Wire and cable industry to take the road of differentiated competition

With the acceleration of the process of industrialization, the rapid advancement of urban rail, shipbuilding, power construction, and urbanization has brought a huge market for China's wire and cable industry. However, the internal problems of the wire and cable industry in China are also continuing. The majority of wire and cable manufacturers are generally pessimistic about the industry and the market. In this regard, correctly understanding the various problems that occur in the industry and finding a reasonable solution to these problems are wire and cable. The healthy and orderly development of the industry and the continuous growth of wire and cable manufacturing companies are fundamental.

Under the global wire and cable market competition pattern, it is not difficult to find that although the total output value of China's wire and cable industry has surpassed that of the United States and ranks first in the world with 1.1 trillion yuan, this output value is minimal in the global wire and cable market. In the domestic cable and cable manufacturing companies, their R&D capabilities lag far behind those of cable giants abroad, and they can only compete in the low-end market. At present, the scale of the global wire and cable market has exceeded 100 billion euros, of which the Asian market accounts for about 36%, the European market about 31%, the American market about 23%, and other markets about 10%. The market share of China's wire and cable industry in the Asian market is far behind that of wire and cable manufacturers in Japan and South Korea.

Although China currently ranks as the world leader in terms of gross domestic product, its market share in the global competitive landscape is not optimistic. Moreover, the average profitability of China's wire and cable market share is also very low, only hovering around 3% - 4%. Although margins such as ultra-high voltage cable, special submarine power, and new energy special cable are relatively high, they are not at the disposal of most wire and cable manufacturers.

The reason why China's wire and cable manufacturers have a meager profit lies in the fact that China’s wire and cable industry is dominated by medium and low-end products that cannot meet the requirements of products such as German Priusman, France’s Nexans, and Japan’s Furukawa. R & D and process control levels. Moreover, at present, the development of the wire and cable industry in China is an extensive and extensive production and business model. The vast majority of SMEs attach more importance to short-term economic effects. Few companies are willing to invest manpower, material resources and funds for high-end products. R&D and production therefore create a vicious circle that can only compete in the low-end market. It can even be said that many small and medium-sized manufacturing companies in China have not even carried out basic research work, so they will be so far from the gaps between foreign cable giants.

It is also due to the lack of R&D and production capacity of domestic high-end products, which has led to serious problems in the industry. Due to the lack of unified planning, it has caused a serious excess of production capacity. Take the Lita project as an example. The local wire and cable manufacturers are keen to compete for the Lita project. The reason is that China's largest cable purchaser, State Grid and China Southern Power Grid, had previously required the use of ultrahigh-voltage cables for the selection of Lita. As of December 2012, the total number of towers that have been built or under construction in China has exceeded 70, and conservative estimates have reached or exceeded the total number of towers in cable companies in all countries except China. In addition to the large number, but also the higher the construction is, the maximum has now reached 180 meters.

In recent years, the ultra-high pressure catenary cross-linking production line can also meet the requirements of cable eccentricity, and the State Grid and China Southern Power Grid have gradually liberalized the catenary market. Therefore, whoever can achieve the quality level of the production cable of the tower with a catenary production line with less investment will inevitably bring huge profits to the company. If blindly follow the trend, they have to invest in the production of cable, it is high cost and low profit.

From China's wire and cable industry in the global market competition is difficult to occupy a dominant position, and domestic wire and cable manufacturers for high-end product research and development deficiencies, corporate profits and other issues, thus extending the domestic mainland China in spite of numerous wire and cable brands, but the lack of international famous brand. Currently, foreign counterparts know little about other large wire and cable brands, in addition to knowing a few large companies such as Far East.

I remember that at the Asia International Wire and Cable Exhibition held in Shanghai in 2012, foreign wire and cable manufacturers or suppliers of raw materials and equipment faced many domestic wire and cable manufacturers that were actually stunned and only produced a few large wire and cable production. A little understanding of the business. This shows that China's domestic wire and cable brands lack international influence and there is still much room for brand expansion. Therefore, China's domestic wire and cable manufacturers should seize opportunities for foreign exchanges and contacts, such as international wire and cable exhibitions, to promote their brands to the international market, and to expand their brand influence and appeal. .

Of course, unavoidably, another important reason for the low profits of China's wire and cable manufacturers is the ever-increasing production cost, which is mainly due to the high prices of raw materials such as copper. As we all know, the cable industry is a heavy light industry, raw materials and other raw materials, copper and other raw materials accounted for about 90% of the total cost. In recent years, due to the fluctuation of copper prices, the prices of cables have also increased year by year and are extremely unstable. In addition, the problem of dragging and borrowing wires and wires to buy a house is serious. Therefore, under the circumstance of forced necessity, wire and cable manufacturers can only vigilantly owed money to copper and other raw and auxiliary materials manufacturers, thus forming a credit crisis in the wire and cable industry.

Therefore, the way to minimize the cost of purchasing raw materials by which means and by what kind of channels is also the number one goal and number one problem for many wire and cable manufacturers. If it can effectively suppress the chaotic fluctuation of copper prices, it will play a positive role for wire and cable manufacturers.

In addition to the above problems, there is another difficult problem that cannot be ignored in China's wire and cable industry. The industry concentration of China's cable manufacturers is low, which is also the main reason for the competitiveness of wire and cable giants in developed countries. According to the British Intertek Corporation statistics, although there are nearly 10,000 cable manufacturers in China, there are thousands of supporting industries such as equipment, raw materials and semi-finished products. However, the low concentration rate is one of the main reasons that restricts the competitiveness of China's wire and cable manufacturers.

It is reported that at present, China's top 10 cable companies only account for 7% to 10% of the domestic market share. In contrast to the wire and cable market pattern of developed countries, we found that the top 10 cable manufacturers in the United States, General Motors, 100 Tong, Corning, South Line, etc. - occupy about 70% of the market share! And in Japan, seven major cable companies - Furukawa, Sumitomo, Tengcang, Hitachi, Showa, etc. - occupy more than 66% of the market Share. In France, the five major cable companies—Nikesen, Newtex, etc.—have occupied more than 90% of the French market share!

Although the total output value of China's wire and cable industry ranks first in the world, facing the objective reality of low concentration of Chinese wire and cable manufacturing companies, it shows a great inconsistency and even conflicts. It can be said that it is precisely because the concentration of China's wire and cable manufacturing enterprises is too low, which has increased the instability of China's wire and cable industry, and even caused some small and medium-sized manufacturing enterprises to be eliminated by the market in competition, or barely maintained or on the verge of collapse.

Faced with the problem of low concentration, only by strengthening the integration of industry resources, efforts to expand the market share of enterprises, etc., can increase the stability of the domestic wire and cable industry. But also through the above-mentioned problems and misconceptions, not only stinging the cable manufacturing companies, but also for the wire and cable manufacturers to specify the direction - through increased R & D efforts, local brands, take the road of differentiated competition, Integrate industry resources and other methods to achieve a new breakthrough in the global market competition structure of China's wire and cable industry!