(FORTUNE Magazine) – On a shivery Saturday morning in Warsaw, the only workers at the headquarters of the Polish state automaker FSO are uniformed security guards and a delighted new Korean owner, Kim Woo-Choong, 59, chairman and founder of the Daewoo Group. He outbid General Motors for this relic of the communist era by promising the Polish government that Daewoo would put $1.1 billion into FSO without laying off any of its 21,000 employees for at least three years. The deal, combined with the earlier purchase of a light-truck manufacturer and a plant for making TV sets, gives the Korean conglomerate a key and improbable role in a country half a world away. Daewoo will soon be the biggest direct foreign investor in Poland, the largest economy in Central Europe.

From that pivotal position the gutsy and charismatic Kim plans to challenge some major forces on what is likely to become one of the auto industry's most interesting battlegrounds. Demand for new cars has slowed in Western Europe, where it is likely to grow no more than 3% or so a year for the rest of the decade. But in the seven nations of Central Europe, demand is expected to jump at the attention-getting rate of 10% a year. Daewoo wants that business. So does Fiat, which currently has 51% of the Polish market. Volkswagen has taken over and modernized the Czech Republic's state-owned car company. And GM, despite its stunning loss to Daewoo in the bidding for FSO, is determined to fight; it recently announced plans to build a $300-million-plus auto plant in southern Poland.

Kim's obsessive ambition is to become a significant global player in cars and trucks. "It's not just a dream," he insists, though skeptics wonder whether it will prove a profitable vision. The auto industry is mature and slow growing, with a lot of talented competitors and some stumbling ones as well, all of which are clogging the industry's arteries. Kim's audacious goal, nonetheless, is to invest about $11 billion over four years and quadruple Daewoo's annual production to two million vehicles, which would make Daewoo almost as big as Chrysler is now. In addition to his coup in Poland, Kim has bought plants in the Czech Republic and Romania, and built one in Iran; Daewoo is also constructing a $658 million factory in Uzbekistan, putting its vehicles within striking distance of the huge, if troubled, Russian market.

Daewoo cars shipped from Korea have already taken a 0.7% share of England's car market--a tiny slice, to be sure, but a very impressive showing by a new entry in its first year. Kim, too, has purchased parts of England's International Automotive Design, a powerhouse of engineering expertise that has built and tested prototypes for such clients as Volvo and Ford. The British auto industry whirs with reports that Kim may soon take over Lotus, best known for its hot sports cars. Kim, moreover, plans to enter the U.S. market in a year or so. Whew.

In a European industry that already considers itself overcrowded, Kim's enthusiasm is as welcome as a Hell's Angels caravan weaving through heavy traffic. "They're a very disruptive force," grumbles Lou Hughes, president of GM's international operations, as he watches Daewoo's ever-increasing production capacity. "They'll do whatever it takes to create markets."

Kim is not reckless--but that doesn't mean his expensive gamble will pay off and that he won't join the stumblers (among them: Japan's Isuzu and Mazda). Kim goes into combat with some serious handicaps. Korean cars--those made by Hyundai and Kia as well as Daewoo--are relatively little known in the West. Industry analysts generally rate them not much higher than okay. "Their quality is better than it used to be," says Maryann Keller, a top-rated industry analyst at Furman Selz in New York City, though they're "still not up to Japanese or American cars, because the whole standard has moved up." Daewoo's cars, which have a slightly dated look, are mostly derived from old GM models, because until four years ago the American giant owned half of Daewoo's automotive operation. GM sold its share back to the Koreans in 1992, after Daewoo--bridling under its inability to export cars bearing its own emblem--asked for a divorce. The two companies continue to have a complex relationship; they are polite partners in several projects to make manufacturing parts (generating sales of some $1 billion a year) and rivals otherwise.

Kim has promised that over the next few years Daewoo, with a major assist from the International Automotive Design outfit he bought, will develop five new models independent of GM's platforms. That's partly why he needs that two-million-a-year volume--to underwrite the enormous cost of that bold makeover.

As Daewoo races toward its two-million-car goal, it will inevitably hit some bumps, such as tariff disputes and labor problems. "The company has made unprecedented leaps in expanding capacity, so many people are skeptical," says auto analyst Susan Brown of DRI/McGraw-Hill in London.

Few, however, would be foolish enough to dismiss Kim out of hand. In 1967 he and a few friends borrowed money to launch a small textile trading company, and he has since transformed it into a manufacturing giant whose products range from radios to railway cars. With revenues of $57 billion last year, the Daewoo Group consistently ranks among South Korea's four largest industry groups, or chaebol. (Daewoo Motor, though, earned just $13 million on sales of $4.4 billion.)

Kim is a complicated and extraordinary leader, one whose authority is not often challenged by those around him. Despite the usual boards of directors and hierarchies that you would expect to find in a diversified conglomerate with 184,000 employees, Daewoo's command structure, in practice, is rather simply organized. "I make the decisions," says Kim. These days he's focused mainly on the auto business and for the most part has turned over other operations to his colleagues.

Although he is generally pleasant, his manner can quickly turn to that of a Marine sergeant with a toothache--a trait he didn't try to hide from this journalist, who traveled with him through Europe recently. Spotting ill-trained workers at a new Daewoo television tube factory in Longwy, France, Kim immediately phoned a senior manager at bedtime in Korea and delivered a blistering rebuke that everyone in the room could hear. In Budapest, Park Jong Soo, the chief executive of Daewoo Bank (Hungary), repeatedly resisted an order to start the paperwork for extending the bank into neighboring countries--until the chairman icily commanded: "Just do as I say."

Has his sizable ego overreached in the auto business? Maybe. But don't bet on it. He's a canny strategist, a relentlessly driven builder and acquirer, and an exceptionally inspirational leader. Kim turned Daewoo into what it is today mostly by taking over and transforming outmoded Korean factories, the same approach he is using with the car and truck plants in Poland. Explains Kim: "We go in with a small amount of money, renovate the company, and change the spirit of the workers."

Kim's new employees in Poland seem to have bought into the idea. Before Daewoo took over, FSO was a string of 14 factories building the Polonez, a prosaic compact car with a very small future. Kim has convinced the workers that they can compete with the best of the West. Says Jerzy Wozniak, president of the Solidarity labor union at FSO in Warsaw: "Kim has the sort of charisma that makes you want to follow him, even with a saber against tanks."

Kim's brave plan of attack is to go after two very different markets simultaneously, the developed world and the undeveloped. Selling successfully in the U.S. and Western Europe is important partly because it will give Daewoo prestige. But why would buyers in sophisticated markets want a Daewoo, a new Korean brand? Replies Kim in a slightly testy tone: "The only problem is giving people a chance to drive our cars. Everybody who does finds out that Daewoo cars are just as good as others. There's no difference."

Perhaps, but given a choice among a Daewoo, a Ford, and a Honda, say, the customer is far more likely to buy the familiar name. So Daewoo's initial edge has to be better service and a deep discount off the prevailing price--made possible by lower labor costs in places like Poland. The Nexia subcompact that Daewoo markets in Britain, for example, sells for about 10% less than the comparable Ford Escort. Daewoo also offers a generous package that includes three-year Automobile Association coverage for breakdowns anywhere in Europe. Banners that promise "hassle-free, peace of mind, courtesy" at Daewoo's 32 showrooms in England entice the curious to check out what a clever promotion campaign calls "the biggest car company you've never heard of." Many of the 13,000-plus drivers who bought Daewoos in the early months are the newly retired or young people buying their first cars.

The more important market, however, is the world beyond the rich West. Says Kim: "We have to move into big potential markets where few competitors have gone--India, China, Russia, and the eastern European countries. So I'm going into those places as quickly as possible to start production."

Supersalesman Kim masterfully plays the politics of trade and investment. Before taking over an idle Romanian auto plant, he persuaded the government to pass a law granting Daewoo tax concessions and duty-free privileges for bringing in components from Korea to assemble cars. Admits Kim: "We try to get as many incentives as possible. It's only natural." From afar, Uzbekistan, a Central Asian republic that belonged to the former Soviet Union, may seem like an odd place to launch a new $658 million car factory, but Kim got its government (flush with natural gas revenues) to put up half the money in exchange for half ownership.

For all those clever maneuvers, Kim still needs to pump $5 billion into his dozen foreign plants over the next five years. He expects to borrow 60% of that princely sum from international banks, while raising the remaining 40% from what Kim terms "equity"--the proceeds of European bonds convertible into shares of Daewoo's profitable Korean companies, plus the earnings of all those foreign auto factories. In short, he's betting part of the Daewoo Group on his ability to make this bold gambit work.

He exudes confidence. Riding a chauffeured Mercedes through Warsaw, past gray Stalinist-style buildings that look all the more drab amid bright new shops and American fast-food outlets, Kim points to the construction site for a 40-story Daewoo Center. Says he with growing excitement: "The production base is here, the people are well educated, and their incomes will rise very fast. This country is taking off." Poland has recovered from the shock therapy applied in 1990 to dismantle 45 years of state socialism, and its economy grew 5% last year. With a population of 39 million, Poland is the largest market in Central Europe and a competitive exporter. Consequently, Kim has brought in some 150 Korean managers and technicians, many of whom hang out in the lobby of the pastel-hued Sobieski Hotel in hopes of greeting their chairman.

What gives Kim additional encouragement is the empathy between Koreans and Poles, who share a long history of being dominated by their respective neighbors and are both eager to prove themselves. Some 100 miles southeast of Warsaw, in the town of Lublin, is the companion company to carmaker FSO. It is Daewoo Motor Polska, the new name, on bright green signs, for the former state-owned FSL truck company. At first a visitor wonders why anyone could possibly want this collection of 14 overstaffed factory buildings with broken windows and equipment dating back 20 years--especially for the reported price of $340 million.

In the foundry shop, which resembles a scene from a Charles Dickens novel, a worker pours molten steel from a ladle into a mold for shaping parts--by hand. At the end of a final assembly line, which moves at the speed of a weary snail, completed vans are stacked up awaiting such minor components as floor mats because FSL has no computer system for managing its materials. To boost the morale of Lublin employees, Daewoo's first investment went into sprucing up their previously dingy locker rooms and canteens that serve meals. In addition, Kim energizes Polish employees by dispatching hundreds of them for training at his auto plants in Korea, where they learn to build cars by working alongside Korean workers. Proclaims the chairman: "This will give Polish employees confidence that they can do as well as Koreans."

Most executives in the auto industry recognize, like Kim, that the big growth in their business will be outside the U.S.-Western Europe-Japan triad, which is close to being saturated with vehicles. What makes Kim different is that he is willing to take risks that others shun. As he likes to say, "You have to find places that people have never been to, and you have to do things that people haven't done yet."

Above all, Kim sees gold in antiquated factories that look like nothing but trouble to most established automakers. Consider the deal he struck to acquire that sprawling FSO car plant in Warsaw. GM had been dickering with the Polish automaker for nearly five years. The reason the negotiations dragged on was that the U.S. company proposed acquiring just portions of the Polish automaker--and less than one-third of its work force--a plan that Andrzej Tyskiewicz, former president of the Polish company, termed "suicide for FSO."

Searching for another savior who might see a way to keep more of FSO's workers employed, Tyskiewicz secretly went to Vienna last May and pitched his company to Kim, who within 15 minutes responded: "Okay, let's start talking." He quickly made his offer to invest $1.1 billion without laying off any of the 21,000 workers for three years. How can Kim afford to take on what seemed a forbidding burden to the world's largest automaker? Simple, he says: "I figured that if we increased production three to four times, then we'd need all those people. This is the difference in our way of looking at things."

Kim is pursuing the same go-for-growth strategy with his other overstaffed, unproductive Eastern European acquisitions. The Lublin truck plant, among other things, is this year assembling 20,000 Daewoo Nexia model compact passenger cars annually from kits of components--shipped from Korea at no charge for the first year--as well as more than doubling the output of Polish-designed commercial vans and small trucks to 17,500 units. That old Dickensian foundry shop, which now operates at 60% efficiency, is being revamped to supply 200,000 engine cylinder blocks for Daewoo cars in 1997. And within a year the Polish company will begin mass-producing a sleek new commercial van.

Inside his biggest dusty jewel, the FSO plant, Kim is finding such little-noticed assets as several hundred acres of prime real estate in Warsaw, five vacation resorts, a health spa, and a 4,000-acre farm. Initially his engineers wrote off the car assembly line as having "zero value" because the obsolete Polonez model, derived from an old Fiat, seemed to have little future in Poland and no export potential. The chairman, who takes pride in being able to find a market somewhere for almost any product, decided to update that Polish car and increase production fivefold, to 120,000 cars annually. Daewoo dealers will peddle Polonez autos in the Third World for the next several years.

What Chairman Kim has accomplished so far is this: He has fashioned the beginnings of what could become a powerful network in the faraway places that everyone in the auto industry is thinking about these days. Has he outwitted some of the more experienced and more cautious players? Or has he reached too far, too fast? If Kim's instincts prove him right, Daewoo will, in a modest but important way, change the map of the business.

REPORTER ASSOCIATES Eryn Brown, Melanie Warner