Observing the Domestic Cable Industry Barrier from the Bottleneck

The problems in China's wire and cable industry can often be seen as small, and the problems that are exposed from one region or even one company can often be seen in the entire industry. China's wire and cable companies are mainly concentrated in several major regions, among which the cable industry is the most concentrated in East China. The East China region has Anhui Wuwei and Jiangsu Yixing are the most representative. This paper will use Wuwei as an example to illustrate the comparison. Refraction the entire cable industry faces many problems.

Last year, cable revenue in inactive regions was not ideal. On the one hand, it was related to the financial crisis. On the other hand, it was closely related to the company's own business and fierce competition in the market. Especially in the fierce competition, unwieldy cable companies have exposed many deficiencies, such as less brand influence, lower product quality, and weaker core competitiveness, which directly affect the camp of unwired cable companies. Received.

According to the statistic of a non-local government, from January to April of last year, although the total output value of Wuwei County's cable industry has increased to 5.23 billion yuan, the tax revenue is only 177 million, which is a drop of nearly 30%. The profit space of enterprises is also severely squeezed, and even some cable manufacturers are struggling. It is reported that in the Wuwei County and above-scale cable companies, eight of these companies suffered losses of varying degrees, and the profits of 14 companies fell sharply, which also reflected the shortcomings of current domestic cable companies:

First of all, the product structure is backward. The current wire and cable products are mainly divided into five categories, while Anhui’s non-productive cable products are mainly concentrated in the two categories of electrical equipment cables and power cables. In terms of power cable products, they are mainly concentrated in 35KV and below medium and low voltage cables. The 220KV EHV and UHV cables that lead the development direction of power cables are almost blank.

As a result, with the great opportunities brought about by the rapid development of the national grid, especially the UHV grid, it is difficult for local cable manufacturers to get involved, especially in addition to domestic high-voltage cable manufacturers, as well as the competition of foreign joint ventures. Intangible cable companies lack the competitive advantage.

The products of unreliable cable manufacturers for electrical equipment are also mainly concentrated on control cables, computer cables, fluorine plastics, and silicon rubber cables. In the face of the rapid development of railway signal cables, wind energy cables, and nuclear cables, The vast market can only hope to sigh. In addition, in the area of ​​submarine cables, petroleum platform cables, and optical fiber cables, which have great potential for development, intangible cable companies have not yet stepped in. The bottlenecks caused by problems such as insufficient product development, single products, and high-end products are very obvious. .

The situation of the intangible cable manufacturers looked at the national concentrated areas of cable production and found that there were only a few companies capable of achieving product diversification and competition in the high-end market, and many companies could only watch the national development belt. The huge market has been eroded by foreign cable giants, but there is no alternative. From this point of view, the adjustment and optimization of the industrial structure have become urgently needed. If we do not want to miss the vast market and do not want to stay in the low-end market with vicious competition for a long time, the continuous adjustment and optimization of the industrial structure will be the only way.

Second, the management level is backward. With the continuous expansion of the enterprise scale and the continuous improvement of the market economic system, the traditional management system and management methods are difficult to adapt to the objective requirements of the development of the market economy. Compared with Jiangsu Yixing in East China, there is still a certain gap between the management level of Wuwei County's wire and cable companies. Mainly manifested in: a single corporate property rights structure, corporate governance structure is not perfect, many companies are still family-style management; companies generally focus on sales and light management, internal management is weak.

In addition, the awareness of using the capital market to drive the rapid growth of enterprises needs to be improved. As of now, Wuwei County is seriously lacking in listed companies. At the same time, the awareness of the company's wire brand promotion is not strong, it lacks China's well-known trademarks, there is no one famous brand product in China, and there is no national quality award company.

The problem of weak brand awareness is a common problem for the industry. Although in recent years there has been a call for increasing brand awareness, at present, only a handful of companies in the Far East, Shanghai, Shanghai, Baosheng, and Hengtong have a certain degree of certainty. In recognition, other companies are obscure, and domestic cable companies have reached nearly 10,000 homes. It can be seen that brand awareness is weak and over 99% of cable companies are submerged in the brand's ocean.

Third, the market development capability needs to be strengthened. According to statistics, in 2009, the total output value of the wire and cable industry in Wuwei County was 18.9 billion yuan, accounting for 2.7% of the country. In Yixing, the total output value of the cable industry reached 60 billion in the same year, and it gradually occupied the high-end market. Wuwei County also has many deficiencies in terms of exports, and it is only bundled with China National Petroleum Corporation, Sinopec and national large construction companies. In 2009, Wuwei County's direct export of wire and cable products was only 220,000 U.S. dollars, while Yixing reached 265 million U.S. dollars. This is only a relatively large gap compared to Yixing and it is in the range of national exports. It is even more insignificant.

In the process of opening up the market, Wuwei County has exposed a serious problem of low concentration, and has been deeply trapped in the middle and low-end market competition. The author believes that even for the problem of low concentration and competition in the low-end market, even if it is Yixing, besides several leading domestic companies, it is also facing such awkward situation. Looking at the nation's wire and cable industry, the lack of concentration has become a consensus within the industry. The top 10 cable companies in the country are only familiar with 7%-10% of the domestic market share. Under the pressure of competition from foreign giants, domestic cable companies are also familiar with the disorderly competition in the low-end market. Therefore, how to break the low concentration and competition in the low-end market is not an ineffective issue, but national The problems of the wire and cable industry are even more of a problem for the government.

Fourth, the supporting capacity is not strong. The cable industry is a heavy-duty light industry. The copper and other raw and auxiliary materials in finished cables account for about 90% of the total cost. Therefore, the upstream and downstream cables as well as the matching of logistics, technology, and information are of vital importance and are directly related to the level of production costs.

At present, Wuwei County has a large number of wire and cable supporting enterprises, but it is generally small in size, and the supporting products can only meet the 5%-10% required for inaction. The production of copper conductor material is only one, and the actual annual output is only 30,000 tons, accounting for only 1/10 of the total amount of copper material needed for inaction.

In addition, the original and auxiliary materials required must all be purchased from outside, coupled with deficiencies in logistics and transportation, public technical services, and tertiary production support, which will cause the production costs of inactive cable companies to remain high.

The price of raw materials remains high, the price hike is hard, and the phenomenon of falling cable prices is also not surprising. In addition, the advantages of labor costs, outstanding receivables, and “triangular debt” issues have directly caused the cable industry. High production costs, severely squeezed profit margins, coupled with problems such as excess production and insufficient operating rates, have seriously affected the survival and development of cable manufacturers.

Finally, the lack of equipment research and development capabilities. Wuwei County's cable manufacturing enterprises generally lag behind. There are only 3 imported production lines in the county, which are concentrated in 2 companies. In 2009, Wuwei County built 12 35KV production lines, but the utilization rate of equipment was only 13.4%. In the research and development, it also encountered relatively outstanding problems. There are problems such as competing imitations, incompetent R&D capabilities among enterprises, shortage of talents, insufficient technical input, and lack of innovation awareness among enterprises.

In addition, the backbone companies do not have a strong core driving force, and large enterprises do not have high technological content in the new projects. Small companies generally follow suit to imitate the products of large enterprises, and the homogeneity of enterprise products is serious. The proportion of Wuwei County-owned enterprises with independent intellectual property rights is only 18%.

Problems such as the severe lack of redundant construction, severe shortage of talents with comprehensive quality and backward R&D capability are also common problems in China's cable industry. At present, China’s wire and cable industry spends R&D funds on average less than 1% of sales. It is not difficult to see how to maintain close contact with universities and research institutes to attract outstanding scientific research talents; how to raise awareness of innovation, take the road of differentiated competition, and invest more money in product and technology research and development. Has become a problem to be solved.

From the series of problems encountered during the development of Wuwei County's cable industry, it can be said that 100% of the problems are the problems facing the entire cable industry in China. The transformation and upgrading of the domestic cable industry has reached an urgent urgency. It is also a necessary means for companies to become bigger and stronger and the industry bigger and stronger. Whether it is to expand the market or increase the profit rate, it cannot be achieved in a single way, but requires a comprehensive, holistic and organic development.