Chinese Economics Thread

[maozedong]

There is the question also whether or not the Chinese government will approve of the deal.

Chinese government exactly is the background of the deal.
in the recently years, China has been pushing it's owend company group to invest to oversea include western.
Sichuan Tengzhong Heavy Industrial Machinery registered as not chinese government owend company group, but I checked it's page, the company group registered in 2005, before the histroy is blank, at least it's a listed company.
one article is strange:Tengzhong has more than 40 years of production in Heavy construction machinery of history.

[Rising China]

Actually it is a good deal. China only paid $150 million for the company.


GM Hummer Sale Finalized: Brand Bought By Chinese Firm

DETROIT — Hummer, the off-road vehicle that once epitomized America's love for hulking trucks, is now in the hands of a Chinese heavy equipment maker.

General Motors Co. and Sichuan Tengzhong Heavy Industrial Machinery Corp. finally signed the much-anticipated deal for GM to sell the brand on Friday.

Tengzhong will get an 80 percent stake in the company, while Hong Kong investor Suolang Duoji, who indirectly owns a big stake in Tengzhong through an investment company, will get 20 percent. The investors will also get Hummer's nationwide dealer network.

Financial terms were not disclosed, although a person briefed on the deal said the sale price was around $150 million. The person did not want to be identified because the terms were being kept private. GM's bankruptcy filing last summer said that the brand with military roots could bring in $500 million or more.

Suolang Duoji also is the controlling shareholder and chairman of Lumena Resources Corp., a Hong Kong listed mining company.

GM and Tengzhong said in a statement that the transaction still must be approved by the U.S. and Chinese governments. Chinese regulators initially expressed reservations about Tengzhong's ability to run such an enterprise.

Hummer's current management team will stay with the new company, which will be headquartered either in Detroit or suburban Auburn Hills, Mich.

James Taylor, the GM executive who has run Hummer recently, will remain as its chief executive officer.

Taylor said in an interview with The Associated Press that he knows resurrecting the brand will be difficult, but the key will be quickly rolling out more fuel-efficient models that get over 20 mpg.

"I'm not in any kind of denial that we have a very steep uphill challenge in front of us," Taylor said.

Hummer, he said, has been in a state "suspended animation" since June 2008 when GM announced it would be reviewed for sale or closure. Since then, its future has been uncertain and it got no marketing support or new products. Financing for leases, a big part of its luxury market, also dried up, Taylor said.

Still, GM sold 1,000 Hummers in some months, proving that buyers are out there.

"There's still a loyal customer base underneath there that loves Hummer," he said.

Hummer hopes to keep buying fuel-efficient engines and transmissions from GM, but can seek them elsewhere, Taylor said.

He said the brand has been unfairly tagged as a symbol of the American gas guzzler, saying other vehicles get worse mileage.

He wants to make sure "at least we aren't a victim of misinformation that we stand alone as the ultimate bad guy in the space, which we aren't."

Hummer hit the streets for civilian use in 1992 while owned by AM General LLC, which makes Humvees for the U.S. Army, and California Gov. Arnold Schwarzenegger was among the first customers.

The brand, whose smallest model gets 16 miles per gallon (14.7 liters per 100 kilometers) in combined city and highway driving, sold well until the middle part of this decade when fuel prices began to rise. Sales peaked at 71,524 in 2006.

But only 8,193 Hummers have been sold in the U.S. through the first nine months of the year. That's down 64 percent from a year earlier. And only 426 Hummers were sold nationwide last month, according to Autodata Corp.

GM, which spent 40 days in bankruptcy protection during the summer and has received about $50 billion in U.S. government aid, also plans to sell its Saab brand and scrap Pontiac and Saturn as it tries to streamline its operations.

The Hummer deal is a victory for GM, which saw a similar agreement to sell the Saturn brand blow up at the last minute. Auto dealership magnate Roger Penske's bid fell through just before the deal was to close last week when a contract to make vehicles for Saturn was rejected by the Renault board.

The company wants to focus on four core brands: Chevrolet, Cadillac, Buick and GMC.

With backing from a well-capitalized company, Hummer will now focus on improved efficiency and performance and include alternative fuels, more efficient gas engines, six-speed transmissions and diesel engines.

GM said its assembly plant at Shreveport, La. would continue to assemble the commercial Hummer H3 and H3T pickup trucks on a contract basis until June 2011, with a one-year option until June 2012. The military H2 version will continue to be assembled by AM General in Mishawaka, Ind., under the same terms.

South Bend, Ind.-based AM General retains ownership of the military versions of the vehicles, which have been used frequently in Afghanistan and Iraq.

The Shreveport GM plant is currently slated to close by June 2012. For the time being, the plant also is assembling the Chevrolet Colorado and GMC Canyon pickup trucks.

CEO Taylor said GM has agreed to make the H3 models under contract through 2012, but he expects the manufacturing relationship to end when production of other products made in Shreveport ends.

"GM's not in the business of supporting other OEMs or niche manufacturers like us," he said.

He sees a potential for a manufacturing relationship to continue with AM General, he said.

___

AP Business Writer Alan Sayre in New Orleans contributed to this report.


Read more at: GM Hummer Sale Finalized: Brand Bought By Chinese Firm

[bladerunner]

Surely $150 million for a firm thats is losing sales and is down to 400 a month and no new products on the line in the short to intermediate term, raises question marks? still $150 mil is 150 mil and a lot of money if it goes down the drain.

[Rising China]

$150 million for the entire Hummer-company is not bad a deal because investors can turn around and sell all the tangible assets like the plant, machinery, inventory, land, etc. and recover the monies. The business is doable; that's why investors buy the company. We will see what sort of strategy the investors have to turn this venture into a profitable one.

[Rising China]

Additional information about the Hummer deal:

REPORT: GM close to offloading Hummer for as little as $150 million
by Sam Abuelsamid (RSS feed) on Oct 9th 2009 at 10:30AM

Not so many years ago, Hummer appeared to be one of General Motors' most potentially lucrative brands. Now, the fallen brand looks poised to fall into the hands of the Chinese very soon. Bloomberg is reporting that a deal to sell Hummer could be finalized in the coming days as Sichuan Tengzhong Heavy Industrial Machinery Co. hammers out a purchase price. During its bankruptcy proceedings, GM estimated the Hummer brand to be worth $500 million, but last week's collapse of the Saturn deal with Roger Penske appears to have made the Detroit automaker ready to accept whatever it can get. The final tab paid by Sichuan Tengzhong could be as low as $150 million.

The Chinese government has thus far been reluctant to approve Sichuan Tengzhong's move for Hummer, in part because of the brand's image as a gas guzzler. The hope is that once a purchase agreement is complete, the regulators will allow it to move forward. For its part, GM likely just wants the deal done and some extra cash in its coffers so it can move on with its streamlining efforts plans.

[bladerunner]

$150 million for the entire Hummer-company is not bad a deal because investors can turn around and sell all the tangible assets like the plant, machinery, inventory, land, etc. and recover the monies. The business is doable; that's why investors buy the company. We will see what sort of strategy the investors have to turn this venture into a profitable one.

I was thinking more along the lines of continued operations......... Theres no new product on the line and it would cost squillions to design a new model

[AssassinsMace]

In other articles I've read that they plan to make a more fuel efficient model.

[solarz]

Has anyone thought about the military possibilities of this acquisition? Perhaps the PLA could use this acquisition to improve their ability to produce military-grade vehicles?

[maozedong]

first, Sichuan Tengzhong will put more money to help GM to continued operation of the lines, Tengzhong will help Hummer into China market.
the second step Tengzhong and GM will open a new produce line in China, to reduce the cost for Hummer production. this step will be after 3 years.
every body knows it is a matter of fact GM already bankruptcy, just depend on the US government support, but GM company in China branch still making money.

[bladerunner]

In other articles I've read that they plan to make a more fuel efficient model.

Yip I read that to, something like 20miles to the gallon or something, its not much, with a trend going towards the thirtys for bigger vechiles 40+ for mid size and smaller. In my opinion they should stick with what they do best.

I dont know if they export alot to the West but things could get tricky if the WEst have their way, something I predicted earlier on in this thread.

Asia Times Online :: Asian news and current affairs

Climate protectionism on the rise
By Martin Khor

A new and dangerous form of trade and technology protectionism is fast emerging in the name of climate change, and it is poisoning North-South relations in the two negotiating arenas on climate change and on trade.

There are clear signs that some developed countries, especially the United States, are preparing to use unilateral trade measures, such as imposing tariffs, taxes or charges on the products of developing countries, on the grounds of combating climate change.

A bill passed recently by the US House of Representatives gives the US president authority to impose financial charges (or taxes) on some imports coming from developing countries that in the US view are not taking enough action to curb their greenhouse gas emissions.

The US House of Representatives has also sought protectionism against technology transfer through three bills it has adopted that prevent US negotiators in the UN Climate Change Convention from agreeing to any relaxation in the rules or enforcement of intellectual property. There are signs that other developed countries, including in Europe, are also preparing the grounds for climate-linked protectionism.

The developing countries are starting to oppose these moves. Indian political leaders protested to US Secretary of State Hillary Clinton about the threat of US carbon tariffs during her recent visit. China's Commerce Ministry has also criticized the protection element in the US climate bill.

Most importantly, the developing countries have taken up the issue at the climate talks leading up to Copenhagen. On August 13, the Group of 77 countries and China made a statement at the Bonn climate talks, warning developed countries not to adopt unilateral trade-restrictive measures, as these would contravene the Climate Change Convention's provisions.

India also proposed text for the outcome of the upcoming Copenhagen climate meeting that developed countries "shall not resort to any form of unilateral measures including countervailing border measures, against goods and services imported from developing countries on grounds of protection and stabilization of climate".

The text listed many provisions of the Convention that would be violated if such measures are taken. This was supported by many countries, including China, Argentina, Brazil, Singapore, South Africa, Saudi Arabia, and by the G-77 and China's statement.

In Geneva, many developing country diplomats are increasingly concerned about the likelihood of the United States and other developed countries making use of either tariffs or financial charges on imports of developing countries. Imposing extra tariffs or financial charges on imports on the basis of how the products are produced ("process and production methods", or PPMs in technical jargon) is very controversial.

It has been rejected by developing countries at the World Trade Organization (WTO) since 1996 as a form of protectionism, which they say will unfairly curb developing countries' exports. They also argue that it is against the rules of the WTO.

Many developed countries however have wanted to make use of trade measures on environmental grounds. They are preparing the case that trade measures linked to PPMs are legitimate, or else climate-linked trade measures are allowed under the general exception for the environment under the General Agreement on Tariffs and Trade (GATT).

Developing countries claim that linking trade measures to climate and the environment are unjust because they have lower technological capacity and thus cannot match the developed countries. Developing countries should instead be assisted through technology transfer, but the intellectual property rights regime (especially the TRIPS intellectual property rights agreement of the WTO) is an obstacle, and now the US Congress is proclaiming that the US administration cannot allow relaxation of the intellectual property rules.

If climate protection is allowed, it will also open the floodgates to all kinds of protection by blocking developing country products on the basis of how they are made.

This "mother of new trade protection" is coming at a time of economic recession when world leaders have piously proclaimed they will not resort to trade protection. The climate-trade issue is thus explosive, and is opening a Pandora's box that threatens to contaminate the negotiations in the United Nations Framework Convention on Climate Change as well as the WTO.

Before the situation deteriorates, developed countries should re-consider their moves on this issue, restrain the climate-protection forces in their society, and commit instead to a "fair game".

Martin Khor is Executive Director of the South Centre. He can be contacted at: director@southcentre.org. For further reading on Climate Protectionism, check out this special edition of the South Centre bulletin.

(Published with permission of the Global Policy Innovations program at the Carnegie Council for Ethics in International Affairs.

Lets keep our fingers crossed that this doesn't happen, because if it does, a lot of chinese companys are gonna have to find money to ensure their factories comply, and thats where this 150mil. could come in handy. Futhermore the Hummer wont be seen as eco friendly vechile, and thus attracting so much tax no one would be interested in purchasing it.

[AssassinsMace]

That's not gonna to happen especially when the majority of Chinese exports are made for foreign corporations. Inflation will rise in the developed world and they can kiss selling those products to China when it comes to profits, their only bright spot, too. Zero-sum gain.

There are already charges that the developed world is going to sabotage Copenhagen which is just going to show the world that all those developed countries pointing the finger over Kyoto for years now are liars.

[bladerunner]

Has anyone thought about the military possibilities of this acquisition? Perhaps the PLA could use this acquisition to improve their ability to produce military-grade vehicles?

I understand the Hummer is a civilian vehicle, the military version is made by a entirely different company.

AS mentioned earlier, if it goes ahead it would be interesting times for the Chinese company thats already making Hummer copies.

[maozedong]

Lets keep our fingers crossed that this doesn't happen, because if it does, a lot of chinese companys are gonna have to find money to ensure their factories comply, and thats where this 150mil. could come in handy. Futhermore the Hummer wont be seen as eco friendly vechile, and thus attracting so much tax no one would be interested in purchasing it.

maybe you don't understand in China already many Hummers runing on the road,
It is a matter of fact there is a market demand, such as military, police, in China's vast western region, as well as transport difficulties in mountainous areas, it has its advantages, such as trucks, which fuel consumption, but still use it.
same as GM Buick, in U.S, Canada market, its hard to sale, but in China, GM China branch sale a lot of Buick.
reason 1, GM in U.S production costs are too high, only labour the worker pay 60 U.S. dollars per hour,and lots of benifits.
2 the U.S the economic downturn, it is significantly reduced purchasing power.
3 in China,the production cost are much lower, and government tax is very low, but for import car, chinese government levy high taxes,dfficult for foreign producers to enter the Chinese automobile market.
now,Sichuan Tengzhong purchase Hummer is the fact, but still nee the U.S government approve of the deal.

[bladerunner]

maybe you don't understand in China already many Hummers runing on the road,
It is a matter of fact there is a market demand, such as military, police, in China's vast western region, as well as transport difficulties in mountainous areas, it has its advantages, such as trucks, which fuel consumption, but still use it.
same as GM Buick, in U.S, Canada market, its hard to sale, but in China, GM China branch sale a lot of Buick.
reason 1, GM in U.S production costs are too high, only labour the worker pay 60 U.S. dollars per hour,and lots of benifits.
2 the U.S the economic downturn, it is significantly reduced purchasing power.
3 in China,the production cost are much lower, and government tax is very low, but for import car, chinese government levy high taxes,dfficult for foreign producers to enter the Chinese automobile market.
now,Sichuan Tengzhong purchase Hummer is the fact, but still nee the U.S government approve of the deal.

OK But theres already a company in China thats making Hummer look alikes for the military

[AssassinsMace]

China's billionaires rise to 130 despite global crisis

BEIJING, Oct 13 (AFP) Oct 13, 2009
Car battery tycoon Wang Chuanfu topped a new list of China's 1,000 richest people released Tuesday, which has 130 dollar billionaires in an emphatic declaration of the Asian giant's economic arrival.
Most of the super-wealthy on the Hurun Rich List, unlike Wang, made their fortunes in the property and stock markets -- the focus of Beijing's massive government stimulus efforts over the past year.

"China's wealth is growing at breakneck speed," Rupert Hoogewerf, the founder of the Shanghai-based Hurun Report which publishes the annual list, told a press conference.

"You can double the real number of billionaires in China to 260. There are still a large number of billionaires off the radar screens, managing to build up substantial wealth away from the public spotlight from property, the stock market and investments."

Wang, the founder of rechargeable battery and electric car maker BYD, leapt 102 places to top the rich list after his fortune increased more than five-fold to 5.1 billion dollars, said Hoogewerf.

The rich list gained 180 new members -- despite the entry criteria for the latest list rising by 50 percent to 150 million dollars.

Seven people moved into the top 10, in the biggest shake-up since the report started publishing the rich list in 1999.

Last year's richest man, Huang Guangyu, who made his fortune building up the nation's largest electrical appliance chain Gome, slipped to the 17th spot after he was detained late last year on suspicion of market manipulation.

Du Shuanghua, last year's second-richest person, plunged 39 places to 41 as he battled a state-owned company for control of Shandong-based private steel manufacturer Rizhao Steel.

"Since our 2004 list, we have seen a ten-fold increase in the number of individuals with personal wealth of at least 150 million dollars," said Hoogewerf.

"In 2004, we could only find 100 individuals with 150 million, whereas this year, we managed to find 1,000 individuals with 150 million."

Rebounding capital markets and property prices pushed the collective net worth of the 1,000 richest people in China to 571 billion dollars by September 15 of this year, from 439 billion dollars last year, the report found.

Zhang Yin, the woman who founded paper-recycling company Nine Dragons Paper and China's richest person in 2006, was in second place.

Zhang was one of 102 women on the list -- up from 88 last year and accounting for 10.2 percent of the total.

"Significantly, all are self-made, a remarkably high percentage compared with their Western counterparts. Chinese women now lead the world's richest self-made women," the report said.

Among the new people in the top 10 were husband and wife Huang Wei and Li Ping, who shot up 23 spots to fifth place through their 71 percent stake in Shanghai-listed property developer Xinhu Zhongbao.

Shares in Xinhu Zhongbao had surged 265 percent to 12.5 yuan in early September from 4.7 yuan a year ago, the report said, reflecting strong gains in the Chinese stock market.

Zhongwang Holdings chairman Liu Zhongtian moved into 10th place with 4.1 billion dollars after the aluminium manufacturer raised 1.3 billion dollars through an initial public offering earlier this year.





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