China may reject GM deal

• Advocate staff and wire report
• Published: Jun 27, 2009 - Page: 6B

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In a potential blow for Louisiana, the Chinese government is likely to reject a bid by one of that nation’s industries to buy the Hummer unit of General Motors Corp., according to a report by China National Radio.

The Associated Press cited the late Thursday report, which held that China’s planning agency — the National Development and Reform Commission — is likely to reject the bid because the gas-guzzling vehicles conflict with Beijing’s conservation goals and because the buyer lacks the expertise to run Hummer.

The potential buyer, Sichuan Tengzhong Heavy Industrial Machinery Corp., hasn’t completed a deal with GM to buy Hummer, but GM officials earlier this month said the deal could save 3,000 U.S. jobs.

Some jobs could be at GM’s Shreveport plant, where the production of 10,000 Hummer vehicles from South Africa was expected to take place under Tengzhong ownership.

Though Tengzhong is privately owned, Chinese regulators can still block foreign acquisitions, the AP reported.

Louisiana officials say they’ll continue to recruit a next-generation line of GM cars to the Shreveport plant, though GM has said publicly that the plant will close.

Production of current Chevrolet and GMC trucks there will end in 2012, the company said.

Tengzhong said it has yet to reach a definitive agreement with GM, which the company said previously was required to make a formal request for government approval of the deal.

“Some people may have views and speculation, but the Chinese government has a process that we respect,” said a company statement. “We do not yet have a definitive agreement, but are developing our proposals with GM and Hummer and we will continue to engage with the appropriate authorities in an appropriate manner.”

Employees who answered the phone at the NDRC referred questions to its foreign affairs office, where calls were not answered.

Tengzhong, based in the southwestern city of Chengdu, emerged as Hummer’s surprise buyer this month after GM sought court protection from its creditors.

The companies said the sale still required regulatory approval and refused to disclose the price.

Auto industry analysts questioned how Tengzhong, which makes construction vehicles such as cement mixers and tow trucks, could succeed with Hummer, known as “Han Ma,” or Bold Horse, in China.