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Opinion... Tengzhong's Hummer deal is a leap into the unknown

3-Nov-09, 09:31

If there was ever a quintessentially American auto marque, Hummer would be it.

Everything about the vehicles - their massive size, their severely boxy lines, the throaty roar of their engines - conveys the aggressive individualism of the unapologetic Yankee.

And now, Hummer is Chinese, acquired by Sichuan Tengzhong from cash-strapped, semi-state-owned enterprise General Motors for US$150 million. Without exploring the ironies implicit in the transaction, or what a Chinese Hummer suggests about the aspirations and self-image of China’s elite, let us congratulate Tengzhong and wish it the best of luck.

Because if Tengzhong is to succeed, it must pull off a feat that no Chinese company has yet accomplished: the acquisition and enhancement of a troubled global luxury brand.

Focus on the ‘enhancement’ for a moment. Hummer was in trouble when GM sold it, and Tengzhong is going to have to prove that it is capable of producing, servicing, and (within the next four years) designing better vehicles than could a company with 80-odd years of experience doing just that.

Half of that problem is a production and quality control issue. I actually am confident about that part: China has proven in the past decade that - at its best - the country is capable of producing world-class quality. I drive, wear, live in and am typing on living proof of that. The problem Tengzhong will need to address as aggressively as it pursued the acquisition is that now it has a dealer network and customer base around the world that has all but written Hummer off.

Tengzhong cannot wait. Right now the hitherto publicity-shy company needs to shake off denial and publicly recognise that it has a perception problem, and begin addressing that through dealer and customer outreach.

The best approach: honesty (we recognise our challenge, and it is not small), transparency (it is going to take us some time to complete the merger and deliver truly revolutionary products) and an invitation (join us in making Hummer truly great - help us in this process).

I’m not sure many companies in the world would be up to such a radical transparency approach. And Tengzhong may think it can build a big enough market in China to ignore the rest of the world.

But if the company has hopes of sustaining its global market, it needs to act. Right now.
We’re waiting.

David Wolf, CEO, Wolf Group Asia
wolfgroupasia@mac.com


This article was originally published in 22 October 2009 issue of Media.
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