Primarily because of the China’s slower economic growth, and the low global price for crude oil, the valuations of Sinopec and PetroChina, the two oil and gas brands in the BrandZÔ Top 100 Most Valuable Chinese Brands 2017, both declined, and the category lost 6 percent in value.
Five years ago, Sinopec and PetroChina ranked 8 and 9 in the BrandZÔ China Top 100. These State Owned Enterprises (SOEs) have slipped to ranks 12 and 15 in the 2017 report, reflecting the shift of China’s economic drivers from production to consumption, and the rise of market-driven technology and e-commerce brands.
Consistent with the government’s determination to reduce overcapacity, Sinopec and PetroChina limited production and focused instead on controlling costs and increasing exploration efforts for oil and natural gas. Retail sales of petroleum products grew only 0.1 percent during the first 10 months of 2016, according to China’s National Bureau of Statistics.
In an initiative aimed at meeting supply side reforms, Sinopec launched a giant petrochemical complex in the southern coastal province of Guangdong, a cooperative venture being completed with Kuwait. As part of the government’s effort to increase SOE competitiveness, Sinopec planned to collaborate with private companies in the sale of refined petroleum products, and entered an agreement with JD.com.
The brands entered cooperative exploration projects in Asia and the Middle East to use surplus engineering and refining capacity overseas and gain access to oil and gas at favorable prices. The initiatives advance China’s One Road, One Belt vision for reviving Chinese economic engagement along the ancient trade routes.