At the end of last month, the 2014 China Petroleum and Chemical Private Enterprises Development Conference was held in Beijing. The conference, attended by nearly 400 companies, can be said to be a feast for private oil and chemical companies. It has been three years since the last development conference was held in 2011. So in the past 3 years, what kind of achievements have China's private petroleum and chemical enterprises made? What are the opportunities and challenges for future development?

Prominent achievements have been made over the years

Since the 12th Five-Year Plan, with the continuous improvement of the market economic system, the private economy of petroleum and chemical industry has shown a good momentum of steady development, and its proportion in the total economic volume of the industry has been rising. Data from the China Petrochemical Federation show that in 2011, the total non-public economic output value of the industry reached 5.65 trillion yuan, up 34.9% year-on-year, accounting for 50.11%, exceeding half for the first time in history. By the end of 2013, there were 25,946 non-public enterprises in the industry, up 5.9% year on year, accounting for 90.6% of the whole industry. Total assets of 5.1 trillion yuan, up 18.5% year on year, accounting for 48.4% of the whole industry; Main business revenue was 7.55 trillion yuan, up 15.1% year on year, accounting for 56.7% of the whole industry's main business revenue; The total amount of profits and taxes was 0.73 trillion yuan, up 14.1% year on year, accounting for 41.2% of the whole industry.

In the past three years, petroleum and chemical private enterprises have adapted to the new economic situation, accelerated the pace of industrial structure adjustment, continuously expanded the scale, continuously optimized the structure, and gradually improved the competitiveness. The highlights are mainly reflected in the following aspects.

First, the scale of enterprises is expanding rapidly. Since the 12th Five-Year Plan, private enterprises in the petroleum and chemical industries have maintained steady growth and their overall scale has continued to expand despite the slowdown in macroeconomic growth. From 2012 to 2013, the growth rate of assets of non-public economy was 26.7% and 18.5% respectively, and the growth rate of main business income was 21% and 15.1% respectively. The growth rate of assets and income is higher than the average level of enterprises above industrial scale in the same period. The income from the main business of the non-public economy has accounted for more than half for three consecutive years. According to the survey data of 186 private enterprises in the second half of last year by the Small and Medium Enterprises Working Committee of China Petrochemical Federation, the average growth rate of total assets and sales revenue of enterprises reached 28.16% and 27.23% from 2010 to 2012, higher than the average growth level of enterprises above industrial scale in the same period.

Second, the economic efficiency has been continuously improved. Over the past three years, petroleum and chemical private enterprises have maintained good economic returns. From 2012 to 2013, the total profit growth rate of enterprises was 7.7% and 14.3% respectively, higher than the average profit growth rate of enterprises above the scale of the whole industry. From the 186 investigated private enterprises in the industry, the average growth rate of total profits is 15.3%, which shows the good growth of petrochemical private enterprises in the period of economic restructuring and enterprise transformation and upgrading.

3) Remarkable results were achieved in transformation and upgrading. In accordance with the national industrial policy and the requirements of sustainable development of enterprises, private enterprises in the petroleum and chemical industries have intensified structural adjustment, focused on transformation and upgrading, and made notable progress in technological and equipment, operation and management, labor skills of employees, and overall quality of enterprises. From the perspective of the overall labor productivity, a comprehensive indicator to measure the effect of transformation and upgrading, in 2011 and 2012, the growth rate of the total labor productivity of the non-public economy of the industry was 14.75%, higher than the 8% growth rate of the whole industry. In the private enterprises surveyed, the average growth rate of total labor productivity reached 16.77%, exceeding the growth level of enterprises above the industrial scale in the same period.

Reform will stimulate internal driving forces

In his report to the conference, Li Yongwu, president of the China Petrochemical Federation, stressed that the current and future development of the industry is still facing a complex situation, with both favorable conditions and unfavorable factors. Therefore, private enterprises should seize the opportunity of deepening reform and accelerate transformation and upgrading.

Internationally, the global petroleum and chemical industries are accelerating a new round of structural adjustment. First, the process of material diversification is accelerated. Major breakthroughs have been made in the development of shale gas and positive progress has been made in the research and development of biomass energy and other emerging energy sources, exerting a major impact on the world energy and industrial landscape. Second, we will accelerate the shift of development focus to new chemical materials, high-end specialized chemicals, biochemistry and other emerging fields. Many multinational companies actively adjust their development strategies, decisively divest their traditional businesses, and seize the commanding heights of future competition through merger and reorganization and resource integration. Third, green and low-carbon development has become the mainstream model, and the circular economy, cleaner production, energy conservation and environmental protection industries are flourishing.

Domestically, the fundamentals of China's economy remain sound in the long run, and its economic growth rate remains one of the highest in the world. Industrialization, IT application, urbanization and agricultural modernization are advancing further. The domestic market has huge potential, creating long-term and stable market demand for petroleum and chemical products. In particular, the Third Plenary Session of the 18th CPC Central Committee made an overall plan for comprehensively deepening reform, clearly stating that economic structural reform is the focus of comprehensively deepening reform and that the core is to let the market play a decisive role in the allocation of resources. With the introduction of various reform measures, the institutional obstacles restricting economic development will be effectively removed, and the endogenous driving force for economic development and market vitality will be fully stimulated. This will provide a new historical opportunity for the transformation and upgrading of the petroleum and chemical industries, especially for private enterprises.

What are the opportunities for private enterprises in the development of various industries? Gu Zongqin, president of the planning institute of petroleum and chemical industry, thinks there are three main aspects.

First of all, China's external dependence on crude oil reached 58.1% in 2013, and it is predicted that the consumption will exceed 500 million tons in 2020, and the external dependence will exceed 60%. Therefore, there are opportunities for private enterprises in the refining industry. With the market playing a decisive role in the allocation of resources, the source of imported oil will be gradually opened in the future, and private oil refining enterprises will change the existing situation.

Second, in recent years, the domestic ethylene production capacity has gradually increased, but the domestic ethylene self-sufficiency rate based on equivalent consumption is still less than 50%. In 2012, the domestic ethylene equivalent consumption is about 31.9 million tons, the equivalent self-sufficiency rate is only 47.5%, and the market space is huge. In terms of natural gas production and consumption, it is estimated that natural gas consumption in 2013 will be 117.6 billion cubic meters, of which 53 billion cubic meters will be imported and the apparent consumption will be 167.6 billion cubic meters. Consumption will increase by 13.9 percent and external dependence will be 31.6 percent. In recent years, the rapid growth of domestic economy has driven the strong demand for downstream propylene derivatives, while the shortage of domestic supply makes it necessary to import a large number of downstream propylene derivatives every year, such as polypropylene, acrylonitrile, butyl alcohol, propylene oxide, ethylene propylene rubber, etc. In 2012, the equivalent consumption of propylene in China was about 24.28 million tons, with an equivalent self-sufficiency rate of about 63%. In these areas, private enterprises have opportunities to develop.

Thirdly, from the self-sufficiency rate of the main fields of new chemical materials in 2012, only 39% of engineering plastics, 52% of special rubber, 31% of high-performance fiber, 96% of biology-based new chemical materials, and 50% of functional membrane materials and components, there is a gap between supply and demand.

Wang Lei, deputy general manager of Beijing Aokali Science and Technology Development Co., Ltd., told China Chemical Industry News that the current national policies are more conducive to the development of private enterprises, and many small and medium-sized private enterprises in the industry have begun to strive for policies together. For example, thanks to the efforts of local refiners in Shandong, the state has been willing to gradually increase refining quotas to local governments. This shows that private enterprises have development opportunities in this respect.

The deep contradiction is gradually prominent

Li said that while the achievements have been made, the deep-seated contradictions and problems accumulated for a long time in China's petrochemical industry have been further highlighted.

First, economic efficiency is not ideal enough. Although we reversed the decline in 2013, it was still 6 percentage points below the national industrial average; The cost management gap is also relatively large, among which the profit margin of the main business of the chemical industry is 0.8 percentage points lower than the overall level of the national industry; The cost of 100 yuan of main business income is 1.7 yuan higher than the national average cost of industry.

2) Excess production capacity is a serious problem. The production capacity of traditional products and some general-purpose products is still excessive, while the production capacity of some high-end products with high technical content and high added value is obviously insufficient. With the new project put into production one after another, overcapacity contradiction will further aggravate.

Third, the capacity for scientific and technological innovation is weak. The R&D investment intensity of enterprises is generally not high, and there is a lack of technical innovation talents. The industry-university-research collaborative innovation system with enterprises as the main body has not been fully established. In particular, the original innovation capacity and the transformation capacity of scientific research achievements are weak, and the conversion rate is less than 30%.

Fourth, the security and environmental protection situation is grim. In recent years, a series of serious and extremely large safety and environmental accidents have attracted extensive attention from the society and the public. The emission of three wastes in the industry ranks first in the industry, and the pressure of pollution reduction is huge.

Wu Yuqi, chairman of the board of directors of China National Petroleum Energy Group Co., Ltd. (Hong Kong), believes that private chemical enterprises are facing great challenges and are moving forward in the wind and rain.

On the one hand, the current slowdown in domestic economic growth and consumption will have a chain reaction, and the consumption of materials and products in all walks of life has decreased. Petroleum and chemical industry is the pillar industry and basic industry, the consumption reduction of downstream products will inevitably affect the consumption reduction of upstream raw material industry. Wu Yuqi said, this can be seen from the start of capital construction. In previous years, a lot of infrastructure construction started after the Spring Festival, but this year the construction rate was 50 percent lower than in previous years, and many construction projects have been halted. From the perspective of the provinces, the construction volume of many infrastructure projects has been greatly reduced, resulting in a decrease in material consumption and a significant decrease in the consumption of petrochemical products. In addition, the domestic petrochemical industry, including all the subsectors, accounts for a large proportion in the world, and all industries have emerged surplus, which forms a contradiction with the continuous reduction of consumption.

On the other hand, labor costs are rising, raising the cost of all industries. As the cost of logistics, services and supporting industries increases, so does the cost of the petrochemical industry. Rising costs combined with falling consumption inevitably result in excess. After excess accumulation for a period of time, the reserves of various industries are very large, which enterprises can not bear. The increase of various expenses, such as finance, will inevitably lead to competitive sales of enterprises. Prices are down, costs are up, private enterprises have begun to show difficulties at the beginning of this year.

Wang Lei also said that the current chemical industry many products overcapacity, some enterprises will certainly fail in the competition. In addition, now many foreign companies are gradually increasing the penetration of the Chinese market, their obvious technological advantages, only continuous innovation, enterprises can better participate in the competition.

Zhang Xiaofei, general manager of the marketing center of Kunming Jiahe Technology Co, said that for small and medium-sized private enterprises, the key is a lack of technology. At present, many enterprises buy medium - and high-end technologies and equipment from abroad, and few of them develop and produce their own products. In addition, domestic private enterprises lack the service concept of foreign enterprises. In my opinion, the project is not every day, but the loss of every day, through the provision of services to get the loss of money, is the most important indicator of small and medium-sized enterprises to resist risk. "Zhang Xiaofei said.

Seize the opportunity to fight wind and rain

Li said that the Decision of the Third Plenary Session of the 18th CPC Central Committee clearly stated that the non-public sector must be unswervingly encouraged, supported and guided to develop and stimulate the vitality and creativity of the non-public sector. This has pointed out the direction for the future development of private enterprises and created a better policy environment. Since this year, including petrochina, sinopec and cnooc of China, many of the central enterprises, on the mixed ownership reform, allowing what equity subsidiary and construction projects, the equity ratio is much higher than in the past, it helps to promote the reform of state-owned enterprises to speed up the marketization, also contribute to the sustainable development of the non-public enterprises. Private enterprises must seize the opportunities and meet the challenges.

Gu Zongqing suggested that in the oil refining field, private enterprises can use the oil products from large refining projects to further hydrogenate and refine to produce high-grade dearomatization solvent oil and other higher value-added petroleum products, so as to achieve a dislocations development with large enterprises. It can also make use of the by-products such as propylene, liquefied petroleum gas, sulfur and petroleum coke produced by large-scale refining projects to develop downstream extended products. It can also provide supporting facilities and services around the needs of large-scale oil refining projects.

There are also opportunities for private enterprises downstream of the olefin. In the future, there will still be a large gap in olefin products. It is estimated that by 2020, the self-sufficiency rate of ethylene and propylene equivalent consumption in China will increase to 70% and 80% respectively, and there will still be a gap of millions of tons.

In addition, with the further diversification of olefin feedstock routes, private enterprises can find business opportunities. In recent years, a variety of olefins from raw materials have been developed and applied at home and abroad, including MTO/MTP, CPP, SuperFlex, ACO and so on. During the 13th Five-Year Plan period, the state will encourage the exploration of olefins raw material diversification, and private enterprises can participate in the development.

In the field of coal chemical industry, private enterprises with good control over coal resources can cooperate with large domestic and foreign oil, natural gas and petrochemical companies to build large new coal-to-gas, coal-to-oil, coal-to-olefin and other large-scale coal-to-gas projects.

For many existing private coal chemical enterprises, such as methanol, calcium carbide, coke, etc., on the one hand, they can use advanced technology to transform the existing production line to maintain their position in the industry. On the other hand, it can explore the downstream extension and development of new products to promote the transformation and upgrading of enterprise product structure. At the same time, enterprises should closely follow the progress of new coal chemical technology, such as methanol to aromatic hydrocarbons (MTA), new carbonyl synthesis products, etc.

Gu Zongqin also pointed out that the new field of fine chemical sector will remain the focus of investment, private enterprises should pay attention to. Especially functional coatings and water-borne coatings, dye varieties and chemical intermediates of new varieties, green synthesis technology, water treatment chemicals, electronic chemicals, high-performance functional food additives, high performance and environmentally friendly flame retardant, high-performance rubber additives, green plastic additives, etc., become the fine chemical industry technology development and industrialization of key. At the same time, enterprises should vigorously develop new products and new technologies in the field of biological fine chemical industry.

It is understood that some private enterprises have begun to eyeing the above opportunities. We have been engaged in oil field chemicals. In 2008, we won the second prize of national science and technology progress, and we have more than 30 national patents. While continuing to do well in this area, the company is also considering a transformation. First, they have the intention to enter agriculture, engaged in the deep processing of fruit trees, and improve the added value of products; Second, to develop overseas, Iran is our first choice for breakthrough. As long as an enterprise has the technology and strength, it is sure to be able to open overseas markets. Wang Lei said.

In addition, the relevant government departments are also providing a fair environment for private enterprises to develop and innovate. Zheng Xin, director of the Department of Small and Medium-sized Enterprises of the Ministry of Industry and Information Technology, said that the next step of the Ministry of Industry and Information Technology will mainly do the following work: to further implement the State Council's opinions on further supporting the healthy development of small and micro enterprises as the focus, strengthen the implementation of the policy; Focus on the revision of the Law on the Promotion of Small and Medium-sized Enterprises to further optimize the development environment of enterprises; We will promote the healthy development of the non-public sector of the economy with the focus on removing all kinds of hidden barriers. To promote the innovation and development of small and medium-sized enterprises with the focus on deepening the integration of industrialization and industrialization; To further strengthen the construction of service system with the focus on the construction of public service platform network for small and medium-sized enterprises; We will further improve financing services for private enterprises with the focus on implementing the guidelines on financial support for small and micro enterprises.