China's cable industry threshold and concentration need to be improved

China's wire and cable products are now under a production license management system, which has created certain industrial barriers. However, these barriers are relatively low, leading to a surge in new companies entering the market. Despite the industry experiencing annual growth of over 10%, excessive capacity has resulted in fierce competition. On average, equipment utilization rates across the industry are below 40%, indicating a serious overcapacity problem. According to statistics, there are tens of thousands of wire and cable companies in China, making it the world’s largest manufacturer of such products. Yet, the market share held by the top five companies is only 8.43%. Even the top 65 companies combined hold just 30% of the market. In contrast, in the UK, just 12 companies control more than 95% of the market. In the US, the top ten companies have a 67% market share, while the top seven in Japan account for 86% of sales. In France, the top five companies capture 90% of the market. Globally, eight major oligopolistic manufacturers collectively own 25% of the market. Only one company, Italy’s Prysmian Group, achieves annual sales exceeding 5 billion euros. The Chinese wire and cable industry suffers from low entry barriers, unchecked investment in production scale, and serious issues of redundant construction. The lack of concentration has led to the presence of many small workshop-style companies that lack essential facilities like production capacity, quality control, and testing. Additionally, rising raw material costs have driven some companies to produce counterfeit or substandard products, compromising safety and quality. As a result, not only do these products pose significant security risks, but legitimate producers and distributors also struggle to compete. Meanwhile, foreign enterprises are rapidly entering the Chinese market, dominating the high-end segment. Only a few Chinese cable manufacturers can meet international standards and compete globally. With the introduction of EU directives like WEEE, ROHS, and EUP, a global push for greener products has emerged. This has created trade barriers for many Chinese manufacturers, weakening their competitiveness in the international market. Economists often refer to Gresham’s Law—“bad money drives out good.” In the context of the wire and cable industry, consumers are increasingly unwilling to tolerate substandard products. Zheng Yonghan, CEO of Shenzhen Jinlongyu Group, suggests strengthening consumer education, raising awareness about product quality and safety, and encouraging the use of nationally certified high-quality products. He also advises consumers to learn how to identify fake items and avoid inferior ones. Guo Tingke, president of Shenzhen Bendak Group, agrees, emphasizing the need for businesses to operate with integrity and maintain product quality. Regulatory authorities should intensify efforts to crack down on the production and sale of counterfeit goods and unlicensed operations, improving law enforcement efficiency. For cable companies, implementing a safety grade certification system could help. Conducting qualification assessments and using them as criteria for project bidding eligibility would promote the dominance of quality products in the market. In summary, the challenges facing the Chinese wire and cable industry reflect broader issues in traditional manufacturing sectors, such as low entry barriers, fragmented markets, homogenized products, price wars, and chaotic order. Industry experts believe that by learning from foreign experiences and adopting strategies like large-scale integration, regional agglomeration, product differentiation, technological innovation, and brand building, China’s wire and cable sector can move toward a more sustainable and competitive future.

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