The Study On The Market Strategy Of CNOOC And Shell Petrochemical Company Ltd.

Chinese Economy has consecutive improvement in soaring and stable trend since Chinese Reforming and Open-up Policy, especially from 21st Century, our GDP is with an yearly average increasing rate of 10%. China does achieve great success in various fields, which leads it becomes one of the economic large-scale country in the world and it plays an important role in world's economic stage. In this rising tide of economy, Chinese petrochemical industry has entered into the decade of high speed development since last century, the end of 1990s. Chinese capacity of Ethylene Crack is accounting for 20% of Asia, and 6% of the whole world till year 2006. Owing to this huge market share, it attracts large chemical companies from all over the world, therefore, domestic and overseas large corporations participate into this market competition, resulting in hectic competitive environment. Chinese petrochemical enterprises are expanding gradually in the direction of bigger and stronger. Individual factory's average capacity of Ethylene Crack achieves to 450,000ton till year2006.CNOOC and Shell Petrochemicals Company Limited(CSPC) is the joint venture of Shell Chemicals and China National Offshore Oil Corporation (CNOOC), which is the largest capital investment for a Sino-foreign joint venture project to date in the People's Republic of China. CSPC accomplished construction and startup in Jan. 2006 to join in the competition of domestic petrochemical market. Its capacity (800,000ton) of Ethylene Crack does large impact on domestic chemical market. This essay discusses in current Chinese drastic competitive petrochemical market, as a newly established company, how CSPC achieves its aims of becoming the world class petrochemicals supplier and expanding stably and continuously in China by reasonable and effective sales strategies.First of all, the competitors and macro external environment where CSPC is standing were examined and analyzed: the products of CSPC are encountering the opportunities of National Law & Regulation improvement, domestic demand increase, etc, whilst the weakness of its less scale comparing with domestic competitors, and non integration of upstream and downstream industries. From evaluation, it is worth to mentioned that recently, CSPC is in a appealing demand-over-supply market which is marching to the balance between demand and supply gradually. Firstly, we analyzed the political and legal circumstance and pointed out that government has been reforming and adjusting financial system that offers good legal environment to enterprises. Secondly, we analyzed our national economic environment: along with Chinese economic development and enrollment to WTO, domestic demand is continuously enlarging, it provides capacious space for petrochemical market development. Lastly, we analyzed the impact of social culture and technology development on this industry, focusing on assessing of major competitors by indicating strengths respectively.Moreover, we composed SWOT analysis model for CSPC products. The strength of CSPC is the highly reputation of its parent companies and superior product quality, conducting advanced management system of Shell Chemicals, possessing strong financial position, together with powerful technical and financial support by parent company. Comparing with domestic and overseas competitors, the weakness is its scale of horizontal and vertical integration. The dramatic development of Chinese economy facilitates wonderful opportunities and chances to promote petrochemical industry. However, as to the impending periodic recession, and domestic Ethylene market is in the trend of demand and supply balance, CSPC is going to encounter critical market challenges.CSPC sales strategy in China is emphasis on its product brand specialty, to compete with competitors in CSPC strength aspects in order to avoid its weakness, not to partake in low price fight among industrial competitors. CSPC is taking advantage of parent companies highly reputation and superior product quality to create positive image of its products in the market. CSPC actively develops other territories market and expands product market share and impact scale, continuously enlarges customer base, meanwhile, makes efforts on maintaining main market regulations. CSPC not only pursuits profit, but also concerns social accountabilities which is reflected in company's HSE (Hygiene, Safe, Environment) policy. CSPC deals with market changes via diversified sales channels and flexible pricing strategies. Last but not least, CSPC staff focusing human resource management policy and the company culture of enterprise long-term development provide effective guarantee for sales strategy implementation. Also, CSPC actively seeks for operation cost reduction to enhance company competitive ability.