A Study On The Development Strategies Of Sinopec Group

Base on the promises of the entrance of WTO, China has to open the business of retail and wholesale of finished oil before December 11, 2004 and December 11, 2006 respectively. With China's entrance into WTO, it brings new development opportunities as well as severe challenges to the international trade industry of China. The petroleum refining & petrochemical enterprises are facing intensified competition not only from domestic competitors but also from foreign competitors. The large capacity state-owned enterprises, who play an important role in the development of national and regional economy, are facing the challenge of strategy transferring. During this transformation, it becomes the most important and critical factor for the enterprises to make out a new development strategy in order to keep the competitive advantages in the refining & petrochemical industry.Sinopec Group was established in July, 1998. Sinopec Group is it's a state-owned exclusive proprietorship corporation. Sinopec Group executes the investor rights over related state assets owned by its full subsidiaries, controlled companies and share-holding companies. These rights include receiving returns on assets, making major decisions and appointing management teams. The Group operates, manages and supervises state assets according to related laws and shoulders the corresponding responsibility of maintaining and increasing the value of state-owned assets. China Petroleum and Chemical Corporation (Sinopec Corp.), controlled by Sinopec Group, issued H-shares and A-shares at overseas and home in October 2000 and August 2001 respectively and was listed on stock markets in Hong Kong, New York, London and Shanghai. By end 2006, Sinopec Corp. had a total of 86.7 billion shares, 75.84% of which is held by Sinopec Group, 19.35% by foreign investors and 4.81% by domestic investors. Sinopec Group's key business activities include: industrial investment and investment management; exploration, production, storage and transportation (including pipeline transportation), marketing and comprehensive utilization of crude oil and natural gas; oil refining; wholesale of gasoline, kerosene and diesel; the production, marketing, storage, transportation of petrochemicals and other chemical products; design, construction and installation of petroleum and petrochemical projects; overhaul and maintenance of petroleum and petrochemical equipments; manufacturing of electrical and mechanical equipments; research, development, application and consulting services of technology, information and alternative energy products, import and export of commodities and technologies both for the Group and as a proxy (with the exception of those commodities and technologies that are either banned by the State or to be carried out by the state-designated companies). Sinopec Group ranked the 17^th in the Fortune Global 500 in 2007.This paper tries to make a search for the sustaining development path in the new situation through studying the development strategy of Sinopec Group and it may be the reference for the refining & petrochemical enterprises other than those of Sinopec Corporation in China. This paper consists of five chapters briefly stated below:Chapter One introduces the Sinopec Group's development history and the analysis of its business status and problem, and the importance of the development strategies to the corporation future.Chapter Two introduces the analysis of economic characteristics of the refining & petrochemical industry and of the development environment after the entrance of WTO. Selecting Porter's Five-Forces Model Theory to analyze the industrial competitive environment, the paper makes a prospect analysis of the Corporation.Chapter Three introduces the analysis on the internal environment of the Sinopec Corporation. This chapter analyzes the resources of the Corporation and evaluates the Corporation's competence by SWOT and Value Chain Analysis, and identifies the core competences of the Corporation.Chapter Four introduces the development strategies of the Corporation. This chapter proposes and analyzes the possible development mode based on the previous analysis, and then establishes the general strategy and goal of the Corporation, i.e., to become the most competitive refining & petrochemical corporation.Chapter Five introduces the conclusion and policy proposes. The author believes that the refining & petrochemical industry of China will face severe challenges and have great opportunities after entering into WTO. Sinopec Group shall actively seek for the path specifically suitable for its development and take full use of its resources and advantages to raise and strengthen its core competences, and finally goes on a way of sustaining development.