The market size and structure of China’s wire and cable industry

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Wires and cables are essential basic components for transmitting electrical power, conveying information, and manufacturing various motors, electrical appliances, and instruments; they are necessary fundamental products in the electrified and information-based societies of the future. The wire and cable industry is a supporting industry, and its products must meet the performance requirements of various main industries. The vast majority of industries in the national economy are related to wires and cables (especially power cables); therefore, wires and cables are referred to as the \"blood vessels\" and \"nerves\" of the national economy. Over the past decade, China’s wire and cable industry has achieved significant development; with an industry output value of 1.1 trillion, it once surpassed the United States to become the largest in the world. Currently, the global market size for wires and cables exceeds 100 billion euros. Within the global wire and cable industry, Asia accounts for 37% of this market, Europe accounts for nearly 30%, the Americas account for 24%, and other regions account for 9%. As the construction of smart grids in China’s power grid system, along with the corresponding upgrades to rural power grids, moves forward and enters the actual construction phase, the domestic wire and cable industry also sees opportunities for growth. However, behind this prosperity, internal problems within the industry remain quite severe. At present, China’s cable industry lacks strong technical capabilities and lags behind foreign counterparts in many aspects. As the construction of smart grids comes to a temporary halt after three years, the domestic cable industry may face another period of industrial downturn. Therefore, while the domestic cable industry is developing rapidly at present, it is increasing investment in technological research and development in order to build a large and strong local industrial chain. 1. Market size: According to the Report on the Investigation and Research of China’s Wire and Cable Market and Forecast of Development Trends (2016–2022) published by China Market Research Network, in recent years, due to the bottleneck issues of energy and power shortages in economic development, China has increased its investment in the power sector, which has led to rapid growth in the wire and cable industry. However, due to the industry’s huge output value and profits, coupled with the fact that over 90% of domestic cable manufacturing capacity is focused on low-end products, a large number of small enterprises have entered this industry. Many small businesses even take risks by passing off inferior products as good ones, resulting in a product quality rate of only about 1/3 in this industry. Currently, the concept of environmental protection is strongly promoted worldwide, and its importance is gaining increasing attention from countries around the globe. Conventional wires and cables use PVC, and when they are incinerated after being discarded, dioxins are generated; when buried, there are toxic issues related to lead compounds. Therefore, the market needs environmentally friendly cables that are safer and cause less environmental pollution. Europe, the United States, and Japan attach great importance to pollution related to cables; they impose strict restrictions not only on the emissions generated during the cable manufacturing process but also exercise comprehensive oversight over the disposal of used cables. This forces cable manufacturers to replace traditional materials with environmentally friendly ones in order to produce eco-friendly cables, or so-called \"clean cables\". Developed countries such as those in Europe and the United States are actively promoting the use of environmentally friendly cables, and China has also accelerated the promotion and adoption of such cables; for example, Beijing and Shanghai have stipulated that environmentally friendly cables must be used within their jurisdictions. Therefore, as China improves its access system for the wire and cable industry and introduces policies to phase out outdated production capacity, wire and cable companies will be phased out one after another. China’s wire and cable industry benefits from the accelerating pace of rail transit development in the country; the faster pace of railway construction will create a huge demand for markets such as locomotive cables, as well as communication and signaling cables. In 2011, the sales value of China’s wire and cable industry reached 1.1438 trillion yuan, exceeding the 1-trillion-yuan mark for the first time, representing a growth of 28.30% compared to 2010. In 2014, the sales value of China’s wire and cable industry was approximately 1.5328 trillion yuan, representing an increase of 8.49% compared to 2013. 2. Market landscape: In China’s wire and cable industry, foreign-funded enterprises hold a significant share, and they have an even greater advantage in the market for high-end products. In the competition among domestic enterprises, private enterprises have a clear advantage over state-owned enterprises. Most private enterprises are relatively new, have a light operational burden, operate with flexibility, and grow rapidly ； In contrast, the wire and cable industry has many older state-owned enterprises that are burdened by various challenges and generally lack a sense of innovation and development; as a result, they tend to be at a disadvantage in competition with private enterprises. In 2014, private enterprises accounted for nearly half of the total industry sales revenue, at 48.89%. Followed by enterprises of other types, which contributed 22.17% to sales revenue; foreign-invested and enterprises from Hong Kong, Macao, and Taiwan accounted for 18.57%, while joint-stock enterprises accounted for 5.95%. State-owned enterprises, on the other hand, contributed only 1.72% to the industry’s total sales revenue.