Get more Mail & Guardian
Subscribe or Login

China bid for Hummer triggers scepticism

The announcement from little-known Chinese company Tengzhong that it wants to buy the Hummer brand from troubled General Motors has led many to question just how plausible the deal really is.

What has perplexed Chinese analysts the most is the company’s lack of expertise in either international trade or making cars.

“Tengzhong is just a privately owned company that has no experience in the car industry and Hummer is a niche brand that suits a small group of people,” said Zhu Junyi, an auto analyst with Shanghai Information Centre, a think tank.

Even China’s state-owned media have been quick to point out that Tengzhong, based in south-west China’s Sichuan province, specialises in making machinery to build roads and bridges, as well as equipment for the energy industry.

Tengzhong “has no experience in producing passenger vehicles, adding difficulties for the company to manage the brand,” Xinhua news agency quoted Zuo Xiaolei, an economist with China Galaxy Securities, as saying.

The headline of a recent commentary printed in the English-language Global Times said “China’s Hummer fever should come to a stop.”

“The purchase comes at a time when China should be buying fewer Hummers, not more,” the commentary said. “The deal deserves criticism more than it does pride.”

The low fuel efficiency of the Hummer was one of the main reasons that North American sales of the sports utility vehicle have tanked in recent years.

And although the Hummer is a status symbol in China, the four-wheel-drive modelled after the US military’s Humvee has also become a symbol of pollution in a nation already beset with serious environmental problems.

That could be one problem for Tengzhong, which sees the Chinese market as key to its hopes of reinvigorating the Hummer brand.

“The company’s strategy is to take the Hummer brand global and that should certainly include the Chinese market,” said an official with Tengzhong’s public relations agency. The agency asked not to be identified.

Analysts also questioned whether the group based in the city of Chengdu has the know-how to manage an international brand, citing the 2004 purchase by Shanghai Automotive of South Korean car maker Ssangyong.

Ssangyong, which has been under court receivership since February, is expected to cut 36% of its workforce, or 2 646 workers, as part of a restructuring plan.

“I don’t see how a Chinese car maker can acquire companies like Volvo or Hummer,” said John Zeng, a market analyst with Global Insight.

“It is not realistic either financially speaking or from a management standpoint.”

The international experience of most Chinese companies is in their relations with foreign firms in China, not in managing foreign companies overseas, he said.

“The failure of Shanghai Automotive in its purchase of Ssangyong has affected the reputation of other Chinese companies in South Korea,” said Jia Xingguang, an analyst at the China National Automobile Industry Consulting and Development Corporation.

The final hurdle for the Hummer deal will be gaining approval from Chinese regulators, who state media said may be opposed to the purchase.

But even a red light from the regulators could be in Tengzhong’s interests, some analysts said, suggesting the offer for Hummer was little more than a bid for some free publicity.

“Market talk has it that Tengzhong’s takeover of the Hummer brand is pure hype,” the Shanghai Information Centre’s Zhu said.

“The company knows the plan won’t get approval from the authorities, but the news can turn it from a little-known company to a household name in China. Even multimillion-dollar ads will not be able to achieve a similar effect.”

Three hundred workers at General Motors South Africa (GMSA) stand to lose their jobs following the sale of the Hummer H3 brand. The workers are based at GMSA’s Port Elizabeth plant.

About 1 000 workers have already been laid off since last year.

Subscribe for R500/year

Thanks for enjoying the Mail & Guardian, we’re proud of our 36 year history, throughout which we have delivered to readers the most important, unbiased stories in South Africa. Good journalism costs, though, and right from our very first edition we’ve relied on reader subscriptions to protect our independence.

Digital subscribers get access to all of our award-winning journalism, including premium features, as well as exclusive events, newsletters, webinars and the cryptic crossword. Click here to find out how to join them and get a 57% discount in your first year.

Related stories


If you’re reading this, you clearly have great taste

If you haven’t already, you can subscribe to the Mail & Guardian for less than the cost of a cup of coffee a week, and get more great reads.

Already a subscriber? Sign in here


Subscribers only

‘The children cannot cope any more’: Suicide in Calvinia highlights...

How Covid-19 has intensified the physical and emotional burdens placed on children’s shoulders.

Capitec Bank flies high above Viceroy’s arrow

The bank took a knock after being labelled a loan shark by the short seller, but this has not stymied its growth

More top stories

If the inflation-driving supply strain in the US lasts, it...

In South Africa, a strong trade surplus, buoyed by robust commodity prices, will cushion our economy against pressure arising from US policy

Covid-19: No vaccine booster shots needed yet

Scientists agree it is important to get most of the population vaccinated before giving booster jabs

The convenient myth of an Africa spared from Covid-19

There are few, if any, studies to support Pfizer chief executive’s assertion that the global south would be more vaccine-hesitant than the north

press releases

Loading latest Press Releases…