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China has become the world's fastest growing market for lubricant oil consumption. The market environment and market structure development in 2006 further predicted that the Chinese lubricants market will become more competitive in 2007. However, this industry-recognized momentum of development until the recent foundation of Flowserve's new factory in Jiading Nanxiang, Shanghai, was considered as a cornerstone of competition in the lubricants market.
On July 2, 2007, Shanghai Shijiazhuang Nanxiang, Shanghai's new plant for the expansion of production capacity, will be holding a groundbreaking ceremony. At the same time, in the planning of the new plant, the Flowserve Group will also relocate the Asia Pacific R&D center to Shanghai. Wu Feng, president of Flowserve China, said in an interview with this reporter that China has become the world’s second largest consumer of lubricants, and the demand for high-quality lubricants is growing faster and faster. To adapt to this rapidly growing market trend, The addition of new production lines has been particularly urgent for Flowserve China. At the same time, this is a major development measure for Flowserve to accelerate the deployment of the Chinese market in order to achieve a sustainable competitive advantage.
Flowserve in China
For some of the world's major oil companies, lubricants account for less than 1% of their daily business. However, Flowserve is a company that completely focuses on R&D and production of lubricants. According to Flowserve China, the Flowserve Oil Group is the world's lubricating oil expert, ranking eighth in the world's integrated oil companies, but it ranks first in the world's 590 independent lubricant manufacturers, globally Production and sales of lubricants for vehicles, industrial lubricants, special lubricants, etc., its global sales revenue in 2006 was as high as 1.323 billion euros.
It is understood that the new plant in Shanghai, where Foss China was founded, is located in Shanghai's Nanxiang Industrial Park. It covers 65 acres and is scheduled to be put into production in 2008. The construction of the new plant will be completed in two phases. The first phase of production will reach 35,000 tons per year. The headquarters of Flowserve Germany stated that after the Shanghai plant is put into operation, it will further enhance Flowserve's competitive advantage in the Chinese market, which is part of Flowserve's implementation of a new strategy for the Chinese market.
As a professional lubricant brand, Flowserve began global expansion in the 1960s and 1970s and landed in the Chinese market in the 1980s. In 1984, Flowserve invested and set up a factory in Yingkou and officially entered the Chinese lubricants market in 1988. In March 2004, in order to meet the needs of new market competition and development, Flowserve Oil Group acquired the Chinese company's shares in Flowserve Hefei, a joint venture company, and further consolidated its three subsidiaries in Yingkou, Hefei and Shanghai as Flowserve China Group. On February 22, 2006, Flowserve Lubricants (China) Co., Ltd. was incorporated. From 1998 to 2006, Flowserve China achieved a CAGR of 31.5%, and its sales maintained a sustained growth.
The fastest-growing market in decisive battle
The growth of the world economy will continue to increase the consumption of lubricants.
According to relevant data, global lubricant demand will grow at an average annual rate of 2% by 2010, and the demand for lubricants in developing countries will increase at a faster rate. However, in the eyes of Germany's Fox, the Chinese market will also become the biggest bright spot in the global lube oil demand market, and it will play a significant role in the global strategic competition of the international lubricants giant.
A study confirms Flowserve's point of view. The report shows that by 2020, the demand for lubricants in the Chinese market will double and consumption will likely exceed that of the United States. Even in the next five years, the Chinese lubricants market will grow at a rate of 10% per year, and it will shift to a higher-quality type.
In fact, the rapid development of China's lubricants market has long been a competitive arena for foreign oil companies. In September last year, Royal Dutch and Shell purchased a unified lubricant, and in early June, Castrol Group, a subsidiary of the BP Group, announced that Dongfeng Castrol Oil Products Co., Ltd. has been established with Dongfeng Group, China’s largest commercial vehicle manufacturer. In addition, nearly all the multinational oil giants such as Mobil, Total, and Caltex joined the ranks of China's lubricants market.
Thus, after the completion of the integration of the three subsidiaries of the Chinese market, the accelerated expansion of production capacity has become the most important strategic step for Flowserve. Fox Group headquarters representative Dr. Selent told the reporter that “China’s market demand development will be a major part of the global growth in lubricant consumption in the future, and Flowserve China’s new plant construction and capacity expansion in Shanghai is precisely to meet the full growth of the Chinese market. prepare."
Technology determines competitive advantage
According to China’s WTO commitments, by the end of 2006, China had fully opened its domestic refined oil wholesale market to foreign capital. There is no doubt that this will have an impact on the development and layout of China's oil market in 2007, an important puzzle for the Chinese oil and petrochemical market. Experts generally believe that 2007 is a comprehensive start to accelerate the integration of China's lubricants into the international market, and in 2007 China's lubricant market competition will also be more intense.
Flowserve China believes that the development trend of lubricants in the future will be applied to more oils in engines, gear units, hydraulic systems, and metal processing machinery, and will be in the direction of biodegradable biodegradable lubricants. The grease should also be suitable for any application. Wu Feng, president of Flowserve China, said that Flowserve is paying more attention to high-end market segments in the world, focusing on market segments with high technology added value. “Folsom still pays high attention and attention to the research and development of products and technologies, and pays attention to the development of the Chinese market and relocates the Asia-Pacific R&D center to Shanghai.â€
Experts analyze that the game between national brand core strength and foreign brands in the high-end market will be the main theme of China's lubricant industry for a long period of time. There is no doubt that in the course of this game, anyone who can master advanced technology may be able to claim the top spot. As the multinational giants continue to exert their power to increase China's distribution, the pressure on domestic lubricant companies will undoubtedly become even greater.