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Sources said that Sinochem Corporation is currently participating in the acquisition of the Incheon refinery in South Korea. In addition to the Sinochem Group participating in the bid for the oil refinery, there are 10 international business giants such as Morgan Stanley and Citibank. In fact, the previous year Sinochem Group had participated in the bid of the Incheon refinery in South Korea and failed to succeed. So, why Sinochem Group is so keen to acquire the Incheon refinery?
In general, in order to become a petrochemical company with international influence, it is necessary to have a complete industrial chain for the integration of mid-stream and downstream oil. Since Sinochem Corporation transformed itself from a purely foreign trade-oriented enterprise into an industrial group with three major core businesses of petroleum, chemical, and agrochemical products, the chemical and fertilizer industries have progressed smoothly. In addition to controlling imports of chemical fertilizers, a number of nitrogen and phosphorus fertilizer companies have also been acquired in Jiangsu, Zhejiang, and Southwest China in recent years. However, the integrated petrochemical business has not progressed satisfactorily. At the previous year's CPPCC session, Liu Deshu, president of Sinochem Corporation, once proposed that he would like to break the barriers to the domestic oil product market and allow powerful companies such as Sinochem to enter the domestic gas station market. However, this wish has not been echoed at home. However, the cooperation with foreign countries has turned round the dream of integration of Sinochem Group. In October 2003, Sinochem Corporation and Thai PTT Oil & Natural Gas Company signed the "Memorandum of Understanding with the Thai Petroleum Agency" to jointly produce oil. In October last year, it signed a joint venture agreement with the world’s “Oil IV†France’s Total to establish a fuel company. The two sides invested RMB 900 million to build 200 cities in Beijing, Tianjin, Hebei and Liaoning in the Bohai Rim region for seven years. Gas station and retail network. However, in this industrial chain, there is still a lack of middle-scale links - large-scale refineries. The Incheon refinery with an annual refining capacity of 14 million tons is an ideal target. The distance between the plant and the Bohai Rim area is ideal. After the refined oil wholesale market was liberalized in 2006, the refined oil provided by the Incheon refinery will enable Sinochem to compete extremely well in the 200 gas stations in the Bohai Rim region where highway transportation is extremely heavy. If this acquisition of a South Korean refinery is successful, Sinochem Group can once again use its “external force†to open its own petrochemical upstream, midstream, and downstream industrial chain, becoming China’s truly “oil fourth†after PetroChina, Sinopec, and CNOOC.
Looking at the integration process of Zhonghua Group, we can find an interesting phenomenon that is to use “external forces†to develop the industrial chain. In fact, this strategy has been adopted by many large companies in China that have strength but are in the domestic situation. For example, China Chemical intends to acquire South Korea Ssangyong Group. Its advantage is that it can avoid many domestic constraints, regardless of success or failure, can allow companies to truly appreciate the thrill of battle. And this kind of pleasure is actually a kind of enjoyment and longing for entrepreneurs.
In general, in order to become a petrochemical company with international influence, it is necessary to have a complete industrial chain for the integration of mid-stream and downstream oil. Since Sinochem Corporation transformed itself from a purely foreign trade-oriented enterprise into an industrial group with three major core businesses of petroleum, chemical, and agrochemical products, the chemical and fertilizer industries have progressed smoothly. In addition to controlling imports of chemical fertilizers, a number of nitrogen and phosphorus fertilizer companies have also been acquired in Jiangsu, Zhejiang, and Southwest China in recent years. However, the integrated petrochemical business has not progressed satisfactorily. At the previous year's CPPCC session, Liu Deshu, president of Sinochem Corporation, once proposed that he would like to break the barriers to the domestic oil product market and allow powerful companies such as Sinochem to enter the domestic gas station market. However, this wish has not been echoed at home. However, the cooperation with foreign countries has turned round the dream of integration of Sinochem Group. In October 2003, Sinochem Corporation and Thai PTT Oil & Natural Gas Company signed the "Memorandum of Understanding with the Thai Petroleum Agency" to jointly produce oil. In October last year, it signed a joint venture agreement with the world’s “Oil IV†France’s Total to establish a fuel company. The two sides invested RMB 900 million to build 200 cities in Beijing, Tianjin, Hebei and Liaoning in the Bohai Rim region for seven years. Gas station and retail network. However, in this industrial chain, there is still a lack of middle-scale links - large-scale refineries. The Incheon refinery with an annual refining capacity of 14 million tons is an ideal target. The distance between the plant and the Bohai Rim area is ideal. After the refined oil wholesale market was liberalized in 2006, the refined oil provided by the Incheon refinery will enable Sinochem to compete extremely well in the 200 gas stations in the Bohai Rim region where highway transportation is extremely heavy. If this acquisition of a South Korean refinery is successful, Sinochem Group can once again use its “external force†to open its own petrochemical upstream, midstream, and downstream industrial chain, becoming China’s truly “oil fourth†after PetroChina, Sinopec, and CNOOC.
Looking at the integration process of Zhonghua Group, we can find an interesting phenomenon that is to use “external forces†to develop the industrial chain. In fact, this strategy has been adopted by many large companies in China that have strength but are in the domestic situation. For example, China Chemical intends to acquire South Korea Ssangyong Group. Its advantage is that it can avoid many domestic constraints, regardless of success or failure, can allow companies to truly appreciate the thrill of battle. And this kind of pleasure is actually a kind of enjoyment and longing for entrepreneurs.
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