Insight into the future of China's lubricants market

After turning over the Chinese lubricants market for more than a decade, we can see that the Chinese lubricants market has been driving in the fast lane and has been the second largest lubricant market in the world.

However, since May 2011, under the influence of the national macro-control policy, China’s economic growth has begun to slow down, the growth rate of construction machinery and auto production industries has declined, the railway investment and construction have reduced production, the rapidly growing lubricant market has slowed down, and demand has declined. .

The slowdown in China's economy has become an irreversible trend, which has caused continuous pressure on the Chinese sales of lubricants. At the same time, the trend of base oil prices deviated from normal in 2011, causing a significant increase in production costs. Most lubricant oil companies suffered operating losses. This situation continued throughout 2011 and even continued into 2012.

Industry experts pointed out that after more than ten years of rapid growth, the Chinese lubricant industry is about to enter a watershed and enter the adjustment period. The most direct evidence is that the declining demand and rising production costs have triggered a sharp shock in China's lubricants industry, and have caused a devastating impact. Lubricating oil companies have generally experienced operating difficulties. Some small and medium sized lubricant companies have not Do not stop production or switch to sleep.

Is the beach dead? Or is it torrential?

Although the pains of adjustment have gone deep into the bone marrow, this still cannot withstand the confidence of domestic and foreign lubricant companies in China's future market.

Competition rules under market concentration

From the perspective of the global lubricant market, the world’s 15 largest lubricant manufacturers, such as Mobil, Shell, and Great Wall, accounted for 1% of the total number of lubricant manufacturers, but controlled more than 60% of global lubricant sales. Concentration is the general trend of the entire lubricant industry.

Although the current Chinese lubricant market has formed the "State-owned enterprise legion" represented by the Great Wall and Kunlun, the "transnational legion" represented by Meifu and Shell, and the "private enterprise legion" formed by numerous small and medium-sized enterprises. Seemingly three pillars, but the Great Wall, Kunlun, Shell and Mobil, and other large companies have absolute dominance, and the trend of market concentration is intensifying, is constantly compressing the vast majority of SMEs living space. This means that a group of companies with weak market, limited investment, and low-end routes will be eliminated, and the survival of a single lubricant specialty company will become increasingly difficult.

Where do you go from here? This is not only the choice of life and death of small and medium-sized enterprises, but also the issue that large enterprises have to ponder deeply under the increasingly fierce competition.

As the head of China's largest high-grade lubricants company, Song Yunchang, general manager of Sinopec Lubricants Co., Ltd., foresaw the evolution of China's lubricants market five years ago, and has an insight into the industry. The nature of chain competition. In fact, the industry chain competition has become the key to the present and the future. It has become the law for the survival and development of enterprises under market concentration, especially the shrinking of the profit space of lubricants, the dynamic evolution of related industry technologies, and the fierce competition in the market. Next, both large-scale lubricant companies and small and medium sized lubricant companies cannot ignore the importance of competition in the industry chain. From R&D and design to raw material procurement, processing and production, logistics and distribution, and marketing systems, they all have a bearing on the success or failure of companies. This also indicates that the pattern of coordinated development of the lubricating oil industry chain will further deepen, extending to the base oil, additives and other industries, and extending downwards to the marketing channels and the automotive aftermarket services related to the lubricants.

At the "2011 China International Lubricants Industry Development Summit Forum" held recently, Song Yunchang pointed out: "The influence of the brand and the control of technology are the indispensable core elements of competition in the industrial chain, with the brand as the guarantee and the technology as the band. The market can not only form a competitive advantage in the popular market, but also guarantee the personalization and diversity of many market segments.”

Brand Influence: The Global Seashore

Many lubricating oil companies have such confusion: Why is the product sales volume good, but the company does not have much profit? Why did companies stagnate or even regress after a period of scale expansion? Whereas the top-tier international companies such as Shell and Meifu occupy more than half of the high-end market, the two major state-owned enterprises, Great Wall and Kunlun, are increasingly dominant.

The root of the problem lies in the brand, and the brand in front of the industrial chain is the pinnacle of the company.

Taking Great Wall Lubricants as an example, Great Wall Lubricants won the first place in China's lubricants industry for the eighth consecutive year in the list of "China's Top 500 Most Valuable Brands" released by the World Brand Lab, and it has formed the first space in the Chinese lubricants industry. "Aerospace quality" has become a "strong brand" with a core competitive advantage in China's lubricants market. It has promoted the city's wide recognition and acceptance among users of all walks of life, and has also created the market position of China's largest lubricant manufacturer. .

Judging from the competition between large-scale enterprises and SMEs, it is undeniable that even though large companies such as Great Wall, Mobil, and Shell occupy a large part of the market share, more companies have unique competitive advantages in a certain regional market and market segment. However, such boundaries are ambiguous. With the improvement of these large-scale enterprise channel systems and the promotion of market segmentation strategies, their brand coverage is also becoming wider and deeper, and SMBs want to compete with them. , also need to form a unique and distinctive brand influence. If it is only for a moment to get enough food and clothing in the three-point field, the market will sooner or later suffer from these large enterprises' continued devour and even devastating blows.

If we look at boosting China's domestic lubricants industry, brand building is even more urgent. In the high-end automotive oil market, the increase in the influence of Chinese brands also requires local lubricant companies to make more efforts.

At present, China has become a global lubricant market. Almost all international oil companies have already entered their own brands of lubricants into the Chinese market through various means. International lubricants brands have gathered, which has brought quite a bit of Chinese domestic lubricant brands. Big pressure. The gap between domestic brands and international brands is an indisputable fact. If local Chinese companies cannot eliminate the gaps, they will be passively beaten in the market, causing sales to decrease, and then affecting the operation of the entire industry chain.

Industry experts believe that the Chinese lubricant industry will inevitably integrate into the international arena and play an increasingly important role. This requires the emergence of world-class lubricant brands, not only to become a first-class brand in China, recognized by consumers, but also to actively go overseas and expand the international brand influence, therefore, the Chinese brand of lubricants companies Long way to go.

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