On October 10, the little-known Chinese private company announced that it had clinched an agreement with General Motors Co. (GM) to acquire the Hummer brand of gas-guzzling and road-hogging sport utility vehicles (SUV).

Under the deal, waiting for regulatory approval, Tengzhong will obtain ownership of the Hummer brand and trademarks, and assume existing dealer network agreements. GM will continue to manufacture the vehicle until June 2011, with an optional one-year extension.

Tengzhong will acquire Hummer through an investment entity, in which it will hold an 80-percent stake. Financial details of the deal remain unclear.

The outsized SUV took a heavy blow last year when fuel prices began to escalate, rubbing salt into the wounds of the buckling giant GM. Hummer sales in the United States so far this September have collapsed 64 percent from the same period last year.

Learning its lesson from the sales crash, GM pledged to come up with more fuel-efficient models for markets outside North America. "Backed by a privately owned and well-capitalized company, we are going to be able to focus on providing customers with more efficient models that deliver Hummer's promise of authentic, purpose-built design and engineering," Hummer CEO James Taylor said in a prepared statement.

This would be a stride in the right direction, but far from a guarantee of a substantial turnaround as complete restructuring takes time and capital, said Huang Zherui, a senior analyst with CSM Worldwide, an international auto market consulting firm. This would be unbearable for the struggling GM, he added.

Market on the Go

After a half year of exploding growth, China's white-hot auto market has not shown any signs of slowing down.

Sales of home-made automobiles totaled 1.33 million units in September, up 77.88 percent over the same period last year, the China Association of Automobile Manufacturers (CAAM) said on October 13. This was the seventh month in a row that saw auto sales surpass the landmark 1 million units, said the CAAM. From January to September, sales amounted to a dizzying 9.66 million, up 34.24 percent year on year.

The market has been gathering momentum since February after the government offered stimulus measures to lift the industry out of its slump. These measures included financial subsidies for vehicle purchases and a lower tax for small cars.

The tax reduction will expire at the end of this year and it remains unclear whether the policy will be continued next year.

With or without the tax break, the uptrend is likely to lose steam in 2010 as the comparative base has become much higher, said Ji Junfeng, a senior analyst with the Changjiang Securities Co. Ltd.

Rural Lending

Citibank China on October 14 opened its third lending company in China as the U.S. lender makes a push into the financial market of the world's third largest economy.

The company in Wafangdian of northeastern Dalian City, Liaoning Province, will be engaged in deposit taking and low-interest lending to individuals, the self-employed and micro-businesses, said Andrew Au, CEO of Citibank China, in a statement. The first two lending companies are located in Gong'an and Chibi of the central Hubei Province. Citibank now has eight branches and 26 outlets in China.

This was part of its efforts to lay a firm foothold in the country's second- and third-tier cities where financial services are relatively underdeveloped.

"China remains one of Citi's highest priority markets around the world, and we will continue to expand our presence here across multiple lines of business," said Stephen Bird, Citibank CEO for Asia Pacific.

Economic Forum

The 2009 Euro-Asia Economic Forum is scheduled to open on November 16 in Xi'an, the capital city of northwest Shaanxi Province.

With a theme of "Working Together to Facilitate Economic Recovery," the two-day forum attracts more than 600 economists and business leaders from Asian and European countries.

It will be important to hold the forum as global economies come to a critical stage in the fight against the economic downturn, said Zhang Deguang, secretary general of the forum, at a recent press conference in Beijing.

The biennial Euro-Asia Economic Forum was launched in China in 2005 with the first two rounds held in Xi'an in 2005 and 2007. Xi'an was named the permanent venue for the forum in April 2007.