SLOWER ECONOMY, DECLINE IN CRUDE PRICES, HURT PROFITS
After a meager 4 percent rise in value a year ago, the oil and gas category declined 15 percent in the BrandZ Top 100 Most Valuable Chinese Brands 2016, as weakened demand and low crude oil prices hurt profits.
Both oil and gas companies included in the BrandZ China Top 100, Sinopec and PetroChina, are high-value, strategic State Owned Enterprises (SOEs), and both dropped several spaces in ranking, placing them below the Top 10.
Like many of the international energy leaders, the Chinese brands cut capital expenses and considered selling assets to help boost profitability. PetroChina announced plans to divest some of its natural gas pipelines. At the same time, low crude prices improved profits of some refined products, like petrochemicals.
Sinopec continued its efforts to diversify into non-petroleum businesses and to leverage its brand retail points of sale, the more than 30,000 service stations it operates throughout China. In cooperation with Tencent, the giant Internet portal, Sinopec introduced a mobile app for purchasing its products and services using Tencent’s WeChat messaging service. It also o ered insurance from China Taiping in many of its retail outlets.