China’s central government clearly isn’t enthralled with Tengzhong getting intimate with Hummer. If you want to get a feel for how they really feel, all you need to do is read Xinhua, their official news agency. Xinhua speaks for China’s government—with plausible deniability if something goes wrong. As far as Hummer goes, every single day Xinhua has sown FUD (fear, uncertainty, doubt) about the marriage.
Today’s Hummer Deathwatch, Xinhua style, opens as follows:
“General Motor’s Hummer is considered as an exaggerated and extreme example of a disregard for the environment and there are significant brand negatives for the Chinese company Tengzhong to buy it.”
Xinhua carefully selected “a U.S. financial expert” to say that: one Richard L. Wottrich, managing director, international, at Dresner Partners, an investment banking firm based in Chicago.
In case you’ve never heard of Wottrich (neither have I), Xinhua furnishes a flattering feature list of his achievements: “Wottrich has initiated merger and acquisition transactions in China and has delivered speeches at several influential events such as “2005 Summit of CEOs and Career Managers of Chinese and Foreign Enterprises” in Beijing and the Greater China Business Conference at the Kellogg School of Management, Northwestern University, in 2008.”
After establishing his bonafides, they let Wottrich go postal on the presumptuous planned amalgamation:
“The vehicle 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 Tengzhong to consider.”
“Hummer is a difficult brand name to reconcile with current global conditions and political thought.”
“The brand is based upon the High Mobility Multipurpose Wheeled Vehicle (HMMWV or Humvee), a military 4WD motor vehicle manufactured by AM General. It is an essential part of the landscape of war in Iraq and Afghanistan.”
“The final consideration is brand name development and new products. What market will Tengzhong focus on? The mature and stable Western markets have the negative views of Hummer mentioned. If they target developing countries, this becomes a symbol of wealth obtainable by few.”
In other words: Bu hao, no good. Give up, already.
Just in case someone hasn’t received the message, Xinhua reminds its readers: “The Hummer and other large vehicles have been a drag on the U.S. auto industry since fuel prices spiked in 2008 and the recession deepened. GM said it sold 5,013 Hummers worldwide in the first quarter, down 62 percent from the 13,050 that it sold in the same period of the previous year.”
What if someone doesn’t put credence in Wottrich? In a separate article, the second so far today on a quiet Saturday morning in Beijing, Xinhua presents an array of Chinese experts who say the deal is a dumb idea. Their crown witness: The Hummer dealer in Tengzhong’s hometown Chengdu.
“I had never heard of the company and was surprised at the news,” said Yang Cheng, general manager of Sanhe Hummer Sales Center, one of the two branches that sold Hummer in Chengdu, capital of Sichuan Province.
“Producing gas-guzzling brands is against the current trend toward energy-saving and emission-reduction,” Zuo Xiaolei, an economist with China Galaxy Securities told Xinhua Saturday. “Meanwhile, the company has no experience in producing passenger vehicles, adding difficulties for the company to manage the brand.”
“Wang Yukun, a researcher with the Yangtze River Delta Research Institute under Beijing-based Tsinghua University, said it would be hard for the buyer to “digest” Hummer.”
“Tengzhong plans to maintain the current management team for Hummer and develop more energy-efficient models, but it is just their fantasies. If the current team could prevent the brand from slumping in any way, they would have done so before,” Wang told Xinhua.
“It’s difficult for a company to digest something dumped by others,” Wang said.
That’s as close to “Tengzhong eats what GM secrets” as you will ever get in the officious Xinhua. Someone—or many—in Beijing are clearly displeased with Tengzhong. My prediction: The formerly unknown Tengzhong company managed to receive buzz from Hummer and can now go back to making cement mixers and bridge pontoons. With so much flak from Beijing, this deal will go down in flames.
Never in a million years would I have thought that I would agree with the Chinese government on anything!
Man, the whole world is turning upside down.
My initial thoughts when I found out that a Chinese company wanted to buy Hummer was maybe to drastically repackage the Hummer for military/commercial use.
I never would have guessed that they were planning to actually sell them as-is. To me, it just doesn’t seem like a feasible or practical thing to do given the economic and political environment.
I agree with both posts 100%
This article explains why GM did not revel the buyer of the Hummer brand.
Maybe Tengzhong is going Hollywood “No such thing as bad publicity”
AM General sold/licensed “Hummer”, an undeveloped, inflexible brand as well as a stupid sounding word that is slang for oral sex, to GM for an undisclosed, but supposedly in the billions, sum.
GM may have helped to kill American Motors as an independent automaker, but its defense division lived on to get revenge.
Chinese communism is smarter than half capitalism/half democracy. Go figure…
Can’t have the next Reagan until we’ve had the next Carter!
Welcome Back Carter! Welcome Back!
Bet those wheels aren’t all that much more harsh than ultra low aspect tires on dubs. If that thing had a nickname it would be Ol’ Hemorrhoid Maker….
Why stop with the wheels?
I see this as being 100% about image (face?), PR, and control for the ChiComs, and it presents two issues on those fronts.
1. Despite lots of indications and actions to the contrary – see coal-fired energy for examples, China understands that it must brand itself as green to avoid a backlash from western consumers who are increasingly willing to pay more for anything they (we) perceive as being environmentally friendly. Hummer is the anti-green product, and the green trend is here to stay.
2. The Chinese government wants Chinese firms to play in the US auto market, but will tightly control the strategy used to enter. This ain’t it. Chinese strategy in the US will be based on small, efficient cars withh way low price points, much the same as Korea’s initial strategy. China knows the Hummer deal is a no-win for its overall entry strategy.
half capitalism/half democracy
What exactly is “half capitalism/half democracy”? One is an economic system, the other a political one.
As for the Carter analogy, it’s inaccurate on many levels, though I realize it was a popular attempted smear during the 2008 campaign. Obama is much closer to Clinton, and apparently the prospects of him having the same economic track record as him is a frustrating thought to certain people.
Carter also is responsible for 20 years of cheap energy in America, so to malign him is rather odd. We’d be in a much stronger place as a nation if we had had the will to follow through with his energy policies.
Wow, smart government they have.
a toy for the rich
Huh?
The “Rich” buy Land/Range Rovers if they buy SUVs. I’ve always seen Hummers as a Toy for the Unintelligent.
–chuck
“General Motor’s Hummer is considered as an exaggerated and extreme example of a disregard for the environment”
That’s a laughable statement as I thought “disregard for the environment” was not in China’s lexicon. Centalized control being disingenuous I guess.
Good reporting, thanks!
@long126mike:
Half democracy/half capitalism is Barney Frank meddling with GM’s bankruptcy to serve his need to be reelected.
Regarding the Carter analogy…
Obama’s plan for Detente with terrorists probably doesn’t end well, but hey, who am I to judge…
I think we need a conservative government to fix this mess.. but as it stands we only have republicans and democrats that work harder and harder to make sure we can’t tell them apart.
The Onion had a great take on what Carter might have said last year if he were a lot more profane than he really is:
http://www.theonion.com/content/opinion/i_got_what_america_needs_right
Plus, I have a question. If government meddling in industry is wrong, what do you call industry meddling in government?
“June 6th, 2009 at 9:20 am
Can’t have the next Reagan until we’ve had the next Carter!” -lw
Obama IS the next Reagan. GW Bush WAS the next Carter.
I’m not dissing Reagan. He was a great inspiration, and a great leader.
I’m saying- so is Obama, regardless that they are on opposite ends of the political spectrum. We were lacking coherent leadership between the two. Bush/Clinton/Bush were horrible duds.
Nice looking Hummer in that picture, and the truck is interesting too.
@scarey
Time will tell who is who… 2010 will be interesting.
I want one. Not the one with a motor.
long126mike:
Half capitalism / half democracy? Here let me give you an example.
President Bush, in the fall of last year, went on TV to scare the shit out of Americans about what would happen if billions of dollars wasn’t given to Wall Street, pronto. Very similar to his Iraq speech.
After that Congress passed Bush’s TARP legislation, with which congress delegated unconstitutional levels of authority to the executive branch.
That part is the half democracy, at best, part.
Bush’s TARP legislation basically, in an unprecedented way, created a system of privatizes gains and socialized losses.
That is the half capitalism part.
John Horner,
Thanks for the Onion link re: Carter.
My wife and I had some good laughs over breakfast with that.
I think GM needs to call “no take backs” before it’s too late. In Chinese no less.
The girl in that pic is very photogenic.
But what’s with those hideous wheels?
I could go with the wooden rims. They would get me some Amish cred at the very least.
Half democracy/half capitalism is Barney Frank meddling with GM’s bankruptcy to serve his need to be reelected.
Meddling politicians trying to get re-elected? Egad! Next thing you’ll say is the sun rises in the east.
Had dinner with my banker friend. She said (it’s a she): “The Chinese government is very smart. We wanted to buy foreign banks, they were cheap. Chinese government didn’t let us. Now they are much, much cheaper!”
If the Chinese government blocks a Hummer sale to their own people it will directly violate “Government-hands-off” trade policy and as such should be despised by free market proponets regardless of if it’s a good decision to buy Hummer or not.
Whatever happened to letting business’ making stupid ass mistakes and falling flat on their asses? Guess China never got the memo.
And we do an ever increasing amount of business with these people? Excellent!
Title should read
Beijing to Tengzhong No Free Enterprise for you
Oh, and stay the Hell out of Tiananmen Square
Hummer def: noun
A person of the female persuasion who is amiss in the persuance of feminine hygene owing to lack of adequate sanitary padification.
King Bojack : China is a centrally planned economy which in recent years has hit upon a way to keep central planning while at the same time encouraging people to work their butts off. In some ways it is similar to the US’ economy during WWII, centrally planned and yet hyper-productive. Conservative ideologues claim that this combination is impossible.
General Motor’s Hummer is considered as an exaggerated and extreme example of a disregard for the environment…
In that case Hummer should fit in very well with China’s overall environmental policies.
China is proving it works well but at the same time they’re taking a crap all over traditional free trade ideas when they feel it serves their needs. This shouldn’t happen with any country.
Show me one country which built a strong industrial base while adhering to “traditional free trade ideas”.
John Horner :
“The Onion had a great take on what Carter might have said last year if he were a lot more profane than he really is…”
A great read — I think that Jimmy may have had thoughts like that, but had to pray to clear those evil “I told you so” thoughts from his mind.
He was truly ahead of his time, but there wasn’t anybody in Washington that would stick with him when the going got tough; i.e., his ideas smacked of (gasp!) socialism! That’s what you get from someone who focuses on the New Testament rather than the Old.
“Show me one country which built a strong industrial base while adhering to “traditional free trade ideas”.”
Great Britain in the earl to mid 1800s, though that only worked because they were the ONLY industrial power for a few decades. As soon as they got competition from Germany and especially the United States, the tariff barriers went up.
The United States industrialized thanks in large part to high protective tariffs in the late 1800s.