Acquisition of Hummer: M&A Challenges Faced by Chinese Companies Overseas Harvard Case Solution & Analysis

In the month of June 2009, Sichuan Tengzhong Heavy Industrial Machinery Company Limited ("Tengzhong"), a vague producer of building equipment and special-use cars in south-western China, took the worldwide automobile market by surprise when it revealed its policy to obtain the money-losing Hummer department of General Motors Corp. Hummer's premium sport-utility trucks and sport-utility automobiles had fairly low fuel performance of 9 − 16 miles per gallon. Because of year 2006, Hummer's sales volume had actually decreased greatly due to intensifying oil costs, its unfavorable image as a "gas-guzzler" and a shift in client choices to smaller sized sedans.

Tengzhong had no previous experience in the light car market or in handling a significant car brand name. Since this was Tengzhong's very first effort at foreign direct financial investment, it was crucial for its management to figure out the significant barriers in handling its brand-new Hummer subsidiary in the United States.

PUBLICATION DATE: June 24, 2010 PRODUCT #: HKU893-PDF-ENG

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Acquisition of Hummer: M&A Challenges Faced by Chinese Companies Overseas

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