As of now, China's wire and cable development this year is not optimistic, at least as optimistic as 2012 imagining. Although China’s electric power industry, data communication industry, urban rail transit industry, aerospace industry, and shipping industry are all ushering in a new round of development, the demand for wire and cable is escalating, but we have found through actual investigation that Domestic cable manufacturers are not optimistic enough about the operating rate or the profit rate. According to statistics, there are more than 10,000 small, medium, and large cable manufacturers in China. However, due to material price fluctuations, labor costs continue to increase, which intensifies production costs. In 2013, the National Bureau of Statistics reported a profit rate of 4.15% (as of April), but the domestic cable industry generally believes that it is too optimistic and the actual profit rate has been as low as 3%, far below the 5.54% in 2012. On the contrary, the issue of overcapacity and difficulty in repayment has become increasingly prominent, and even some small and medium-sized enterprises have faced suspension of production and closure. The main reason for this is that small and medium-sized enterprises compete in the main line of low-price competition, product performance is not high, and even there are quality problems, it is difficult to obtain the current domestic vigorous development of various industry projects of all ages. In addition, on the macro front, as China’s economic growth rate has declined this year and it faces a critical moment of transformation and upgrading, the government has not taken excessively irritating measures, which has also caused the cable demand to be difficult to open up. What's more, even if there are some large market opportunities in the country, it is difficult for domestic cable products to meet market demand. Therefore, in the construction of UHV power grids, we saw the phenomenon of importing advanced cable products at high prices. This aspect reflects the high degree of responsibility of electric power companies for electric power engineering. It also shows that some key projects are still not reliable for the quality and performance of domestic cable products. Nowadays, there are two problems in the domestic cable industry. One is that the market has more than enough action. Despite the new development and great development in all walks of life, due to macro-control, there is no special performance in the power grid, real estate and infrastructure. Total demand has steadily declined. The other is that even if the cable market demand has opened up, there are very few local companies that can support such a large market. Except for a few large-scale enterprises, domestic cable companies almost always take the route of low quality and small brands, and can only compete in the low-end market for a long time, and they are often weak for high-end market projects. Ships, aerospace and other special cables are basically monopolized by foreign countries, and their technical input is seriously deficient. The basic domestic production of ordinary cable products with low technological content is the main cause, and the phenomenon of counterfeiting and shoddy is serious. According to statistics, currently China's top ten cable manufacturers occupy only 7%-10% of the domestic market share, and the largest cable companies account for only 1%-2.5% of the market share, while the concentration of cable companies in Europe and the United States has reached More than 80%, low concentration has become difficult to ignore the obstacles to the development of the domestic cable industry. Coupled with the insufficiency of domestic cable technology upgrades and product innovation capabilities, the vast majority of manufacturing companies tend to focus only on short-term money, thus causing the high-end market to fall. In addition, the cable industry is an industry that weighs light and light industries. With the price of copper and various raw materials in the market rising sharply, the bidding prices for wires and cables are both transparent and relatively low. Enterprises are produced in accordance with industry standards and national standards, and the process is strictly enforced. It is imperative to make substantial losses, so the current domestic cable industry is immersed in the quagmire of low-price competition and the quality of products is worrying. Driven by interests, some companies began to ignore raw materials entering the factory in order to save costs. Some even deliberately used inferior raw materials. Some manufacturers even used copper-clad copper, copper-clad steel or copper-clad aluminum for cables. Inferior cables and wires are difficult for most people to identify. Professionals can't tell if they don't use instruments. For the insulation and sheathing materials, manufacturers are also trying their best to cut corners and materials, such as the purchase of waste bottle, hanging needles and other medical wastes at low prices, or imported waste plastics. There are no problems with qualified products for 20 to 30 years. Inferior materials will wear off in two to three years. In addition, waste plastics also contain impurities such as iron scraps and copper shavings. If used as buried cables, they can easily penetrate water and electricity, causing serious safety hazards. Therefore, it is quite common for products to be shoddy or have to be sheathed with recycled materials, such as non-compliance of wire diameters and super-negative tolerances. Once a survey was conducted by an organization, the survey results showed that the wire and cable quality standards in the market can reach less than 50% of the national standards, and the situation is very serious. But it is very puzzling is that there are many unqualified products passed the test smoothly, and eventually flowed to the market. Whether it is because the market is large but the power is insufficient, or because domestic cable manufacturers do not have sufficient R&D intensity, the low-price competition is fierce, or the product quality is not high, and the production cost is high. All of these directly lead to difficulties for cable companies, and it is even difficult to maintain the status quo. . In addition, in this year, problems such as financing difficulties, difficulties in repayment, and investment losses have seriously plagued cable manufacturers. In particular, the bank’s monetary tightening and the domestic cable industry’s payment mechanism are unreasonable, and it is even more difficult for domestic cable manufacturers to make it difficult this year. As the concentration of cable manufacturers in East China, some organizations recently conducted relevant research. The results of the survey showed that some enterprises with good production in previous years were forced to close down and stop production this year. The main reasons for this are financing and repayment. In terms of financing, due to the tightening of bank loans this year and the increase in loan interest rates, some of them turned to individual high-interest loans to raise funds. As the rate of profit declines, the deficit eventually becomes greater and greater. In addition, the cost of capital has risen too fast. Since 2012, the bank deposit reserve ratio has been raised 12 times in a row, and the loan interest rate has been raised four times in a row, which has increased by one percentage point. In addition, there are too many acceptance bills. Due to the tightening of funds, many customers forced payments by way of acceptance bills, generally starting at 6 months. The current acceptance bill discounted to 6.2% per month, and stripped some of the company’s profits in disguised form. With respect to payment collection, due to the long payback period and the extremely low payback rate, the cable manufacturer’s capital chain has become tense. Not to mention increasing the cost of technology research and development, even the daily operation and maintenance has become a problem. At present, most cable manufacturers generally have a 70% repayment rate, and the remaining 30% are delayed by about six months for acceptance. Some small and medium-sized enterprises have a remittance rate as low as less than 50%, and the issue of triangular debt is outstanding. In terms of investment, some cable manufacturers currently seek to diversify their development. In addition to the cable industry, they have also made investments in other areas. However, because of inadvertent selection, the funds are tied up and even lost. For example, the current investment direction of cable companies is mostly real estate, stocks, mining, agriculture, catering, and tourism. The reason is that these industries have a relatively easy return rate relative to the cable industry. As a result, some SME owners believe that some so-called diversified industries can easily obtain considerable returns without effort. However, as the so-called investment risks, we must be cautious when spending money.
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