by Xinhua writer Yang Bo
CHENGDU, June 3 (Xinhua) --
Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd. (Tengzhong), a private
Chinese firm who has struck a preliminary deal with General Motors Corp. (GM)
for the premium SUV brand Hummer, said Wednesday it has no plan to manufacture
Hummer in a Chinese plant.
File photo taken on March 11, 2009 shows
Hummer CEO James Taylor (R) presenting a Hummer model to a local official
in Deyang, southwest China's Sichuan Province. U.S. automaker General
Motors Corp., a day after filing Chapter 11 bankruptcy, has a tentative
deal to sell its Hummer brand to Chinese-based Sichuan Tengzhong Heavy
Industrial Machinery Co., Ltd., the automaker said on June 2.
"Rather than setting up a plant in China, Tengzhong
will use the current facilities including their employees in the United States,"
said Zhao Xiaolu, spokesman for the ongoing transaction for Tengzhong, a leading
manufacturer of road, construction and energy industry equipment based in
southwest China's Sichuan Province,
Zhao works for the Brunswick Group, which is handling
the public relations matters for the Tengzhong deal. Tengzhong's managers were
not available for comment on the transaction, which was disclosed Tuesday, a day
after GM filed Chapter 11 bankruptcy.
According to an overall restructuring plan, the U.S.
based automaker GM will shed off its none-core assets including Hummer, Saturn,
Saab and Pontiac.
The preliminary deal allows Tengzhong to keep the
management and operational team along with the Hummer brand, and secure more
than 3,000 jobs in the United States. The Chinese buyer will also assume
existing dealer agreements relating to Hummer's dealership network.
Tengzhong CEO Yang Yi said in a statement Tuesday
that the company will "allow Hummer to innovate under the leadership and
continuity of its current management team".
James Taylor, Hummer chief executive officer, went to
Chengdu City and Deyang City, Tengzhong's current base and new base under
construction, to discuss project cooperation with local officials in March.
"This transaction, if successful," said Taylor in a
statement Tuesday," will allow us to embark on a more aggressive global
expansion, ensuring a successful future with our new partners."
According to Zhao, Tengzhong will use internal fund
and bank loan to make the transaction, which will be a "strategic move for the
company to expand into the premium off-road vehicle segment". Formed in 2005
through a series of mergers, Tengzhong currently has more than 4,800 employees.
"It is probably more attractive for Chinese
enterprise like Tengzhong to learn from the foreign brand's past successful
experience in research, design, marketing and service," said Guo Guoqing, a
professor with the School of Business, Renmin University of China.
Xu Zhaohui, head of the Sichuan Provincial Department
of Commerce, said the officials will "strive to serve the transaction", which is
expected to close in the third quarter of this year and is subjected to
customary closing conditions and regulatory approvals.
In recent years, there have been
several headline purchases of foreign auto brands by Chinese enterprises.
A Hummer is on sale at a dealer in
Flint, Michigan, the United States, May 30, 2009. General Motors Corp (GM)
announced on June 2 that it has entered into a memorandum of understanding
(MoU) with a buyer for HUMMER, its premium off-road brand, a day after it
filed for bankruptcy protection.(Xinhua/Gu Xinrong)
In 2004, Shanghai Automotive Industry Corporation
Group (SAIC)purchased 48.9 percent equity of Ssangyong Motor, the fourth largest
automaker in the Republic of Korea (ROK). In 2005, Nanjing Automotive bought
collapsed British brand MG. And this March, China's largest independent carmaker
Geely Automobile acquired Drivetrain Systems International, the world's second
largest auto transmission supplier.
"Acquisition of overseas brands by Chinese
enterprises could help these brands go over operational dead end, and expand in
the vast Chinese market," said Guo.
All the world's main auto markets are in decline
except form China. In the first quarter, almost 2.68 million vehicles were sold
in China, which marked a 3.88 percent increase year on year.
However, not all foreign auto brands revived under
Chinese management. In February, a Seoul court granted Ssangyong Motor
bankruptcy protection. SAIC was deprived of management control despite its 51
"Declining asset prices amid the financial crisis do
not always mean a good bargain for the buyer," said Zhang Zhiyong, the chief
adviser on auto market with Mingyuan Consultancy in Beijing, "a Chinese
automaker should choose a foreign brand with conforming strategy and similar
culture for possible acquisition."
The fuel-hungry brawny Hummer also pose new
challenges for Tengzhong to control cost and boost competitiveness after
takeover. Statistics from local vehicle management section showed that Hummer
vehicles are only owned by about 10 people in Sichuan's capital Chengdu
"We will be investing in the Hummer brand and its
research and development capabilities," said Yang Yi in a Tuesday statement, "
which will allow Hummer to better meet demand for new products such as more
fuel-efficient vehicles." (Xinhua reporters Yan Sanjun, Guo Xin, Cheng Xie
and Chen Kai also contributed to this story)
GM announces preliminary agreement to sell Hummer
DETROIT, June 2 (Xinhua) -- General Motors Corp. announced on Tuesday it had entered into a memorandum of understanding (MoU) with a buyer for Hummer without disclosing the buyer's name or the price.
The deal came one day after GM, one of the world's largest automakers, filed for Chapter 11 bankruptcy. The transaction is the result of GM's strategic review of the Hummer brand and the company's ongoing restructuring efforts. Full story
Iconic U.S. auto giant GM declares bankruptcy
NEW YORK/DETROIT, June 1 (Xinhua) -- In the largest industrial bankruptcy ever seen in U.S. history, General Motors Corp., the top U.S. automaker and once the world's largest corporation, filed for bankruptcy protection on Monday.
The Detroit-based company, for decades a symbol of American manufacturing supremacy, corporate culture and even lifestyle, filed a Chapter 11 petition to the U.S. Bankruptcy Court for the Southern District of New York early Monday morning. Full story
Special Report: Global Financial Crisis