China's Wire and Cable Manufacturing Industry Challenges and Opportunities

Although the wire and 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. 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.

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.

The disorderly expansion of production capacity "Although the market demand is still heating up, the deep-seated problems in China's cable manufacturing industry are already very prominent. It is imperative for the integration of resources and transformation to be upgraded." Secretary of the Electric Wire and Cable Branch of China National Electrical Equipment Industry Association, Mr. Chen Kun According to the report, the rapid development of the high-voltage 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."