OK, I haveto admit that I am fascinated at the slow-motion train wreck that is the proposedsale of Hummer to a Chinese company in the foothillsof the Himalayas.  I understand thatGM and its advisors are just looking to off-load this division, but I wonder whatthe buyer is thinking.  Do they reallythink they can operate a 3,000 person, money-losing manufacturing operation in theUS from Chengdu?  Of course, it’s notimpossible, given that the actual manufacturing of the civilian Hummer (H2) isdone by AM General (here)under contract in a plant just adjacent to their factory that produces the military version of thevehicle.  But, the H3 might be moredifficult as it is manufactured at the GM truck plant in Shreveport, LA (here).  

TheTengzhong transaction will require that Tengzhong takeover the contract with AMGeneral for the production of the H2 and also enter into some sort oftransition services agreement with GM for production of the H3 unless it wantsto carveout the line from the existing Shreveport plant that currently builds theH3 along with the Chevy Colorado and the GMC Canyon and run that themselvessomehow.  What happens when GM decides toditch the Colorado and the Canyon?  Whoruns the factory then?  Or is Tengzhonggoing to buy those lines as well?

Though itwas easy to announce, I suspect this transaction will be much more difficult forthe Chinese buyer to successfully accomplish. I’m not alone.  Here’s a samplingof Chinese English-language press reaction:

"Ihad never heard of the company and was surprised at the news"

"(Tengzhong)has no experience producing passenger vehicles, which adds to the difficultiesit faces in managing the brand."

“WhileChina has made clear its determination to pursue energy-saving,environment-friendly and sustainable growth, the purchase of a US auto brandfamous for being a gas-guzzler obviously does not make sense.”

 “Tengzhongplans to maintain the current management team for Hummer and develop moreenergy-efficient models, but this is just a fantasy. If the current team couldprevent the brand from slumping in any way, they would have done so before.”

 “Thevehicle is too big, uses too much gas, and is viewed as a toy for the rich.These are rather significant brand negatives for the Chinese company Tengzhongto consider."

On the other hand there was thisfrom the People’s Daily, the party organ:

“Theacquisition of General Motors Corporation (GM) "Hummer" brand name bythe Chinese private enterprise Sichuan Tengzhong Heavy Industrial Machinery isan example that should be encouraged.”

-bjmq