China Blue Star Group, a state company which does not produce cars, said it had defeated major foreign manufacturers to buy 55.4% of Ssangyong Motor, South Korea's fourth-largest car company.
Blue Star was established in 1984 as an industrial cleaning company but now owns factories making car parts and components and runs a chain of repair shops. The company said the purchase price for Ssangyong was about US$500 million and a formal contract would be signed in early 2004.
If the deal goes through, it will be the first purchase of an overseas car manufacturer by a Chinese company. China's car industry is the fourth biggest in the world in terms of output.