1. Overcapacity: An Industry Dilemma
Statistics indicate that China, as the world’s largest cable producer, hosts nearly 30,000 cable enterprises. However, capacity utilization has long remained below the international average (typically around 30-40% in China compared to over 70% globally). More critically, overcapacity for low-end products exceeds 50% of demand, while the high-end market relies heavily on imports: approximately 80% of nuclear power cables and 50% of marine cables are controlled by Western industry giants.
In the first four months of 2025, China’s wire and cable exports grew by 12.79% year-on-year. Nevertheless, adjustments in US trade policy and international geopolitical risks pose significant uncertainties.
Is the industry’s overcapacity now approaching a tipping point? The answer likely lies in the underlying structural imbalance between supply and demand.
2. Three Indicators of a Tipping Point:
(1) Low-End Market:
Intense competition prevails in low-end cables used in real estate and traditional infrastructure. To capture markets with thin profit margins (around 20%), many small and medium-sized manufacturers resort to selling at cost. This drives down overall industry profitability. Data shows that 90% of SMEs operate with equipment utilization rates below 40%, with some even forced to operate at a loss.
(2) High-End Market:
While localization is accelerating in high-end sectors like aerospace, nuclear power, and UHV (the localization rate for high-end cables among the top 100 enterprises rose by 22% in 2025), core technology dependencies persist. Key products like superconducting cables and deep-sea engineering cables still rely on imports, with average prices 3-5 times higher than domestic alternatives.
Technical Barriers: Meeting international standards such as EU RoHS and ISO 14067 (carbon footprint) involves high costs and lengthy certification processes for domestic companies.
R&D Investment: R&D spending among leading enterprises is growing at an average annual rate of 15%. However, SMEs primarily rely on a strategy of imitation and low pricing, lacking strong innovation capabilities.
(3) Policy vs. Market Tensions:
Some companies exploit policy loopholes by shifting production to special cables for sectors like new energy and rail transit. Paradoxically, this exacerbates localized overcapacity in these very segments.
3. Strategies for Transformation
(1) Technological Breakthroughs: Leading companies are focusing on niche sectors like submarine cables and aerospace cables, breaking international dominance in these fields.
(2) Standard Setting: Participation in formulating international standards (e.g., IEC standards) is enhancing the global influence of domestically produced high-end cables.
(3) Product Upgrades: The adoption rate of technologies like halogen-free flame-retardant materials and lightweight designs has reached 40%, filling critical domestic gaps.
(4) Smart Manufacturing: The introduction of AI-based inspection and intelligent production scheduling systems is reducing defect rates and improving capacity utilization.
Conclusion:
The tipping point is not an endpoint, but a pivotal transformation point. The cable industry’s overcapacity reflects more than a simple supply-demand imbalance; it embodies the broader challenge of transforming and upgrading traditional manufacturing. While small and medium-sized manufacturers struggle in the low-end market, leading enterprises are forging ahead with breakthroughs in technology, standards, and branding. Over the next 5-10 years, the industry is likely to evolve through three phases:
(1) Short-term (1-3 years): Accelerated elimination of low-end overcapacity under policy and market pressures, driving industry concentration above 30%.
(2) Medium-term (3-5 years): Domestically produced high-end cables are projected to capture 50% of the domestic market, with UHV, new energy, and related fields becoming key growth drivers.
(3) Long-term (5-10 years): Chinese cable manufacturers will take the leading position in the global cable industry value chain.
This tipping point may well be the industry’s opportunity to rise like a phoenix.
