Chinese equipment manufacturer Sichuan Tengzhong has finally failed in its bid to buy Hummer, General Motors’ sports utility vehicle brand. Although there has been talk of the company using an offshore structure to avoid regulatory interference, specialists say this idea is fundamentally flawed.
There was considerable scepticism in the market when the intended purchase was first made public in June 2009. The buyer has very limited experience in producing consumer vehicles and, in fact, specialises in heavy machinery equipment for the construction and energy industry.
At the time, one PRC lawyer told CLP that the National Development and Reform Commission (NDRC) may block the deal on the grounds that Tengzhong does not have the “corresponding investment capabilities”, and following the 2004 Tentative Administrative Measures for Checking and Approval of Outbound Investment Projects (境外投资项目核准暂行管理办法).
Another ground mentioned for blocking the deal was that it...
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