Competition, China And Change

In June of this year, I was honored to represent PEI at an oil conference in Beijing, China. These are exciting times for China. The growing Chinese automobile market, now universally recognized as the world's largest potential market for motorized vehicles, is booming and exceeding all expectations. The volume of passenger car sales jumped 27 percent in 2005. China produced four million cars in 2006. Just imagine what it will be like when one in two of China's 1.3 billion people own cars, just as people do in the United States and Europe.

As more automobiles are added to the roads in China, more refueling stations will be needed to serve them. China opened its oil product retail market to outside investors on December 11, 2004, and by the end of 2006, there were 93,879 gas stations operating in China. The world has taken note of the relentless effort by the oil companies to modernize the existing stations in China and to add new ones.

In contrast, the U.S. market is declining. Twenty years ago we had approximately 230,000 retail gasoline locations in the United States. A substantial number were owned and operated by major oil companies. Now there are only 173,000 retail stations operating in the United States.

After comparing the two markets, I was asked to summarize my thoughts on what I would recommend to the Beijing audience. I thought the following four suggestions were valid based upon my own experiences.

1. Never use the same equipment simply because it is what you have used in the past. Newer equipment can help you run your operation more efficiently and pay for itself over time.
2. Be aware of the possibility that fuels you use today won't be the fuels you use in the future.
3. Continue to look for better methods and technologies for equipment installation. State-of-the-art equipment, improperly installed, will fail over time and cause everyone problems.
4. Customers and markets change. Change with them. Make sure you have the people and financing available to take advantage of those situations.

Even though these suggestions are simplistic and relate to an emerging market, I believe they are also valid for a mature market.

I want to relate what I think makes the American market strong and what is not necessarily true in the Chinese market—and that is competition. My personal attitude toward competitors is summed up in a quotation a fellow distributor has hanging in his office. It reads:

My competitors do more for me than my friends. My friends are too polite to point out my weaknesses, but my competitors go to great expense to advertise them. My competitors are diligent, efficient and attentive, and would take my business away from me if they could. They keep me alert. They force me to search for new ways to improve my products and services. If I had no competitors, I would be lazy, incompetent and inattentive. I need the discipline they force upon me. I salute my competitors. They have been good to me. They make and keep me strong.

I genuinely suscribe to the philosophy in this quotation. None of us is going to get 100 percent of the business available in a territory. We are always going to have competition and it is going to take on many forms, often changing from one season to the next. But if we concentrate our efforts on doing the best job we can for our own suppliers and customers—if we dedicate ourselves to real service within the framework of our organizations—we are going to get more than our share of the business.

If one of our long-time customers elects to place his order with one of our competitors, it's quite clear, I believe, that we have somehow failed to serve him; that he thinks so little of our performance that he is willing to entrust the supplying and servicing of his equipment to another organization. I can't blame that competitor for securing the order. Instead, I am prompted to think that my company may need changes to keep this from happening again.

Good luck in acquiring and keeping those good customers.

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The PEI Journal • Fourth Quarter 2007 • Volume 1, No. 4 • Contents are Copyright © Data Key Communications, Inc.
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