To fulfil China's WTO commitments, the Ministry of Commerce has recently released Management of Refined Oil Product Market and the Management of Crude Oil Market, which will take effect on and after January 1st 2007. The wholesale operation rights of crude oil and refined oil products have been opened up to the outside.

The private-owned enterprises have also marched into the distribution markets of refined oil products in China. By the end of November 2006, social wholesale enterprises enjoy a proportion of 33.4% in the number of refined oil wholesale enterprises. Meanwhile, social gas stations take 56.3% of the total number of gas stations in China.

The total number of gas stations in China has now been overflow, so gas station industry stands in the intersection as domestic refined oil resources get gradually diversified due to the opening-up market.

Impacted by market competition and the limited profits in the industry, the number of gas stations in China will decline steadily, which is attributable to the following three reasons. Firstly, the domestic pricing mechanism for refined oil products has been gradually consummated, and the profit margin of gas station industry keeps decreasing year by year. Compared with the Ninth Five-Year Plan period, the retail gross profit margin of gas stations decreased approximately by 45%-60% during the Tenth Five-Year Plan period. Secondly, there will be an increasing number of competition entities. For instance, Sinopec, China National Offshore Oil Corp., private-owned enterprises as well as overseas companies like Shell and BP are all sparing no efforts to access into Chinese gas station industry. Lastly, the cost of gas station construction goes up significantly due to the rising land price.

To be competitive in the market of refined oil products, many domestic enterprises actively explore the resources related to oil products, like commodities, clients and profitable business. Nowadays, the profits of convenience stores attached to gas stations in developed countries take 45%-55% of total profits. However, the non-oil product business in China fails to bring considerable returns due to the poor management and lack of reasonable plan. Whereas, the huge potentials of non-oil product market in China will be brought into full play with the fast growth of automobile ownership, the changes of people's consumption ideas as well as the efforts from industry giants both at home and abroad.

The National Phase and Phase Emission Standard will be carried out respectively in 2007 and 2010. Chinese Phase Emission Standard will take effect across China since July 1 2007. In fact, Chinese Phase Emission Standard has been first put into practice in Beijing since January 1 2006, where only decades of gas stations can meet this standard.

In a word, China's gas station industry will develop towards quality-oriented instead of quantity-oriented during the Eleventh Five-Year Plan (2006-2010).