XI’AN, China – As competition ramps up for business with original equipment manufacturers, Chinese lubricant companies are working to differentiate themselves while also looking for other types of clients.
That was a theme expressed by speakers at the Mu Cheng You lube forum held here late last month. For example, Shandong province-based Dongying Haoming Lubrication has big production lines for big orders, but recently it also added several production lines dedicated to small orders from new, local lube brand owners.
“Our clients can leave the manufacturing to us and focus on branding, marketing and sales,” Haoming General Manager Zhao Yunshan said. “Nurturing a young brand is not easy.” He added that small orders are inevitable as the market fragments and more clients seek to reduce inventory levels.
“We are happy to grow with our clients, but we are also very selective about our clients because young brands often die fast,” he said. Some key factors the company uses to evaluate a new client include its target group and ability to control sales channels.
Blenders trying to get or stay in good graces with OEMs should keep in mind that they care about a blender’s ability to produce on spec during mass production, Zhao said, not just when making samples.
“Samples usually show the best quality, but the tricky part is the large-scale production,” he said. “Is the supplier able to deliver the same quality as showed in the samples?”
Wang Quanzhong, client manager at Shanghai-based Dalian Petrochemical, said OEMs and other types of clients, should also find out about issues that loom for blenders – for example learning a little about local area development plans and whether they could impact a producer’s blending plant.
“Is the facility going to be demolished or moved to another place in the near future?” he said. “A stable supply chain is important.”
Makhop Technology Co. Director Yu Langtao agreed, saying stability, along with service and quality should be “at the top of the list” when a client is seeking a manufacturer.
Yu was optimistic about OEM business, citing forecasts that demand for motor oils will continue for many years despite China’s push to shift rapidly to electrical vehicles.
“Hybrid vehicles still need oils, not to mention the vast amount of existing conventional vehicles,” he said.
Currently alternative energy cars account for only 4.9% of the 328 million vehicles operating in China, according to the country’s Ministry of Public Security.