Hummer Deal Scuttled

It’s now official: the Hummer deal has been scuttled. The conventional wisdom from the very beginning has been that the Chinese government would never approve the sale of Hummer by General Motors to Sichuan Tengzhong Heavy Industrial Machinery Co. because it runs counter to current Chinese auto policy which is promoting smaller, more fuel efficient vehicles. Against this backdrop, approving the purchase of Hummer by a Chinese company would be against everything that Beijing wishes to promote as far as its automotive industry.

I never really bought the conventional wisdom. In fact, I was so confident that the deal would be completed that I borrowed the line, “Book ‘em Danno!” from the Hawaii Five 0 television series to end my post on the subject in October. Despite the fact that Hummers are gas guzzlers, I believed that the off the road technology that came with a purchase of the company would be interesting to China’s military and other organizations in need of rugged vehicles. Moreover, China Daily had three articles in one edition in October touting the deal, which seemed to be a good sign. After all, China Daily is a state-owned newspaper that tends to promote government policy, isn’t it?

How could I have been so wrong? Perhaps the Hummer message is so antithetical to what Beijing is preaching these days that there is no way that the deal was ever going to get approved, and I just didn’t give that line of reasoning enough weight.

That may be the case. But there is one other explanation that is at least worthy of consideration, and that has to do with the fact that the relationship between the United States and China has deteriorated significantly over the past six months. It all began with the famous tariff on tires. In the name of jobs, and as a tip of the hat to the United Steelworker’s Union, the Obama Administration slapped a 33 percent tariff on tires made in China last year. That decision did not sit well with Beijing, and we may now be witnessing one of its repercussions.

General Motors has exhausted the list of potential buyers for Hummer. As a result of its broken deal with Tengzhong, the company has announced that Hummer will be wound down, and many of the 3000 Hummer jobs in the United States will be at risk. Who owns General Motors now? As we all know, it’s the United States Government. What better way to send a subtle message to President Obama?

I’m not a believer in conspiracy theories, and I never look too far beneath the surface for ulterior motives. However, the state of the relationship between the United States and China is now such that American businessmen in China would be wise to keep this in mind as they go about their daily business. Maybe the tariff on tires has absolutely nothing to do with Hummer, but the fact that we are able to even draw a possible connection is telling.

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