Chinese Ministry of Commerce Has Not Rejected the Tengzhong-Hummer Deal

Yesterday, we reported that Tengzhong, the Chinese company that intends to acquire Hummer from General Motors could try to perform the deal through Sichuan Tengzhong Heavy Industrial Machinery Co, an offshore investment vehicle, if its own attempt of convincing the Chinese government to approve the transaction would fail.

Earlier today, Reuters wrote that the Chinese authorities had rejected the offshore company’s proposal, a move which could kill the whole deal. Subsequently, Wang Chao, an assistant commerce minister of China emphasized that Sichuan Tengzhong had not filed an official application for the Hummer deal and that media reports showing that the agency had rejected the bid were based on nothing but speculation, thus being false, as Dow Jones reported.

Wang added that he doesn’t know if other government ministry had received an application for the Chinese bidder. "The Chinese government supports companies' overseas investment, but requests them to carry out cooperation based on market rules," Wang said. The commerce ministry had previously expressed support for this deal "as a way for a Chinese company to go global."

However, it is believed that the Chinese officials may not approve the transaction, as the Hummer brand’s image does not suit the current environmental friendly trend adopted by the automotive industry. And the acquisition is just a part of the whole picture. Even if Tengzhong managed to buy Hummer though an offshore company, it would still need the authorities’ approval to build production sites for Hummer in China.