Building a joint venture in an emerging market
A Burmah Castrol case study

Page 1: Introduction

Burmah Castrol is a leading international marketer of specialised lubricant and chemical products and services. With operations in over 50 countries, Burmah Castrol employs some 20,000 people world-wide. Burmah Castrol’s organisation is based on a number of business streams which operate in the lubricants and chemicals sectors. The lubricants business, which operates under the name...
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Page 2: New markets

Positioned at the centre of the fastest growing economic zone in the world, Vietnam offers a unique opportunity for Burmah Castrol to continue geographic expansion of its heartland business. Vietnam is situated on the eastern seaboard of the Indochinese peninsula. Neighbouring countries are China to the north and Laos and Cambodia to the west. Vietnam has a land area approximately one third larger...
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Page 3: Market research

Market research information available to Castrol in the 1990s estimated the automotive market (consumer and commercial) and the general industrial market at approximately 37 million litres each, giving a potential market of 75 million litres of lubricants. Market growth is estimated to be about 6% per year, so that in the early years of the next century, the market will be worth about 130...
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Page 4: Partnerships

The marketing information provides a strong case for Castrol’s involvement in Vietnam. There is clearly a gap in the market for the supply of high quality, performance lubricants. Castrol’s association with Vietnam began in the early 1980s through a link with Vosco Shipping, Vietnam’s premier overseas shipping line, which, at that time, was having vessels constructed in the UK...
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Page 5: Stakeholders

Today, Castrol Vietnam works with 7,000 retailers and employs about 160 people in Ho Chi Minh City, Hanoi and Da Nang. The joint venture has worked hard to develop strong relationships with local retailers and distributors by providing detailed technical assistance and support. It has become standard practice to provide funds for upgrading petrol stations as well as arranging trade loans...
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Page 6: Conclusion

At the end of the day, running a successful joint venture is a matter of give and take. One disadvantage, of course, is that Castrol does not have 100% of the ownership and takes only apart share of profits and dividends. However, this is counterbalanced by the benefits of working in partnership with a local company - a better understanding of the culture, market and ways of operating in an...
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Related: Dixons Group
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