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With the development of China's auto industry, the lubricant oil market has gradually formed two major brands, import brands and domestic brands, as part of the automotive aftermarket. In the 18 years of foreign investment in the Chinese lubricants market, Chinese domestic brands are fighting a tough fight.
Recently, Klein Company, a multinational consultancy, released the “Business Opportunities in China's Lubricants Market in 2009â€, pointing out that the Chinese lubricants market will grow at an annual rate of 10% in the next five years, and lubricants will also Higher quality type conversion. However, Chinese manufacturers may lose development opportunities.
Imported brands occupy high-end market
Imported lubricant brands have seized the high-end market since they entered the country. Almost all multinational oil companies entering the Chinese market have lube oil as their main brand product, and lucrative high-end markets are their targets. At present, in the Chinese lubricants market, 20% of the high-end market accounts for 80% of the profits, of which 80% are monopolized by foreign brands.
Recently, Danfoss Oil Company, the largest US oil supplier, announced that its 200,000-ton lubricant production line in China will be completed and put into production. This is also the company's third production line in China.
Danfoss' investment in the Chinese market began in 2002. Since then, Danfos has gradually changed its strategic plan and increased its capital injection into Asia. Danfoss expects that in the coming years, the growth of Greater China will continue to play an important role in its global growth.
The company that covets China's lubricants market is BP Group. In June of this year, Castrol Group, a subsidiary of the BP Group, announced that Dongfeng Castrol Oil Products Co., Ltd. has been established with Dongfeng Group, China's largest commercial vehicle manufacturer. Since then, all Dongfeng-made cars will use Castrol oil products from the initial shipment of oil from the factory to after-sales maintenance oil. Both parties expect that by the year 2010, Dongfeng Castrol Oil Company will have an annual sales volume of 30,000 tons, accounting for 10% of the market share.
In addition, nearly all the multinational oil giants such as Kesda, Shell, Mobil, Total, etc. have joined the ranks of the Chinese lubricants market.
The vice president of Klein Company stated that multinational lubricant companies like BP and Shell not only have production experience, but also established business relationships with foreign truck manufacturers, so their market position will be further strengthened.
Domestic high-end market for lubricants is difficult to base
Lubricating oil is one of the earlier petrochemical markets opened to the outside world, and it is also an industry with low technical barriers. Therefore, in the 18 years since the market opened up, domestic small and medium-sized lubricant manufacturers have emerged like mushrooms. At the most, only domestic small and medium lubricating oil manufacturers reached more than 3,000.
From the perspective of the entire lubricants market, high-end automotive oil is the largest profit point in the lubricant market. However, most of the market share of this market is occupied by foreign brands. Due to the gap in marketing, core technologies, etc., it is difficult for local brands to enter the high-end market. According to the latest statistics, local brands have occupied more than 80% of the entire automotive lubricant market, but profits account for only 20% of the market share.
Kline Company stated that the increase in demand for high-quality lubricants has enabled transnational lubricant producers to be in an advantageous position in market supply. And now, more than two-thirds of domestic manufacturers in the Chinese market have not yet prepared for the production of high-performance lubricants.
This situation is naturally difficult for local lubricant companies to accept. Sinopec's Great Wall lubricants plan to increase its share of the high-end oil market from the current 5% to 30% to 40%. China National Petroleum’s Kunlun Lubricants also explicitly proposed to enter the high-end market. In order to carry out the brand strategy, it once won the CCTV Standard King at a price of 150 million yuan.
However, due to the predominance of imported brands, it is difficult for Chinese domestic products to establish a foothold in the high-end oil products market in the short term.
High threshold to block domestic products from entering the high-end market
While imports of lubricants gradually penetrated into the low-end product sector, the pace of entry into the high-end market threshold for domestic lubricants is very slow.
An important step for domestic lubricants to enter the high-end market is to obtain relevant certifications from various international automobile brands. A relevant person in charge of the marketing department of a domestic lubricants company believes that the Chinese domestic lubricant brands have inherent disadvantages in this regard. Foreign auto companies originally had higher product requirements for lubricants, coupled with a relatively stable relationship with their domestic partners, it became a high threshold, making it difficult for domestic lubricant brands to enter.
It is understood that foreign high-end cars are using foreign lubricants. For example, the European cars basically use Flowserve, Shell, Nissan for Japanese cars, LG, SK for Korean cars, and Mobil, Caltex etc. for American cars. These imported lubricants are designated by automobile companies for direct filling in automobile engines and gearboxes when they are used in automobile production. Loading oil also has a direct impact on the selection of lubricant brands by car users when they are car owners. The average consumer will choose the brand used or recommended by the manufacturer.
In addition to the barriers that are difficult to overcome on products, due to the relative reduction in the profits of auto products, auto companies are involved in the competition in the auto aftermarket, and they have also become an important impediment to the domestic lubricants' promotion of brand image and profitability in the high-end market.
In order to promote their own brands, auto companies have produced their own brands of special oils, or have hidden those brands of lubricants that provide them with products. They are collectively referred to as “special oils for certain brandsâ€. For lubricant companies, they are What people see is just a spare part number.
Industry experts said that in the face of many obstacles, domestic lubricant companies should also focus on cooperation with domestic auto companies in addition to improving their own product quality.
Local Brands May Lose Oil Market Opportunity