China May Reject GM Hummer Deal on Environmental Concerns

Posted by: Frederik Balfour on June 26, 2009

It looks like China will reject the proposed purchase of General Motors’s Hummer division by Sichuan Tengzhong Heavy Industrial Machinery Co. on the grounds that producing the GM gas hogs isn’t in line with the country’s environmental goals. The source is none other than China’s National Radio which said late Friday the deal was off.

You have got to give Beijing credit for its green stance against gaz guzzlers. Indeed, the government already has higher fuel emissions standards than most U.S. states, and has introduced tax breaks to encourage car buyers to buy vehicles with smaller engines.

You have to wonder why an obscure Chinese heavy construction machinery company with no experience in auto making ever wanted with Hummer in the first place. Now with the deal unlikely to go through, who is going to step in? A suitor from an oil-rich nation perhaps?

Reader Comments

C. H. Ng

June 26, 2009 8:55 PM

Oh...that's a good news. It never make sense anyway in the first plac. Buying a Hummer vehicle is a total waste of money other than to show off you got the money to spend on a guzzler. But buying a non-profitable company producing a not very saleable guzzlers is sheer madness.
No wonder there is no opposition all all this time from the shareholders, the governmental bodies and the American people. They would be smiling all the way to the bank if this stupid deal was to have gone through.

Jogging

June 27, 2009 12:06 PM

Sichuan Tengzhong fails to convince the government that it can succeed in the deal. The government thinks the company may be mad, so it should prevent the company from making mistake. The environmental concern may be just an excuse.

Morr

June 27, 2009 12:59 PM

China already has had one company which makes this kind of truck for the military.Flush GM's Hummers down the toilet.

Interconnect

June 27, 2009 4:28 PM

Incentives offered for replacing old cars which are fuel efficient do not substantiate the purchase in the US market for the Hummer. But still Hummer has history for auto fans. It will keep the mast high and up of GM.

Khyber

June 30, 2009 4:59 AM

Perhaps the Chinese government has learned from the fiasco of Lenovo buying IBM's PC Unit. At that time Lenova was upbeat that it bought an IBM business including the 'Thinkpad' brand. Little did it realize that IBM had just gotten rid of a business that did not future business sense. Just to give you a sense, in my work place, PCs are now considered 'operating expense' not 'capital expense'. It is clubbed with toilet papers, pencils.

Bob

June 30, 2009 3:01 PM

The Hummer purchasr would be fall crazier than the Lenovo purchase of IBM PC. The goverment rejection of the deal is actually the best news for Sichuan Tengzhong. This previously unknown company have gained a lot of publicity without much cost. And already they seem to demonstrate a knack of turning that publicity into cash.

jcage

July 1, 2009 2:11 AM

I am glad that the Hummer was not bought by China! There is not point to buy a gas guzzler with the prospect of raising gas!
"Just to give you a sense, in my work place, PCs are now considered 'operating expense' not 'capital expense'. It is clubbed with toilet papers, pencils."

Now, PC is considered as operating expense and not capital expenses?! Investing in capital equipment can lead to amortization for certain period of year and it could be used by the company for tax deductible! Well, more tax for uncle Sam then!
Beside IBM ThinkPad got better brand name than Hummer since Hummer is associated with the American lifestyle excess during the housing boom!

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Bloomberg Businessweek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies.

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