SAO PAULO, Apr 25 (AFP): Big Chinese automaker Chery is considering open a US$700-million factor in Brazil to tap into the country's growing market, and to learn more about building biofuel-capable engines, Brazil's Gazeta Mercantil daily reported Friday.

"Our development center is already working on this project," the head of Chery, Yin Tongyao, said.

The plant, which would supply the Latin American market, would be built by 2012 if it goes ahead, he said.

"But before starting a factory in Brazil, we have to develop flex-fuel technology, which we still haven't mastered," he said.

"Flex-fuel" refers to car motors capable of running on biofuel or gasoline, or a mix of both. Almost all new cars in Brazil -- the world's biggest exporter of ethanol, made from sugarcane -- feature such engines.

Chery Brazil chief Luis Curi said the mooted factory would imply an investment of $700 million and would be able to produce between 100,000 and 150,000 cars per year.

Yin said his company, China's biggest independent car manufacturer, intended to sell at least one biofuel-ready Chery model in Brazil next year.

The company will from June this year start offering four gasoline-only models in the country from June. Two of the models will be imported from neighboring Uruguay, where Chery already has an assembly plant, and two directly from China.

The top price in Brazil for a Chery car -- its A3 sedan with all the options -- will be around 44,000 reais ($20,000), Curi said.

Chery vice-president Zhou Biren acknowledged to Gazeta Mercantil that the biggest challenge his and other Chinese automakers faced was overcoming the perception that their vehicles were cheap and badly made.