Tengzhong Confirms Plans for Chinese Hummer

Even if Tengzhong said in the early stages of the deal it will not move any of Hummer's production outside the US, some media reports now claim that the Chinese plan to move some of the production to China.

Such a possibility is even being taken into account by Yang Yi, Tengzhong's general manager, who told the Chinese Central Television that "in the future, it's very likely for us to build up a Hummer production base in China".

Tengzhong will invest 450 million yuan ($65.8 million) on top of the purchase price for Hummer in its native country to build a Hummer production line in Chengdu, the capital of the Sichuan provence.

At least for now, though, such a move is not planned, the Chinese say. Fears of a Hummer wearing a "made in China" plate reaching the US are a bit ill-founded, as a Chinese built Hummer will be intended for Asia and not for the US. The Chinese manufacturer also promises the US based Hummer personnel will not be affected by its plans.

As for the terms of the deal, things are still a bit sketchy. Neither the Chinese, nor the American sides have talked about the financial aspect of the deal, but rumors say the sum to be paid for Hummer is around $100 million, plus additional commitments. However, Yang did state that his company will not take any of Hummer's debts.

"This acquisition will not undertake any debts. They bear no relations to the new Hummer and Tengzhong Heavy Machinery," the official was quoted as saying by Reuters. In turn, Tengzhong will enter a long-term agreement with GM, at least until 2012, for the supply of Hummer parts.