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January 17, 2017

Volume 7 Issue 8

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Ogistar Eyes New Listing, New Segments

In August, GTS Group, a Liaocheng, Shandong province-based chemical producer and the owner of the lube brand Ogistar, delisted itself from the London Stock Exchange, which it joined in 2014. 

“The liquidity in the LSE was a little too sluggish for us,” GTS president Liu Qingcheng told Lube Report Asia. He said he is in talks with Korea Exchange in Seoul, which is known for its high liquidity, and hopes to join the KRX soon.

But getting listed is less of a priority for GTS now. Instead, it hopes to increase lubricants sales, especially after it spent nearly ¥300 million (U.S. $43.3 million) building a highly automated blending plant in 2015.

Liu has a vision for the facility. “We plan to have a sterile facility in the plant, maybe in the second stage, to supply the lucrative industries – pharma, cosmetics, food and perhaps aviation,” Liu said. It is no secret that Chinese airlines use imported aviation lubes in their aircraft, which to date have all been imported. But Liu said he has connections to break into the market and is confident that Ogistar can make products that meet performance requirements by contracting with base oil producers such as Taiwan's Formosa Petrochemicals and with multinational additives suppliers.

Liu has a reason to think beyond high-volume segments such as engine oils. Three years after entering the lube business, Liu acknowledged that the whole market has been hit by China’s slowing economy. The engine oil market is overcrowded with low-quality products, making it difficult even for reputable brands to profit.

“But I told myself that opportunities are always there for the companies that are ready,” he said. Part of getting ready means having the right people, he said. Being a long-term supplier of ammonium sulfite and ammonium bisulfite for China’s pharmaceutical and food industries has made GTS a financially secure, recognizable company – a big advantage when it comes to competing for talent against its counterparts.

In late December, GTS hired Zhang Yueyi, a senior engineer who spent decades at the China Air Force Institute of Oil Production, which focuses on jet fuel studies.

Unlike some other lube companies that scoff the idea of selling engine oils through e-commerce, Liu takes business-to-consumer sites seriously.

“I think a well-run online store can indeed generate sales. To me it’s more than just a brand image,” he said.

Ogistar has a store on JD.com, a major Chinese B2C platform. Liu said in the future there will be more Ogistar stores at other major B2C sites.

“We know it takes a lot of time and resources to build a solid business, and we can afford to be patient,” he added.