Identifier
Created
Classification
Origin
09BEIJING1476
2009-06-03 23:24:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Beijing
Cable title:
CHINESE BID TO BUY HUMMER AWAITS GOVERNMENT
how-toVZCZCXRO9864 PP RUEHCN RUEHGH RUEHVC DE RUEHBJ #1476 1542324 ZNR UUUUU ZZH P 032324Z JUN 09 FM AMEMBASSY BEIJING TO RUEHC/SECSTATE WASHDC PRIORITY 4268 INFO RUEHOO/CHINA POSTS COLLECTIVE PRIORITY RHMFIUU/DEPT OF ENERGY WASHINGTON DC PRIORITY RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
UNCLAS BEIJING 001476
SENSITIVE
SIPDIS
STATE FOR EAP/CM SFLATT/JHABJAN
STATE PASS USTR FOR STRATFORD, WINTER, MCCARTIN, READE,
VENKATARAMAN, KEMP, MILLER, MALMROSE
DOC FOR MELCHER, SAUNDERS; LORENTZEN AND SHOWERS (5130);
HEIZNEN(6510)
E.O. 12958: N/A
TAGS: ECON EINV SENV CH
SUBJECT: CHINESE BID TO BUY HUMMER AWAITS GOVERNMENT
APPROVAL, DEEMED UNLIKELY BY SOME
This cable is Sensitive but Unclassified (SBU) and for
official use only. Not for transmission outside USG channels.
UNCLAS BEIJING 001476
SENSITIVE
SIPDIS
STATE FOR EAP/CM SFLATT/JHABJAN
STATE PASS USTR FOR STRATFORD, WINTER, MCCARTIN, READE,
VENKATARAMAN, KEMP, MILLER, MALMROSE
DOC FOR MELCHER, SAUNDERS; LORENTZEN AND SHOWERS (5130);
HEIZNEN(6510)
E.O. 12958: N/A
TAGS: ECON EINV SENV CH
SUBJECT: CHINESE BID TO BUY HUMMER AWAITS GOVERNMENT
APPROVAL, DEEMED UNLIKELY BY SOME
This cable is Sensitive but Unclassified (SBU) and for
official use only. Not for transmission outside USG channels.
1. (SBU) SUMMARY. A Chinese industrial machinery company has
signed a memorandum of understanding (MOU) with General Motors
(GM) to purchase its civilian Hummer brand. A GM China
official (protect) confirmed that Sichuan Tengzhong Heavy
Industrial Machinery does not have experience in the
automobile market, and even may not have initially understood
the civilian Hummer line. One industry insider speculated
Tengzhong may be interested in Hummer engine technology. The
acquisition still requires government approval, and officials
indicated the deal did not have Beijing's support. End
Summary.
Sichuan Heavy Machinery Company
--------------
2. (SBU) According to Tengzhong's website, heavy machinery
equipment manufacturer is one of China's largest non-state-
owned engineering companies. The company was established in
1965 as the state-owned Sichuan Changdian Electric Company,
and was purchased by the current owners in 2005. Since then,
it has grown rapidly by acquiring other previously state-owned
enterprises.
3. (SBU) According to GM China, Sichuan Tengzhong Heavy
Industrial Machinery Company is not a car company. In fact,
they were extremely unfamiliar with the Hummer initially, and
GM had to clarify that the military Hummer and the civilian
Hummer are entirely different vehicles. One industry analyst
speculated that given Chinese auto companies' relative
weakness in engine technology, Tengzhong is interested in
acquiring Hummer's advanced engine technology. GM announced
that they had chosen to sell to Tengzhong because it has the
money to commit to long-term growth and plans to keep
operations in the United States.
Not a Done Deal
--------------
4. (SBU) Although an MOU has been signed by the two companies,
the deal still needs the approval of the Chinese government.
The National Development and Reform Commission (NDRC) must
approve all large-scale overseas acquisitions by both state-
owned enterprises (SOEs) and private companies. According to
an NDRC official, the Commission's Department of Industry has
not yet received an application from Tengzhong to buy Hummer.
The GM China official told EconOff that GM is going to
formally brief the Chinese government on the sale conditions
in the coming weeks.
5. (SBU) NDRC officials in conversations with the Embassy
cited several concerns about the deal. First, Tengzhong has
no experience running a car company, and the plan is to keep
the brand and management intact. Second, Hummers are not
energy efficient, which runs counter to China's current push
for energy-efficiency in the auto industry. One official said
the proposed acquisition "may be a no-result deal." The GM
China representative confirmed this view.
PICCUTA
SENSITIVE
SIPDIS
STATE FOR EAP/CM SFLATT/JHABJAN
STATE PASS USTR FOR STRATFORD, WINTER, MCCARTIN, READE,
VENKATARAMAN, KEMP, MILLER, MALMROSE
DOC FOR MELCHER, SAUNDERS; LORENTZEN AND SHOWERS (5130);
HEIZNEN(6510)
E.O. 12958: N/A
TAGS: ECON EINV SENV CH
SUBJECT: CHINESE BID TO BUY HUMMER AWAITS GOVERNMENT
APPROVAL, DEEMED UNLIKELY BY SOME
This cable is Sensitive but Unclassified (SBU) and for
official use only. Not for transmission outside USG channels.
1. (SBU) SUMMARY. A Chinese industrial machinery company has
signed a memorandum of understanding (MOU) with General Motors
(GM) to purchase its civilian Hummer brand. A GM China
official (protect) confirmed that Sichuan Tengzhong Heavy
Industrial Machinery does not have experience in the
automobile market, and even may not have initially understood
the civilian Hummer line. One industry insider speculated
Tengzhong may be interested in Hummer engine technology. The
acquisition still requires government approval, and officials
indicated the deal did not have Beijing's support. End
Summary.
Sichuan Heavy Machinery Company
--------------
2. (SBU) According to Tengzhong's website, heavy machinery
equipment manufacturer is one of China's largest non-state-
owned engineering companies. The company was established in
1965 as the state-owned Sichuan Changdian Electric Company,
and was purchased by the current owners in 2005. Since then,
it has grown rapidly by acquiring other previously state-owned
enterprises.
3. (SBU) According to GM China, Sichuan Tengzhong Heavy
Industrial Machinery Company is not a car company. In fact,
they were extremely unfamiliar with the Hummer initially, and
GM had to clarify that the military Hummer and the civilian
Hummer are entirely different vehicles. One industry analyst
speculated that given Chinese auto companies' relative
weakness in engine technology, Tengzhong is interested in
acquiring Hummer's advanced engine technology. GM announced
that they had chosen to sell to Tengzhong because it has the
money to commit to long-term growth and plans to keep
operations in the United States.
Not a Done Deal
--------------
4. (SBU) Although an MOU has been signed by the two companies,
the deal still needs the approval of the Chinese government.
The National Development and Reform Commission (NDRC) must
approve all large-scale overseas acquisitions by both state-
owned enterprises (SOEs) and private companies. According to
an NDRC official, the Commission's Department of Industry has
not yet received an application from Tengzhong to buy Hummer.
The GM China official told EconOff that GM is going to
formally brief the Chinese government on the sale conditions
in the coming weeks.
5. (SBU) NDRC officials in conversations with the Embassy
cited several concerns about the deal. First, Tengzhong has
no experience running a car company, and the plan is to keep
the brand and management intact. Second, Hummers are not
energy efficient, which runs counter to China's current push
for energy-efficiency in the auto industry. One official said
the proposed acquisition "may be a no-result deal." The GM
China representative confirmed this view.
PICCUTA