Although my country's wire and cable industry has made remarkable progress over the past few decades, it remains trapped in a cycle of being large but not strong, with most companies still lagging significantly behind well-known foreign enterprises.

Currently, foreign-invested enterprises hold a considerable proportion of my country's wire and cable industry. The industry suffers from numerous problems, including low industry concentration, a large number of small-scale enterprises, insufficient economies of scale, inadequate independent innovation capabilities, and prominent structural contradictions in product offerings.

With technological advancements and policy support, the market capacity of the wire and cable industry has surged, maintaining an annual growth rate of over 8%.

1. Specialty Cables Remain in Short Supply

The market demand for specialty cables is increasing daily, but domestic cable companies are rarely able to meet this demand. Limited by technological levels and production scale, this market segment is insufficient. Because specialty cables currently have higher barriers to entry, higher profit margins, and less competition, and because they can meet the needs of special environments and occasions, specialty cables are poised to become the "darling" of the future market.

2. Significant Fluctuations in Raw Material Prices in the Industry

With recent developments, Chinese domestic wire and cable manufacturers have faced immense cost pressures. Raw materials such as copper, aluminum, and plastics account for over 80% of the cost of wire and cable production. Rising energy prices, transportation costs, and labor costs have further exacerbated these challenges. In recent years, the soaring price of copper ingots has led to a surge in domestic wire and cable costs, causing a severe cost crisis for almost all cable companies.

Many cable companies believe that the high copper prices and significantly increased costs are unbearable for some smaller businesses, with some having already ceased production. However, the market remains, with orders for cables worth millions of yuan accounting for a significant proportion. But buyers are unwilling to accept the increased cable costs due to rising copper prices. Cable companies are in a difficult position. Some have resorted to signing contracts with customers stating that while the price won't be adjusted this time, they must fulfill future cable orders. This "losses within the dike are compensated for outside the dike" approach—making up for losses with future orders. This is a characteristic "domineering clause" in the cable industry, reflecting the industry's difficulties under the pressure of soaring copper prices.

3. Oversupply of Low-End Wires and Cables

For a long time, while the domestic cable industry has appeared prosperous, it has also suffered from many persistent problems. Although it has continued to grow in scale, most companies in the industry have shrunk in size, lagged behind in innovation capabilities, and are mired in price wars in the low-end market.

The overall profit margin of the wire and cable industry is less than 5%. A purely buyer's market has led to serious financial problems for cable companies, with many facing bankruptcy. Currently, a prominent problem in the product structure of my country's wire and cable industry is the oversupply of ordinary cables and the undersupply of high-end products, resulting in a significant structural contradiction.

my country's wire and cable industry faces good development opportunities, but the COVID-19 pandemic has dealt a heavy blow to many companies. However, this has also been a major "reshuffling" for the industry. Wire and cable companies should strengthen their independent innovation capabilities, increase investment in the research and development of new products and new performance characteristics, improve their competitiveness, and further seize market share. This is the long-term solution for the development of the wire and cable industry.