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The development of wire and cable industry
May 30, 2018

Current situation of the development of

Although the wire and cable industry is only a supporting industry, it accounts for 1/4 of the output value of China's electrical industry. It has a wide range of products and a wide range of applications, involving electric power, construction, communications, manufacturing and other industries, and is closely related to various sectors of the national economy. Wire and cable also referred to as the "artery" and "nerve" of the national economy, is the transmission power, information and manufacturing various electrical machinery, instruments, meters, realization of electromagnetic energy conversion are indispensable basic equipment, is the foundation of the future society need of electrification and informationization products.

The wire and cable industry is the second largest industry in China after the automobile industry. In the world, China's total output value of power lines and cables has surpassed that of the United States, becoming the world's largest producer of power lines and cables. With the rapid development of China's wire and cable industry, the number of new enterprises has been increasing, and the overall technical level of the industry has been greatly improved.

From January to November 2007, China's wire and cable manufacturing industry realized a cumulative industrial output value of 476,742,526 thousand yuan, an increase of 34.64% over the same period last year. The cumulative sales revenue of products reached 457,503,436 thousand yuan, an increase of 33.70% over the same period last year. The accumulative profits totaled 18,808,301,000 yuan, an increase of 32.31% over the same period last year.

From January to May 2008, China's wire and cable manufacturing industry realized a cumulative industrial output value of 241,435,450,000 yuan, an increase of 26.47% over the same period last year. The cumulative product sales revenue was 227,131,384,000 yuan, up 26.26% from the same period last year. The cumulative profit was 8,519,637,000 yuan, an increase of 26.55% over the same period last year. In November 2008, in response to the world financial crisis, the Chinese government decided to invest 4 trillion yuan to boost domestic demand, of which more than 40% was spent on building and upgrading urban and rural power grids. The national electric wire and cable industry has a good market opportunity, various electric wire and cable enterprises seize the opportunity to meet a new round of urban and rural power grid construction and transformation.

Over the past 2012 years for China's wire and cable industry is a sill, because GDP growth slowed, the global financial crisis, domestic economic structure adjustment, the cable companies generally starts in domestic shortage and excess capacity, even cause industry concerns about failures. With the arrival of 2013, China's wire and cable industry will usher in new business opportunities and markets.

By 2012, the world wire and cable market size has more than 100 billion euros, and in the global scope, wire and cable industry in Asia market is 37%, the European market is close to 30%, American market accounted for 24%, other markets accounted for 9%. Which, although China's wire and cable industry in the world wire and cable industry plays an irreplaceable role, and as early as in 2011 China's wire and cable enterprise value has surpassed the United States, as the world's first. But objectively speaking, compared with the electric wire and cable industry in Europe and the United States, China is still in a big and weak situation, and there is still a big gap between China and foreign famous electric wire and cable brands.

In 2011, the sales value of China's wire and cable industry reached 1143.8 billion yuan, surpassing trillion yuan for the first time, increasing by 28.3 percent and generating a total profit of 68 billion yuan. In July 1, 2012 - the national wire and cable industry sales output value 671.5 billion yuan, profit of 28.1 billion yuan, an average of only 4.11% profit, profit margins are lower than China's electrical industry average profit 4.88%, compared with a marked decline of 2011.

In addition, in terms of the asset scale of China's cable industry, the assets of China's wire and cable industry reached 7904.99 billion yuan in 2012, an increase of 12.20% over the previous year. East China accounts for more than 60% of China's total electric wire and cable manufacturing industry, which remains a strong competitiveness. [1]

China's sustained and rapid economic growth, provides a huge market space for wire products, and the Chinese market strong allure, made the world are focused on the Chinese market, in short decades of reform and opening-up, China's huge production capacity which is formed by the cable manufacturing makes the world sit up and take notice. As China's power industry, data communications, urban rail transportation, auto industry and the expansion of the scale of shipbuilding and other industries, the demand for wire and cable will be rapid growth, the future wire DianLanYe and huge development potential, as shown in the "China's wire and cable industry market demand forecast and investment strategy analysis report.

In wire and cable enterprises transnational operation strategy, implementation and control in the process of strategic management, should follow the following principles: both the domestic and international business, cohesion, seeking resources and industrial layout, scale and benefit is consistent, ownership and control type of match, coordinated operations, parent and subsidiary organization form of production and management of the organization structure and management system. Wire and cable enterprises should follow these principles and handle the following relationships:

1. Correctly handle the relationship between domestic business and international business

It needs to be pointed out that the transnational operation of wire and cable enterprises is the requirement and objective result of the expansion of enterprise productivity, not the subjective and artificial intention. Not all of the wire and cable companies must engage in transnational business, due to the scale and nature of the business enterprise is different, there are quite a number of wire and cable companies only fit for doing business in the domestic market. Wire and cable enterprises with transnational operation conditions should still properly handle the relationship between domestic and international business. Domestic market is the enterprise survival and development of the warehouse, wire and cable enterprises doing business in China can occupy the favorable conditions, geographical and human conditions, expanding the international market and to take risks in these areas; However, in order to improve the market share and competitiveness, the development of Chinese wire and cable enterprises should focus on the long term and expand the regional scope of operation from the perspective of optimal allocation of production factors.

2. Give due consideration to the relationship between industrial layout and resource allocation

Therefore, wire and cable enterprises should not only develop resources overseas, but also make the best use of materials overseas to reduce the cost of raw materials and some transportation costs. At the same time, wire and cable enterprises belong to the manufacturing enterprise, should be considered in natural resources and energy shortages and reasonable industrial layout, the influence of resource intensive to production layout in rich resources, lower cost of overseas countries and regions.

3. Properly handle the relationship between scale expansion and efficiency improvement

For many years, the scale of transnational operation of Chinese wire and cable enterprises has been concerned, and it is widely believed that due to the small scale, many enterprises have not produced the expected economic benefits. Since a period, therefore, part of China's wire and cable enterprise multinational operation to the other extreme, one-sided pursuit of scale expansion, ignore the economic benefits, and when the purpose of transnational operation. Therefore, in the planning and implementation of transnational operation strategy, wire and cable enterprises should correctly handle the relationship between scale and benefit, and expand scale to obtain higher benefits.

4. Properly handle the relationship between ownership and control rights

Wire and cable enterprise through foreign direct investment have a partial or full ownership of overseas companies, the purpose is to get control of overseas companies through ownership, which serve for the overall development strategy of the parent company in order to obtain the biggest economic benefits. If, instead, wire and cable companies get some or all of the overseas enterprise ownership at the same time, but no exercise of control of the enterprise, there is no ownership to serve for the company's overall strategy, the multinational business has lost its real meaning, the enterprise also is not the true sense of transnational operation enterprises. Therefore, a wire and cable enterprise with global market as its strategic target must obtain corresponding control no matter how much ownership it gains in transnational operation.

5. Properly handle the relationship between parent and child companies and overseas enterprises

The headquarter of wire and cable enterprise is the decision-making center of transnational operation, and its subsidiary is the profit production center of the parent company. Overseas businesses should respond to each other rather than compete internally. Under the system control of the parent company, overseas enterprises carry out production and operation activities to complete the instructions of the headquarters.

6. The organizational form of production is in line with the organizational structure and management system of operation and management

At different stages of transnational operation, wire and cable enterprises adopt different production organization forms, horizontal integration or vertical integration. Therefore, the organizational structure and management system of electric wire and cable enterprises should correspond to the organization form of production, so as to form a consistent, reasonable and efficient management control system both inside and outside.

Industry concentration analysis

Product concentration

China's wire and cable industry five products - bare wires, winding wires, electrical equipment, wire and cable, power cable and communication cable and cable, the output value of industry output value accounted for 18%, 19%, 22%, 19% and 10%.

Bare wire products are mainly used as semi-products of overhead conductors and other cable products, and their share is relatively stable. Winding line products are growing in line with the shortage of national energy and power supply. Power cable products will continue to grow at a high speed, driven by the construction of the national smart grid.

Starting from the second half of 2010, countries have introduced a further expansion of 3 g and fiber optic broadband investment scale, promote the triple play pilot, cultivate strategic emerging industries and other related policies, so in the next few years, telecommunication cable and optical fiber cable market share will significantly expand. In addition, the electric equipment cables will also maintain rapid growth with the rapid development of the energy industry, automobile industry, construction and household appliances.

Regional concentration

According to statistics, Chinese wire and cable enterprises are mainly concentrated in east China, and the number of enterprises is more than half of the total number of the whole industry, mostly in jiangsu province and zhejiang province. The number of electric wire and cable enterprises in the central and southern region accounts for 27%, mainly in guangdong province. The number of enterprises in north China, northeast China, southwest China and northwest China accounts for 10%, 6%, 4% and 2% respectively.

East China and central south region accounted for 80% of the wire and cable market in our country, with the adjustment of industrial structure, market concentration increase, the market will be more concentrated in jiangsu, guangdong, zhejiang and shandong provinces such as cable production.

Guangdong province is the province with the largest output value of electric power cables in China. Jiangsu province occupies about 40% of China's market in communication cables and optical cables, and ranks second in power cables. Well-known production enterprises in the cable industry, such as far east group and baosheng group, are located in jiangsu province. Zhejiang province, shandong province in winding wire and power cable products are in the forefront of domestic.

Future market forecast

Overall, the macro economic situation in 2010 is still conducive to the development of the electrical industry. But at the same time, China's economic recovery is not yet firmly established, and there are many uncertainties both at home and abroad, so the path of development in 2010 is doomed to be uneven.

According to the relevant planning, in 2010, the total industrial output and sales output of the electrical industry and other economic indicators are expected to exceed 3 trillion yuan, an increase of about 12% year on year. Profits will total 170 billion yuan, up about 10 percent year on year. Among them, the output of power generation equipment is still expected to reach more than 100 million kilowatts. The output of transformers in the transmission and transformation equipment will exceed 1.4 billion kva, which is expected to increase by 10%. In order to promote the good and rapid development of the electrical industry, several major problems affecting the economic operation of the whole industry need to be paid attention to and solved as soon as possible.

A, in industries with excess capacity still disorderly development of wire and cable industry has presented overgrowth phenomenon, but since last year, some local governments in "expanding domestic demand, sustaining economic growth and maintaining stability" policy, under the drive of the development of new products or in the name of the development of high-end technology products, still invested heavily, new factories, purchase of production lines and equipment from abroad to expand capacity, often hundreds of millions of yuan, billions of yuan, even 2 billions yuan, formed a new round of investment boom. No matter the nature of the enterprises is state-owned or private, but the vast majority of the funds invested are loans from national Banks. These investments add to the problems and add to the problems of the cable industry, which is already overdeveloped and has severe overcapacity. With high voltage crosslinked cable vertical line (VCV) as an example, the domestic has been put into production at the end of 2008 there are 32 (which only one is domestic), already bought the equipment and 28 and after put into production in 2009, a total of 60. This kind of blind investment, regardless of the actual situation, not only wastes a lot of capital and wealth, but also greatly harms the healthy and orderly development of the industry. These production lines will further idle domestic VCV production lines, which are already only 40 per cent efficient. At the same time, due to overcapacity, it will also lead to shoddy work, shoddy goods, low-price competition and even counterfeit goods.

Second, there are still restrictions on domestic equipment. In some regions and areas of China, there are restrictions on domestic equipment, which seriously hinder the localization of major equipment. To reduce the financial crisis impact on China's economy, the state has staged a series of policies to expand domestic demand to promote steady and rapid economic growth, the national development and reform commission and other nine ministries jointly issued "on the implementation of expanding domestic demand to promote economic growth policy decisions to further strengthen the supervision of project construction bidding and tendering work opinion" (hair change regulations [2009] no. 1361). The file explicitly prohibited by setting discriminatory restrictions on domestic equipment use, further strengthen the supervision and administration of engineering construction bidding and tendering work, standardize the order of bidding and tendering market, improve the efficiency of the investment play an important role. In domestic engineering construction bidding limit domestic equipment, adopting discriminatory phenomenon has been greatly, for the development of national industry, to promote the adjustment of industrial structure and product upgrading has played a positive role. However, in some places and in some areas, the central government's policies have been ignored, and even in the face of wind, discriminatory provisions have been adopted to restrict domestic equipment in the bidding of major construction projects. As in the city rail transit line 1 project (400 v switchgear procurement project) in the tender documents, unexpectedly appeared "bidding product of circuit breaker, contactor and other components must have two or more subway use performance, the main components (circuit breaker, contactor) must be international famous brands of discriminatory terms and limit domestic equipment to participate in the bidding activities. And the bidding documents mentioned in the "main components (circuit breaker, contactor)", many domestic enterprises are able to produce, and are widely used in aerospace, airport, subway, electric power, machinery, petrochemical, metallurgical, textile, and many other industries and national key projects, such as the qinshan nuclear power plant, zhongnanhai substation, the Oriental pearl TV tower, etc., and running in good condition. The product has the characteristics of good quality, high stability and high cost performance. It can be said that the domestic 400V switchgear circuit breaker, contactor has been able to meet the technical requirements of a city rail transit project.

Since the 1990 s, the cable industry is known as the city "nervous" and "blood", is shouldering the pillar industry of national economy for all walks of life form a complete set of functions, growth for China's machinery industry position in the second to the auto industry. However, the output value of China's cable industry still only accounts for about 15% of the world's cable industry. This huge market still has a lot of development space and blank spots, which need to be developed. During the eleventh five-year plan period, according to the annual growth rate of the national economy of 7 percent to 8 percent, the development speed of the electric wire and cable industry will be the same as the development speed of the national economy, which is expected to be about 8.5 percent. On the macro level, the whole Chinese wire and cable industry is in a period of rapid development and growth.

Development is rapid, and problems arise. Especially in the low - and middle - end wire and cable with relatively low added value

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