GENERAL Motors Corp yesterday began construction of a US$250-million facility in Shanghai to focus on advanced research and development in China, the world's second largest auto market which is key to its future success.

The GM Campus, which covers 120,000 square meters in Jinqiao Export Processing Zone in the city's Pudong New Area, will house its China and Asia Pacific headquarters alongside the GM Center for Advanced Research and Science, said Kevin Wale, president of GM China, at the ground-breaking ceremony.

The new facility will spur exploration of alternative fuels, advanced alternative energy compulsion systems and manufacturing and supply energy efficiency through local cooperation.

The first phase of the campus will open at the end of next year and when fully operational, it will have more than 2,500 employees. Construction started on the same day that the Chinese operations will join GM in marking the 100-year birthday of the world's largest auto maker globally.

Soaring fuel prices and stiff market competition have prompted United States-based GM, the biggest car maker in China, to spend more efforts into clean energy and fuel efficient vehicles to maintain its lead in the country's auto market.

'We have seen a slowdown in auto sales in China, but I am very confident that for the medium and long term China's auto market is strong,'' said Nick Reilly, president of GM's Asia Pacific region. 'We will keep our lead in China.''

He estimated GM's annual sales growth in China to be around 10 to 15 percent over the next five years.

In the first half of the year GM sales in China grew 13 percent to over 590,000 units while Volkswagen's sales rose 23 percent to 531,612 units.

China is GM's second largest market globally and also the company's major research and manufacturing base in the Asia Pacific region.