Government May Block Hummer Sale. The Chinese Government.

Bertel Schmitt
by Bertel Schmitt
government may block hummer sale the chinese government

The sale of Hummer to Sichuan Tengzhong Heavy may run afoul of the government, Bloomberg reports. The Chinese government. After Hummer hit the wires on Tuesday, there were increasing rumors in Beijing that China’s central government is not particularly thrilled. The acquisition runs contrary to two of China’s declared goals.

Yi, China wants fuel efficient vehicles and not hydrocarbon hungry Hummers.

Er, China wants to desperately consolidate its more than 100 (nobody is really sure) automakers to a manageable number. The goal is to merge China’s 14 largest automakers into 10 by 2011, and let the others fade away. A new entry, and one that is supposedly owned by a mining baron is all they need.

Reports appeared in the financial magazine Caijing and state-run newspapers. They say a mining tycoon, Suolang Duoji, who is also known by the Chinese name Li Yan, was behind the deal. Suolang Duoji owns a big stake in Sichuan Tengzhong. He also is the controlling shareholder and chairman of Lumena Resources Corp., a mining company and the world’s second largest producer of mirabilite, a chemical used in washing powder and pharmaceuticals.

“A new entrant in the car industry is not something they’re looking to see,” said Chip Chaikin, who helps oversee $800 million as managing director of Shanghai-based Blue Point Capital Partners Asia. “It’s pretty unlikely” the deal will get approved.

If the purchase is more than $100 million, the deal needs to be approved by the central government. If it is below $100 million, a permit from the provincial government is required. Sichuan province probably will look more kindly at the deal than Beijing. This may explain the $80 million Hummer is supposedly worth. But then, the State Administration of Foreign Exchange also looks at all overseas investments by Chinese companies.

State-owned Shanghai Securities News says outright that China is unlikely to approve the Hummer deal. The government is encouraging companies to buy overseas parts makers rather than automakers, says the paper. Shanghai Securities News belongs to the state-controlled Xinhua News Agency. They usually don’t write these things unless there was a nod from above.

There is another way the deal can be blocked. If Tengzhong needs to raise funds from Chinese lenders, their regulator may tell them that it’s too risky. “The government will step in if Tengzhong wants to fund the deal with loans from domestic banks,” said Yale Zhang, a director at CSM Asia in Shanghai.

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  • Areitu Areitu on Jun 05, 2009

    Interesting! Seems like it'd be the opposite. threeer : I wouldn't worry too much about the Chinese attempting to wreck the US economy. A decent portion of their economy is dependent on exports to the US and the US Dollar makes up a significant portion of the basket of currencies the Renminbi is pegged to.

  • Bertel Schmitt Bertel Schmitt on Jun 05, 2009

    Areitu: The RMB is currently completely pegged to the USD. Hasn't much drifted from 6.83 against the dollar since summer last year. Which lowers the price of the RMB against other world currencies as the USD goes down.

  • Master Baiter Might as well light 50 $100 bills on fire.
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  • Sgeffe Why on Earth can’t you just get the torque specs and do it yourself if you’re so-inclined?!
  • Sgeffe As was stated in another comment, the FAA nominee went down in flames. But the NTSB chairwoman certainly didn’t, and she’s certainly not qualified either!Lots of this kind of stuff going on both sides of the aisle—Ben Carson would have arguably made a better Surgeon General than HUD Secretary under Trump, for example.
  • Art Vandelay Interesting, the Polestar 2 I had as a rental utilized Android Automotive which is what GM said it is going to exclusively, yet it still offers Apple CarPlay according to this. Wonder if GM will do the same.