Steven Chan, who is a Hong Kong-based investment banking analyst, traveled to the mainland province of Guangdong by the end of the year 2005 to get a tour of the new service stations constructed by a Chinese-Western petroleum joint venture. Concerned by reports of long lines at the pump in Shenzhen, his driver elected to fill the tank with "high-priced" Hong Kong petrol before crossing the boundary. Costs of crude oil, unregulated in China, had lately grown much more than government-directed diesel and petrol costs, squeezing the borders of local refiners.
Gossip had it that independent stations were having trouble getting supply, and "black market" commerce was active. As they made their way up the Hong Kong-Guangzhou highway, Steven questioned the Western petroleum company's strategy of aggressively entering a price controlled marketplace.
PUBLICATION DATE: November 29, 2006 PRODUCT #: HKU605-HCB-ENG
This is just an excerpt. This case is about GLOBAL BUSINESS
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