Idemitsu Q8 expands foothold via third petrol station in north
By differentiating its trading strategy from competitors, Idemitsu Q8 is realising its ambition to cover north Vietnam with its petrol stations by opening the third one in Hung Yen.
Idemitsu Q8 opens three petrol stations in one year
In the context of the complexities in completing procedures to open petrol stations, Idemitsu Q8’s opening its new petrol station shows the company’s determination to occupy a bigger slice of the Vietnamese petroleum retail market, which previously only belonged to domestic businesses like PV Oil and etrolimex.
Hiroaki Honjo, general director of Idemitsu Q8 Petroleum Limited Liability Company (IQ8), shared that Idemitsu Q8 will take advantage of its experience in the petroleum business in Japan and Europe to develop its business in Vietnam.
In October last year, Idemitsu Q8 , a joint venture between Japanese company Idemitsu Kosan Co., Ltd. and Kuwait Petroleum International Ltd. (KPI), opened the first petrol station in Hanoi, becoming the first FDI business to enter the local petroleum retail market.
After one year of operation, although Idemisu did not publish information about its business results, the consecutive opening of new petrol stations shows that Idemitsu Q8 is upbeat about its prospects in the market and that entering the petroleum retail sector was the correct choice.
“According to the plan, Idemisu will open five petrol stations in Vietnam, and we already have three of these. However, we have not yet achieved number five as expected, but we are trying to meet the target,” said Hiroaki Honjo.
Idemitsu Q8’s joining the petroleum retail market contributes to a stable petroleum supply in Vietnam, especially as demand is predicted to increase high in the next years. However, the market already established its own order, and as a newcomer, Idemitsu Q8 needs a separate direction.
There are over 14,000 petrol stations in Vietnam, of which the giant petroleum business Petrolimex has 5,200 stations, holding 45 per cent of the market, followed by PV Oil with 3,000 units, Thanh Le with 1,500 units, and Saigon Petro with 1,000 units. Petrolimex sold over 50 per cent of its products directly to customer and 20 per cent directly to industrial customers. However, there remains ample space for a newcomer to increase its market share, provided it proves competitive enough.
Idemitsu Q8's market approach was markedly different from its competitors as the firm opened its three petrol stations in industrial parks—as opposed to urban hubs—where the presence of Japanese companies is strong.
For instance, the second petrol station is located at the last service zone of Dinh Vu Port (Haiphong) with the purpose of serving citizens in Hai An District as well as Vietnamese and Japanese transport businesses in the area. With the area of 10,000 square metres, this is the biggest petrol station of Idemitsu Q8 outside of Japan so far.
The representative of a business in the petroleum retail market said that Idemitsu Q8’s choice of industrial zones (IZs) to increase its revenue from big customers, especially Japanese companies. Besides, it is also important to mention that land leasing procedures are far easier to complete in IZs because the management boards of these entities can lease the ground, helping businesses save time.
Besides, Idemitsu Q8 is aiming to set itself apart through its services. The leadership of the company affirmed that they intend to incorporate farm more than simply trade in their operations, with a distinctively Japanese style of customer service.
As proof, at the opening day of the first petrol station at Thang Long IZ in October 2017, general director Hiroaki Honjo respectfully bowing to each customer in the rain for hours went viral, eliciting great customer support for the new company. Similarly, on the opening day of the third station, the staff wiped the windshields and mirrors of customers’ cars while pumping petrol completely free of charge.
Whether Idemitsu Q8 can achieve their ambition of growing to dominance in the Vietnamese petrol market remains a question for the future, but opening three petrol stations in a single year shows the determination of Idemitsu Q8.
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