Coexistence of Opportunities and Challenges in Wire and Cable Industry

In recent years, the sustained and rapid growth of China’s economy has provided a huge market space for the wire and cable industry. According to statistics from the China Machinery Industry Federation, the average annual growth rate of the wire and cable industry has exceeded 15% in the past 15 years. In the “12th Five-Year Plan” related industry planning, the power, railway, rail transportation, energy, construction, communications, shipbuilding, automobile and other industries still maintain a large scale of investment, which will certainly provide many rare opportunities for the wire and cable industry. It will be a sunrise industry that is full of hope in China.

Specific to the national grid planning, 2009 ~ 2010 is the smart grid planning pilot phase, the "12th Five-Year" smart grid will enter the full-scale construction phase, UHV as China's strong grid of the smart grid backbone, it will also enter the construction peak During the period, by 2015, the country’s total installed capacity will reach 1.436 billion kilowatts, with an average annual increase of 8% during the 12th Five-Year Plan period. It is understood that China's "12th Five-Year" period of national grid power grid investment will exceed 1.7 trillion yuan, the new power installation is expected to reach 380 million kilowatts, while the "Eleventh Five-Year" period, the new power installed capacity is only 265 million kilowatts . This also means that the wire and cable industry once again usher in a new stage of development.

Although the industry is developing rapidly, it is currently faced with excess capacity, the quality of products is worrying, the product structure is backward, and the level of gross profit of the industry is falling. These are serious challenges.

First of all, the current wire and cable industry has low production concentration. The top 19 companies accounted for only 11.70% of the market, and 409 medium-sized companies accounted for 36.90% of the market. Most companies are limited to lower-level competition in terms of scale and price.

Secondly, the price of copper, the main raw material, rose sharply, resulting in tight funding for wire and cable companies and slow capital turnover.

In addition, the wire and cable industry in the world has formed a pattern of giant monopoly, and foreign special cable products have entered the Chinese market, further exacerbating the fierce competition, and some companies have faced a crisis of survival.

We are concerned that Mr. Jiang Xipei, chairman of Sanpu Pharmaceuticals, pointed out in his article “The User's Maturity: The Hope of China's Manufacturing Industry” that at present, China’s wire and cable industry’s investment in production scale is out of control, and the industry’s production capacity has been seriously excessive, with low levels of repetition. The construction phenomenon is serious. Whether it is low-voltage, medium-voltage cables, or the production capacity of high-voltage and ultra-high-voltage cables, the production capacity of the entire industry has greatly exceeded the market demand, resulting in serious oversupply of many products and directly leading to low-cost vicious competition for the entire industry. The state and product quality levels have been declining. At the same time, the industry has entered a low threshold, and the concentration is not high. Over 95% of more than 7,000 manufacturing enterprises are small and medium-sized enterprises. Many do not have the necessary means of production capacity, quality control and testing. “Workshop companies” were able to get rid of the industry, coupled with the operating pressures caused by the rising raw materials, so that counterfeiting, shoddy work, cutting corners, shoddy work, and repeated shoddy phenomenon, non-standard products prevailed, not only buried a huge security risk , also make legal production of enterprises and dealers walk Difficult.