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Hindered development China cable enterprise pressure big industry

Information Source:Henan Huadong Cable Co., Ltd Release date:2014-04-25

In 2014, Chinese cable production enterprises is not easy, with the cable industry competition is becoming increasingly intense, coupled with the face of the Party (purchaser / downstream user) cable enterprise almost lost the initiative -- bargaining power, even in the face of some unreasonable requirements of Party A, cable production enterprises can only choose to resign oneself to adversity...... In addition, the pressure from outside is so Chinese cable industry some breathing hard, than Buddha since the threat of new entrants, from serious homogenization resulting price competition resulting in low profit ratio pressure etc..

From both parties unequal angle analysis, at present, the wire and cable industry especially wire and cable manufacturing enterprises in low-end shows the competitive information transparent, etc.. At present the domestic wire and cable production more than 7000 enterprises, above scale enterprises over 4500 homes, industry competition is brutal, still exists the phenomenon of the low price competition, the quality; the homogenization of products will inevitably lead to the upstream and downstream enterprises have roughly understanding of cable products price location, relatively transparent market information. And the purchase of party is in a strong position, obtaining information easily. Most of the downstream industry electric power, communication, railway traffic and other enterprises are state-owned monopoly enterprises, is in a strong position in the relationship between supply and demand, coupled with price information relatively transparent, makes the downstream enterprises are more selective in the actual operation.

In addition, wire and cable industry facing fierce competition, the Multi-National Corporation competition at the same time, plus the downstream customers very selective in the market, so the downstream customers have a strong bargaining advantage, severe price often let cable production unprofitable enterprises, and even "lose money trading" example also emerge in an endless stream.

So, what is causing the face of downstream users, some cable production enterprises, especially small and medium enterprises increasingly lost due authority and dignity?

First, because the cable industry competition is becoming increasingly fierce, resulting in "only user is present from". The fierce competition of wire and cable industry in its technology and market information transparency in the industry, many competitors so that buyers have more choices, also has a price pressure, requires more commitment of capital, the replacement of the supplier's cost and risk reduction, is in a better position in the enterprise and in the negotiations for a supply of sth.. Compared with the industry competitors, especially the ordinary small and medium-sized enterprise in very unfavorable bargaining position.

Second, the industry standard is more and more strict. Wire and cable products have strict standards, requirements of production in accordance with the provisions, such conversion in the application of cost very little. But those who can innovate to promote industry standards with the technological innovation of enterprises, still has a very strong product competitiveness in the industry, so they have enough bargaining power, in the new products, relatively speaking, the lower the bargaining power of buyers is relatively weaker.

Third, the downstream customer master the real-time dynamic cable and even the price and profit, and for the downstream industry, cable production enterprises are often kept in the dark. In the wire and cable industry chain, downstream clients relative to the wire and cable manufacturers, is the market organizers, its biggest advantage is access to the wire and cable industry information is relatively simple, so that in the negotiations, to have enough information for the wire and cable industry enterprises do transfer step, and the wire and cable industry enterprises in a passive position.

Fourth, the interest relationship between inequality. Wire and cable industry buyers, mostly is the national power grid, large-scale mining enterprises, large copper iron joint enterprises, large-scale telecom operators, the industry property buyers themselves, often reflected in the market, in the inequality of a strong position, leading to its strong ability for a supply of sth..

Fifth, multiple choice and foreign advantage, resulting in loss of bargaining for local cable industry. In recent years, the Multi-National Corporation have been in China established wire and cable production base through the sole proprietorship or joint venture cooperation way. A major international telecom equipment manufacturers almost have entered the China market, realize the localization of production. USA Kang Ningjian Corelle Beijing, Corelle Shanghai, Chengdu, fiber three plants; Japan Sumitomo built Shenzhen fiber optic cable factory; Japan Furukawa, Tokura successively in China wholly-owned factories; South Korea LS company also entered the market with Chinese, LS cable, LS TV, LS machinery and many other entities, $5700000000, is still Jiangsu Wuxi set up a car cable factory. Of high-grade cable field at present in the profit space, China market completely to seize the multinational giants. With the Multi-National Corporation to enter the high-end market, the share has no advantage in the background, Chinese cable industry is facing a severe test.

Finally, the upstream and downstream changes and cable production enterprises to expand the business, also limits the cable enterprise bargaining power. Associated with the wire and cable enterprise users, such as large power industry enterprises, large non-ferrous financial industry, additional production carried out to solve the problem of enterprise personnel prosperity, to a certain extent, wire and cable industry competition intensifies. Because the wire and cable enterprise product variety, some enterprises to adopt the expansion strategy. Such as the production of ordinary cable enterprise itself, because the market or other reasons, to expand the business to the special cable. The enterprise funds chain tight, low-end products no advantage, the promotion of high-end products difficult and long cycle, only at the cost of products will be converted into cash, capital chain problems, thus caught in a vicious spiral.

In summary, wire and cable enterprises limited effect on customer for a supply of sth. ability, does not have the ability to transfer cost. And downstream industries of wire and cable includes communication, city construction, shipbuilding, electric power, new energy, High-speed Rail industries, constitute the main demand of wire and cable industry customers. In the industry, trading, Changbiaoxianwei: buyer general bulk purchase, pay attention to the quality of the products; bulk buyers are sensitive to price, bargain capability is very strong; the purchaser is generally require manufacturers to flexible payment methods, delivery time, service in place. Low prices and high demand caused by the cable industry, profitability is declining, the presence of many small business losses or even bankruptcy phenomenon.

The development of pressure from domestic cable companies continue to increase, also inevitably caused industry development is blocked. Finally, will aggravate the merger and reorganization, the survival of the fittest.

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