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Hummer in China: Regulators Clash on GM Hummer – Sichuan Tengzhong Heavy Industrial Machinery deal

By Amarendra Bhushan for CEOWORLD Magazine Updated:July 15, 2009

Hummer in China: Regulators Clash on GM Hummer deal; Ministry of Commerce (Mofcom)- yes and National Development and Reform Commission (NDRC)- no!

The two Chinese regulators Ministry of Commerce (Mofcom) and National Development and Reform Commission (NDRC) in charge of the Hummer takeover appear to have opposing views on the viability of the merger.

The Ministry of Commerce (Mofcom) is backing the deal between General Motors (GM) and the Sichuan Tengzhong Heavy Industrial Machinery Co.

But the National Development and Reform Commission (NDRC), China’s main economic planner, has opposed the deal on environmental grounds, due to the fuel inefficiency of the brand’s vehicles.

Tengzhong was talking to the government about the deal last week but had not yet submitted a formal application to government regulators.

If the deal is approved, Tengzhong will fund product development and not be a hands-on operator. The deal was expected to close by Sept. 30.

Late last year, a deal by China’s Chery Automobile Co. to assemble small cars for Chrysler fell apart.

If Tengzhong can obtain Hummer for the alleged asking price, something like $500 million, then it will have achieved access at a major discount. And unlike India’s Tata Motors, which bought Jaguar and Land Rover from Ford last year, it will not have had to take on billions in debt to pick up an established, if controversial, brand.

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