“Now the cable industry has been forced to live on the edge of life and death. We can now operate on a cost basis. The company’s goal is to protect the cost as long as it does not fall. Then, even if it is a slight loss, it must be run. Only under the premise of normal operation, In order to find new projects," the reporter recently joined Chaohu with the Anhui Provincial Political Consultative Conference's "Jianghuai Banking Team". Chao Chung, a chairman of the Chaohu CPPCC Committee and Chairman of Anhui Huaxing Group Co., Ltd., appealed to reporters during an exclusive interview and called for the cable industry to Can't afford a disorderly competition.
Gaogou Town, Chaohu City, Anhui Province is one of the country’s four major wire and cable industrial bases. It is known as the first town in Anhui Province. There are more than 200 wire and cable and its supporting facilities on the Yangtze River bank town of less than 100 square kilometers. Businesses gather here. At present, the small town famous for its cables is worrying about cables.
20% of small businesses stopped production
Gao Gou was once known as Wenzhou of Anhui Province. Its wire and cable industry originated in the 1980s and was gradually changed from the production of electric heating products. At present, there are more than 400 various types of enterprises in the town, mainly around wires and cables. With the development of downstream product clusters, the industry has gradually extended from the field of cable manufacturing to the supply of raw materials, product design and sales services, and formed an industrial chain in which upstream and downstream companies are connected to each other and large and medium-sized enterprises complement each other.
However, in such a specialized town with a relatively mature industry, the financial crisis has not been affected much, but now some companies are bearing the test of life and death.
“Gaogou’s dilemma is first and foremost an industrial dilemma, and it is a microcosm of China’s professional township that is dominated by private enterprises,†said Cao Zhongnian. Due to the low investment threshold, a large number of enterprises have flooded into the market, blind investment has caused the companies in the industry to “become excessive and excessiveâ€, excess capacity, and oversupply has caused everyone to compete with each other, especially low-end and middle-end wires with relatively low technology added value. Cable products, price competition and marketing become popular. At the same time, the consequences of “bad money driving good currency†appeared. According to the results of the spot checks released by the State Bureau of Quality Supervision, 60% of the cable products were unqualified.
“Part of the 'workshop companies' are doing their own things, making fake and shoddy goods, shoddy work, cutting corners, shoddy work, shoddy goods, and non-standard products. They have hidden huge security risks, depressed sales prices, and aggravated the disorderly competition in the industry. The lower the price, it also makes legal production companies and distributors struggling, "said Cao Zhongnian.
As for the predicament, Cao Zhongnian made an account for the reporter: The material last year was 6.2 million yuan per ton, and 70,000 yuan per ton this year. The terminal sales price not only did not rise but fell. "You can only be slightly lower than others, otherwise Can't sell it." Moreover, interest on bank loans is increasing, cable companies are mostly private enterprises, and interest rates on loans to loans have also risen by about 40%, and some have simply failed to fund. Because financing is difficult, the entire industry has experienced a slow cycle of capital repayment, and the triangulation has become very popular. In the past three months, it was able to make payments, and now it can be back in six months. Only the cost of capital will eat about 80% of the gross profit of the industry. The cost of materials, manpower, and capital has been rapidly increasing, just like the three big mountains are on the head of cable companies.
"Profit was originally less than 20 points, and it has now been overdrawn. In this industry, no company is not debt-free. Bank loans are like a “sweeping spellâ€. Companies are struggling on the break-even point. Without cash flow, banks may go into debt collection. Soon you will die, and you will be able to die slowly. Now that Gao Gou has nearly 10% to 20% of small-scale enterprises stop production, these companies have followed suit in recent years. There is no market, no financial support, and you can only choose to stop production. "Cao Zhongnian said.
Difficult transformation and upgrading
According to data released by the China Wire and Cable Association, there are as many as 7,000 large and small enterprises in the wire and cable industry, with a production capacity of more than 1,000 billion. At present, China's wire and cable market demand is only 700 billion, and the net surplus is 300 billion.
The reason is that, as an investment industry, the cable industry's dilemma depends on the market demand brought by public investment for a long time, satisfies the expansion of low-tech capacity, blindly follows the trend, and constantly competes for prices by fighting down prices. Once the growth rate of social investment slows down, overcapacity pressure will be released and the industry crisis will have to be the result.
As for the way out, the reporter learned that in an interview, in order to speed up the transformation and upgrading of the wire and cable industry, bigger and stronger wire and cable companies, Wuwei County has successively introduced a number of incentives to encourage enterprises to increase technological innovation and investment, and accelerate the transformation and upgrading.
Cable companies in other regions have also received support from the local government to varying degrees, but this is only a local wish.
The squeeze of profit space made Cao Zhongnian very helpless when talking about the future development of the cable. He told reporters that on July 5th he was talking to strategic investors, and the new project may no longer be the cable industry.
"In this industry, you can say a word like this, you will not die and revive the market environment. There is no future without compressing production capacity," said Cao Zhongnian.
As for enterprise innovation and transformation and upgrading, Cao Zhongnian said that as long as there is a demand for cable construction, as one of the construction materials, the demand determines the way out of the product. At present, there are overcapacity status in the domestic high and low end cables, and the dilemma remains after the transformation and upgrading. On the other hand, R&D needs investment. For many companies that can only maintain “open-door food†now, the funds are like mountains on top of their heads. Where can they still invest in R&D?
Gaogou Town, Chaohu City, Anhui Province is one of the country’s four major wire and cable industrial bases. It is known as the first town in Anhui Province. There are more than 200 wire and cable and its supporting facilities on the Yangtze River bank town of less than 100 square kilometers. Businesses gather here. At present, the small town famous for its cables is worrying about cables.
20% of small businesses stopped production
Gao Gou was once known as Wenzhou of Anhui Province. Its wire and cable industry originated in the 1980s and was gradually changed from the production of electric heating products. At present, there are more than 400 various types of enterprises in the town, mainly around wires and cables. With the development of downstream product clusters, the industry has gradually extended from the field of cable manufacturing to the supply of raw materials, product design and sales services, and formed an industrial chain in which upstream and downstream companies are connected to each other and large and medium-sized enterprises complement each other.
However, in such a specialized town with a relatively mature industry, the financial crisis has not been affected much, but now some companies are bearing the test of life and death.
“Gaogou’s dilemma is first and foremost an industrial dilemma, and it is a microcosm of China’s professional township that is dominated by private enterprises,†said Cao Zhongnian. Due to the low investment threshold, a large number of enterprises have flooded into the market, blind investment has caused the companies in the industry to “become excessive and excessiveâ€, excess capacity, and oversupply has caused everyone to compete with each other, especially low-end and middle-end wires with relatively low technology added value. Cable products, price competition and marketing become popular. At the same time, the consequences of “bad money driving good currency†appeared. According to the results of the spot checks released by the State Bureau of Quality Supervision, 60% of the cable products were unqualified.
“Part of the 'workshop companies' are doing their own things, making fake and shoddy goods, shoddy work, cutting corners, shoddy work, shoddy goods, and non-standard products. They have hidden huge security risks, depressed sales prices, and aggravated the disorderly competition in the industry. The lower the price, it also makes legal production companies and distributors struggling, "said Cao Zhongnian.
As for the predicament, Cao Zhongnian made an account for the reporter: The material last year was 6.2 million yuan per ton, and 70,000 yuan per ton this year. The terminal sales price not only did not rise but fell. "You can only be slightly lower than others, otherwise Can't sell it." Moreover, interest on bank loans is increasing, cable companies are mostly private enterprises, and interest rates on loans to loans have also risen by about 40%, and some have simply failed to fund. Because financing is difficult, the entire industry has experienced a slow cycle of capital repayment, and the triangulation has become very popular. In the past three months, it was able to make payments, and now it can be back in six months. Only the cost of capital will eat about 80% of the gross profit of the industry. The cost of materials, manpower, and capital has been rapidly increasing, just like the three big mountains are on the head of cable companies.
"Profit was originally less than 20 points, and it has now been overdrawn. In this industry, no company is not debt-free. Bank loans are like a “sweeping spellâ€. Companies are struggling on the break-even point. Without cash flow, banks may go into debt collection. Soon you will die, and you will be able to die slowly. Now that Gao Gou has nearly 10% to 20% of small-scale enterprises stop production, these companies have followed suit in recent years. There is no market, no financial support, and you can only choose to stop production. "Cao Zhongnian said.
Difficult transformation and upgrading
According to data released by the China Wire and Cable Association, there are as many as 7,000 large and small enterprises in the wire and cable industry, with a production capacity of more than 1,000 billion. At present, China's wire and cable market demand is only 700 billion, and the net surplus is 300 billion.
The reason is that, as an investment industry, the cable industry's dilemma depends on the market demand brought by public investment for a long time, satisfies the expansion of low-tech capacity, blindly follows the trend, and constantly competes for prices by fighting down prices. Once the growth rate of social investment slows down, overcapacity pressure will be released and the industry crisis will have to be the result.
As for the way out, the reporter learned that in an interview, in order to speed up the transformation and upgrading of the wire and cable industry, bigger and stronger wire and cable companies, Wuwei County has successively introduced a number of incentives to encourage enterprises to increase technological innovation and investment, and accelerate the transformation and upgrading.
Cable companies in other regions have also received support from the local government to varying degrees, but this is only a local wish.
The squeeze of profit space made Cao Zhongnian very helpless when talking about the future development of the cable. He told reporters that on July 5th he was talking to strategic investors, and the new project may no longer be the cable industry.
"In this industry, you can say a word like this, you will not die and revive the market environment. There is no future without compressing production capacity," said Cao Zhongnian.
As for enterprise innovation and transformation and upgrading, Cao Zhongnian said that as long as there is a demand for cable construction, as one of the construction materials, the demand determines the way out of the product. At present, there are overcapacity status in the domestic high and low end cables, and the dilemma remains after the transformation and upgrading. On the other hand, R&D needs investment. For many companies that can only maintain “open-door food†now, the funds are like mountains on top of their heads. Where can they still invest in R&D?
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