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.
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