China Petroleum and Chemicals, better known as Sinopec, is taking another step away from petroleum. Last month, the company opened a store on online shopping platform Taobao, to expand its presence in everyday retail markets. Sinopec, the largest state-owned energy firm in the country, is restructuring itself. So where is it heading?
Sinopec's first online store sells products from the famous Wuyi Mountain area in Fujian Province. The products the store sells are Fujian specialties such as tea, dried duck and Fujian chestnuts, can also be found in other online stores. Sinopec's Taobao shop, however, is linked the company's Easyjoy convenience shops, so that customers can have a look at what they've ordered before completing the purchase and taking things home.
"Taobao is very popular and convenient, but I prefer to pick up the products myself because I can check on the quality," Customer Mr. Li said.
Last March,Sinopec took on partners for its chain of Easyjoy shops, which brought in expertise from the convenience chain C-Store. The experiment has been a success.
"The hot food here sells extremely well. Our business has gone up mainly because of the hot food and the refrigerator here, which we didn't have one before. And now the business is getting better. After working with C-store, our daily income is up from 4,000 yuan to around 6,000," Staff with Easyjoy Convenience Store said.
Last year, the number of Easyjoy stores across the nation hit 24,000. The extensive network of shops helped Sinopec to achieve a turnover of 17 billion yuan last year, a figure completely separate from its petroleum sales. Sinopec is now also working with other retail firms such as online grocery store Yihaodian and delivery company SF Express. Retail products accounted for only one percent of Sinopec's turnover last year, but the growth in retail sales was 28 percent, as compared to a fall of two percent in the company's overall business.
"The investment of the retail giants proves large development space for Sinopec in this market," Shao Yu, chief economist with Orient Securities Company, said.
According to Sinopec's first quarterly report, because of the continued decline of crude oil prices, the company's petroleum business had a loss of 1.2 billion yuan for the first three months of the year. Shao believes the company's move into retail is aimed at helping it ease the resulting financial pressures.
"In the future, the Sinopec sales system, will have branches all over the country. The integration between online and real stores will help offset the effects of declining oil prices," Shao said.
Before his recent retirement, Sinopec president Fu Chengyu laid out the company's future plans, saying "In the future our primary business will not be petroleum, but rather based on our nationwide network of convenience stores."
