China’s Hummer "Purchase", Just as We Predicted

Way back in September, 2009, in Our First China Hummer Post. Our Silence Said It All, we emphatically stated that the Hummer deal would never go through:

Which brings me to Hummer. I can see a Chery buying Volvo to increase company prestige and to improve their in-house technology. I just never believed a Chinese purchase of Hummer would go through because I never thought it made sense. I did not think it made sense because I could see no logical reason for a Chinese company to buy Hummer with the intention of keeping its production in the United States, especially when the Chinese company is not in the auto business. I therefore never bothered to write about it until now because I did not see it as indicative of anything of much import.

I just do not see it. Do you?

I then talked about the sorts of Chinese outbound investments our China lawyers see that actually make sense:

Chinese companies looking to buy American companies are usually looking for a valuable technology or commodity or, to a much lesser extent, a strong brand name. If the company you are pitching has neither, the chances of a Chinese company buying it are really slim. People have told me that Chinese companies “have to be” interested in companies with really good marketing people. They tell me Chinese companies are terrible at marketing and so they obviously will be buying American companies that are good at it. That’s true in theory, false in reality.

Goodby Hummer and good riddance.

UPDATE: ChinaBizGov Blog did a post, Hummer rejection: It’s all right there in the policy, explaining how the Chinese government rejecting Sichuan Tengzhong’s proposed purchase of Hummer should have been no surprise. The post explains what is required for Chinese companies to secure government approval to get their money out of China for international business transactions. FURTHER UPDATE: Paul Maidment over at Forbes Magazine has written on the failed sale, in Hummer’s Doomed Sale. Maidment cites our blog (this post) and agrees this deal never made economic sense and that helped doom it.

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