An industry standard jointly issued by a U.S. cable company and a third-party independent agency in China is pushing the large-scale Chinese wire and cable market into the standard era. This will allow more than 7,000 domestic companies in the sector to directly Is it at the starting line?
In July 2013, due to the emergence of some landmark events, it was destined to become an important watershed in the development of China's cable industry.
At the beginning of the month, Baosheng Group, a state-owned large-scale cable company located in Nanjing, Jiangsu Province, one of the industry leaders, was incorporated by the Central Enterprise of AVIC, bringing a feeling of embarrassment to the industry. People exclaimed: Is it true that the Chinese cable market has been scattered, disorderly and poor? Will soon pull up the integration curtain?
This series of discussions has not yet been finalized. Since mid-July, a series of tour forums with the theme of safety and innovation has arrived in the four major cities of China's cable market: Tianjin, Hangzhou, Guangzhou, Xi’an (according to the plan, and will continue to be in Zhengzhou in the future). Held in Kunming and Changsha). Wherever the Forum is located, we would like to invite experts, scholars, and corporate customers in the cable industry to discuss and communicate together. The scene is very lively.
However, you are certainly not convinced that the organizer of this forum is not an industry association related to China's cable industry, nor is it a large-scale local company, but a US-based GM cable that has just arrived in China for less than a year!
Headquartered in Highland Heights, Kentucky, USA, Universal Cable has a 170-year history of development, design, and development of copper, aluminum, fiber optic cable, and cable products for the energy, industrial, specialty, construction, and communications markets. Manufacturing and sales are all global leaders. In 2012, GE Cable achieved a total sales of US$6 billion, ranking third in the industry in terms of scale. Compared to the Chinese cable companies of the same period, even the largest players, such as the Far East and Shanghai, did not exceed two billion U.S. dollars.
However, although it is a real name in the global cable industry, many Chinese people are not familiar with general-purpose cables. The reason is mainly that the time for the GM cable to enter the Chinese market is not only late but also quite different: 2012 In that year, General Cable acquired Alcan Cable, also located in North America, and subsequently formally entered China, the world's largest cable market, by rapidly integrating its business in China. In 2012, China’s cable market exceeded 1.2 trillion yuan, accounting for about one-third of the global market.
Having said this, many people will surely wonder that a multinational giant such as GM Cable, which came to China as a cable market with a large amount and a rapid growth rate, should not immediately bring its leading technology and high-end products into the market. Is it? Why should the theme of safety and innovation be used to tour forums in several major cities across the country to organize such a high-profile and seemingly unrealistic industry exchange activity (after all, the main purpose of the company is to make profits rather than popularize knowledge)? So, which door of the universal cable to play abacus? Is this American company really planning to give the Chinese cable industry a chance to spread the knowledge and ideas about safety and innovation?
There is an old saying in China that drunks are not meant to drink, but also between mountains and rivers. This time, this drunkard is not someone else, it is the United States General Cable.
The meaning of drunkard cares about standards!
"The rated voltage of 0.6/1kV aluminum alloy conductor XLPE insulated cable" energy industry standards have been submitted for approval, is expected to be released in the second half of the implementation. The standard was drafted by Shanghai Cable Research Institute and U.S. General Cable (China) Co., Ltd.
The formulation of the aluminum alloy conductor low voltage cable industry standard lays the foundation for product evaluation and quality supervision and is an important means and measure for regulating the product market.
The above two paragraphs came from the speech of Chen Kun, director of the China Wire and Cable Industry Standards Committee, and this speech was one of the main contents of the Security and Innovation Forum (Xi'an Station) held by American General Cable on August 9, 2013.
Having said this, you must have guessed a few points. Yes, an industry standard for Chinese aluminum alloy cables has been established and is expected to be implemented in the second half of this year! As stated by Chen Kun, the standard is jointly drafted by the Shanghai Cable Research Institute, which is an independent third party (which is neither a cable buyer nor a cable seller), and U.S. General Cable (China) Co., Ltd.
In most cases, when it comes to standards, the Chinese business community tends to be jealous. In the early years, due to the limitations of its own technology, many industries in China have adopted standards from abroad or helped foreign companies establish and establish standards. These external standards did indeed help the Chinese market to advance toward a more standard order of competition and quality supervision. However, in the end, local companies are very vulnerable to competition with multinational corporations because they lack the right to speak on the standards. status. Such examples are too numerous to enumerate, and as a result, the long-term circulation of such a phrase in the Chinese business community is called third-rate enterprises doing products, second-rate enterprises doing branding, and first-rate enterprises as standards.
However, you will be surprised to find that many people in the industry are not convinced by this industry standard for aluminum alloy cables. On the day of the Xi'an Station Forum, a customer from Shaanxi Baoji stated this way: China's cable market is a mess What standards are of no use, especially since China's cables are made of copper, this aluminum alloy cable is rarely heard, and promotion is certainly difficult.
So, is that true?
From the actual situation, China's cable market is regarded as one of the most lack of real standards of the industrial market. For a long time, due to a serious overcapacity and a large number of enterprises, the basic principle of competition in the industry turned out to be that the lower ones were winning. (Since most companies compete in the low-end product areas, product quality is often not very different, and the price is even higher. The factors in the competition that are far more important than the technical level and product quality). The result of this form of competition is that bad money drives out good money and borrows the words of an expert: Whoever wins will win, which is to encourage scale, because large-scale companies have cost advantages, and the result is a blow to the industry as a whole. R&D and innovation.
The pure price war directly led to the cable market becoming one of the hardest ways to make money in the machinery industry. Several simple figures are sufficient to illustrate everything: The market with a total output value of over 1.2 trillion yuan (the largest in the world and accounting for more than 30% of the world's total) has more than 7,000 companies participating in the competition, of which the largest one is only worth 10 billion yuan. At the same time, most companies are frantic in the low end of the price war. The industry’s overall average profit margin is less than 5%. The actual production capacity exceeds the existing demand by more than 3 times and the production capacity is seriously excessive. In order to gain price competitive advantage by relying on economies of scale, companies often know that However, the surplus still keeps expanding production capacity. Therefore, the pure buyer’s market has caused cable companies to suffer from bad debts and bad debts. From time to time, there is also a crisis of the three-year debt crisis...
Many people may not realize that the American Universal Cable, which seems to be late, is clearly aware of all of the above-mentioned Chinese market, and is well prepared for it. The aim is precisely
The Next Tipping Point in China's Cable Market
When most of the companies are struggling in the fiercely competitive Red Sea, a small number of excellent companies are seeking blue oceans and are regaining opportunities to earn high profits.
Blue Ocean Strategy
If there is more than 7,000 companies in China's cable market, which is cruelly competitive, is a downright Red Sea, then aluminum alloy cables that use aluminum alloy instead of copper as conductors are increasingly becoming a vast blue ocean in the development of China's cable industry.
The earliest aluminum alloy cables originated in the North American market. In the 1960s and 1970s, the southern cables and Alcan cables of the United States (now part of the General Electric Cable) were the earliest inventors of aluminum alloy cables and began to promote aluminum widely in the North American market. Alloy cable. As a cable product that uses aluminum alloy instead of copper or pure aluminum as a conductor, aluminum alloy cables are mainly used in construction projects such as airports, military bases, office buildings, houses, hotels, supermarkets, colleges, stadiums, hospitals, and factory buildings. The United States has successfully applied aluminum alloy cables for more than 40 years and has never had any safety accidents.
In terms of actual performance, although the aluminum alloy cable does not improve the electrical conductivity of the pure aluminum cable, its bending performance, creep resistance and corrosion resistance are greatly improved, and it can ensure that the cable is continuous during long-term overload and overheating. Stable performance, while solving the pure aluminum conductor electrochemical corrosion, creep and other issues. Compared with copper cables, aluminum alloy cables have unparalleled advantages in terms of weight, material price, and special application fields. In other words, the aluminum alloy cable is more economical and has a wider application area under the premise of ensuring the conductive performance.
From a global perspective, the ratio of aluminum conductors for insulated wire and cable in advanced industrial countries in Europe and America is much higher than in Asia and Africa (see the figure below). Some countries use aluminum conductors for medium voltage cables. For example, 75% of the 95~2500mm2 cross-linked polyethylene insulated power cable of the 63~500kV grid system of the French Electric Power Company (EDF) is an aluminum conductor cable.
In the past six or seven years, due to the continuous rise of international copper prices and continuous improvement of alloy technology, aluminum alloy cables have continued to develop, and the application rate of aluminum alloy cables in many developed countries has even reached 40%. According to the statistical data in 2012, China has exceeded 90%. The cable market is still a copper cable.
It is also in the current state of the industry that the aluminum alloy cable market in China has been detonated over the past year or two. From the actual situation, there are at least three major reasons that are leading to the upcoming explosion of aluminum alloy cables in the Chinese market. The first and foremost is the increasingly high copper price in China.
Speaking of copper prices, this is probably one of the main reasons why China's cable companies haven't had much good days in recent years. Statistics show that in 2012, China's copper consumption accounted for about one-third of the world's total. However, the reality is that China not only has low reserves of copper resources but also has a low copper grade (an average grade of only 0.87%). There is a huge contrast between huge consumer demand and scarce resource reserves. This has led to a long period of time when China not only imports large amounts of refined copper, but also imports copper ore. At the same time, China is currently the world’s largest cable producer and consumer country. In 2012, the wire and cable industry’s copper consumption accounted for 68% of all copper used in the country that year!
At the same time, however, China is the world’s top ten aluminum country with reserves of 2.503 billion tons.
Under such circumstances, the rising price of copper in China is increasingly becoming a serious spur to cable companies in the face of fierce competition for overcapacity, which has also fundamentally led to a serious decline in the economics of copper as a cable conductor.
In addition to the resource characteristics of the poor copper-rich aluminum, the competition in China's cable market itself has also made aluminum alloy cables a blue ocean.
One argument that has spread widely in China's cable industry is that China's cable industry has basically no technical threshold. To find a factory, call a bunch of people, and then buy the copper and straighten it, pack the insulation, and a cable factory is born. . Of course, this sentence is quite a joke, but to a certain extent, this reflects a basic fact, that is: because most companies are only producing low-end products with copper as the basic material, making China's cable industry serious The problem of homogenization competition (copper accounts for about 70% of the total cost of the cable, that is to say, the removal of copper, leaving the cable companies to carry out the transfer of space is not much). It is also for this reason that the Chinese cable market is basically following the international copper price.
To put it more plainly, the Chinese cable industry, which looks as high as 1.2 trillion yuan, is still not a good day for most of the companies. The price war has made the overall progress of the industry very slow, and even development stagnates.
Perhaps it is this kind of competitive reality that many companies that smell the business opportunities of aluminum alloy cables are starting to make a comeback. In the past year or two, China’s investment in low-voltage cables for aluminum alloy conductors is in the making. According to the preliminary statistics, more than 100 companies have invested in the project. And just as some industry experts worry that this will lead to another round of surplus in the cable industry, the U.S. general cable came, and then the standard came.
Now, let’s go back and look at the universal cable that came to China last year, especially its series of layouts for the Chinese market. We will clearly find out that this multinational giant that has been dominating North America for many years is indeed a strategic vision. It’s high and far, and what it’s going to pursue is precisely
300 billion yuan of new market right to speak
Not surprisingly, this time, in comparison with multinational companies, Chinese companies have lost ground.
A latest forecast shows that even if China's aluminum alloy cable use level only reaches the current international level (30%) in the next 5 to 10 years, it will quickly form a huge market of up to 300 billion yuan. Right now, this is considered to be a virgin land that China's cable market needs to develop. It is a blue ocean in a real sense.
Obviously, it is this huge emerging market that has quickly turned a large group of Chinese companies into action and even set off an investment climax. However, although aluminum alloy cables have matured in more than four decades of development in markets such as North America, they have really entered the Chinese market for five or six years. However, the real concern of the industry and the formation of investment are more in the past two years. Therefore, domestic research and development and technology are all in the starting stage. This has led to the majority of Chinese companies not only owning mature technologies but also many of the aluminum alloy cables. Even cognition is quite limited.
When we came to the Chinese market, we discovered that not only customers, but even many companies directly used aluminum cables as aluminum alloy cables. Many people did not know exactly what aluminum alloys were. Tan Bingwen, President of U.S. General Cable China, explained to the media: So this time the industry standard for aluminum alloys starts with the most basic issue, namely, what is the true aluminum specification.
Many domestic companies are simply following the trend, creating concepts like what high-iron rail aluminum alloy, rare earth high-speed rail aluminum alloy, and so on, all kinds of propaganda variety, made people confused, this is one of the irrational disorderly competition in China's cable industry Kinds of practices. For a variety of aluminum alloy cable investment projects in the domestic market in the past one or two years, Chen Kun, director of the China Wire and Cable Standards Committee, gave such comments directly.
Different from the domestic enterprises, the U.S. General Cable, which came slowly, is just a few steps. It has basically completed its layout in the aluminum alloy cable market in China. First, with the acquisition of Alcan cables, the universal cable is directly located in Tianjin. An advanced factory with an area of ​​140,000 square meters and 10 domestic registered companies covering about 300 sales outlets across the country. Secondly, the world’s most recognized brand in the aluminum alloy cable brand in the Chinese market is absolute. High-end brands; and the last important thing is that once the industry standards set by General Cable and Shanghai Cable Research Institute are implemented in the second half of this year, universal cables will undoubtedly have the right to speak in terms of Chinese aluminum alloy cable standards.
At this time, it is necessary to mention that when Gregory B. Kenny, President and CEO of General Cable of the United States, visited the Chinese market for the first time in May of this year, he answered a question from the media:
Reporter: I chose to come to the Chinese market only in 2012. The universal cable is definitely what I saw. Will your company become a big but weak integrator of China's cable industry? Or do you think that the Chinese market with universal cable will be different from the previous one?
Gregory B.Kenny: We have seen some changes in the Chinese market. We believe that China's wire and cable market is entering a new period of development. Now, here we pay more attention to standards, product quality and service, and energy conservation and environmental protection. There are some changes in customer demand and market competition. We have a good plan for this. However, how to express it (laughs), there is a saying in China that if things haven't been done yet, don't start with big talk first, so I'd like to ask everyone to wait and see.
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