Hummer in China: The Plot Thickens

It’s a car deal that’s captured the attention of the world! General Motors (GMGMQ) wants to sell Hummer to an obscure Chinese manufacturing company, Tengzhong. Initially, it looked good. But Hummer is just one of those polarizing brands. Actually, it’s not even that polarized anymore—it’s become a symbol of everything that was wrong with the pre-bailout U.S. auto industry, as well as a convenient scapegoat for gluttonous overconsumption.

Some might argue that the Chinese could use a bit more gluttonous overconsumption, but according to Reuters, one side of the regulatory apparatus—the side that manages economic development—is opposed to the deal, while another side—the Ministry of Commerce—wants it to go forward.

General skepticism abounds that a manufacturing firm no one has ever heard of will have the managerial chops to deal with what is, after all, a global car brand. However, you could look at this another way: If Chinese businesses don’t at least try to acquire and manage global brands, how are they ever going to learn the rules of the game? If the country is going to grow a reasonably competitive international auto industry, it’ll need to gain the experience. Somehow. And right now, fire-sale purchasing of brands that haven’t succeeded in the portfolios of major carmakers would seem to be a excellent strategy.

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.