Chinese Company Buys Hummer from GM

Posted by: Frederik Balfour on October 10, 2009

GM’s iconic Hummer brand has been acquired by a Chinese heavy construction equipment maker for about $150 million, marking another step in the long march by China to develop a world class local automobile industry. The deal, which was announced on the General Motors website, stipulates the manufacture of all Hummer brand vehicles will continue at its U.S. plants until 2011, ensuring 3,000 workers will keep their jobs. Sichuan Tengzhong Heavy Industrial Machinery Co. will take 80% and a Chinese entrepreneur from Sichuan province in China’s interior, Suolang Duoji will take 20%.

Tengzhong was an obscure private company until it made headlines in June announcing it was in talks with GM to buy Hummer. Initially the official Chinese press conveyed Beijing’s displeasure over such a deal, claiming that the purchase of the gas guzzling Hummer brand was not in keeping with the country’s goal of cleaning up its environment. However insiders said that what really rankled the authorities was that Tengzhong did not seek approval from the central government before making the bid. All overseas investments require the government’s blessing, and Beijing is particularly sensitive to how attempted overseas purchases would be perceived by a world that is increasingly wary of the country’s growing economic might.

Though Tengzhong has no previous record in assembling cars, it will have a couple of years to learn things from the inside before attempting to move operations to China. The holy grail for Chinese automakers has been the intellectual property and full design capability of international brands, which has made other investment targets nervous about doing deals with them. Beijing Automotive had attempted to by the Opel brand from GM during the summer, but the transfer of design know how became a deal breaker in the end. No doubt Credit-Suisse, which advised Tengzhong on the deal, made sure that details about the transfer of technology were clearly spelt out. It will want to ensure it doesn’t repeat the mistakes made by Shanghai Automotive Industrial Corp. which bought a majority stake in Ssangyong Motors in Korea, a company which is now in bankruptcy. The Korean side accused SAIC of trying to steal its technology. Chances are there will be more attempts by Chinese automakers to acquire overseas capabilities. Geely Automotive was rumored to be interested in buying either Saab or Volvo, and is likely to continue scouring the globe for auto assets.

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Reader Comments

dal

October 10, 2009 06:47 AM

I want to be an editor for you all, so I can leave words in the final sentence like globe to be seen as, "glob".

fred piercey

October 10, 2009 06:50 AM

Obviously Hummer was purchased to supply mobility/weapons platform to the chinese army. In America business comes first, national security is a distant second. This is one of the benefits of 'capitalism'.

Hananova

October 10, 2009 06:51 AM

Unbelievable.

3000 US workers get to "keep their jobs."

Well, ACTUALLY, they get to work for one more year, then they are unemployed.

$150 million sale price. For this yard-sale price, the Chicoms get all the technology of modern car plant, plus the basic technology to make tanks for their ever-expanding military.

Obama really is bent on destroying the USA.

Fred

October 10, 2009 07:16 AM

Perhaps you should take some remedial English courses. Though I am a high school dropout, I recognize many grammar and spelling deficiencies in this article. This could be easily overlooked if your content was of any value. When teachers grossing $30k per year were buying $350,000.00 houses as well as brand new Hummers and Yukons, why could you not predict the economic collapse? Why could you not call attention to the banks setting up our current depression?

Mark

October 10, 2009 09:36 AM

Buying the company or the truck is the buyer's big mistake.

Karl

October 10, 2009 11:17 AM

Maybe the Chinese now own Lego Land too, right? It was reported that the Blackstone Group purchased Lego Land, correct? And if you 'Google' this- CHINA INVESTMENT AN OPEN BOOK, you will see that China invested in the Blackstone Group, right? And if you 'Google' this- MONEY TRAIL LEADS TO THE MIDDLE EAST BOSTON GLOBE, you can read how Blackstone's chief executive was "strolling through the Four Seasons Hotel in Saudi Arabia" last year. That was right around the time OIL was at its highest price in history. I wonder what he was doing over there? And we all know that Blackstone's chief executive made $702,440,573.00 in 2008, right? WOW!

Henry L.

October 10, 2009 11:32 AM

I don't know. With so many Auto makers already in the US I am not sure if any new comers is going to be successful. Then again who would have thought that Hyundai come this far. I guess it's going to be survival of the fittest.... may not be good for the average worker.

bob

October 10, 2009 11:53 AM

Of course its for the technology, a heavy industrial machinery company don't just buy a brand like Hummer to learn how to make cars, duh.

Steve

October 10, 2009 12:33 PM

I'm not sure I would call Hummer an "iconic" brand. Corvette is iconic. Hummer is damaged goods. I would like to think that the Chinese just purchased a toxic asset and freed G.M. to produce cars people actually want to drive, not fantasize about.

Zahidali

October 10, 2009 01:49 PM

dats a gr8 nwz. china growing by thinking.

rakesh

October 10, 2009 03:44 PM

as all cell phones now onwards we see HUMMER(made in china),m not sure how geuinune hummer will be in the market

rakesh

October 10, 2009 03:46 PM

as all cell phones now onwards we see HUMMER(made in china),m not sure how geuinune hummer will be in the market

jim

October 10, 2009 04:56 PM

@fred piercey: there is no security issue here, hummer is a civilian vehicle, it is just a SUV, nothing to it. The Chinese got a bad deal, they produce their own military jeeps long time ago. As of today, according to reuters, China's commerce department has not even received any applications yet. I hope it would not go through. Besides, it is not green, bad for environment and bad for the world. Let the 3000 American workers collect unemployment TODAY (instead of next year), save all the headache. And the Chinese company can invest into something worthwhile (OUTSIDE of U.S.).

Marco

October 10, 2009 04:59 PM

The technology they have at Hummer is not near anything I would consider cutting edge (unless you consider a need to move several tons worth of superfluous vehicle half-way efficiently). I have doubts that any military tech that Hummer has is relevant to today. It is likely that military vehicles have improved and the Chinese already have better tanks. What the Chinese company does get is an internationally recognized brand, a thing Chinese companies are lacking. If they can somehow remake Hummer to be smaller and more fuel-efficient with the same sporty feel, the brand could very well be successful. Hummer has a lot of potential in overseas markets such as South America.

Dean

October 10, 2009 05:12 PM

Another bone-headed move transferring american intellectual property and capital to our future adversaries...Americans should be outraged at how the greedmeisters and politicians are stripping this country of every remaining competitive advantage we have...WTF?? W

Joe

October 10, 2009 05:49 PM

Fred Piercey - the Chinese did not acquire the military application of HUMMER. That business remains with AM General. You sound down on capitalism...you must be loving Obama then.

CJCurrie

October 10, 2009 05:50 PM

@ Hananova & @Fred Piercey:

Seriously, xenophobia is SO three decades ago. To claim that an entrepreneur with the rights to a luxury car is somehow going to produce tanks/weapons platforms for a government that disavows his actions is utterly preposterous. Have any of you ever been in a Hummer?

Chinese military and economic might is not what Americans need to worry about. Instead, we need to be wary of the xenophobic tools who poison our culture and diplomatic progress. Seriously, grow up. In this day and age we all need to be a little more tolerant and open-minded. Have we ever actually been attacked by China? Ever?

Paill

October 10, 2009 07:48 PM

"Another bone-headed move transferring american intellectual property and capital to our future adversaries...Americans should be outraged at how the greedmeisters and politicians are stripping this country of every remaining competitive advantage we have...WTF??" -- You said it Dean,the worst part is they always seem to add that little slap in the face when they mention that what they just acquired was in some way "Iconic" to America.

Dean

October 10, 2009 08:00 PM

Xenophobia? CJCurrie: You don't get it, do you? China is wages economic attack on the US every time some poor under-paid american worker plunks down his hard earned $ at the local WanMart, to buy artificially cheap goods, with that debt itself being subsidizied by Chinese purchase of US T-Bills. Any day China wanted, it could dump its T-bills sending us into the worst economic chaos this country would ever see. Its not a matter of Xenophobia, its a matter of National Security. Why the hell do you think Geithner went to china immediately after Obama's inauguration? It wasn't to eat General Tsao Chicken..

2Bob

October 10, 2009 10:22 PM

China's 60th anniversary celebration in Beijing looked like a throw back to the worst days of the Cold War. Think ICBM's in solemn procession behind endless rows of tanks. It was a stark demonstration that despite its talk of a "peaceful rise" China may have other intentions. Stupid America for fueling the fire with technology deals like this.

g.r.r.

October 10, 2009 10:33 PM

Hananova, you really need to learn before speaking. The HumVee was built many decades ago by American General. The HumVee tech was sold by American General to CHina back in the 80's. reagan allowed it. Quietly (both reagan and W have had more to do with the destruction of America than any other two presidents).
The current hummer (H3) is nothing but a car produced by GM.
This sale of the hummer has NOTHING that is interesting. And the tooling will NOT be going to CHina. All that China has bought is the name.

They are hoping to penetrate the US market DIRECTLY, with an American brand. Basically, the middle men have sold out American manufactuers long ago, and now, China is getting rid of them.

If America wants to avoid total decimation, then it will need to rebuild its manufactuering base. In addition, it will have to disallow any country that has trade barriers and/or have their money fixed to ours.

Sree

October 10, 2009 10:46 PM

Day is not far when you see a "Made in China" on every product on face of earth

expat in China

October 10, 2009 11:55 PM

Another bad China Move,

This deal is a joke, and anyone inside China knows it. Only the wealthy can afford a Hummer. If you want to know what a second rate Chinese manufacturer can do when they purchase a brand name, look at the results they have had with buying MG. A joke!

siphandone

October 11, 2009 08:58 AM

Chinese have money... they start to buy the brand name... then they do what they want (Chinese labor, Chinese engines, Chinese assembly lines)... We Americans go downhill...

realguy

October 11, 2009 12:53 PM

i dont know from where a question of US security comes in this article.....i mean in terms of modern weaponery US is much ahead of china......Mr bob talks of the horrors of cold war.....does anyone know the positive effects of cold war.......what is currently happening in the palestine.......what happened in iraq could never had happened if USSR existed.....you people are so ignorant politically

Henry L.

October 11, 2009 12:54 PM

Just as I expected. A bunch of insure American crying the sky is falling thinking a garbage brand being sold to China is somehow transferring their superior technology to China. There's a reason why Hummer is being sold...it's junk and outdated technology...got it? I don't see the outcry when India bough Jaguar and Land Rover. These two brand is by far technological superior. In any case, I believe in America and it's ability to survive and re-invent itself to come out stronger. Common guys, give more credit to the American society.

wakeup

October 11, 2009 03:38 PM

@Dean. there is no General Tsao's Chicken in China

HAKAN OZCAN

October 11, 2009 05:20 PM

Hummer is the most environmentally hazardous SUV with very high CO2 emissions. I hope China can transform this car into more environmentally friendly style at much cheaper prices.

Bobby Trailer

October 11, 2009 07:18 PM

I wouldn't have given the Chinese the opportunity to take over what we started. The Hummer just needs to be more fuel efficient that's all. Why give it to the Chinese to improve and. We all know that they have the intelligence to turn the Hummer brand around and have everyone in this country wanting one. Bad move! visa customer service

barefoottech

October 11, 2009 08:52 PM

I think the Chinese already know how to make TANKS.
The deal is to allow the chinese to make Overpriced , gas Guzzlers called Stupid Useless Vehicles (SUV's). You know the same sort of vehicles that sent GM and Chrysler BROKE!.

jambo

October 11, 2009 09:42 PM

I've worked with the Chinese and know how they operate. They r no different from their US counterpart. The workers will lose their job in about a year or two and the product will be made in China, not the US. Bottom line is profit, and they already know it makes no sense to have a US work force while their ppl can make the vehicle at a fraction of the cost.

C. H. Ng

October 11, 2009 10:24 PM

Really don't understand what's the fuss you people (American) are complaining & voicing your unprofound fear about a silly (maybe they will prove me wrong)Chinese company taking over your money losing maker of the useless gas guzzling vehicle.
What superb technology and/or military expertise China can gain from taking over this stupid deal? If there is or if you can find another company stupid enough to take over, by all means go ahead. It will save the Chinese company & the government from being made to look like fools.

huangxu

October 11, 2009 11:37 PM

hummer's exhausted gas is going to pollute China's air,American are bad,very bad.and most chinese people don't have consciousness of being polluted,bad, too bad.

Chuck

October 12, 2009 12:31 AM

People, Hummer is a retail vehicle inspired by the military vehicle. Key word is 'inspired'. If any of you security wanna bees had ever actually served, you would know this and stop whining all the time. Use your tiny brains to realize only the sheet metal is the same. Dumping Hummer is like taking out the garbage. THINK !!

downhill

October 12, 2009 01:10 AM

Build "a world class local automobile industry" via the Hummer? It has ultra fuel-efficient hybrid engine? Runs 150 miles on a single battery charge that takes only 30 minutes? Super-lightweight, bulletproof yet shock-absorbing body plates? Can the author or BW Editor please tell in a follow-up article as to why the Hummer is going to help its new owner do that. Surely more interesting than this one. Oh, let's not forget its present owner failed.

flightdream

October 12, 2009 02:01 AM

China don't need Hummer's probablity for its military force. It is only an automotive car, which no better than the one made by Dongfeng in China.

Spiele

October 12, 2009 02:06 AM

It needs to be saved. Hummer has got some critics behind it and its always been a problematic one for ecologists.
Spiele

C. H. Ng

October 12, 2009 03:56 AM

One of the main reasons I can see why the Chinese company is buying over Hummer is their love of face and/or showing off. The other reason is the feeling of safety being inside the monster car when you see the ways they drive in China...almost in total blatant disrespect of traffic regulations.

Bharath Acharya K

October 12, 2009 04:55 AM

Well thou chinese buy the hummer brand but the real thing is whats the fate of hummer brand after this.. |Can the chinese company maintain the same quality hereafter or will it bring the same model to sustain its business??

xiatian

October 12, 2009 05:26 AM

Because of great of P.R.C,and Hummer is only a example

Jeff B

October 12, 2009 09:29 AM

There is some beautiful irony here. Hummer for years has had the some of the lowest customer satisfaction of all brands sold in the US. The quality was very poor, and their designs are 90% image and 10% engineering. Now all the poor souls who bought these dinosaurs get to have their American flag tatoos soiled by Chinese ownership. I guess you're 0 for 2 now guys. But look on the bright side. I hear there will be a Tiananmen Square Special edition with a front bumper that can easily roll over protesters.

The_Observer

October 12, 2009 10:22 AM

GM is lucky to get US$150m for Hummer. When the British government got rid of their car industry they paid people to take it away. That Sichuan Tengzhong can carefully work the name and brand 'Hummer' to their advantage would be the main reason for the purchase. Otherwise if they blow the marketing for 'Hummer products' and ruin the brand it will be a huge waste of money.

cc

October 12, 2009 03:39 PM

C. H. Ng
October 12, 2009 03:56 AM

One of the main reasons I can see why the Chinese company is buying over Hummer is their love of face and/or showing off. The other reason is the feeling of safety being inside the monster car when you see the ways they drive in China...almost in total blatant disrespect of traffic regulations.
----------------------------------------

I have to agree with you, why else do they want to buy a unprofitable business model that have failed in the US for years and when the world is going toward fuel efficiency cars? Good luck with the brand.

Hananova...Please China will never need the US for their military built up, they do not owned any weapons made from the USA, they have their own. So does Russia and many other countries. US is not the only country that can produce weapons.

XY

October 12, 2009 08:26 PM

This deal will NOT get approved by the government. Americans are really bad at making autos. German cars rule. American cars suck. As a matter of fact, most american products, bulky and envirionmentally-damaging, are of secondary appeal to consumers at large.

Trader

October 12, 2009 10:24 PM

SUVs like Hummer may have earned a bad reputation in the US, but in the developing world (Asia), they have a good market. For e.g., in India, Hummer is considered a prestigious vehicle, with film stars and businessmen queuing up for it. So, it may not be a bad idea after all, if they could market Hummer in these markets at a lower price.

Toom

October 13, 2009 06:23 PM

Sichuan Tengzhong was and is a maker of industrial equipment. As a fire sale, i'd say they did well to buy something that may fit into their product line. GM must feel pretty lucky. But the critics.... oy such ignorance and prejudice!

Average passenger fuel efficiency in China is 36 mpg, in the US it's 25... and has been for many years. Tenzhong is boasting that they will improve efficiency to over 40 mpg for the Hummer (they said it in reaction to Beijing, so now the politburo has eyes on this statement, and may hold them to it)

We will see, but what's the big deal? It's NOT a militay move, they're not taking over, maybe helping failing GM. ...anyone consider that?

William

February 16, 2010 04:15 AM

Come on people they bought the rights to hummer. hummer was required to syop production of the "H1" back in 2006 because AM General told them to. AM General still owns the contract for the HUMVEE. They will not get the design for it. there for our national security is still safe. Look up the OshKosh defence co. they are buying AM General.

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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. Eye on Asia’s bloggers include Asia regional editor Bruce Einhorn, Tokyo reporter Ian Rowley, Korea bureau chief Moon Ihlwan, Asia News Editor and China Bureau Chief. Dexter Roberts, and Hong Kong-based Asia correspondent Frederik Balfour.

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