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Hummer's planned sale to China draws mixed reviews

(Xinhua)
Updated: 2009-06-06 18:48

CHICAGO -- The planned sale of General Motors' iconic Hummer brand to a privately owned Chinese truck maker is drawing mixed reviews from industry analysts.

"Usually Americans are not exactly happy about the sale of any American icons to a foreign country. But there isn't much uproar for this sale," Angela Y. Lee, a marketing professor at Northwestern University, told Xinhua on Friday.

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Sichuan Tengzhong Heavy Industrial Machinery Co and GM have given no financial details about the planned sale of the Hummer brand.

Lee said Americans are reacting differently to the sale than they might for another US icon for a variety of reasons.

"For one, no one feels they should say anything about GM selling off assets, given the dire situation that the former auto giant is facing," she said.

"Second, the Hummer has always provoked mixed emotions -- it is a pure status symbol with not much functional value for the civilians. It hogs the road and is a gas guzzler -- not very traffic friendly nor environmentally friendly," she said.

Lee said that from a Chinese perspective, there are pros and cons to the planned sale to Tengzhong, a Chengdu-based maker of heavy industrial vehicles such as cement mixers and tow trucks.

She said acquiring an American icon such as Hummer creates awareness and builds the Tengzhong brand, but the idea of putting the boxy, military-style SUVs, which sport oversize tires and can weigh up to five tons, on the road in China seems to go against the central government's stated priority to conserve and preserve.

From that perspective, Lee said, "Tengzhong acquiring the Hummer may not be all positive."

Anita Y. Tang, managing director of Royal Roots Global, a Chicago-based U.S.-China cross-border business strategy advisor, said there are many concerns about Tengzhong's acquisition of Hummer.

She noted that the Chinese company has no apparent car manufacturing experience, manufacturing costs are high in the United States, and there are cultural barriers and differences in management styles.

Uniting the American and Chinese management teams after the acquisition could be a real test for Tengzhong, Tang said.

"The biggest post-acquisition challenge is not one that money and expertise can easily fix. It is about bringing the American team and Chinese team together -- to work as one with one same goal in mind -- survive and thrive," she said.

"The challenge is to instigate such flames in each person in this cross-border, cross-cultural entity and translate it into affirmative actions," she added.

On the positive side, Tang said China can add additional value to the Hummer brand by possibly leveraging its solar expertise to improve the SUV's poor fuel efficiency.

She said, too, that Tengzhong may be buying the Hummer brand for its look and design and will attempt to advance its investment by making the SUV a "total package."

It will be interesting to see how a Tengzhong-manufactured Hummer will be received by Chinese consumers, Tang said. She said profitability will depend on the model Tengzhong decides to develop and distribute in China and on consumers' willingness to pay for the vehicle and the extra fuel it consumes.

Tengzhong's CEO, Yang Yi, said in a statement that the company will keep Hummer's headquarters and operations in the United States, while investing more in research and development of more fuel-efficient vehicles. Yang said the company will continue to be led by its existing management.

GM said the sale would rescue 3,000 manufacturing and dealership jobs, as it would continue to make Hummers under contract with the new owner.

Hummer's CEO, James Taylor, said the company wants to launch an "aggressive global expansion." The company said it expects to expand its dealer network, including to China.

Formed in 2005 through a series of mergers, Tengzhong has more than 4,800 employees and manufactures road, construction and energy-industry equipment.