Analysts tracking the deal believe Tengzhong's inexperience with automobile markets and overseas management may sow the seeds for future risks if the deal is completed. The ongoing global economic gloom has further darkened the Hummer brand's prospects for revival, they added.

In addition, cross-cultural differences in market understanding and management methods could undermine post-merger integrations. The experience of Shanghai Automotive Industry Corp. (SAIC) shows how daunting the challenge can be. In January 2005, SAIC bought a 48.9-percent stake in the South Korean automaker Ssangyong Motor Co. But fractious relations between Chinese management and Ssangyong's labor unions drained life from the venture, contributing to its collapse earlier this year.

Shining on

Although it has raised eyebrows nationwide, the deal is not without an upside. It puts Tengzhong in a good position to learn advanced technologies in SUV manufacturing, a powerful incentive given the fast-growing SUV market in China.

At the very least, the brand could serve as a springboard for the Chinese company to go global. Lenovo Group's purchase of IBM's personal computing division in 2005 may offer some insight on that prospect.

Optimists believe buying an American icon like Hummer will draw attention and help build the Tengzhong brand, though its future still depends on how effectively it can improve fuel efficiency while at the same time keep costs under control. Tengzhong still has a lot to do to make a success out of its high-profile acquisition. The first step should be to restructure the business, rein in excess capacity in the United States and foster a potential market in China, they said.

Tengzhong would have to demonstrate the ability to learn very quickly and take steps to acquire local management talent with industry expertise to help them overcome the steep learning curve, said Stella Su, Director of Blackman Kallick LLP China Practice. Blackman Kallick is an accounting firm based in Chicago.

In addition, it will need to invest in information systems and management processes in order to effectively manage offshore assets, as well as invest in new product development and technology that can overcome negative product stereotypes and create competitive advantages, she said.