Market Entry
In general, ROC oil has made quite appropriate market entry decisions to avoid real exchange rate risk. They often expand new foreign markets when the foreign currencies are strong in real terms. Specifically, ROC attaches great importance to China which is the largest market for ROC in terms of sales volume and revenue. Therefore, they have taken two large expansions in China when Chinese Yen appreciate significantly.
The first time is in 2001, when ROC began to sale oil to China. As the data illustrates, Chinese yen has experienced a significant depreciation in terms of US dollars from￥5.8/$ to ￥8.6/$ in 1994. Then Chinese yen had a slightly appreciation from 1995 to 2003 (Exchange Rates 1994-2014). ROC has seized this opportunity and commenced opening China market. Firstly, ROC implemented a new venture project in the Beibu Gulf, offshore China. Then, by year end of 2002, ROC was actively involved in the potential development of newly discovered oil fields offshore China (ROC Annual Report 2003). As a result, ROC has completed its first market entry following the appreciation of Chinese yen during 2000-2002.
From 2004 to 2013, Chinese yen began a process of slow appreciation from ￥8.2/$ to ￥6.0/$. ROC made use of this opportunity to expand China market further. Specifically, in 2009, ROC’s Chinese team successfully completed the construction and installation of new facilities at Zhao Dong (offshore Bohai Bay). It also formed a joint venture with PetroChina and CNOOC, both of which are China’s leading companys. As a result, a Zhao Dong gas sales agreement was completed in 2009 and executed in 2010, which means gas sales revenue will take place in 2010. By the year 2010, China has contributed 48% of ROC’s global revenue (ROC Annual Report 2010). By seizing these two critical opportunities, ROC has won a stable market share in China.
Critical evaluation
As discussed above, the moderate appreciation of the Chinese yen from 2001 to 2013 gave ROC a unique opportunity to penetrate the China market with comparatively low Chinese yen prices that translated into high US dollar revenues. Doing so allows ROC to gain competitiveness against the other oil companies so that it can occupy a stable market share in China (Buckley 1998). In addition, ROC formed joint venture relationships with PetroChina and CNOOC, thus it was able to establish a good reputation in China for providing low-priced, high-quality productions within help of its partners. This reputation will bring huge profits to ROC permanently, even after a substantial appreciation of the US dollar in real terms.
Brand loyalty
ROC has been working hard to build its reputation and brand loyalty for many years, not only in domestic, but abroad. First of all, as a leading Australian independent upstream oil and gas company, ROC always put most of its development expenditure in Australia (ROC Annual Report 2009). Faced fierce competition with many oil giants like Shell and BP, ROC has still obtained stable market share. Specifically, under the circumstance that global crude oil price fell sharply to US$53.48 per barrel in 2009, ROC priced oil US$57 per barrel which was slightly higher than the global level. Higher price didn’t drive away loyal customers and ROC still obtained profit of US$3.7 million despite the lower oil price environment in 2009.

Furthermore, in entering a foreign market, ROC also developed its brand loyalty. As discussed in market entry, ROC commenced expanding in China market when Chinese yen is relatively strong in real terms. Then, through joint venture with PetroChina and CNOOC, ROC has completed further expansion and built its reputation successfully. As the data demonstrated,