Tengzhong who?

The chances of a Chinese company buying the Hummer brand from beleagured US automaker General Motors were always quite high. It is common knowledge that China is in the market for assets at a time when other nations are still licking their economic wounds. But who would have thought that Hummer’s new owner would be Sichuan Tengzhong Heavy Industrial Machinery? Tengzhong’s expertise lies in road, construction and energy-industry equipment – its four-wheel endeavors have until now been limited to dump trucks. Still, GM was convinced that Tengzhong has the cash to commit to Hummer’s long-term growth – and preserve 3,000 US jobs. It’s worth noting that some of the higher-profile names in China’s auto industry aren’t in a position to match Tengzhong’s commitment. Chery Automobile sold a 20% stake to private equity investors and will use the funds to shore up its balance sheet after a difficult few months rather than go shopping for assets overseas. Nevertheless, Tengzhong’s ambitious step is confirmation of Beijing’s more relaxed attitude to non-resource related outbound investment following concerns that acquisitive Chinese firms could be undermined by volatile asset prices. Even Morgan Stanley, into which sovereign wealth fund China Investment Corp (CIC) sank over US$5 billion only to see the value of its holding cut in half as the markets plummeted, is back on the table. CIC has agreed to invest an additional US$1.22 billion in the US investment bank. Given the public battering CIC took after the initial investment sank, executives must be hoping that talk of a silver lining in the global economy doesn’t turn out to be false prophecy.