The Shanghai Automotive Industry Corp. (SAIC) Thursday dismissed allegations that it had stolen technology from its Republic of Korea (ROK) auto-making affiliate as "totally baseless", claiming the "technology exchange" was a normal commercial activity.

"The accusation is totally baseless," said Zhu Xiangjun, SAIC spokesman."The technology exchange between SAIC and the ROK's Ssangyong Motor Company after the merger is normal."

SAIC, China's biggest car maker, holds 51 percent of Ssangyong.

Zhu said all the technology transfers between the two companies were based on contracts, which accorded with international practice.

Ssangyong labor union leaders held a rally in front of the Chinese Embassy in Seoul Tuesday. The protestors, chanting slogans and waving placards, accused SAIC of stealing technology from the company and violating cooperation promises.

"SAIC and Ssangyong focus on different technologies," said Zhu. "The Ssangyong labor union accused us of stealing their technology on the hybrid diesel engine, but SAIC's research field is a hybrid gasoline engine.

"Meanwhile, Ssangyong's technology is at the concept phase while the hybrid power sedan developed by SAIC will be mass produced in one year," he added.

Ssangyong labor union leaders also said SAIC had failed to cash its promise to invest US$1 billion in Ssangyong .

"We have never made such a promise," Zhu said. "What we said is we will raise the capital by different means in accordance with international practice."

Zhu said the promise was made by another bidder who competed against SAIC to acquire Ssangyong in 2004 and was "mistakenly grafted on to SAIC".

Ssangyong has fallen into a financial crisis with slow auto sales and a lack of operating funds. SAIC offered a restructuring proposal that included jobs, cost and benefit cuts. But the labor union rejected the proposal and asked for capital injections from its parent company.

Ssangyong filed for bankruptcy protection on January 9, but the ROK court failed to produce a turnaround plan. SAIC is awaiting the court ruling on whether to accept the applications or to proceed with insolvency procedures.

SAIC will lose control of the auto maker under court receivership.

"Under the pressure of financial crisis, we believe that Ssangyong has no other alternative, but to apply for the bankruptcy protection," Zhu said.

(Xinhua News Agency January 16, 2009)