【正文】 ecialist will need strong retail partners梖 oreign and local梩 o get the necessary scale for its products. Carrefour and WalMart, which are building works of retail sites in China, are obvious partners, but Jet, QuikTrip, Tesco, and even McDonald抯 might also be suitable. Moreover, since the structure of China抯 retail sector is strongly regional in character, multinationals will need to build relationships with a number of local retail partners. Finally, a gasoline specialist should differentiate itself on products and services, not price. In addition to highquality gasoline, it must offer quick and friendly assistance, convenient layouts, links to pany or cardpayment schemes, and services such as repairs and car washes. To reinforce the message that quality is paramount, prices shouldn抰 be visible from the street.Can China抯 oil panies realistically pursue the gasoline specialization strategy? There are certainly problems. Although these panies may decide to scale down their investment in retail sites, the quality of their gasoline and service is still relatively poor, and their 9 / 10brands, though wellknown, are perceived as being of lower quality than those of the STICKING TO WHOLESALELocal and AsiaPacific producers and merchant refiners, such as the Chinese National Offshore Oil Corporation, that can抰 invest in a substantial retail position could steer clear of retailing altogether and focus on supplying independent retailers. Once the industry has consolidated, the remaining ones will be looking for a secure source of local gasoline under their own or franchised brands. For Chinese panies that have already invested heavily in their own sites, this path might not be an acceptable choice. But for many regional refiners梐t least if the costs of distribution aren抰 prohibitive 梚 t could prove a safe way to operate as petition intensifies.Chinese and multinational oil panies, building on their established supply positions and brands, are investing heavily to sell gasoline in the fastgrowing Chinese market. But with falling margins, aggressive petition, and ever more demanding consumers, selling gasoline in China isn抰 a simple game. The size of the country, the abundance of distinct regional markets, and the number of independent sites still available give all interested parties the ability to map out profitable strategies. But unless these panies get it right梐 nd to do so, many of them will have to realize the full potential of retail operations梩 he black gold of a billion consumers may bee just another drop in the sea of Chinese red inkNotes:Jonathan Woetzel is a director in McKinsey抯 Shanghai office. The author wishes to thank Carlo WaiKeung Yu for his contributions to this article. 1See Paul Gao, A tuneup for China抯 auto industry, The McKinsey Quarterly, 2022 Number 1, pp. 144?5. Only the United States and Japan will have larger markets for gasoline. China 抯 market for it is growing by 4 percent a year, about double the rate of the developed world. 2Convenience stores accounted for almost percent of retail sales in 2022, and local and international chains plan to expand further. Yet Shanghai and some other cities already have five times more convenience 10 / 10stores per unit of GDP than Hong Kong。 and Lawson抯桱apan抯 largest convenience store operator梙 as 87 stores in Shanghai but is still in the red after six years. 3In China抯 downstream sector, the legacy of supplydriven planning is average utilization of less than 70 percent。 and extensive transport bottlenecks. PetroChina抯 downstream sector lost more than $1 billion in 2022, while Sinopec has consistently missed its operating targets. In most cases, investing to improve refineries is impossible given their location, scale, and sources of crude oil. Gradual shutdowns are unavoidable. 4China抯 oil panies are trying to make the quality of their products, channels, and marketing more consistent by building, for example, highquality lubricant brands such as Great Wall (Sinopec) and Seven Star (PetroChina