China's cable industry urgently needs to eliminate capacity

Jiang Huajun, general manager of Far East Cable Co., Ltd. believes that although China's cable companies have sufficient competition for low-end products, the development of high-end products has lagged behind, which has affected the sound development of China's cable manufacturing industry.

Serious excess capacity

"Serious excess" has become a true portrayal of the current cable industry.

"China's current capacity can even meet 70% of the global market." Jiang Huajun estimates that the operating rate of SMEs is less than 30%, and the capacity of the cable industry has far exceeded the demand for cables in the domestic market.

After years of development, China's wire and cable industry has become the second largest industry after the automobile manufacturing industry. The annual output value has exceeded one trillion yuan.

"In fact, the annual demand for the market is only 500 billion yuan. China's cable industry has experienced serious overcapacity." Jiang Huajun said that China produces 9 million tons of copper each year, of which 55% to 60% of copper is used. To the cable industry. From this data, it can be concluded that the real sales data of China's cable industry should be more than 4000 billion yuan for copper cables and 100 billion yuan for aluminum cables. In other words, the demand for cables in China in 2013 should be around 500 billion yuan.

In fact, Jiang Huajun, who has the same opinion, and Ding Shanhua, chairman of Jiangsu Shangshang Cable Group, once stated in public that the cable industry is currently experiencing serious overcapacity, and the industry’s average profit margin has been declining due to extensive development.

Quality problems still exist

Although the AQSIQ, the National Development and Reform Commission, the Ministry of Industry and Information Technology and other relevant government departments have always been concerned about the quality and quality of the wire and cable industry, there is still a long way to go before the quality improvement of wires and cables.

The General Administration of Quality Supervision, Inspection and Quarantine of the People's Republic of China (AQSIQ) recently released the results of the nationwide supervision and inspection of wire and cable product quality in 2013. From the point of random inspection, the product sampling pass rate is 89.1%. Among them, the sampling rate of large-scale enterprises was 97.3%, and the pass rate of small and medium-sized enterprises was 91.1% to 87%.

Jiang Huajun told reporters that this figure only represents the passing rate from the factory. If you check from the market, the quality index of cable products is much lower than the spot check of the factory. He admitted that quality issues such as cross-linked polyethylene-insulated power cables are still very prominent, and key performance indicators such as insulation, high temperature, and weight loss of jackets have relatively serious safety risks.

Wei Chuanzhong, deputy director of the General Administration of Quality Supervision, Inspection and Quarantine, also frankly stated that at present, the overall level of quality of wire and cable products in China is still not high. In recent years, the pass rate of spot checks has been around 90%, and 10% of unqualified products have brought a lot of quality and safety risks. Loss of quality benefits.

It is understood that in recent years, the quality inspection department has always maintained a high-pressure situation against the quality of wire and cable violations, and conducted continuous product quality inspections for three consecutive years. A total of 7,798 batches of products from 6,369 companies were spot-checked, and 891 batches of unqualified products were detected. A total of 1042 cases of counterfeit and inferior cables were investigated and sold.

Where is the way out

“The improvement of quality, transformation and upgrading will become the main theme of the cable industry in the future, and it is also the only way for the cable industry’s production companies.” Ding Shanhua told reporters.

Looking at the world’s top 500, no one does not rely on quality to win. Today's quality is that the market has become more and more a reality. Having no quality means losing everything. On the contrary, good quality and good service can win the market.

“The quality must be improved in all aspects. In addition to establishing a high level of quality awareness, vigorously promoting scientific management methods, continuing to carry out quality improvement, and ensuring the quality of all employees, we must keep up with the measures.” said Ding Shanhua, as long as the concept of “quality is day” is established. Perseverance will surely be effective.

The key to the transformation and upgrading of the cable industry? Ding Shanhua believes that the key is to spend time on "product differentiation and cost leadership." He believes that the development of high-end materials, high-end products, to seize the commanding heights of cable technology will form a "product differentiation." Accelerating the elimination and upgrading of backward equipment, increasing production efficiency, and improving product quality will lead to a “cost leadership”. The combination of the two will form the company's core competitiveness. Even if it is well-integrated, doing a professional job will also create a competitive advantage.

Jiang Huajun believes that the transformation and upgrading of the cable industry can start from the aspects of high-end cable manufacturing, internationalization of cable companies, economic service, and industrial e-commerce platforms. He said that the most current lack of Chinese enterprises is high-end products, and there is a relative lack of R&D and manufacturing of high-end products and their ability to provide comprehensive services.

In recent years, Far East Cable has targeted the world's leading companies, using Nexans and Prysmian as benchmarks, and using R&D and services as a strategy for the company's long-term development. Now the Far East is learning from Siemens, ABB, Schneider and other companies to realize the integration of “planning, design, construction and energy efficiency management” and fundamentally help users save energy efficiency.

He stressed that the current transformation and upgrading of the cable industry focus on three aspects. The first enterprise should shift from the low end of the value chain to the high end of the value chain; the second shifts from capital input to innovation; and the third shifts from cost competition to competition in quality, technology, brand, and service.