Sichuan Tengzhong Will Build Hummer in China

The effects of the prospected Hummer sale to Chinese Sichuan Tengzhong Heavy Industrial Machinery may be bigger than first anticipated. According to a report by Gasgoo, the Chinese company will not limit itself at being the silent manager, but will take on a more active role.

In addition to the estimated 550 million yuan ($80.5 million, despite the fact that Hummer is evaluated at $500 million) to be spent for the acquisition of the Hummer brand, Tengzhong will invest an additional 450 million yuan ($65.8 million) in its native country to build a Hummer production line in Chengdu, the capital of the Sichuan provence.

This move will still not affect the US based Hummer personnel, or at least this is what the company says. The plan to build Hummer in China is most likely intended for the Asian market, but questions surrounding the effects of this decision in the US do exist.

"The Hummer brand is synonymous with adventure, freedom and exhilaration, and we plan to continue that heritage by investing in the business, allowing Hummer to innovate and grow in exciting new ways under the leadership and continuity of its current management team," said Yang Yi, CEO of Tengzhong, when the identity of the company who will buy Hummer was revealed.

The adventure may end up badly for the Chinese manufacturer, as news regarding a possible block of the sale by Chinese regulators. "There are many uncertainties about the deal and one of them is whether Chinese authorities will approve it," said Zhang Xin, Guotai Junan Securities analyst says. "The big issue for Tengzhong is how long it will take to make a profit from the investment."