the SAIC with a 59.1 per cent share,” SsangYong Australia managing director Russell Burling says. “They are joint venture partners with General Motors and Volkswagen and are in the process of introducing their own brand in China.”

Burling says that while SAIC is growing within China the company also provides a stable base for research and development for SsangYong and a freedom from the financial strains many other car companies labour under.

“They are one of the wealthiest of the car companies and Beijing is the owner so I don't think we are going to have a lot of problems with financing in the future,” Burling says.

He believes the acquisition of the Korean manufacturer was an export strategy that brought SAIC unexpected benefits.

“SAIC bought Ssangyong for that purpose; to do all the exporting,” Burling says. “People don't understand export out of China is not a given. All of SAIC's planned exports will be built in Korea.

“There is no capacity in China to export. This is the great fallacy; everybody says China is going to rush and pollinate the world with their cars.

“I believe their home market, if their product is good, can take every car they build so why would they need to go through the drama of exporting.

“Within a few years China will be the world's top car market. It's already well on the way.”

Burling says that apart from the export strategy, SsangYong has provided SAIC with some unexpected benefits.

“I think SsangYong was a surprise package for SAIC. From what I have been told they bought it thinking they would get a nice little brand but have been very surprised with the technology, the sharing with the Europeans, the quality they can build and the technology and designers they have within SsangYong, particularly with diesel.”

SsangYong currently sells diesel-engined cars across its range in Australia including the Actyon SUV, Sports Ute and the Rexton 4WD.

That acquired knowledge gels well with SAIC's internal new-car model plans which revolve around the design and technology they inherited as part of the purchase of British brand Rover.

Burling says the Rover influence is not a retrograde step.

“Some of these cars were already on the drawing board at Rover when SAIC bought the design centre but they are not just variants on the old Rover models,” he says.

“They are on all-new platforms with a range of east-west engines and six-speed gearbox.

“If we decide to take the cars there is still a question over whether we will be able to get them. While our cars will be made in Korea they will only be made available to us after the home market demand is satisfied.”

Burling says SAIC plans to have a model in every segment but SsangYong Australia would be much more selective.