ORLEN Group will consolidate its position in China
Direct sale of ORLEN Group products on the promising Chinese market will be managed by ORLEN China, which is to officially launch its operations in the second half of the year. Initially, the company will focus on selling engine oils, previously distributed in China through third parties. Over the coming three years, sales through an ORLEN Group company will contribute to achieving a several-fold increase in operating profit compared with the present level.
‘We are consistently increasing export sales of our products. More than 60% of PKN ORLEN revenue is generated on foreign markets. The establishment of ORLEN China is a strategic decision geared towards strengthening the Group’s position both on the promising Chinese market and in neighbouring countries. By building our own sales competencies in China we will be able not only to boost sales, but also to optimise costs and lead times. At present, we export our products to 20 countries in Asia alone. Importantly, along with the process of enhancing its sales competencies ORLEN China may become a platform for selling other products on the Chinese market, including petrochemicals,’ said Daniel Obajtek, President of the PKN ORLEN Management Board.
ORLEN China will become the centre of sales (including e-commerce), marketing, logistics and freight competencies in China. The company will be registered in the city of Suzhou (Jiangsu Province) in the east of China. Initially, it will operate in the Jiangsu Province and the neighbouring provinces. The Jiangsu Province, with a population of more than 80 million people, is an important industrial centre with a well-developed machine engineering, electronic and automotive industries. The province is also a leader in the creation of special development zones, with more than 150 such zones set up so far. The zones are hubs that attract direct foreign investments, international trade and technological innovations.
ORLEN Group products have been sold in China since 2016. Currently, sales of engine oils (Platinum oils) on the Chinese market are based on cooperation between ORLEN Oil and local distributors. The oils are sold in eastern China, mainly in the Jiangsu and neighbouring provinces, as well as in the Shanghai port area. PKN Orlen estimates that over the coming three years sales through an ORLEN Group company will contribute to achieving a several-fold increase in operating profit compared with the current sales model.
Economic performance indicators, despite the COVID-19 pandemic, show that the potential of China’s economy is immense. The number of cars per 100 inhabitants is almost three times lower in China than in the EU, and the figure is showing a clear growth trend. In 2007–2017, the increase in consumption of lubricants in China, of 55%, was the highest in the world. China was also the market where sales of ORLEN Oil products grew at the highest rates among all Asian markets to which the Group exports its products. Between 2016 and 2019, our total lubricant sales volumes in China rose nearly 20 times.
The ORLEN Group is present in 116 countries on 6 continents. In Asia, the Group’s products are marketed in 20 countries by several Group companies, including ORLEN Oil. Asian markets are enjoying robust economic growth: last year, the GDP growth in Asia was the highest of all continents.