The Post-China III Era: A World of Difference for Lubricant Companies

In the fast-fading year of 2008, China implemented a series of major environmental protection measures, one of the most representative being the full implementation of the China III vehicle exhaust emission standard on July 1, 2008. Half a year into the standard's implementation, our reporter's investigations and visits found that under its influence China's lubricant companies are dividing into winners and losers.
Low-end Companies in Trouble
The China III standard sets limits on vehicle exhaust pollutant emissions and clearly specifies emission limits and measurement methods, with the aim of effectively controlling exhaust pollution and protecting the natural environment. According to market staff at Kunlun Lubricants, compared with the previous China II standard, China III raises requirements for engines, fuel and lubricants. To meet China III requirements, gasoline vehicles are recommended to use SJ or higher lubricants to reduce phosphorus content and lower the risk of three-way catalyst failure in exhaust emissions, while diesel vehicles are recommended to use CH-4 or higher engine oil.
It is understood that China currently has more than 4,000 lubricant companies, a large proportion of them small and medium-sized enterprises with low-end products and little technological content; some are even at the workshop stage and are simply incapable of producing environmentally friendly products. Faced with the demanding China III standard, these companies are entering a crisis of survival.
Mainstream Companies Respond with Composure
Four months before the China III standard took effect, Beijing took the national lead in implementing the China IV standard, while the EU had already enforced Euro IV (equivalent to China IV) back in 2005. Whether China III, China IV or Euro IV, all send the same signal to the lubricant market: in the post-China III era, energy saving and environmental protection will be the dominant theme of the lubricant industry.
Faced with even higher challenges ahead, mainstream companies appear quite composed. A senior executive of Kunlun Lubricants believes that difficult challenges better showcase the strengths of mainstream enterprises, making higher emission standards a good opportunity for Kunlun. It is understood that Kunlun farsightedly introduced and established the FOCAS combustion system to research Euro IV standards, and launched China IV dedicated engine oil at the earliest opportunity when Beijing implemented the China IV standard. Kunlun is also the first company in China with base oil hydrotreating technology, and Kunlun Tianlai ethanol gasoline dedicated lubricant has long been prominent in the environmental field. Facing ever-rising environmental requirements, Kunlun has remained composed and steady.
A Reshuffle That Aids Sound Development
Regarding the upheaval in the lubricant industry brought by China III, experts argue that survival of the fittest is an inevitable market choice and that this industry reshuffle is conducive to the market's sound development. At the same time, they remind small and medium-sized companies that competition in the lubricant market will be even fiercer and the challenges more severe in 2009: major players such as Kunlun need to seize market opportunities to accelerate growth, while smaller companies can only hold their ground in the market torrent by continuously strengthening their technological capabilities.