News that an obscure Chinese company reached a tentative agreement to purchase bankrupt General Motors Corp.’s Hummer unit has people here pondering the larger meaning of Chinese ownership of the mother of all gas guzzlers.

The news propelled Sichuan Tengzhong Heavy Industrial Machinery Co. onto the radar screen of auto enthusiasts worldwide. And it underscores China’s growing economic might just as U.S. industrial prowess is flagging. China is already the U.S. government’s largest creditor and America’s largest foreign provider of manufactured goods. Now a Chinese firm plans to salvage a piece of a fallen U.S. titan – a point of no small pride for many in China.

Hummer division CEO Jim Taylor told China Daily last week that he expects the deal to be done by the end of the third quarter.

The new owners say they intend to push sales of the gargantuan vehicle in China, where it’s a status symbol for the newly rich.

The brand "is synonymous with adventure, freedom and exhilaration, and we plan to continue that heritage," said Yang Yi, chief executive of Tengzhong.

But for others, the Hummer is a bad omen, the epitome of American excess.

"To me, the car makes me think about the generation born in the 1980s that only believes in hedonism and shows us the bad consequences of consumerism," said Zhou Xiao Zheng, a sociologist at Beijing’s Renmin University. "I dearly wish we only adopted the good things from the U.S. and not the bad things."

It’s too late for that. U.S.-style furniture stores, luxury malls and gated housing developments now hug Beijing’s ring roads. And the Chinese dream, like that of U.S. consumers, increasingly includes owning a car.

For most, that means purchasing small sedans. But for those who need to announce their presence on the road or traverse China’s rural areas (think wealthy coal mine owners), the Hummer is it.

Known here as Han Ma, meaning fierce horse, it’s one of the ultimate expressions of wealth and ostentation. Though GM never sold Hummers in China, they are sold here by independent importers.

Standing in a suburban Beijing auto dealership filled with Audis, Toyotas, Hondas and Chinese makes, salesman Zhao Hai Tao didn’t hesitate when asked which he’d choose if he had the money: a gleaming black Hummer with leather interior and tinted rear windows.

"It’s so powerful," said the 25-year-old. "As long as you’re a man, you’ll want one of these.

"I know it’s not practical and not fuel-efficient," he said, looking at the souped-up SUV priced at $200,000. "It’s a dream car that most people can’t afford."
Oil dependent

Just how the gas-guzzling Hummer will fit into China’s energy plans is unclear. China is heavily dependent on imported petroleum, a major worry for policymakers. The central government has made fuel efficiency one of its goals. It raised taxes last year on large vehicles, including a 40% surcharge on the purchase price of a Hummer.

"This is not the right time for China" to introduce Hummer, said Wang Cheng, a researcher for the Innovation Center for Energy and Transportation, a Beijing nonprofit group.

Tengzhong, a little-known maker of road and construction equipment based in Chengdu in southwest China, has no experience in the passenger vehicle market. The company was founded in 1965 but shed its state-owned designation by turning private in 2005.

The Hummer deal left China’s auto industry abuzz and observers scratching their heads. Tengzhong said it would manfacture Hummer models in the same plants currently used by GM, meaning it would forgo the benefits of cheaper labor in China.

"I just can’t figure it out," said Jiu Xinguang, an auto analyst based in Beijing. "Why would this company want to buy Hummer? Most Chinese auto companies don’t have anything to gain from a deal like this because they don’t have multinational experience."

The Hummer brand was hugely successful for GM in the first years of this decade, peaking in 2006 with 71,524 selling, but has since collapsed. Last year only 27,785 were sold, and through the first five months of 2009, U.S. consumers bought only 5,113.

It has found acceptance outside the U.S., however. For international markets, GM manufactures the H3 in one of its plants in South Africa, and it contracted a Russian factory to build the H2 there starting last year.

More than anything, what Tengzhong is buying is the brand and its intellectual property, but it also gets rights to the network of Hummer dealers and the Hummer management team. GM said the sale will include "a long-term contract assembly and key component and material supply agreement with GM."

Taylor, the Hummer CEO, told China Daily that Tengzhong would be happy to pay the bills and leave the vehicle end of operations to Hummer’s existing teams.

"All I need is cash," he said. "We were looking for companies with the resources to fund our future development and keep the brand and dealers alive. I’ll bring all [the experience and expertise] to the table."

John Zeng, a senior market analyst for IHS Global Insight, said Tengzhong is stepping into a Chinese SUV market that grew 25% last year. However, those sales were mostly smaller SUVs such as the Honda CR-V.

"SUVs are a strong segment," Zeng said. "Hummer has a good brand image. If they can launch the right product, they might succeed."

The thought of sharing space with the four-door behemoths on Beijing’s congested roads worries Wang Tao, a cabdriver.

"I wouldn’t want to be close to them on the road," he said. "They are huge and not afraid of being scratched." (Tire Review/Akron)