Economic operation has a certain periodicity, and as the nerves and bloodlines closely related to the national economy, the wire and cable industry is greatly affected by the laws of economic operation. The development of the wire and cable industry is affected by the investment in fixed assets of the national economy, and the impact of national infrastructure is very large. Under the influence of the national GDP base and environmental resources, China’s economic growth will adjust, and the development of the wire and cable industry will also be deeply affected. .

Regarding the Chinese economy, on the whole, the next two to three years will be a slow-moving process. Now, the process is still continuing. Last year, GDP growth was around 7.7%. This year it is around 7.5%. It may be difficult to save 7.5% next year. It is estimated that the target will be maintained at about 7% in the future. If you want to keep 7.5% in the future, the cost will be higher and higher. The current state of economic operation is a market-based clearing process and the government's counter-cyclical operations are alternating. However, if there is lack of vigorous reforms, relying solely on the use of government policy instruments for countercyclical operations is difficult to reverse the downward trend of the market. . The declining GDP growth rate, the possible reduction of infrastructure investment, and the constraints of environmental resources will all further reduce the entire wire and cable industry market and force the transformation of China's wire and cable companies.

The wire and cable industry in China has more than 7,000 wire and cable companies. However, these wire and cable companies mainly focus on small and medium-sized enterprises, and the largest companies have a market share of 1% to 2.5%. Low industry concentration, most of the smaller companies, relying on unfair means to disorderly competition, leading to extremely fierce competition in the industry; a small degree of product differentiation, marketing methods means little difference, resulting in fierce price competition. For example, China's first wire and cable manufacturing enterprises, such as the Far East Cable, have been producing more than 10 billion wires and cables each year. In the wire and cable market of trillions of China, there are only 1% or more of the market. Share. Even China's first wire and cable company is still the case, other small and medium-sized wire and cable companies have to say, the market share is even less poor.

Many companies in the industry, many SMEs, low barriers to entry, excess production capacity, these are the causes of today's disorderly low-cost competition, resulting in low profit of the entire cable industry, most of the industry's profits maintained at 3% -5% level . In the recent period, the state has stepped up macro-control over industries with excess capacity, environmental pollution, and bank loans have further shrunk the industry with overcapacity. Many wire and cable industry companies have failed due to the inability of the capital chain to turn around, but this state is, in the final analysis, an industry. With excess capacity, companies do not have enough profit margins to form sufficient corporate capital moats.

In the case of a good economic situation, wire and cable companies can take advantage of the advantages of the entire industry and achieve good results. Under the circumstances where the overall economic environment is sluggish, the situation is much harder. Judging from the Chinese economy, the future economic downturn will face more domestic demand factors, including the decline in real estate, infrastructure investment and manufacturing investment. The economic decline since 2008 was mainly caused by external demand. As the cost of production factors increased and overseas financial turmoil, exports declined. At present, the haze of the financial crisis has dissipated, but the decline in the international competitiveness of our mid- and low-end manufacturing industries is already an established fact. To reshape the previous international competitiveness, we must rely on economic restructuring to upgrade the industrial structure.

Of course, it is not only the cause of the economic environment. From the perspective of the industry itself, any industry will face an industry transformation with different stages of development. From a longitudinal comparison, the wire and cable industry in developed countries is also All of them have undergone transformation. The world-famous wire and cable companies in Europe, Japan, the United States, and South Korea have all experienced corporate transformation. Therefore, the transformation of the wire and cable industry is an inevitable development process and inevitable.

China's wire and cable industry should now consider surviving under the transformation of the outside world. Indeed, in this round of transformation of China's wire and cable companies, most companies are upgrading their products through product improvements and upgrades. This kind of gradual approach means that for companies, changes in the face of the market, the adjustment of their own technologies, and the manner in which their operations are managed are relatively small, and the uncertainties faced by enterprises are relatively small, and the risks faced by them are also relatively natural. Smaller.

Many wire and cable companies have increased efforts in scientific research and development, increased cooperation with international first-line brand companies, and developed new products to continuously increase the added value of products. Several companies have independently developed semi-automatic or fully-automatic production lines to achieve large-scale production and reduce human resources. The dependence has eased the cost pressures caused by rising labor costs in recent years, increased production efficiency, and embarked on the road to transformation and upgrading. There are also some wire and cable companies that rely on their own advantages in the field of special cables to develop new products that meet market demands, and have developed a path of differentiated product development. Initially, rail and locomotive cables, mining cables, ship cables, and aerospace have been formed. Aviation and military cables, rare earth aluminum alloy cables, communication cables, nuclear power cables, wind power cables, solar photovoltaic cables and other special products.

Some cable companies have grasped the main business, upgraded their products, and promoted enterprise upgrades through product upgrades. In the past, companies completed the three-phase transformation and upgrading from wire and cable to submarine cables to marine umbilicals. The products at each stage are the process of enterprise transformation and upgrading. There are also some powerful wire and cable companies whose transformation does not depend on product upgrades, but directly through business adjustments or changes to achieve transformation and upgrading of enterprises, such as the previous transformation and upgrading of Far East cable is to establish the main industry and auxiliary industry. Xing's industrial layout model has taken a solid step on the road to transformation and upgrading.

China's wire and cable companies have accumulated certain experience in terms of financial advantages, technical standards, management perspectives, and resource allocation. They can use one or more of these endowments to directly promote the overall transformation of product lines or market areas. No matter what method is used, whether it is to learn from others or to take the initiative to open up, transformation and upgrading are imminent.