It said it aimed to sell more than 200,000 of its own cars by 2010, 45,000 of them overseas, and to invest US$1.25 billion in a car assembly plant, an engine factory and in research and development centres.

Mr Murtaugh would fit perfectly into this plan, as he possesses the skills that SAIC badly needs. The company has a mountain of cash and strong government backing but no experience of the complexities of managing international operations and selling to first-world markets.

According to Shanghai press, SAIC will send Mr Murtaugh to South Korea to run its troublesome subsidiary, Ssangyong Motors. For the moment, neither SAIC nor Mr Murtaugh are saying anything, so industry-watchers will have to wait and see if the actuality matches the script.

SAIC is in the vanguard of China's plan to forge an indigenous vehicles industry, a national strategic goal that will involve acquiring many foreign firms and hiring hundreds of overseas specialists such as Mr Murtaugh.

A draft plan for the industry in the 2006-10 period that the National Development and Reform Commission will release in the second half of the year calls for Chinese brands to account for at least 60 per cent of the market for cars with up to nine passengers by 2010, more than double the 29 per cent in the first quarter of this year and 25 per cent last year.

This is the ideal policy for SAIC and other big local carmakers as it means the commission's priority is not to cut the huge overcapacity in the sector but to raise production of Chinese brands.

But SAIC's experience with Ssangyong, Korea's No4 carmaker which it acquired in October 2004, shows how bumpy the road is going to be and why the firm needs outside help.

For one thing, SAIC executives have no experience of handling South Korea's aggressive, xenophobic unions or of the intricacies of the country's politics.

Another major beneficiary of the commission's policy is Chery Automobile, a state-owned firm that ranked third among makers of passenger cars in the first quarter.

On March 28 this year, it produced its 500,000th vehicle, the first Chinese carmaker to reach this level with its own brands. Sales of its QQ model, which costs less than 50,000 yuan, doubled last year from 2004.

Also set to benefit is privately owned Geely Auto, which ranked seventh in passenger cars in the first quarter and which is planning to spend 1.9 billion yuan on a new plant in Ningbo that will produce one million vehicles by 2015.

However, Chinese brands are concentrated at the lower end of the market and compete fiercely on price. Last year, the rate of profit in the vehicles sector was 4 per cent, down from 9.11 per cent in 2003, with Chery making an average profit of 500 yuan per unit sold and only 200 to 300 yuan for a QQ, the model that accounts for 60 per cent of its sales.

Many accuse mainland carmakers of stealing foreign technology. Several have been sued over the alleged misuse of foreign designs and brands but none of the suits have been successful.

Also, local producers have yet to set up marketing, distribution and brands in the major global markets.

Foreign vehicle manufacturers remain ahead in design and technology but can produce in the mainland only through joint ventures controlled by their Chinese partners who then study and learn from the foreigners.

For instance, the managers of the company that will produce SAIC's own brands are executives who have worked for more than 10 years at its two joint ventures with GM and Volkswagen.

The head of the company, Wang Xiaoqiu, succinctly described the challenge ahead. 'A housekeeper can never replace a master,' he said, explaining why SAIC had to set up shop on its own instead of working within the joint ventures. So now the battle is on for control of the house.