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Roadside retail in China
China's fuel distribution network is ready to be overhauled, and the government is keen to fix it. Is this an opportunity for multinational oil companies as well as for China's two domestic giants, PetroChina and Sinopec? Perhaps. But with competition among multinational and local companies already driving down retail margins and with prices for retail sites soaring, it is far from clear how any oil company will make money. In fact, only the highest-volume sites will turn a profit on fuel revenues alone; the rest will need substantial nonfuel revenues just to break even.
The take-away: Oil companies looking to do business in China can supplement their gasoline revenues with other retail sales at their sites, or they can focus primarily on their fuel brands. At the moment, most of these companies have failed to make a clear choice.
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