Not all oil markets are controlled by petrochemical companies. In the lubricants industry, foreign companies, state-owned and private brands are fighting hard.
As a leader in foreign brands, Shell tried to maintain its leading position in the high-end market. Recently, Shell's world's largest production base for grease production has laid a foundation in Zhuhai, Guangdong Province. Its purpose is to provide support for Shell's rapidly growing lubricant business in China. On December 16, 2010, Shen Jian, general manager of Shell Lubricants in China and Hong Kong, said: “Shell will continue to increase investment.â€
“State-owned and private brands are also breaking through to the high-end market.†Yu Feng, general manager of Jiarun Automotive Oil Sales Company, said, “The competition in this industry will become increasingly fierce.â€
Shell Campaign
For Shell Lubricants, China, with a market capacity of nearly 7 million tons, and which is expected to become the world’s largest market in the future, has become its top priority.
Klein's market survey data show that in 2010 Shell has become the #1 global lubricant supplier for four consecutive years. At present, Shell ranks third in the Chinese market, and PetroChina and Sinopec’s Kunlun and Great Wall are among the top two.
The acquisition of 75% of the shares of the U.S. company four years ago is an important move to help Shell gain an advantage in the Chinese market. However, unlike what the outside world had envisioned, Shell has not been anxious to integrate the unity after gaining controlling status. "Uniform has its own core customer groups and channel advantages. Shell allows independent two brands and teams to operate independently, and each of them has achieved good results. There is no conflict." Shen Jian said.
Tripartite warfare
No agency can count how many lubricant brands exist in the Chinese market. But according to the nature of the company, this industry can be divided into three camps.
Shell and Mobil are representatives of the foreign camp. Other brands that have a seat include Castrol, Total and BP.
Yu Feng thinks: "At present, the influence and competitive position of Shell and Mobil in the high-end lubricants market in China are still difficult to be shaken."
However, petrochemical hitches achieved a competitive advantage in the lube market thanks to their large network of refined oil sales. Yu Feng said that the biggest advantage of the two major oil companies is that they have low-cost Group I base oils, making their low-end products obvious price advantages. At the same time, the two major oil companies also hold base oil supplies, while private lubricant companies are at a disadvantage in the competition.
However, private enterprises are not without opportunities. “In the areas with weak brand strength, the intensive cultivation of private companies will help turn them into their core markets. If they can continue to strengthen this competitive advantage in the next few years, private enterprises will gain the initiative in local markets. "Yu Feng said.
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