Shanghai General Motors (SGM),the largest Sino-US joint venture which went into operation on April 12, 1999, netted a profit of 600 million yuan in the same year. SGM President Chen Hong said here today that it is very rare for a GM subsidiary out of the United States to become profitable in the first year of its operation.

"We never thought of beginning to gain profits so soon althoughboth investors have been confident about the prospects of SGM," Chen said, adding that "It's really an exciting surprise."

Recent statistics indicate that SGM, co-funded by the Shanghai Automobile Industry Corporation and General Motors with 1.52 billion US dollars, produced a total of 23,000 Buick cars last year, with after-tax sales volume amounting to some six billion yuan.

Chen attributed SGM's success to mainly the "sincere cooperation" between the two investors and their motto: customers first.

Both investors have taken into account China's possible entry into the WTO since the joint venture was initiated years ago, and have therefore set the goal of maintaining its production and services in this country at international standards to meet possible competition from other automakers.

While stepping up development of new models, SGM has been improving its Buick car service centers in major Chinese cities.

All this has helped SGM and its products build a fine image, Chen said.

Asian Brand News, a Hong Kong-based magazine, named SGM's Buick the "1999 Brand Builder of Asia", and orders for Buick cars topped20,000 last year, beating the original target of 15,000.

Wang Lingyi, a senior economist with the Shanghai Academy of Social Sciences, said that SGM's success is also attributable to a series of policy measures taken by the Chinese government over the past years to boost the economy, such as cutting related fees on car purchase, and issuing car loans.

The investors have not discussed the distribution of the profits yet, Chen said, but it is most likely that they will spend the money on developing new products.

SGM plans to make 50,000 Buick cars and wagons this year.

"Our eventual aim is to become an auto giant that can compete globally," said SGM's Vice General Manager Philip Murtaugh.

China is regarded as one of the world's largest potential auto markets in the 21st century, and last year about 550,000 cars were sold. So far, auto giants like Volkswagen and Toyota as well as GMhave all set up subsidiaries in China.

Shanghai, which has listed the auto industry as a pillar of the local economy, has approved more than 20,000 overseas-funded enterprises, with combined contractual overseas investments of about 40 billion US dollars.

Most of these enterprises have been performing well, and they as a whole generated 6.2 billion yuan in profits during the first 11 months of last year.