In China, Suppliers Refine Business Models


As China’s lubricant market becomes more crowded, some suppliers – including both oil manufacturer marketers and distributors – are seeking new ways to gain market share.

Tying up with China’s popular ride-hailing service providers is certainly one strategy.

Get alerts when new Sustainability Blog articles are available.


In June, BPs Castrol teamed up with Uber China to provide its products, including two synthetic lubes – Castrol Edge and Castrol Magnatec – to Uber drivers in selected Chinese cities. According to a press release, Castrol sees the online transportation network as a good opportunity partly because the nation has a huge demand for taxi service but lagging supply of auto care services. China legalized ride-hailing services last week.

Carlos Barrasa, vice president of BP Lubricants China, said in a statement that he believes this is a win-win partnership between Castrol and Uber.

In April, Sinopecs lube division, Great Wall Lubricant Oil, partnered with Didi Chuxing, Ubers largest rival in China, to promote its Jin Jixing branded lubes to Didi drivers at an online shopping platform set up exclusively for a Didi driver event.

According to Great Wall, the move helped it make hundreds [of sales] of Jin Jixing lubes on the first day of the three-day event. The lubricant marketer added that it will continue to explore opportunities to collaborate with popular online service providers to attract consumers.

Shell also announced a partnership, but not with a taxi service provider. The company recently signed Shanghai-based i-maintenance, an online-to-offline auto care service provider that is backed by one of China’s top tech companies, Tencent, to offer two engine oils – a 0W-40 full synthetic and a 5W-40 semi-synthetic – exclusively to over 1 million i-maintenance clients across China.

Lube marketers are using the Internet and smart phones to gain more control over sales channels reaching end consumers, leaving their regional distributors bewildered then panicked. At a June industry meeting and training themed Change, held by consulting firm Muchengyou in Weifang, Shandong province, attendants talked about frustrations, worries and possible solutions.

I think dealers need to think about offering some unique value-added services to make themselves more attractive to consumers, presenterWang Chengsen, general manager at Qingdao-based blender Lewis Lube, said after the event. He acknowledged that tension between lube manufacturers and their dealers has been amplified in the internet era as both parties are competing over control of sales channels.

One possible solution, he suggested, is for distributors to sell other auto care products, such as engine oil filters. Lubes are auto care products, so a dealer could easily build a reputation for itself as an auto care solution provider rather than a lube seller, he added.

He also suggested dealers dig deep in small markets.

Photo: Flickr / iphonedigital

Big cities are dominated by big brands, and it is very difficult to change, Wang said. So why not find a less-known brand and bring it to small towns, even villages, to make it the biggest brand in the local market?

In recent years, more and more dealers are building private brands as a way to become less dependent on manufacturers. These dealers usually are well-connected in the industry, so it is easy for them to find a manufacturer.

For example, a dealer called CRC Materials Sales in Tangshan, Hebei province, sells lubes and greases from big brands including Castrol, Mobil and Great Wall, but it also has its own brand, Hua Yue Run.

But Wang expressed concerns over such a trend, saying manufacturing and quality control is not what a distributor should be good at. Dealers should focus on what they are good at – sales and services, he said.

Related Topics

Asia    Business    China    Distributing    Logistics & Distribution    Region