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Regulators in China Will Scuttle Hummer Deal, State Radio Says

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By Kevin Fayle on June 26, 2009 9:07 PM

When GM announced the sale of its Hummer brand, it was a rare bit of good news for the troubled automaker as it entered bankruptcy.  Unfortunately, it looks like the honeymoon's over for the Hummer deal.

GM sold Hummer to a dark horse Chinese company that specializes in manufacturing heavy trucks and highway equipment.  Any sale would have to go through Beijing, and state radio is reporting that regulators will likely reject the deal.
The reason for the rejection, according to the report, is the very thing that has killed Hummer's sales: its vehicles' low fuel economy.  Apparently, Beijing didn't think that having a lot of Hummers driving around would fit with its conservation goals. 

There might also be less admirable and more practical reasons as well.  Beijing seems to be worried that the company, which has no experience manufacturing commercial vehicles, won't have the skills and knowledge necessary to run the company.  The powers-that-be would probably rather scuttle the sale up front than risk putting out a highly visible inferior product.

The situation drives the point home for companies that there are specific concerns and processes for doing business in China.  The folks at West have put together two books that provide attorneys with information about doing business in China.  If you're currently involved in any business deals in China, or if your company's thinking about making inroads into the People's Republic, you might want to check them out.

See Also:
Report: China likely to reject Hummer acquisition (AP)

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