When a company starts to put its business into motion there are a few basic tenants that need to be addressed. Customer base and location are perhaps two of the most important. Management needs to ask itself: are we located in the correct place and do we have a customer base we can serve effectively. When dealing with bulk materials, this is even more important and needs to be right the first time.

Longwei Investment Holding Ltd., an oil and gas distributor, acts as a distributor of oil and gas primarily in China. The company currently owns 50,000 tons of storage capacity and has near term plans to add an additional 70,000 tons of capacity.

The company has several competitive advantages in its distribution plan. Among them are a central location in a very industrialized provincial region, apparent favor with provincial leaders, a dedicated rail line for deliveries and the ability to purchase imports at favorable rates.

Given the province and its industrial capacity, one needs to understand the growth of the Chinese economy to also understand the investment opportunities associated with the company. The particular province that the company works within is industrial in nature. Coal, coke and electricity are primary industries supplying the region. As such, oil and gas are a needed energy source giving the company a stable customer base. Add to this the reality of government support (a need in China), and the company looks to be well positioned as a stable and growing concern.

One also needs to consider the transportation aspect that the company seems to have well in hand. Shanxi Province is not on the eastern coast of China, where most current economic activity is occurring. The company does, however, seem to have a solid transportation system, or access to reliable transport, such as to transport oils or gas’ from port to its distribution depot.

As with almost everything in China, one must recognize scale. The current economic slowdown in the west has resulted in negative annual GDP growth. In China, the slowdown means reductions in GDP growth from 10-13% annually to an anticipated 7% annual GDP growth. Also consider the growth of power plant construction in China, which is still growing. Longwei Petroleum is well positioned, both economically and physically, to benefit well into the future.