GS Caltex eyes Chinese market

By Park Si-soo

GS Caltex (GSC) is increasing efforts to expand into the Chinese market.

The country’s second largest oil refiner said Thursday it has opened GS Caltex China that will control the Seoul-headquartered company’s business in the neighboring country.

GSC launched its China business in 2003 and nearly 30 percent of its oil, petrochemical and lubricant products manufactured for export are shipped to the world’s second largest market. Officials said the new unit is expected to increase the portion further.

GSC is expected to earn 12 trillion won ($10.63 billion) in sales in China this year, including 1.2 trillion won from products manufactured at its Chinese factories.

“China is a key market where nearly 30 percent of products we make for export are shipped toward. Amid intensifying competition here, however, we cannot expect further growth without having the world’s best competitiveness,” said GSC Chairman Hur Dong-soo. “The opening of a Chinese office heralds that we will try harder to make China our second-biggest market after Korea.”

A GSC official said the office will help localize the firm’s business in China. “The office will control everything in China from recruiting to business planning,” the official said. “This will help deepen understanding of the Chinese market and eventually ensure the firm’s stable growth there.”

The refiner turned its eyes to China in 2003 after facing stagnant growth in the domestic market. In 2007, the firm signed a memorandum of understanding with Shandong Province.

GSC is now operating a plant with an annual capacity of 45,000 tons of polymer compounds in Langfang, Hebei Province, supplying them to China and neighboring nations such as Russia, Taiwan and Thailand. It also founded another Chinese unit in Suzhou, Jiangsu Province last year.

More than half of the firm’s sales are made in overseas markets ㅡ nearly 63 percent of last year’s 47.9 trillion won revenue, or 30.2 trillion won, came from exports of petroleum and petrochemical products.

In recognition of this achievement, Hur was given an award by the Korea International Trade Association in December.

The company has tried to reshape itself as an export-driven firm with aggressive investment in facilities in many other countries. The firm is now building a polymer compound factory in the Czech Republic that is expected to generate additional sales of around 100 billion won from 2014.