According to data released by the National Bureau of Statistics of China at the end of January, the total profit of industrial enterprises above designated size in 2015 fell by 2.3% compared with the previous year, which was also the first decline in many years. For the first time in 20 years, crude steel production showed negative growth, which was a drop of 2% year-on-year. The output and raw coal output all dropped by 3.5% year-on-year; the engineering machinery industry that fell for 4 years even more welcomed the “coldest winter†and output decreased by 34.9% year-on-year. This set of data reflects the changes in supply and demand in China's industry facing a huge transition period.
This change has also affected upstream and downstream peripheral industries. According to data released by the National Bureau of Statistics, from January to November 2015, domestic lubricant production totaled 5.328 million tons, a decrease of 3.2% from the same period of last year. Lu Jian, chief lubricant marketing director of Sinopec Great Wall Lubricants, believes that in 2015 China's lubricants market demand has fallen more than production. The annual demand is about 5.1 million tons (excluding white oil and rubber-filled oil). The year-on-year decline of more than 10% in 2014. At the same time, China Lubricants Information Network has also been confirmed by several international brand lubricants manufacturers, and almost all the well-known brands in the market have shown signs of decline in sales in 2015.
Recently, the latest research report of the China Petroleum & Chemical Research Institute on the Chinese lubricants market pointed out that due to the adjustment and upgrade of China's economic structure, the demand for China's lubricants market will enter the downward range after more than 10 years of steady growth in the next five years. This information shows that China's lubricants market has entered an era of negative growth.
China's lubricants market enters a negative growth era
Fatality: The market demand for lubricants is downward
With the rapid development of the Chinese economy over the years, the size of the lubricants market has continued to expand. Especially since 2002, following the strong expansion of China's infrastructure investment, heavy chemical industry, steel building materials and other industries, demand for lubricants peaked in 2012. From 2013 to 2015, China’s economy has entered a new normal state of development. The decline in macroeconomic growth has led to a significant contraction in the core industries that are highly correlated with the lubricant industry. Industrial integration eliminates outdated production capacity, and high-end product introduction brings The extended oil change period has a profound impact on the size of the Chinese lubricants market. As the lucrative industry of China's economic barometer, its consumption has also grown from continuous rapid growth to a "low growth platform." The market has entered an inflection point of adjustment and decline. Experts in the industry estimate that it is expected to stabilize at a low point by the end of the “Thirteenth Five-Year Plan†period.
At present, the merger and reorganization of heavy chemical industries such as coal, steel, and cement has been speeded up, with the elimination of high-energy-consuming backward production capacity and the decline in demand for lubricants. Macroeconomic and industrial adjustments will force enterprises to phase out backward equipment with low grades of oil, large consumption, short use time, and serious run-off, making the use of lubricants return to a reasonable range. With the improvement of operating efficiency and equipment management level of oil units, through the implementation of a reasonable lubrication solution, the use efficiency of oil products will be further improved, the equipment maintenance period will be prolonged, and the number of oil product replacements will be reduced, thereby reducing lubrication requirements.
In addition, with the enhancement of innovation capabilities in recent years, the refined degree of the lubricant industry has become higher and higher, and product quality has been continuously improved. The rapid spread of high-grade oil will greatly extend the service life of oil products. A predictable trend is that the growth dividends brought by the rapid development of the Chinese economy to the lubricant industry have rapidly weakened or even disappeared, and will continue to usher in the shrinking market demand in the coming years. For the lubricating oil industry, it may be an unavoidable fate for the development of the industry. Under the situation of weak demand momentum and intensified market competition, where will China's lubricant industry and China's lubricating oil brand go?
Trends: Industry Competition Brands Up
The declining demand for the domestic lubricants market has allowed various brands on the Chinese lubricants market to taste the warmth and warmth of the industry. According to the China Lubricants Information Network, many lubricating oil companies have actively competed upward to further expand their market share, while small and medium-sized enterprises have suffered from the development. They struggle to survive and the two sides are no doubt reflecting China. The lubricants industry is entering a new round of reshuffle. After Big Wave Ebbing, small businesses were eliminated and large companies took up the commanding heights and mainstream position of the industry, leading to higher brand concentration in the entire industry.
With the centralized branding of the lubricants market, it will bring new opportunities for the development of China's leading brands of lubricants. At present, due to the upgrading of lubricating oil technology, domestic and foreign brands are increasingly homogenous in product quality and function, and in addition, the lubricating oil customers become more and more rational under the new normal economy. In the Chinese lubricants market, the Great Wall, The boundaries between Kunlun's represented Chinese brands and foreign brands are being broken. In the high-end equipment manufacturing industry, Great Wall Lubricants and other Chinese domestic brands have gradually formed a pattern of equal competition with international brands.
From the perspective of market competition, low-level price competition has shifted to a high level of value competition. Differential development has also become the mainstream of lubricant brand competition. It is no longer merely a price but a comprehensive quality. And technical services, technological differentiation, product differentiation, and service differentiation have become the magic weapon for major brands to compete for customers, and they have made great efforts in areas with higher added value. In 2015, Great Wall Lubricants proposed the mission of supporting and participating in the high-end equipment manufacturing industry, and carried out cooperation with high-end technology application fields such as aviation, aerospace, high-speed railways, and ocean-going transportation, and pushed forward the focus of science and technology, both at home and abroad. The leading manufacturers of equipment manufacturing have jointly developed lubrication products, accelerated the upgrading of products, and continuously improved the “oil, fat, and liquid†product system to meet the lubrication needs of the high-end equipment manufacturing industry. With the advantages of technology and services, Great Wall Lubricants has achieved breakthroughs in the field of marine oil. Currently, it has provided lubrication services for more than 30 VLCCs (over 300,000 tons of supertankers) and serves half of the number of Chinese VLCC ships. Years ago, the field was still occupied by foreign brands.
Transformation: Customers Are the First Value
Looking from the trend of the next few years, the overall cake market will not become larger, but how to compete for their share, not only to live, but also to live better, this is an unavoidable seriousness of all lubricant brands Question. The intensification of industry competition will inevitably force lubricant companies to accelerate their transformation. Looking at the current transformation trend of domestic lubricants brands, we adhere to the consistent pursuit of customer demand-driven, lubricated value for the customer is the representative of the Great Wall of China's oil companies. Based on this, they actively went to the customer to do research and development, to provide customers with customized lubricant products and services.
At present, in the increasingly fierce market competition, customer first, value first is no longer a slogan, and the transition from manufacturers to manufacturing service providers has also become the transformation of many lubricant brands. The industry currently has exemplary cases such as Great Wall Lubricant and Tianjin Petrochemical's “Equipment Lubrication Technology Service Cooperationâ€. This cooperation represents a breakthrough in the transition from Great Wall Lubricants to manufacturing service providers, based on comprehensive lubrication services and integrated technologies. , products, services and other aspects of power, created a new model of lubrication services, but also enhance the value of lubrication services.
As a lubricant industry serving various sectors of the national economy, serving national strategies is the direction of industrial development. With the implementation of the national strategy of “Belt and Road†and “Made in China 2025†in recent years, it has also provided a new stage for the development of overseas markets for Chinese lubricant companies. As a result, “going out, walking in and going up†has also become a way for Chinese lubricants companies to expand in overseas markets. Overseas markets such as Southeast Asia and Africa have brought new space for the development of Chinese lubricants companies.
In 2015, China's lubricant industry was turbulent, but it was not a surprise. The country’s economic transformation has brought challenges to the Chinese lubricant industry, but it also brought another opportunity for innovation and upgrading. In 2016, it is the first year of China's “13th Five-Year Planâ€. The industry pressure brought about by the economic transformation will continue, and the reshuffle of the lubricant industry will also enter a critical period. What kind of brand games will be triggered by future market competition? let us wait and see.
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