General Motors plans to move its Asia-Pacific headquarters from Singapore to Shanghai by January and spend $US250 million with a local partner to expand a design centre in China.

GM, a distant second to Volkswagen in the world’s fastest-growing major car market, said the spending was part of a planned $3 billion investment over three years in a country it expects to become its number two market in 2004, Reuters reported, adding that GM intends to raise its annual output to 1.3 million units by 2007 by expanding factories and building new plants, as it tries to catch up with Volkswagen.

“We wouldn’t mind being number one,” GM Chairman and CEO Rick Wagoner reportedly told a news conference on Wednesday.

“The primary goal we have is growing ourselves, and the rest of the things tend to take care of themselves,” Wagoner told Reuters, before leaving to meet officials in Beijing.

The news agency noted that GM and other multinationals are spending a combined $13 billion to triple capacity to six million cars annually by the end of the decade – defying concerns of a glut in two to three years.

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GM’s sales from its Chinese ventures reportedly rose 69.7% in May from a year earlier to 41,965 vehicles, the company told Reuters on Wednesday. January-to-May sales rose 58.6% to 219,888 vehicles.

A GM spokesman told the news agency that, in the first four months of the year GM had 9.7% of China’s vehicle market – including everything from cars to trucks – compared to Volkswagen’s 12.8%, though Volkswagen claims a third of the sedan segment.

The report said GM’s planned 2.1 billion yuan ($253.7 million) investment in the design centre with Shanghai Automotive Industry Corp would be funded from income generated in China – the partners would build a test track and other facilities in two years’ time.

GM reportedly is also moving decision-makers based in Singapore to Shanghai, closer to the north Asian markets – Japan, South Korea and China – that yield 85% of its sales in the region, joining multinationals such as France’s Alcatel SA that have declared China’s financial centre their regional base.

GM would maintain a sales and service centre in Singapore, but had offered to relocate 90 jobs, Reuters noted.

Wagoner reportedly brushed off concerns over the slowing market.

“The base is getting bigger,” he told Reuters. “Compared to most other places in the world, this is a pretty good issue to be dealing with.”

The news agency noted that GM cut prices in May on two of its core products – the Buick Regal and the GL8 executive minivan – by as much as 11%, followed a month later by almost identical cuts by Volkswagen.

“It’s impossible to sustain that kind of growth as the base gets bigger,” Michael Dunne, president of consultancy Automotive Resources Asia, told Reuters.

But Dunne, who reportedly thinks car sales in 2004 will grow by 10 to 20% on 2003, remained upbeat for the longer term.

“If you look around the world in terms of profitability, growth in China is head and shoulders above everybody else,” he told Reuters. “So slowing, yes, but still highly attractive.”