FOR months before MG Rover careered into administration, company bosses were telling anyone who would listen that the Chinese were the only deal in town.

Shanghai Automotive Industry Corporation (SAIC) hoped to tie up a co-operative deal with MGR that would see some Rover models being built in the People's Republic.

As time ticked away and MGR became more desperate, this "co-operation" turned into a full-blown takeover - but still the British insisted SAIC was the white knight they needed.

We all know what happened next - the Chinese refused to sign the deal, citing financial worries, and MGR ran out of money, casting 6,000 British workers on to the dole.

Administrators PwC, appointed to salvage something from the wreckage, now say SAIC could be the problem, not the solution.

With a number of Asian companies believed to be interested in resurrecting MGR - and dangling the carrot of restarting production at the Longbridge plant in Birmingham - the Chinese are playing hardball.

The difficulty arises over exactly what SAIC bought when it injected £67m into MGR sometime last year.

The Chinese reckon the deal gave them the intellectual property rights to build the full range of Rover cars (minus the MG TF sportscar) and the K-Series engines.

If that is true, any hope of saving MGR as a mass market manufacturer is doomed to failure. What is a car company worth if it has no cars to build? Precisely.

But PwC takes a rather different view. It believes a clause in the deal allows any would-be saviour of MGR to buy back the rights for £67m. In theory, production could then recommence at Longbridge.

SAIC probably believed it could cherry-pick the bits of MGR it needs to start making cars in China. If it can buy the production lines, it has no need for any other bits of the company.

This scenario looked likely, until PwC received expressions of interest from up to six possible buyers for the entire company.

Now SAIC has written to PwC revoking the licence it says was granted to MGR allowing production of the 25, 45 and 75 vehicles at Longbridge.

However, administrator Tony Lomas has responded in kind. He said SAIC had no exclusive rights to anything previously manufactured by MGR.

He told reporters that PwC could be "robust" about intellectual property rights after spending six weeks going over the legal technicalities. This has been done in conjunction with Eversheds, the legal team that drew up the original contract for MGR.

Mr Lomas added: "MG Rover and Powertrain (the group's defunct engine division) have the right to produce virtually everything they have been producing and these rights can be passed to a buyer. SAIC does not have exclusive rights."

Mystery surrounds the identity of MGR's would-be saviours, although at least two companies in Iran have been linked to the group. The Russian millionaire Nikolai Smolenski - who already owns TVR - has also been linked to the business.

Another four Asian companies are awaiting clarification of the legal situation before pressing ahead with their own bids.

SAIC remains bullish: "If they were so convinced they had found a loophole, they would have contacted us to discuss it. They haven't."

Even if SAIC wins this round, the Chinese may still find themselves scuppered.

Production of the Rover 75 - the jewel in MGR's rather tarnished crown - depends on out-sourced components from other British suppliers.

SAIC has quietly sounded these companies out about restarting production in China. Several have refused.

But SAIC is nothing if not ambitious.

If its plan for Rover comes to nothing, you can be sure it will regroup and look for another European partner.

Rumours have persistently linked the Chinese with an audacious bid for the ailing Italian manufacturer Fiat.

Given what has happened to MGR, European car companies are likely to be shy about any liaison with SAIC.

Although the British group's downfall can certainly be laid at its own door, the way the China deal dragged on has left a nasty taste.

One part of MGR the Chinese have no interest in is MG, and the future looks brighter for the famous sports car marque.

Two British consortiums have already thrown their hats into the ring - one led by former Lotus management and the other a group of former MGR bosses. Both want to restart MG TF production as a precursor to a wider range of sports vehicles, which may carry an Austin Healey badge.

Another intriguing possibility has been stoked by reports that a team from Honda recently held talks with PwC.

Rover's erstwhile Japanese partner has no need of Longbridge, but sources claim it may be looking to buy the MG badge to rebrand its own sports cars.

An MG-badged Honda NSX? Now there is a mouthwatering thought.