In recent years, China is accelerating the pace of power network construction. UHV power grids and new distribution networks are all upgrading the current cable market demand. The domestic cable industry is rapidly growing in the market and rapidly expanding production capacity. On the surface, the cable industry has experienced a period of prosperity. But this is only a "puffiness," not "strong."
Wire and cable provide infrastructure for the power industry and communications industry, occupying a quarter of the output value of China's electrical industry. It is China's second largest industry after the automotive industry, with product variety satisfaction rates and domestic market share exceeding 90%. In the world, China's total output value of wire and cable has surpassed that of the United States and has become the world's largest wire and cable producer. From a macro perspective, the rapid growth of China's wire and cable is closely related to China's rapid economic growth. Without the rapid growth of China's economy, China's wire and cable industry will not be able to usher in today's expanding scale in a short time.
However, in the past 2012, it was an embarrassment for the wire and cable industry in China. Due to the slowdown of GDP growth, the global financial crisis, and the adjustment of the domestic economic structure, the general lack of capacity and overcapacity of domestic cable companies has even triggered the industry. Worried wave of closure.
Although a broad market was opened in 2013 with the advancement of industrialization, the internal and internal development of the industry was not optimistic. The reason for this situation is that China’s wire and cable industry’s manufacturing scale has increased at an alarming rate. Technology and product upgrades are far behind the pace of the market. This has caused serious duplication in the industry and overcapacity. , insufficient effective supply, prominent structural contradictions, low input and output, and weak technological innovation. What is the reason for the current situation in the market today?
Local concessions give the cable industry a low threshold
Due to the low barriers to entry and the local government’s “giving money, giving land, and giving policiesâ€, wire and cable companies have mushroomed. Since its development, the wire and cable industry has become the second largest industry in the electrical and electronics industry, second only to the automobile manufacturing industry. The annual output value has exceeded one trillion yuan. As the government reduced investment in infrastructure construction, the contradiction of overcapacity was immediately apparent. Under normal circumstances, an industry's capacity utilization less than 80% can be called surplus. At present, the capacity utilization rate of the wire and cable industry is about 60%, and the degree of excess capacity can be imagined.
In addition, since 2012, in the case of government promotion and excessive credit capital inflows, the already surplus production capacity has once again expanded wildly.
If the cable market is allowed to continue indefinitely, it will undoubtedly have a negative impact on the sustainable development of the industry. The Chinese government has started to regulate the industrial development environment in terms of policies.
National policy eliminates excess production capacity
On February 16, 2013, the National Development and Reform Commission issued the “Decision of the National Development and Reform Commission on Revising the Relevant Provisions of the Industrial Structure Adjustment Guidance Catalogue (2011 Version)â€, which contained the decision to adjust the relevant items of the 2011 version of the industrial policy. Twenty of the “Decisions†are: “Eleventh, Machineryâ€, Item 15: “Wire and Cable Manufacturing Projects (Special Wires and Cables Used in New Energy, Information Industry, Aerospace, Rail Transportation, Ocean Engineering, etc.) Except)) is amended to "6 kV and above (onshore) dry cross-linked power cable manufacturing project". These newly adjusted industrial policies have been implemented since May 1, 2013.
The serious overcapacity has become a source of outstanding contradictions and many problems in the cable industry. Failure to take timely measures to resolve will inevitably exacerbate vicious competition in the market, resulting in falling profits in the industry, unemployment of employees, and increased non-performing assets of banks, threatening the healthy development of the industry.
The new policy seeks to ease the overcapacity situation in the cable industry. The newly adjusted industrial policy has made major adjustments to the original industrial policy. It fully considered the characteristics of wire and cable manufacturing as a basic supporting industry and the development needs. It has explicitly restricted the production capacity with serious excess conditions for the wire and cable industry. The upgrading and transformation provided an opportunity and also made the upgrade of wire and cable manufacturers more urgent. Companies that do not have superior quality, technology, and brand are bound to face the fate of being eliminated.
The word "eliminate" is like a sword, allowing overcapacity cable companies to hang on the line. Resolving the contradiction of serious overcapacity will inevitably cause labor pains and even hurt the bones. At present, the cable industry has passed the stage of pursuing the development of scale. At this stage, it must pursue the development of quality and efficiency. From the overall perspective and long-term perspective, we must curb the further intensification of contradictions, guide investment direction, promote industrial transformation and upgrading, and leapfrog from the “big cable country†to the “cable powerhouseâ€.
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