Why cable manufacturing industry is in trouble

" Although the market demand is promising, China's current wire and cable manufacturing industry is facing a severe test." According to the status quo of the wire and cable market, Cao Xiaoyu, a professor at Xi'an Jiaotong University, said in an interview with reporters, "Since last year, the government With the promotion and excessive credit capital inflow, the capacity of the already oversupply of China's cable manufacturing industry has once again undergone a frenzied expansion, and excess production capacity has led to increased vicious competition in the market."
Market demand warms up
Some people have a metaphorical analogy. Electricity is the blood of the economy, and wires and cables are blood vessels and nerves that carry blood.
In recent years, China's cable manufacturing industry has been developing at a rapid rate, increasing by 15% to 20% each year, and maintaining the world’s top output value of 700 billion yuan. However, due to the impact of the international financial crisis in 2009, China's cable manufacturing industry slowed down.
Although the pace of development has slowed down, a large number of advanced equipment and technologies introduced in recent years have, after years of digestion and absorption, formed a complete manufacturing chain. The enormous production capacity of China's cable manufacturing industry is still making the world look impressive. According to market survey data, at present, there are more than 4,000 cable companies in China, and the power cables and electrical equipment provided by them account for 20% of the global share, ranking the first in the world.
Since 2010 , China's cable manufacturing industry has reversed the sluggish state of 2009 as the entire electrician economy has improved, showing a significant growth trend. According to the statistics of the China Electrical Equipment Industry Association, from January to April, the electrical industry achieved an industrial sales value of 971.735 billion yuan, an increase of 32.10% year-on-year, and a total import and export volume of 34.465 billion US dollars, a year-on-year increase of 31.76%. Profits also showed an upward trend; The total profit of the cable manufacturing industry reached 3.51986 billion yuan, a year-on-year increase of 58.39%.
According to the forecast of experts, the demand for the cable market in China will continue to grow.
First, with the rapid development of new energy industries, wind power, nuclear power and other clean energy have ushered in an unprecedented construction cycle. The market size of special cables in China is 40 billion to 50 billion yuan per year, accounting for 20% of the total domestic cable market. 30%, while the current high-end cables required by China are almost all dependent on imports.
The second is that the copper twisted pair cable used in communications will continue to be the protagonist of the broadband subscriber line in the next 10 years. It is expected that the second climax of telephone cable sales will occur in a few years, and the annual sales volume may recover to 70 million to 85 million pairs of kilometers, indicating a steady increase.
Third, although the domestic supply of electronic wire rods is in excess of demand in macro terms, it cannot meet the needs of the color TV industry in terms of variety, specifications and special performance. For example, ultra-fine enameled wire, there are more than 10 domestic manufacturers, but due to various reasons, about one-third still need to rely on imports. Self-adhesive enameled wire, China's varieties and performance and the international advanced level there is a big gap, some high-performance and high heat-resistant grades of the product still need to import, these products need to be realized in the domestic.
Fourth, the power cable accounts for 25% of the total output value of the cable. The annual output value is nearly 40 billion yuan, which is a big market. Moreover, the market capacity of power cables is still growing at an annual growth rate of 8% to 9%.
According to the national energy plan, the construction and renovation of the new round of large power grids and urban and rural power grids will in turn bring tremendous business opportunities to the cable manufacturing industry. During the “Eleventh Five-Year Plan” period, the State Grid Corporation’s total investment reached 850 billion yuan, and the country’s total investment exceeded 1 trillion yuan. Experts predict that by 2020, China's UHV and cross-regional grid transmission capacity will be 210 million kW, of which 800 kV DC power grid is about 56 million kW, and another about 150 million kW by the AC grid. By 2020, the market demand for cables will reach 406 billion yuan.
Out of order capacity expansion
“ Although the market demand is still heating up, the current deep problems in China's cable manufacturing industry are already very prominent. It is imperative for resource integration and transformation and upgrading.” Chen Kun, Secretary-General of the Wire and Cable Branch of China Electrical Equipment Industry Association, said that The rapid development of the transmission grid and new energy industry has triggered more and more investors to invest in cable manufacturing, resulting in the disorderly expansion of production capacity from conventional cables to high-voltage cables and special cables.
It is understood that in recent years, domestic companies have launched more than 60 high-voltage VCV cable production lines (the cumulative number of other countries is only more than 20).
Why is there an orderly expansion of the production capacity of high-voltage cables and special cables in China's already overcapacity cable manufacturing industry?
Chen Kun believes that the technical content of conventional cables is low, there is basically no market access threshold, the production capacity of the entire industry has far exceeded the market demand, and the market competition continues to show a state of enthusiasm. China's high-voltage power transmission and power grids and new energy industries have developed rapidly in recent years. Cable manufacturing resources are bound to tilt toward high-voltage cables and new energy cables.
“The over-expansion of cable capacity is very serious.” Chen Kun expressed concern that since last year, governments at all levels have driven the development of new products or the development of high-end technology products under the policy of “expanding domestic demand and ensuring growth”. Investing huge amounts of money, building new factories, and purchasing production lines and equipment from abroad are frequently several hundred million yuan, more than one billion yuan, or even several billion yuan, forming a new round of investment boom. “Regardless of whether the nature of the enterprise is state-owned or private, The majority of the funds invested comes from the loans of the National Bank. At present, these investments make the cable manufacturing industry, which has already been over-developed and has a serious overcapacity, a problem that is aggravated by problems.
Take high-voltage cross-linked cable vertical production line (VCV) as an example. Domestically, 32 productions have already been put into production by the end of 2008 (only one of which is domestically produced). There are 28 products that will be put into operation soon after being purchased. A total of 60 pieces will be produced. With the completion of these production lines, domestic VCV production lines that originally had only 40% equipment utilization were left idle. At the same time, due to excess production capacity, the vicious competition such as cutting corners, shoddy goods, low-price competition sales, and even counterfeiting is even more serious. This kind of blind investment that ignores actual conditions not only wastes a lot of money, but also jeopardizes the healthy and orderly development of the industry.
According to relevant department statistics, 95% of the 4,000 cable companies in the country are small and medium-sized enterprises. Only 300 companies have annual sales exceeding 100 million yuan, and only 10 enterprises account for more than 1 billion yuan. In China's cable manufacturing industry with a total output value of nearly 700 billion yuan, industrial concentration is low and economies of scale are insufficient.
According to experts, in addition to serious overcapacity, the structural contradictions in China's cable manufacturing industry are very prominent. While Chinese companies are keen to invest in high-voltage cable production lines, they are unable to solve the problem of localization of ultra-clean cable materials. There are only a handful of manufacturers who can produce high-voltage cable accessories. Research institutions for high-voltage cable systems are even rarer. Especially in the cable industry chain, there are few companies with high value-added products involved, and high-end products such as aerospace, submarine, nuclear power, electronic cables, heat tracing cables, and automotive wiring harnesses are mainly provided by foreign-funded enterprises or overseas companies.
Take the nuclear power station cable as an example. According to relevant department statistics, by the end of 2010, the installed capacity of nuclear power in China will reach 20 million kilowatts, and the cable for nuclear power plants will provide a market space of 10 billion yuan. The demand for wind power cables will also reach 2 billion yuan, and the demand will double every year. As the cables used in nuclear power plants are very strict in terms of technical performance such as halogen-free, low-smoke, and low-toxicity, at present, our country can only produce cables for peripheral uses of nuclear islands, and all other cables are dependent on imports. Wind power cables also have special technical performance requirements, and high-end products still need to be imported.
Transnational companies have entered the Chinese market in large numbers and further promoted the vicious competition in China's cable manufacturing industry.
As early as a few years ago, multinational corporations such as Corning of USA, Fujikura of Japan, Alcatel of France, Pirelli of Italy, and Samsung of South Korea began to study the Chinese wire and cable market. They all agreed that China is the most promising potential for fiber optic communications and high-voltage power cables. Market.
In recent years, multinational corporations have established fiber optic cable, wire and cable production bases in China through wholly-owned or joint ventures, and major international telecommunication equipment manufacturers have entered the Chinese market and realized localized production. Corning has built three factories in Corning, Chengdu, Corning, and Shanghai Optical Fiber. Japan’s Sumitomo built Shenzhen Optical Fiber and Cable Factory, and Japan’s Furukawa and Fujikura successively built factories in China. South Korea's LS company also entered the Chinese market, with LS cable, LS color TV, LS machinery and many other entities, the asset size reached 5.7 billion US dollars, also set up an automotive cable production plant in Wuxi, Jiangsu.
“ The involvement of foreign wire and cable giants has added even more uncertainty and uncertainty to China’s uncertain cable manufacturing industry. However, we should also see its positive side.” Chen Kun believes that foreign cable companies Entering the Chinese market and forming the internationalization of the Chinese market, foreign wire and cable companies bring in capital and technology, as well as advanced management concepts and management culture, which are conducive to learning and drawing lessons from domestic cable companies and establishing an international perspective. To implement an internationalization strategy, "If domestic cable companies want to survive, they must increase their awareness of the crisis and improve their competitiveness."
Deeply troubled by copper prices
Affected by the high prices of raw materials such as copper, aluminum and plastics, especially the price of copper, the cable manufacturing industry has experienced unprecedented cost pressures.
“ China has entered the period of heavy chemical industry. With the advent of high-cost era, the rising price of production factors has become an inevitable trend. It is unrealistic to expect raw material prices to return to their original levels. However, through the improvement of market mechanisms, The government's macro-control and necessary interventions to curb irrational price-raising factors such as market monopolistic behavior and market speculation are still very necessary.” Liu Gangli, chairman of Hebei Xingtai Cable Co., Ltd. believes that this is important for promoting the coordinated and healthy economic development. The conditions are also the expected development environment for the cable manufacturing industry.
It is understood that copper, aluminum, and plastics account for more than 80% of the cost of cables. The significant increase in the prices of these raw materials has resulted in a substantial increase in product costs. However, due to the serious overcapacity of cable capacity, the market competition has become increasingly fierce, and cable sales prices have increased. It is difficult to improve reasonably. In particular, in the low-end and mid-end cable product market with relatively low technology added value, the situation of price reduction and price competition is quite common. At present, the cruel market competition makes it difficult for some cable companies to survive.
Industry insiders believe that the underlying cause of low-price competition for products is blind investment, overcapacity, and oversupply. On the one hand, due to the low investment threshold, a large number of companies have flooded into the country, causing cable manufacturers to “overkill”. On the other hand, due to the low “threshold”, some “shop-style enterprises” that do not have quality control and testing methods can be removed from them and become sources of counterfeiting, shoddy work, cutting corners, and shoddy products, and by lowering sales prices, etc. Means disrupt market order and aggravate disorderly competition in the industry.
Recently, when reporters interviewed some cable companies, the company unanimously stated: "The price of copper is too high to bear." Although the market demand is large, orders for millions of dollars in cables also occupy a certain proportion, but customers cannot accept the company's copper prices. Rising and raising cable prices. Cable companies are very troublesome. Most of the results are: "The price of this order may not be adjusted upwards, but if there is another cable demand, it must be used by me." The outside world claimed that this was a unique “overlord clause” in the cable industry.
In the interview, cable companies hope that through the call of the reporter, the largest user of the cable, the grid company, will change the bidding method and increase the contract price of the cable that has been signed so that they can overcome the difficulties.
Cable manufacturing seeks self-salvation
At present, in the cable manufacturing industry, large companies and small businesses are facing a severe test of survival. What is the road to self-salvage?
Bigger by competing
“ Healthy and orderly market environment is a strong plea for all Chinese cable companies.” Lin Yida, deputy secretary-general of the former China Electrical Equipment Industry Association, told the reporter that the cable industry association has been advocating industry self-regulation to avoid vicious competition, although companies have expressed their position. Self-discipline, but the fact is that corporate self-regulation is difficult to honor, and the current situation of excessive market competition has not changed at all. The industry hopes to prevent vicious competition through government's administrative intervention, and it is also difficult to be effective. “The market problem can only be solved by the market. Only through full competition, the survival of the fittest can make workshop companies, ultra-low-price bidding companies, companies that do not pay attention to product quality, companies that do not pay attention to cost management, and the timing of investment is misplaced. Enterprises that do not pay attention to after-sales service are gradually being eliminated by the market, thus purifying the market order and making China's cable manufacturing industry continue to develop healthily."
" The highest realm of self-redemption is competition and cooperation, and competition is superior to competition." Lin Yida believes that in today's market environment, domestic cable companies must survive through competition and cooperation in order to become bigger and stronger. No matter whether they are local companies or between local companies and foreign-funded enterprises, they must compete with each other and they must cooperate with each other in various forms. The domestic cable production capacity has been severely surplus. Through the integration of stock resources, the time and cost of development can be greatly saved, and the scale can be quickly formed. At the same time, product development time can be shortened and talents and technologies can be obtained.
Cui Genliang, president of Jiangsu Hengtong Group, told reporters that the development of Hengtong benefited from the exploration of the alliance for many years. Hengtong successively established horizontal cooperation relationship with Jiangsu Communication Cable Factory, Ministry of Posts and Telecommunications Wuhan Posts and Telecommunications Research Institute; joint venture with Japanese companies to expand the production scale of optical fiber cables; acquisition of Malaysian companies investing in China to achieve low-cost expansion; joint venture with Japanese companies to establish optical fiber drawing Alpha Corporation; joint venture production of special power transmission products, etc., both are the result of competing.
Improve core competitiveness
All along, China's cable manufacturing industry has given the outside world the impression that its technology content is not high. More than 80% of the competition is concentrated on ordinary cable products. As a result, the market suffers from excess production capacity of low-end cables and shortage of high-end cable products. The reason is that the core competitiveness of Chinese cable companies is not strong.
What is core competence?
“The core competitiveness of a company is the most competitive resource that can be controlled by the company itself.” Cao Xiaotong, a professor at Xi’an Jiaotong University, believes that different phases and different market environments of the company should create different core competitiveness.
For example, in a relatively free-competitive market environment, the competitiveness of enterprises when they are just starting is the ability to quickly respond to the market and the quality of goods and services; during the stage of steady performance, the most important thing is quality competitiveness; at the stage of the development and expansion of enterprises, In addition to ensuring quality competitive advantage, we must also regard innovation ability as the core competitiveness; if we continue to develop and be a century-long enterprise, we must regard corporate cultural influence as the company's core competitiveness.
“ Under a severe market environment, improving core competitiveness, identifying the pulse of industrial transformation, and increasing the added value of cable products will undoubtedly occupy an advantageous position in the market competition.” Jiang Huajun, general manager of Far East Group Composite Technology Co., Ltd. introduced Far East promotes the core competitiveness of enterprises by taking the path of high technology development.
In the Far East, the first is the establishment of a corporate cable research institute and a national postdoctoral research station, and increased cooperation with Tsinghua University and Shanghai Cable Research Institute to form a multi-level technological innovation system and successively developed special cables for nuclear power plants. With new products such as carbon fiber composite wires, the company’s core competitiveness is constantly increasing. The second is to intensify the introduction of talents, from a number of well-known universities and research institutes at home and abroad to hire a group of senior technology, management personnel to join; at the same time under the strength of training enterprise technology backbone.
" A company with a strong capital can attract talents with high salaries and improve its technological competitiveness. Enterprises that are short of money must make a fuss about low costs. Large enterprises can increase their ability to innovate, innovation can be used as their core competitiveness, and small businesses must follow the example of imitation. , use flexibility to build the core competitiveness." Xiaoyan Cao thinks.
Never blindly invest
" Avoiding duplicate investment and overcapacity is a problem that must be faced by the cable manufacturing industry." Chen Kun believes that at present, many cable companies must enter the field of new energy cables. Some of these companies not only have a good technical foundation, but also have abundant capital, and other companies are difficult to compete with them. “Although the transfer of corporate development and R&D direction should be determined by the market, companies must make careful decisions, not Only blindly invest in the immediate interests and do not blindly expand production capacity and strategic shifts.If too many companies participate in a certain field, they will trigger a vicious price war, which can easily lead to lower costs for profit, and the quality of products cannot be guaranteed. It is also not conducive to the healthy and orderly development of the entire industry."
Take the new energy cables that have attracted much attention in recent years as an example. At present, there are nearly 20 companies that can produce nuclear power cables in China, of which 6 to 7 are producing K1 products and nearly 10 are producing K3 products. As a clean energy source, wind energy is inexhaustible and has the most development value. From a global point of view, the wind energy industry will maintain an annual growth rate of 20%, which means a huge market space for China's cable manufacturing industry. However, the environment of wind power generation is poor, the service life of fans is long, and the cables need to rotate with the fans. The technical requirements for the cables are very high. They must be resistant to twisting, cold, salt spray, oil, ultraviolet and soft. Although the domestic R&D of wind power cables is still in its infancy, there are 6 to 7 companies that can produce wind power special cables. These companies have abundant capital and technology. It is difficult for other companies to squeeze into the cable market for wind power.
“ The investment that is suitable for oneself and can lay a long-term foundation for the company and enhance its current efficiency is the best.” According to Jiang Huajun, after several years of development, the Far East Group’s wind power cable production scale has reached RMB 2 billion, and the nuclear power cable The scale of production reached 3 billion yuan. In addition, Far East Cable uses 3% of its sales revenue each year as R&D input for new energy cables to further expand and capture the market.
Focus on the main business
In recent years, due to the difficult survival of cable companies, many enterprises have switched to production and diversified operations, among which there are many well-known large companies. The proportion of diversified industries is gradually increasing, and the main industry is not prominent, resulting in the competitiveness of Chinese cable companies. Constantly lower.
“ Only by concentrating resources and specializing in the main business can we make the cable industry bigger, stronger, and better.” Xiaoyan Cao said that only focusing on the cable industry for a long period of time will be conducive to the cultivation of professional talents and the accumulation of technology. Many areas of the cable manufacturing industry are high-tech intensive industries. Without a strong professional and scientific team, it is impossible to carry out technological innovation and scientific research and development.
The facts show that nothing can be done as a result. In the next few years, the national cable manufacturing industry will continue to experience a difficult stage. There must be a number of backbones, always focusing on the development of the cable industry, and supporting the banner of China's national cable industry. The development of specialization can be extended along the upstream and downstream of the product and industrial chain. The development space is actually huge.
Pay attention to standard setting
When many Chinese companies opened up overseas markets, we found that in addition to a series of trade protection barriers, foreign countries often set technical barriers through the formulation of technical standards. Technical barriers also allow Chinese companies to pay enough production costs and marketing costs. For example, to enter the US market to pass UL certification, to meet European standards in Europe; some European industries even have to revise a standard every two years, the purpose is very clear, that is, allow you to turn around their standards. China's standards are far behind the changes in emerging markets. Leading products such as wind power, nuclear power, optoelectronics, and smart grid have no prior intervention in the national standard.
Experts believe that for China's cable economy to integrate into the global market, it needs more standard sense of competition and sense of responsibility of the nation. "Chinese companies must also learn to use the technology strategy of competing with rivals." Yang Qidong, chairman of Fujian Qidong Wire and Cable Co., Ltd. believes that if China's international bidding for large projects, also set national standards, the future market competition will be Obviously reflected.
Improve patent conversion rate
Patent and innovation are the concrete manifestations of the company's core competitiveness. Domestic cable companies do not have enough patent awareness, and have a significant shortage of patent quality and quantity compared with foreign companies. The conversion rate of patent results is very low. According to investigations by relevant agencies, at present domestic cable companies have relatively few invention patents with high gold content and more utility model patents; while patents applied by multinational corporations are mostly invention patents, and thus the gap between domestic enterprises and multinational corporations can be seen. Statistical data show that if calculated on a per capita basis, the number of patents in China is 14 : 100 compared with developed countries .
Experts suggest that domestic companies should combine the current status of cable products, broaden the horizon of science and technology, pay attention to the source of innovation of the world cable technology, integrate resources, and promote technological innovation, so as to have more autonomous technological patents. At the same time improve the conversion rate of patent results.
Pay attention to personnel training
" For cable companies, talent is very important." Chen Kun told reporters that at present, there is a shortage of skilled and comprehensive talents in the cable manufacturing industry, and the brain drain has seriously affected the development of the industry.
The reason is that companies rarely pay attention to the training of talents. For college graduates who have just graduated, the space for improving their business capabilities is not placed in important positions as a training target. It is difficult for them to quickly grow into the backbone; in the course of business operations, scientific research and production are often disconnected from each other. It is because the interest orientations of scientific research and production departments are often inconsistent; excessive intervention by administrative leaders has weakened the enthusiasm of engineers for technological innovation; the company's treatment is low, the working environment cannot mobilize enthusiasm, and talents cannot be retained; the cable manufacturing industry is similar There are many situations like this. There are often faults in technical personnel. In particular, academic leaders with higher levels of technological R&D, fewer scientific research and management talents with both scientific research and development capabilities and strong organizational coordination capabilities.
Experts of industry associations believe that cable companies must strengthen the construction of a talented team. We must pay attention to the establishment of a combination of production, education and research, and form scientific and technological resources sharing mechanisms with scientific research institutions. This is a shortcut for companies to build core R&D teams and train their own talented teams as quickly as possible.
Promote green environmental protection
Although the cable manufacturing industry is only a supporting industry, it occupies a quarter of the output value of the Chinese electrical industry. It has a wide range of products and a wide range of applications. It is a basic equipment that can transmit electrical energy, transmit information, manufacture various electrical instrumentation and instruments, and realize indispensable electromagnetic energy conversion. It is a necessary basic product for the future electrification and information society. It is worthwhile to promote green regardless of its use and production when it advocates green environmental protection.
The state has promulgated many relevant laws and regulations for this purpose. For example, it is forbidden to use polyvinyl chloride wires and cables in important buildings. Halogen-free and low-smoke cross-linked polyolefin insulated wires and cables must be used to avoid heavy smoke and chlorine at the time of fire, causing casualties.
It is understood that the cable manufacturing industry in the world produces 5 million tons of waste each year in the production process. Also, 10% of long-term stored cable products become waste, which not only pollutes the environment but also wastes natural resources. At present, among the cable materials, the reutilization rate of copper and aluminum is more than 95%, while the reuse rate of polyvinyl chloride and polyethylene is only 3%. Although the low-smoke and halogen-free environment-friendly cables have been widely used in China in the past two years, there are still a long way to go.
Exploring Aluminum on Copper
Because copper has better electrical conductivity and thermal conductivity than aluminum, and less loss of electrical energy when delivering current, it has been recognized as the preferred material for wire and cable. However, our country is rich in aluminum and copper resources are scarce, in recent years, copper prices rose too fast, the feasibility of aluminum substitute copper has become a hot spot in the industry, it has repeatedly led to different views of the controversy.
The small and medium-sized motor industry associations opposed the use of aluminum as the enameled wire and believed that the use of aluminum instead of copper in small and medium-sized motors is not feasible. It is a technical retrogression that violates the national industrial policy. Some people in the wire and cable manufacturing industry are screaming that the price of copper is ridiculously high and they are using energy-saving as an excuse to resist the use of aluminum-core cables. In fact, replacing copper with aluminum is an established technology policy in China. In the cable standards, copper and aluminum are clearly defined as power cable conductors. However, the promotion of aluminum-to-copper conductors for power cable conductors is actually very slow.
“ This is a big misunderstanding. There are many links that need energy saving and energy saving, and reducing line losses is not just a conductor issue. There are other reasons for transmission and distribution equipment and equipment.” Beijing Beiyi Electromechanical Technology Development Center Manager Zhang Guanglie told the reporter, “From the point of view of international development, Europe, the United States, and Japan are promoting the use of aluminum-core power cables, and many of the cable engineering tenders for developing countries that have been seen have been proposed using aluminum-core power cables.”
In the interview, the reporter learned that under the current situation of high copper prices and the unbearable situation of cable companies, the promotion of copper-clad aluminum conductors has begun to break. Experts predict that copper-clad aluminum conductor cables will be rapidly promoted. The two new products of the Xingle Group’s "Copper Clad Aluminum (CCA) and Copper Composite Conductor Wire and Cable" passed the appraisal and signing contracts of tens of millions of yuan is a good example.
The chairman of the group, Ruan Yijie, told the reporter: “The price of copper has gone so far that it has far surpassed the ability of the enterprise to bear. We developed copper-clad aluminum a few years ago, hoping not to reduce the performance of the cable. Under the premise of finding a way out of the bottleneck of raw materials for cable cracking, copper clad aluminum technology is feasible.” The results of the appraisal show that the cost of this product is reduced by 20% to 40% compared with similar copper conductor products. And the proportion of small, easy processing, easy installation, transmission performance.
Although some cable manufacturers have different levels of response, it seems that they have seen the light.