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General Motors will set up its Asia-Pacific headquarters in South Korea to demonstrate its long-term commitment to remaining in the country after the state-run Korea Development Bank raised $ 750 million as part of a $ 4 , 35 billion cash lifeline to fight GM unit in the East Asian nation.
GM has signed a preliminary agreement with Seoul on Thursday and has agreed to purchase more parts from South Korean suppliers for its overseas activities from its current procurement cost of about Won2tn ($ 1
The new Regional Headquarters will monitor GM's production, sales and technology development for the Asia-Pacific region excluding China. Earlier, the company had operated its regional headquarters in Singapore as it reduced most of its business activities in the region to focus on more profitable markets such as China and the US.
In return for his $ 750 million financing for GM Korea, KDB, which has 17 percent stake in the Korean unit, regains its veto right, which allows the US automaker to block more than 20 percent of its Korean assets. This will allow GM to stay in South Korea for at least ten years, said Seoul's Finance Minister Kim Dong-yeon on Wednesday.
GM shut down one of its four factories in South Korea this year and cut its workforce by nearly 20 percent, after a $ 1.1 billion net loss last year, the fourth consecutive year in the red , GM Korea faces acute liquidity shortages as its sales fell sharply following the withdrawal of the Chevrolet brand from the US automaker from Europe.