G.M.'s Hummer goes to China

Posted by: Dexter Roberts on June 3, 2009

This is how mixed up the global business world has become: who should arise to snap up General Motor’s once popular gas-guzzling monster, also known as the Hummer? A private Chinese company I suspect most people have never heard of—I hadn’t and I have been a fairly frequent visitor to the city of Chengdu, Sichuan where it is based, and frequently write about China’s auto industry.

One reason for that may be because the likely purchaser—Sichuan Tengzhong Heavy Industrial Machinery Co.—has been a producer of road, energy and construction equipment, rather than the off-road vehicle maker it apparently now hopes to become. According to an announcement on Tengzhong’s website, the company will acquire the Hummer brand as well as its senior management and operational team. The notice also says that Hummer’s headquarters will be kept in the U.S., and that: “in an earlier statement, GM said it expects the deal if successful to secure more than 3,000 US jobs. The final terms of the deal are subject to final negotiations.” Hmmm—sounds a bit like they are hedging there. It will be interesting to see what those final terms are and what ultimately happens to those jobs. Finally, the statement says Tengzhong intends to expand Hummer dealerships around the world.

As my colleague David Welch points out, it is unclear just how smart this purchase will prove: “How much growth, if any, there is for Hummer is uncertain,” he writes, pointing that Hummer sales fell 51% last year, to 27,485 vehicles, as fuel prices went up and that the military association hasn’t always helped. “The Hummer’s militaristic, anti-green image played a role in knocking it from its perch as one of the hottest brands earlier in the decade.”

Reader Comments

jj

June 3, 2009 12:49 PM

When a Chinese auto company bought SsangYong, a Korean auto company, it sucked all the tech know how out of the company while starving it of new capital investments and R&D. The result is that SsangYong is now in financial trouble. This is rather typical of Chinese acquisitions. They are after the know how and don't care about Hummer or its US workers.

jose

June 3, 2009 1:58 PM

Dear Jj: If you really care so much about the 3000 U.S. workers, why don't you buy it?

Steven

June 3, 2009 9:51 PM

Jj is just an angry youth of America. HAHA.

The_Observer

June 4, 2009 9:52 AM

The Chinese Government may block this takeover deal, see:
http://www.forbes.com/2009/06/03/gm-china-autos-markets-equity-tengzhong.html

I could see why the Chinese Government may want to block this deal. The reasons are: (1) the potential purchaser has no experience in car manufacturing, (2) the largest purchasers of Hummers are the US military and high end consumers who may be lost if a Chinese buyer takes over the brand, (3) China has many car manufacturers already, (4) a Chinese car manufacturer already produces military vehicles similar to the Hummer for domestic use.
On the pro side, the Chinese with the rights to the Hummer brand could now export the vehicles but you could pick those rights up at a bankruptcy sale without buying the whole company.

C. H. Ng

June 4, 2009 9:21 PM

Chinese companies should not think of buying or helping any troubled western companies. Why trouble yourself when all what you will get is deep suspicion of your good intentions with no appreciation?

Remember, any Chinese wanna-to-be "white knight" company running in trying to rescue those half dead western companies will NEVER be treated as so. "White Knight" can only be white (western) company to them, not any yellow (Chinese) company. So why waste your time & effort when you know very well you will not be appreciated and treated as equal even when you dump millions of US$ (if not, billions as in the case of Rio Tinto's venture)?? If I will to be in the higher Chinese government authority, I will definitely block all these useless and ungrateful deals. I will only endorse deals in those countries / companies which really need our helps with open arms, not those who want to take our money in one hand while trying to stab our back with the other hand.

jcage

June 6, 2009 1:11 PM

C.H. Ng

Just wait until the company goes into liquidation then the Chinese companies just need to buy what it really need like technology and know-how!
Also, I don't see any value to buy such as gas guzzler like the Hummer and even the USA army is looking a future replacement for it from what I have read in the past!

C. H. Ng

June 7, 2009 11:53 PM

We all know China still need western's technology and know-how but at times I do agreed that the western governments are also worried whether China will used all these knowledges to further on her military capability. But having said that, I think it's also unfair for the western countries to withheld know-how on areas such as green energy while at the same time condemning China on her pollution problems.

This also apply to area such as China's investment on financially troubled western companies such as Rio Tinto while at the same time the former is trying to secure long term supply of iron ores for her many steel mills. Last week I just mentioned the wasting of time by cash rich Chinese corporations to trying to invest and help those troubled western companies as they will forever be treated with suspicion. And now the latest news of Rio Tinto discarding Chinalco and turning to BHP once the the commodities markets have stablized which really showed the western ppl's true colour.

C. H. Ng

June 8, 2009 2:20 AM

Last week I just mentioned about Chinalco-Rio Tinto deal and now finally it has been soured. Surprised? No, I am not.
As mentioned many times, China should look everywhere EXCEPT western countries to put her money/investments in a proper prospective and where she can expect to get good faith in return. Not those toubled western companies and countries where all she will get is suspicion or a stab-in-the-back.

But having said that, at times I could not blame those western governments and people for their "fear" of a rising China. For all their talks about human rights, democracy and racial discrimination, white people can only accept another white nation to be the top power in charge... not an Asian, African or Arab country. The latters are and can never be their equal. To them these aspiring nations were their colonies before. So how can the former "servants" now lord over their former masters?

So to those growing Asian companies dreaming of taking over financially strapped western companies, please don't waste your time. What do you or will you get? Just look at Lenovo when she took over IBM. Or Proton of Malaysia when she bought Lotus. Remember these one time great companies are (or were) going downhill and spending millions (if not billions) are not going to push your huge investments forward or get you rewarded.

jcage

June 8, 2009 3:06 AM

Rio Tinto and the Australian government has been always a tough player in the commodity market. Japan in the early time when it was developing really fast and it need high quantity of iron ore for its own national grow and export market, the Australian government was price gouging the Japanese while treating the Japanese as a hostage customer. Japan got fed of this treatment and decide to find another source of natural resources and Japan decide to help Brazil to develop its mining industry to be a future rival for the Australian mining company and the rest is story! China should have its own mining company in the same scale as Rio Tinto and BHP and secure mineral resources throughout the world so China does not need to rely buy overpriced minerals from the Aussie!!

Interconnect

June 8, 2009 9:43 AM

Hummer a hall mark of successful US brands. Millions of toy hummer are homes with the youth toying with them, to dream when they grow up. IBM didn't make a wrong decision when it sold Thinkpad to Lenovo. It was not the brand but the know how of IBM technology, which Lenovo acquired. What will happen when the child dreaming to buy a Hummer will end up in the brand being sold and acquired by Haier in China. GE appliances division when put on sale, had enough interest from China, Korea major brands, but didn't go thru. Chinese are capable to convert the Hummer powered by hybrid technology with new battery technology, as another hybrid Hummer an innovation from China for people in China and beyond.

Longdog

June 10, 2009 9:26 AM

US Military Humvees are made by AM General, not Hummer. The civilian H1 which was based on the humvee is no longer made, the buyer of hummer only gets H2, H3, H3T which are based on generic GM truck chassis (suburban and Colorado). Not exactly a lot of technology involved here. No one is helping anyone out buy buying hummer, with the exception of the buyer having an opportunity to buy a failing brand for pennies on the dollar and made a dollar themselves. With correct vision, the buyer can expand and actually turn the brand into something with substance.

arun goel

June 25, 2009 10:55 AM

we are interested in hummer brand please call me 09811661804 india

Post a comment

 

About

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.

BW Mall - Sponsored Links

Buy a link now!