August 29, 2017
Volume 7 Issue 3
Chinese Chemicals Giant Gears up for Lubes
State-owned Chinese chemical company Sinochem will sell lubes as early as the end of 2017, said Li Junfeng, deputy general manager at Sinochem Lantian Trading Co., a subsidiary of Beijing-based Sinochem.
“We’ve been planning it for a while, and we decided aftermarket is so attractive that we don’t want to miss it,” Li told Lube Report Asia in an exclusive interview last week in Xi’an, Shaanxi province, during a lube business forum held by the local consultancy Muchengyou.
Sinochem has a 12 million metric tons per year crude oil refinery in Quanzhou, Fujian province, to supply gas and diesel producers, but in the car care market, Sinochem is known for its refrigerant – branded as “Jin Leng”, meaning gold cold – used in car air conditioners. During its decades in the refrigerant business, Sinochem developed a nationwide distribution network.
“If our distributors are interested and willing to develop with us, we will be able to build a solid domestic sales network in a fast, low-cost way,” Li said.
If success in the refrigerant business taught Sinochem anything, it’s the importance of market education and careful planning.
“Sinochem is never interested in aggressive expansion and quick money. We’d like to focus on one city to build solid business before moving onto another,” Li said. Rather than investing in advertising, Li said Sinochem plans educate potential customers as it did in its refrigerant business.
“We never tell people to buy our products, but we want to teach them how to choose oils wisely,” he said.
Sinochem researched the lubes market extensively before jumping into it, and Li acknowledged that the company identified challenges.
“Too many brands, various quality and trust issues are among our concerns. China’s lube market is no doubt more competitive than the refrigerant market, but we won’t let it distract us from our focus, which is to build our brand and provide high quality oils,” Li said.
The company will use the Jin Leng brand name for its oils, too, and will blend from base oils and additives purchased overseas.
“Jin Leng is a brand for high quality, so we obviously will not get into any price war,” he said.
One thing that refrigerants and oils share in common is they both require services. Sinochem offers refrigerant change services in China, but it is not clear if it will do likewise for lubricants. Li said the company will watch closely to see if there are any good opportunities in the area.
Also being watched is China’s fast-growing e-commerce and online-to-offline platforms.
“We are interested in the platforms, and we would like to figure out how to maximize online resources to serve our businesses,” Li said.