Chinese Regulators Debate HUMMER Deal

Tue, Jul 14, 2009

Hummer News

2008 HUMMER H3 Alpha

Two Chinese regulators are at odds with each other on the approval process for Tengzhong’s approval to purchase HUMMER from General Motors, according to Reuters.

One regulator is the Ministry of Commerce (Mofcom) who seemed initially supportive of the deal saying that the bid was, “normal behavior for a company seeking to take advantage of the global downturn to broaden its horizons.”

On the other side is the National Development and Reform Commission (NRDC), China’s top economic planner. Reportedly the NRDC is concerned with the perception of HUMMER as a gas guzzler and Tengzhong’s ‘vague’ plans regarding the future of the brand. It’s possible the NRDC hasn’t seen all the plans, since according to our sources stateside Tengzhong was one of the few suitors who was concentrating on the long-term vision of the HUMMER brand.

Reuters mentioned a similar disagreement case with Coca-Cola trying to purchase a Chinese juice-maker that ultimately didn’t go through, but since the Chinese are the ones acquiring the goods in the HUMMER deal, regulators may be more open to the idea.

In the end, Mofocom could approve the deal regardless of the NRDC’s decision according to an analyst in Shanghai. Although, if Tengzhong every wished to build a HUMMER production facility in China, the NRDC would have the ultimate say-so. While there haven’t been any official plans to produce HUMMERs in China, if Tengzhong knew they could never build production facilities in their own backyard, it may cause them to rethink their bid.

Reuter’s sources say that the regulators could have a decision by the end of July.

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