Major Transformation in the Cable Industry

At the end of the year, the owner of a cable manufacturing company always feels a certain indescribable emotion. With the copper price rising steadily and the orders not decreasing, by the end of the year, it is always found that the profit is as sharp as a needle, and even incurring losses. Not just a few companies, small and medium-sized enterprises often encounter this situation. Even industry leaders, with revenues reaching several billion, still have net profits in the loss range. For instance, a business worth 4.8 billion actually suffered a loss of over 40 million yuan, which is a real figure. This year, the leading enterprises in the industry survived, and the losses were reduced significantly compared to the previous year - from a loss of 300 million yuan to a loss of 40 million yuan, a reduction of over 80%. The revenue increased by 3.45%, and the operating cash flow turned positive, finally getting rid of the 800 million yuan cash deficit last year. However, in the end, the losses continued, and the turnaround had not truly been achieved.

Many people are concerned: What exactly did these leading enterprises do right? The core change was strategic transformation: The product structure no longer stubbornly focused on low-margin traditional varieties, but concentrated on the high-end market. New growth points also began to emerge. The sales of ultra-flexible cables for artificial intelligence support exceeded 250 million yuan, the annual production of electromagnetic wires exceeded 1.2 billion yuan, with a year-on-year growth of nearly 50%, and the support for high-voltage transformers, the annual sales of energy storage products also more than doubled. These are the core tracks for the future, not the old-fashioned cables that can earn money by simply increasing quantity. However, the transformation of these leading enterprises was quite lively, but the accounts were still in the loss range. Essentially, the predicament had not been completely resolved.

Apart from the structural issues, there is also a pit hidden in the numbers: Some enterprises' revenue performance seems good, but in fact, what has increased is the copper price rather than sales volume and added value. That is to say, the increase in bulk raw materials prices has pushed up income, but the actual business growth is actually weak. Last year, the sales volume of power cables and electrical equipment cables for many enterprises actually declined by more than 15%, only the sales volume of low-margin products still maintained growth. As a result, everyone only grasped the quantity, but the profit was actually decreasing while being generated. The industry's problems are not only in the local market. This year, the leading enterprises in the industry achieved new breakthroughs in overseas business, with overseas revenue exceeding 1.3 billion yuan, an increase of over 20% compared to last year. A single overseas power bureau order reached 1.2 billion yuan. It is very rare for such a large amount of overseas contracts to be achieved in the industry, which can be seen as a boost to everyone. But there are also counterexamples in the industry. For example, some large factories have attempted to significantly reduce R&D expenditures, with the R&D investment of leading enterprises dropping by over 10% this year. The reason is simple: prioritize funds, first reduce costs and enhance efficiency. Even after years of losses, they dare not use funds to take risks in R&D. But for high-end cables, the contracts are based on materials, technology and certifications, and when R&D is reduced, the upgrade pace slows down, making it increasingly difficult to eat the high-end market. To be honest, for the cable industry to transform, it cannot only focus on the short-term accounts, but also leave enough confidence to carry out innovation.

In 2026, the industry's differentiation will become more obvious. The homogenized competition in the low-end market will escalate, and everyone will engage in price-cutting and internal consumption; in the high-end track, demand is growing, and only those who can make early plans and establish technical and certification barriers can break through in new power systems, aviation, nuclear power, energy storage and other ice points. Industry experts put it bluntly: In the future, it is about deepening, not just joining in the trend. Transformation cannot be focused on the short-term accounts, nor can it abandon innovation.

Looking at other industries, similar challenges are still many. The domestic photovoltaic manufacturing industry also experienced a decline in profits last year. Leading manufacturers competed with new technologies, some small factories cut prices and controlled costs, and the differentiation was very fast. Overseas automotive wiring manufacturers, on the other hand, had early plans for intelligentization and new energy vehicle support, and their gross profit margins steadily increased. The experience of these industries shows that transformation must grasp technology and scenarios, not just production capacity and prices. At present, the opportunities in the cable industry are still in the high-end track, and the leading enterprises with scale advantages are exploring overseas markets, which has pointed out the direction for all manufacturers; but the real challenges are also obvious, with the coexistence of cost, technology and risk pressures. If medium and small-sized cable factories follow the traditional path, they will have a hard time surviving until the industry's spring. Only by making a timely transformation and investing in innovation can they have a chance to turn things around.

In the end, for the cable industry to get through the difficult times and steadily move towards the high-end market and overseas expansion, it needs to take a steady and prudent approach. Leading enterprises have found a way to turn losses into profits, but profits still require time. By 2026, the industry will continue to differentiate itself, and we also look forward to more cable manufacturers being able to seize the new opportunities.