China's home-grown lube brands have long served low-grade, domestic OEMs and left the premium segment to international brands. This is now changing.
During the late-90s and early 2000s, domestic producers had neither the technology nor inclination to take on international producers for the premium lubricants market.
Consumers have premium choice Image: Sinopec
At that time the segment was small and the cost of investing in new technology too great, meaning many producers simply entered into a price war, leaving even less funds for research and development.
However, with the increasing amount of newer cars demanding better quality lubes, some of China’s domestic manufacturers are catching up. A decade ago, the market weighting ratio of domestic to international brands in the premium lubes sector was 1:9, whereas today it stands at 4:6. While domestic producers are still some way off surpassing their foreign counterparts, the figures reflect encouraging advances in the nation’s ability to produce high-quality lubes.
For example, Great Wall Lubricants, a subsidiary of Sinopec Group, currently partners around 90% of China’s most famous domestic OEMs, and is a preferred provider of lubricants for popular joint ventures such as Dongfeng Nissan and Shanghai GM.
The company, through its own-branded goods as well as those specially developed for individual car manufacturers, occupies a 65% market share of China's OEM car market. Through continued investment in increasing the quality of its products, the wholly owned subsidiary now serves around one third of China’s premium lubes market.