Serious overcapacity in the cable industry

The State Council's latest "Guidance Opinion on Resolving the Contradiction of Severe Overcapacity" has identified eight specific tasks to resolutely resolve the contradiction of overcapacity, including the blind expansion of production capacity, the consolidation and consolidation of illegal production capacity, and elimination of backward production capacity.

This time from the source to eliminate production capacity and control new projects, is called the history of the most severe new measures. On the other hand, in the wire and cable industry, the excess production capacity is even worse. At present, the overcapacity of the entire industry exceeds 40%, and there are still a number of projects under construction or proposed. The overcapacity in the cable industry has intensified. It does not wait to eliminate backward production capacity.

Due to the low barriers to entry and the local government’s “giving money, giving land, and giving policies”, wire and cable companies have mushroomed. Since its development, the wire and cable industry has become the second largest industry in the electrical and electronics industry, second only to the automobile manufacturing industry. The annual output value has exceeded one trillion yuan. As the government reduced investment in infrastructure construction, the contradiction of overcapacity was immediately apparent. Under normal circumstances, an industry's capacity utilization less than 80% can be called surplus. At present, the capacity utilization rate of the wire and cable industry is about 60%, and the degree of excess capacity can be imagined.

The serious overcapacity has become a source of outstanding contradictions and many problems in the cable industry. Failure to take timely measures to resolve will inevitably exacerbate vicious competition in the market, resulting in falling profits in the industry, unemployment of employees, and increased non-performing assets of banks, threatening the healthy development of the industry.

The word "eliminate" is like a sword, allowing overcapacity cable companies to hang on the line. Resolving the contradiction of serious overcapacity will inevitably cause labor pains and even hurt the bones. At present, the cable industry has passed the stage of pursuing the development of scale. At this stage, it must pursue the development of quality and efficiency. From the overall perspective and long-term perspective, we must curb the further intensification of contradictions, guide investment direction, promote industrial transformation and upgrading, and leapfrog from the “big cable country” to the “cable powerhouse”.