China is gradually opening more industries to foreign direct investment, with the release of a revised Special Management Measures on Foreign Investment Access - Negative list by National Development and Reform Commission and Ministry of Commerce, on June 28, 2018
The new list officially cancelled previous requirement on Chinese ownership of joint venture with foreign enterprise operating more than 30 outlets in China. This move encourages foreign participation in the domestic market, allowing foreign oil companies to operate in the country without establishing joint ventures.
To understand new market challenges for domestic refined oil producers and distributors, and the implications on global oil flows, SGS organised the first International Petroleum Market and Retail Industry Summit in Nanjing on July 26-27, 2018.
More than 200 industry experts from national and international petrochemicals companies and 6 invited speakers, along with Mr. Steven Du, Managing Director of SGS China, Mr. Lisson Yan, General Manager of SGS China Natural Resources Portfolio, Mr. Alee Li, Deputy Director of SGS China Petrochemical Department, and Ms. Rina Wu, Manager of SGS China Nanjing Branch, participated and exchanged views on key topics on the policy update during the summit.
Key takeaways of the event:
✓Liberalized Chinese market to foreign capital will likely intensify domestic competition in the refined market, changing domestic market dynamics and consumer behaviours.
✓Growth of petrol station needs to catch up with rapid vehicle growth in China.
✓Chinese exports of refined products continued to rise in the past 3 years, with 90% of gasoline and diesel fuel exports to South-eastern Asian countries.
✓Global and China’s refining capacity increase with changes to trade patterns and product demand from heavy to lighter products, e.g. gasoline and LPG.
✓Sales volume of electric and hybrid vehicles are expected to reach 20 million units by 2022, less than 5% share of total vehicle sales in China.
Penetration of new energy vehicles will be limited by the availability of rare earth resources, research and development progress, and market acceptance of new energy vehicles, pointed out by Mr. Yin Qiang of China Petroleum Circulation Association.
In addition to China’s new energy outlook, audience also expressed interests in new technologies, such as Internet of Things, and their implications on the traditional market and distribution channels.
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