Creditors of South Korean sport utility maker Ssangyong Motor on Tuesday recommended chemicals conglomerate China National Blue Star Group as the top bidder for a controlling stake in the SUV maker worth about $US620 million, Reuters reported.

The report noted that General Motors and other global car makers had been vying for a 55.4% interest in Ssangyong which was put up for sale by creditors who took control of the debt-laden firm in late 1999.

Reuters said the Blue Star acquisition in South Korea would be the latest in a string of foreign acquisitions by state-owned firms looking to spend some of China's trade surplus to expand globally.

But analysts reportedly warned that picking Blue Star could delay a much-needed restructuring in South Korea's overcrowded vehicle manufacturing sector, which is faced with sluggish local demand and a muted economic recovery, and they also reportedly said Ssangyong would be of little help to Blue Star.

"China is a bad choice for shareholders," Kim Hag-ju, an auto analyst at Samsung Securities, told Reuters.

"If GM or other auto makers took over Ssangyong, it could help reshape the overcrowded sector where too many auto makers are chasing too few customers. But, competition would be even fiercer now with China in the race," he reportedly added.

"The Blue Star group got the highest score in terms of overall evaluation, including prices, employment guarantee and synergy effect from the takeover," main creditor Chohung Bank reportedly said in a statement.

The Chinese conglomerate planned to invest about $700 million in plants and research and development by 2010, the bank said, according to Reuters.

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