In June 2009, took Sichuan Tengzhong Heavy Industrial Machinery Company Limited (“Tengzhong”), a little known manufacturer of construction machinery and special operation located vehicles in southwest China, the global auto industry surprised when they announced their plan to acquire the money-losing Hummer division General Motors Corp. Hummer premium sport-utility vehicles and sports-utility vehicles had relatively low fuel consumption of 9 16 miles per gallon. Since 2006, the sales volume had lobster decl … Read more »

In June 2009, took Sichuan Tengzhong Heavy Industrial Machinery Company Limited (“Tengzhong”), a little known manufacturer of construction machinery and special operation located vehicles in southwest China, the global auto industry surprised when they announced their plan to acquire the money-losing Hummer division General Motors Corp. Hummer premium sport-utility vehicles and sports-utility vehicles had relatively low fuel consumption of 9 16 miles per gallon. Since 2006 Hummer sales volume had declined sharply due to escalating oil prices, its negative image as “gas-guzzlers” and a shift in consumer preferences towards smaller sedans. Tengzhong had no previous experience in the car industry or the management of a major car brand. Since this is the first attempt to Tengzhong on foreign direct investment, it was imperative for the government to figure out the main barriers to cope with his new Hummer subsidiary in the USA. They had to get the approval for this acquisition to formulate a solid business plan of the Chinese government and make the investment a success. (Note: .. This acquisition was called in February 2010 because Tengzhong was unable to obtain the approval of the Chinese government, the data in Appendix 1 of the teaching note are included as a reference)
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from
Dean Xu,
Penelope Chan
Source: University of Hong Kong
37 pages.
Publication Date: Jun 24, 2010. Prod #: HKU893-PDF-ENG
Acquisition of Hummer: M & A challenges faced by Chinese companies overseas HBR case solution

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