GM, Tengzhong to talk with China regulators on Hummer

General Motors and China's Tengzhong will begin talking with regulators this week in a bid to obtain government approval for Tengzhong to buy the Hummer brand by the end of September, a GM spokesman said on Monday.

The relatively unusual step by the two sides of engaging regulators so early in the process, before a formal agreement has been reached, reflects the widespread skepticism surrounding the deal.

"We will start discussions with the Chinese government this week on the Hummer deal," said Micahel Albano, a spokesman with GM's Asia Pacific operations. "We can't sign the deal unless we have approval from the government."

Sichuan Tengzhong Heavy Industrial Machinery, a little-known Chinese machinery maker with no experience in the car industry, raised eyebrows in June when it unveiled a tentative plan to take over Hummer from the Detroit carmaker.

Doubts about whether the deal would get Beijing's approval have been swirling as many believe Tengzhong lacks the experience and expertise to revive money-losing Hummer's operations.

The gas-guzzling nature of the U.S. sport utility vehicle was also cited by state media as reasons for expected opposition from the National Development and Reform Commission (NDRC), the country's top state planner, which must approve the sale.

NDRC officials could not be immediately reached for comment on Monday.

The Ministry of Commerce, which also scrutinises all major cross-boarder equity deals by Chinese companies, has sounded a more positive note, saying Tengzhong's move was normal for a company seeking to take advantage of the global downturn.

A Tengzhong representative said the company had been cooperating with Chinese regulators but declined to provide further information.

Based in the Chinese province of Sichuan, Tengzhong makes special-use vehicles, structural components for highways and bridges, construction machinery and energy equipment.

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