hummerrr... or ch(ina)ummerrr???

CH.8 - ITS THE 'CHUMMERRR' =)

summary

Hummer is a brand of off-road vehicles sold by General Motors (GM). This article talks about how since 2008, the brand has been reviewed and showed the possibility of being sold or eliminated due to the decreasing demand for large SUVs as a result of higher oil prices. Almost immediately after the announcement, a pair of Indian automakers expressed interest in purchasing all or part of Hummer.

While in the process of whether to sell off or eliminate the Hummer. GM announced bankruptcy. in the announcement, it revealed that the Hummer brand would be discontined. However, the following day, GM announced that instead it has reached a deal to sell the brand to an undisclosed buyer. On June 2, CNN identified the buyer of the Hummer truck unit as China-based - Sichuan Tengzhong Heavy Industrial Machinery Company Ltd.

Tengzhong is expected to keep HUMMER a U.S.-based company, and the HUMMER global headquarters will be in the United States. Under the terms of the agreement, Tengzhong will initially contract production and major components to General Motors.

Connection

This article is related to the topic on types of business enterprises, and foreign ownership. First, the business type established between the China's Tengzhong, and US's Hummer is a partnership eterprise. Which according to the Economics textbook - means that there are two or more persons own an operate the business firm and are liable for its debts. This is shown by that although the Hummer brand is sold off the Tengzong; its based company, and the HUMMER global headquaters will still be U.S. based. Next off, the benefits of this foreign deal is that it creates a market access by introducing the GM brand to the Chinese and the increased exports that result from foreign-owned firms will strengthen the foreign-exchage value of the U.S. Dollars, aiding the U.S. to get back out of the recessionary clouds. There is also technology transfer, where the Americans and the Chinese can share their knowledge and innovate; that includes benefits on research and development and employment, which the deal claimed the preserve 3,000 jobs for the Americans.



Reflection

After reading this article, I have once again felt the power of the global market. How it ties and connects almost everything, and everyone with such ease. The evolvement have created a shortcut for better or worst and the ultimate route to unlimited access. The deal have saved both the possible elimination of the HUMMER brand and jobs for thousands. It is amazing to see how a simple transaction like that could affect largely. I am very exciting to see what the Hummer will become in the future.