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Long Lines, Lost Profits: China's Regulated Fuels Market  
 
Product Ref: 06/304C Company: BP
Chevron
Exxon
PetroChina
Shell
Sinopec
Total

Product Type: Case Industry: Energy

Related Product(s): Teaching Note
Authors: Ka-Fu Wong   Mark Stimson
Hong Kong-based investment banking analyst Steven Chan travelled to the mainland province of Guangdong late in the summer of 2005 to tour new service stations built by a ChineseˇVWestern oil joint venture. Concerned by reports of long lines at the pump in Shenzhen, his driver opted to fill the tank with "expensive" Hong Kong gas before crossing the border. Prices of crude oil, unregulated in China, had recently increased far more than government-guided gasoline and diesel prices, squeezing the margins of local refiners. Rumour had it that independent stations were having trouble getting supply, and "black market" trade was active. As they made their way up the Hong KongˇVGuangzhou highway, Steven questioned the Western oil firm's strategy of aggressively entering a price-controlled market.
Functional Area : Economics & Business Policy
Strategy & General Management

Issues: China, Oil and Gas Industry, Economic Regulation, Price Controls and Subsidies, Oil and Gas, Refining and Marketing, Service Station, Price Control, Subsidy, WTO, Petroleum, Energy
Length: Text: 9 pages
Exhibits: 11 pages
Country: China (People's Rep. of)

Pub. Year: 2006 Level of Difficulty: 2
         
This product type is available in the following language(s):      English
         
Related Information: N/A
 
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