1、 Current situation of the wire and cable industry
China is a major cable country, but not a strong one. Currently, the wire and cable industry has a large number and a small scale. According to statistics, there are 7000 cable production enterprises in China, but there are not many large-scale cable enterprises, mostly small enterprises. The concentration of production in the wire and cable industry is low, and the largest enterprise accounts for only 1% to 2.5% of the market share. From the perspective of the development level of the entire industry, the cable industry has low concentration, dispersed technical strength, and low technological content. On the contrary, the cable industry in developed Western countries has undergone over a century of development, with significant polarization and high market concentration. The top ten in the United States have a market share of 67%, the top six in Japan have a market share of 65%, and the top five in France have a market share of 90%. The above facts determine that the internal market competition of China's cable industry is fierce, while the international market competition is weak. How to improve the domestic market environment and enhance international competitiveness is an important issue that the industry urgently considers.
2、 Opportunities and challenges faced by the wire and cable industry
The sustained and rapid growth of China's economy has provided huge market space for the wire and cable industry. Although facing unfavorable factors such as rising prices of raw materials such as copper and aluminum, as well as the backlog of foreign multinational wire and cable giants, China's 11th Five Year Plan has been issued. In the next five years, industries such as electricity, railways, rail transit, energy, construction, communication, shipbuilding, and automobiles will still maintain a large investment scale, It will definitely provide many rare opportunities for the wire and cable industry, and it will still be a promising sunrise industry in China. In 2006, China's wire and cable industry enterprises achieved a total industrial output value of 456.9 billion yuan, an increase of 46% compared to the same period in 2005; The cumulative product sales revenue for the year was 443.3 billion yuan, an increase of 46% compared to the same period in 2005. The total cumulative profit for the year was 19.4 billion yuan, an increase of 47% compared to the same period in 2005.
But China's cable industry also faces enormous challenges. Firstly, with changes in the external environment and the influence of market competition, the world wire and cable industry has formed a pattern of several major giants monopolizing it; Secondly, the significant increase in the price of copper, the main raw material, has led to tight financial resources for wire and cable enterprises and slow capital turnover. Especially with the entry of foreign special cable products into the Chinese market, the fierce competition has become even more intense, and some enterprises are already facing a survival crisis. In response, Jiang Xipei, Chairman of Far East Holdings Group, pointed out in his article "Maturity of Users: Hope for China's Manufacturing Industry" that currently, the production scale and investment of China's wire and cable industry are out of control, and the industry's production capacity has been severely surplus. The phenomenon of low-level repetitive construction is severe, and whether it is low-voltage and medium voltage cables, or high-voltage and ultra-high voltage cables, the production capacity of the entire industry has greatly exceeded market demand, Causing a serious oversupply of many products, directly leading to the entire industry falling into a state of vicious competition at low prices and a continuous decline in product quality levels; At the same time, the industry has a low entry threshold and low concentration. More than 95% of the 7000 production enterprises are small and medium-sized enterprises, and many "workshop enterprises" that do not have necessary means such as production capacity, quality control, and testing have been able to blend into the industry. In addition, the continuous rise in raw materials has brought operational pressure, which has led to the repeated prohibition of counterfeit, shoddy, shoddy, and substandard products, Not only has it buried huge safety hazards, but it has also made it difficult for legally produced enterprises and distributors.
3、 China's wire and cable industry needs to strengthen integration
With the continuous deepening of China's economic system reform and the continuous development of the market economy, the wire and cable industry in China has already begun to reshuffle and integrate.
Nowadays, the restructuring and asset restructuring of Chinese cable industry enterprises have entered a white-hot stage. From the perspective of the largest cable companies in the country, mergers and acquisitions, and asset restructuring are very intense. The largest cable factory in Asia, Shenyang, has disintegrated, and some have become Japanese owned Shengu Cable Company. The Shanghai cable factory no longer exists, and two-thirds of its assets have been jointly invested with Fujikura in Japan. The merger and acquisition of state-owned enterprises not only demonstrates a sense of tragedy for Chinese state-owned cable companies, but also reflects their destiny. Their brilliant achievements have become a glorious page in the history of Chinese cable industry.
The outcome of the major reshuffle of China's cable industry will inevitably be the privatization, joint venture, or wholly foreign-owned transformation of state-owned enterprises. After reshuffling, there will inevitably be fierce competition among these "three modernizations" enterprises.
The large-scale integration of the national cable and cable industry occurred in the mid to late 1990s. During this period, private enterprises became increasingly powerful, and a group of strong private cable enterprises emerged. At the same time, China's huge cable market has deeply attracted the attention of foreign investors, who have come to invest in cable enterprises in China. As a result, under the joint attack of foreign and private enterprises, state-owned cable enterprises, formerly known as the "national team", lost one after another. So far, the first wave of cable industry integration has been basically achieved, with the result that the vast majority of state-owned enterprises have already entered the historical stage, and private and foreign-funded enterprises have become the dominant players in China's wire and cable industry. At present, in terms of assets, the state-owned economy accounts for less than 20% (15%), foreign-funded enterprises account for more than 20% (25%), and private joint-stock economy accounts for 60% (60%).
Now, since entering the 21st century, there has been a second wave of integration. The competition integration this time mainly occurs within the private enterprise group, and the competition concepts of "dancing with the wolf", "big fish eat less than", and "fast fish eat slow fish" have been publicly proposed. Foreign enterprises, on the other hand, are watching from the sidelines. The second wave of integration, due to the competition between private enterprises, is much more brutal. Regardless of whether this private enterprise has merged with others in the past, and regardless of the nature of the merged enterprise, it is all the result of the private boss's own efforts.
4、 Strategies for Wire and Cable Enterprises
Nowadays, integration is an inevitable trend in the wire and cable industry. Without integration, it is difficult to achieve a leap from large to strong, because only through the most intense and sufficient market competition can real wire and cable brands gain market share. Only in the end can we complete the task undertaken by the market: to become stronger and become a strong domestic enterprise. Therefore, enterprises should focus on strengthening two aspects of construction.
One is to strengthen our own brand building. In the context of global economic integration, the core competitiveness of modern enterprises is increasingly linked to the competitiveness of product brands, and the relationship between the two is mutually restrictive and interdependent. For this reason, the revised and improved 2006 "Implementation Measures for Technology and Management Innovation Rewards" of Far East Holdings Group was introduced, which is an annual document that requires Far East to allocate millions of yuan each year to increase rewards for technology and management achievements, and promote the establishment of independent brands. By reforming the distribution system, linking employee income with R&D and management achievements, we aim to maximize the passion for innovation among technology management personnel, enhance Far East Cable's technology management innovation capabilities, and promote the continuous improvement of enterprise competitiveness. Driven by innovation in technology and management by Chairman Jiang Xipei, the production and sales of Far East cables have increased at an average annual rate of 36% for over a decade, becoming a banner for the development of private enterprises in China. Far East Holdings Group focuses on innovation and quality, vigorously developing new and high-quality products to seize the high-end consumer market. Emphasize the importance of the brand, enrich the corporate culture, and inject new cultural accumulation into the brand.
The second is to put people first and establish a learning oriented enterprise. If we used to rely on market opportunities and resources to win the market, then in the future, we will definitely rely on comprehensive strength competition. So in situations where resources are similar, the level of commercial operation ability determines the success or failure in the market. As a wire and cable enterprise, in addition to the resources in hand, it must also have the ability to learn, constantly acquire new ideas and concepts, and learn new knowledge and skills. Far East firmly believes that talent is the most important resource for enterprises, the basic guarantee for the evergreen and excellence of enterprises, and the source of competitive advantages for enterprises. Only by possessing first-class talents can we create first-class enterprises. Far East Holdings Group has always attached great importance to the introduction, cultivation, use, and retention of talents. It has launched extensive talent cooperation and training programs with multiple universities such as Tsinghua University, Peking University, Nanjing University, Harbin Institute of Technology, and Xi'an Jiaotong University to reserve professional and technical talents and management talents, continuously improving the overall quality of employees, and accumulating reserve forces for the enterprise