Shell Unified Converse Investment Future Focuses on China
Difficult moments in the sing of disappointment did not restrain the vigorous ambitions of Shell Uniform Petroleum & Chemical Co., Ltd. (hereinafter referred to as “Shell Unificationâ€). They are planning to take huge amounts of money to counter the Chinese lube market.
Shell General Manager Li Jia revealed that given the good momentum of the Chinese auto market and the multiple improvements in the joint venture over the past two years, the first large-scale investment projects of the joint venture will be launched this year.
It is reported that the first batch of 100 million yuan investment will be used for energy expansion and new related projects. The production base in Beijing will be increased from the current 300,000 tons to 400,000 tons. The production capacity of the Wuxi production base will be expanded from 100,000 tons to 200,000 tons. Another related industry project is waiting for approval and belongs to a business outside of lubricants.
This stems from the strategy of Shell's unification in China, especially with regard to the repositioning of the unity. In 2006, after the unified lubricants joint venture with the world's leading lubricants supplier Shell, it has been attacking the Chinese market with dual brands.
“In the future, we will focus exclusively on China and be a lubricant expert in the Chinese market.†In Li Jia’s view, “The international situation is complex and the potential of China’s lubricants market is huge. At present, the market share of unified brands in China is only 5%. There is still 95% of the huge space to work hard."
As Li Jia said, the still growing Chinese auto market is becoming a hot spot in the global lubricant industry. As the number of car ownership increases and Chinese car owners pay more attention to car ownership, the demand for lubricant products is increasingly diversified. Both in-use vehicles and new car increments will be the growth drivers for China's lubricants market.
Kline, an internationally renowned consulting firm, pointed out that the global lubricant market has matured, but the opportunities are still in China and India. By 2020, China's lubricant consumption will exceed the United States, becoming the world's largest lubricant market.
In support of this view, the Asia-Pacific region surpassed North America in 2008 to become the world's largest lubricant consumption area. Experts predict that the annual growth rate of the Chinese lubricants market before 2012 can reach 7.3%, which is the highest in the world.
"China's lubricants market has become a global highlight," said Shen Jian, managing director of the Shell Lubricants Business in Mainland China and Hong Kong. Many multinational brands represented by Shell, Exxon Mobil, BP Carlsberg, Flowserve, Total, etc. have all been deployed in the Chinese market to start killing.
At the end of last year, Shell Lubricants launched the largest brand and product remodeling operation ever, fully adjusted its product lines and adopted new packaging, and invested heavily in brand promotion. ExxonMobil (China) increased its number of channels in China, allowing Mobil 1 lubricants to reach more than 200 stores in China. BP Group's Castrol Group announced that it has established Dongfeng Castrol Oil Products Co., Ltd. with Dongfeng Group, China's largest commercial vehicle manufacturer. Coupled with the rise of domestic brands represented by Sinopec "Great Wall" and PetroChina "Kunlun", the Chinese lubricants market is facing a fierce battle.
In 2008, crude oil prices fluctuated sharply, and some small and medium-sized lubricant companies lacking technical advantages and lacking basic oil resources could not afford to undergo severe shocks and all of them stopped production or declared bankruptcy.
Experts in the industry believe that the change in oil prices has eliminated some small and medium-sized enterprises, which in turn has caused competition to upgrade to higher levels. Challenges from various aspects such as environmental protection laws, effective use of energy, engine technological innovation and market competition require that lubricant companies must use forward-looking strategies to seize opportunities.
In the middle of this year, Shell will unveil new products and new packaging products. The difference is that their larger plan is to enter the previously weak car lubricant market.
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