The coming liberalization of China's fuel retail sector is going to be a big deal. The planned entry of multinationals will likely transform the business of filling stations.
As in developed countries like the UK and Australia, motorists and their companions will be able to do much more at gasoline stations than just fill up their tanks.
Nonfuel businesses such as vehicle maintenance, repair services, dining malls, banks and convenience stores will soon be a common sight near the fuel pumps.
To be sure, gasoline stations in China already make a lot of money. At the moment, their nonfuel sales account for only a small percentage of total revenue, unlike in developed countries and regions, like the United States, Europe and Australia, where 40 to 50 percent of gas station profits come from nonfuel business.
This suggests that the sector in China, once opened up, will likely see immense potential for growth. With the removal of sectoral restrictions on foreign investment, gas stations in China, enriched by nonfuel revenues, might laugh all the way to the bank.
British energy giant BP has already said the stations it plans to build in China will be equipped with BP-branded convenience stores. Such outlets will enable Chinese consumers to enjoy services other than vehicle fueling.
This, in turn, might encourage China's State-owned oil behemoths to evolve and adapt to market trends and provide more people-oriented services. China Petroleum and Chemical Corp, the world's largest refiner, also known as Sinopec, has already taken several strides in that direction.
The company started its nonfuel businesses, including convenience stores and auto services, in 2008. It has also made forays into auto sales and e-commerce, leveraging its nationwide fuel station network.
Its nonfuel business has witnessed rapid growth in recent years, both in terms of sales and profits. Company data show its nonfuel business netted 2.2 billion yuan ($318 million; 281 million euros; ￡250 million) in profit in 2017, up by 700 million yuan from 2016.
Meanwhile, many startups are also trying to tap the huge market potential. For instance, Shenzhen-based WeCar, which was founded in 2014, has vowed to help fuel retailers boost their performance by 70 percent by taking a supporting role, supplying beverages, snacks, fast food, mini cinemas and the like.
The WeCar mobile app saves motorists the trouble of getting out of their vehicles for food at the gas station. Before, or during, the visit, they can order snacks and drinks with a few taps on a smartphone. In effect, both the vehicle and the people in it get to load up at the same time.
That heralds a big change because there are more than 100,000 gasoline stations across China, most of which cooperate with WeCar. Most of the stations in the southern part of the country are privately owned. Many that have linked up with WeCar have reported average business growth of 30 percent.
Besides food and beverages, WeCar plans to introduce vehicle maintenance, repair services, dining, shopping malls, banks and cinemas in the near future, says Luo Yi, its founder.
The net effect of all this enterprise could be that traditional gas stations, which have tended to ignore nonfuel revenues because fuel sales are already generating robust profits, will be forced to rethink their strategies.
Editor:Yaling
