How to Understand the Low Profit of the Cable Industry

The reshuffling of the cable industry will prompt the advent of a meager profit era. The cable industry competition is like a marathon. The front road is low due to the low threshold, and the contestants are numerous. However, when it comes to the back, the distance is pulled away. If you can't move, you gradually exit the competition field. . In the Chinese cable industry during the crisis, there were more ordinary players than usual, such as a big reshuffle. After the crisis, due to more marketization and more intense competition, the shuffle will continue. After many rounds of shuffling, the cable industry is bound to be like the home appliance industry, and profits are even lower. In the era of meager profits, in the face of increasingly fierce cable market, how should companies act and “kill a bloody channel”?

First, operating independent brands.

Once upon a time, many cable companies still considered themselves to be processing industries. They did not have their own branded products, and cable companies did not need and cannot implement brand strategy. In the era of meager profits, a big price war will only scare the company. Therefore, the development of independent brands is actually a strategic direction for enterprises. In the long run, we must upgrade from OEM (origin processing) to ODM (origin origin design and production) to brand marketing and gradually enter marketing. Channels, brands operate these high-profit links. However, based on the actual situation of the weak internationalization of our product brands and corporate brands, we should take the cultivation of industry brands and regional brands as the breakthrough point, and drive the brand construction of the cable industry with industry brands and regional brands.

Second, along with the financial crisis, the industry shuffled up, and profit became something the company had longed for. As we all know, the source of survival for enterprises is profit. Markets without profits will not last long. If companies evade this reality and want to blindly pursue market share through price wars, they may be able to survive for the time being or be able to survive for a while. Market statistics, but in essence it is no different from chronic suicide. Therefore, the profits path in the era of meager profits is nothing more than two. First, the cost reduction within the enterprise is maximized. Second, the enterprises and industries consider the cost reduction, added value increase, and resource control from the strategic level, and control and upgrade the cost of the enterprise. Industry competition advantages are linked together.

Third, innovation at any time is a magic weapon for profit, and the era of meager profits is no exception. Most of the low-profit products may be technologically identical, with little difference in quality and performance. However, these do not affect the innovation of the company. They may find new ideas in terms of processes, materials, appearance, production methods, marketing models, and management methods. Profit sources, cost control points, finding new market areas, new profit models, and thus profitability, in short, companies must shift from cost strategies to technology and service strategies, and focus on technological innovation and improved service delivery.

Fourth, strengthen internal management, reduce costs, and improve the competitiveness of enterprises. In the situation where the cable product price is difficult to rise, only by strengthening internal management can the company obtain the profits required for its survival.

Fifth, the construction of a new type of industry innovation demonstration system combining production, learning, and research can give full play to their respective strengths, concentrate on solving the common problems in the cable industry's technological innovation, accelerate the conversion and application of new technological achievements, and explore new types of industry R&D. Innovation model.

Sixth, promote and build an industrial cluster innovation service platform to promote the structural upgrading of industrial cluster export products. The industrial innovation platform serves small and medium-sized enterprises in industrial clusters with weak technical and product development capabilities and low management levels. It provides comprehensive innovation services for enterprises, enhances the enterprise's innovation capability and technology, management, and management levels, and accelerates the upgrading of industrial cluster export products.

Seventh, win with the supply chain. One of the characteristics of meager profit products is low product technology threshold, product quality, small difference in performance, and low profitability. Therefore, in such a situation, anyone who wants to break through technical difficulties, use low-cost materials instead of substitution, and rely on a single company to occupy a single market It's hard. Of course, companies in the low-profit era must win, and maintaining a lower product cost is a must, so companies should adopt various methods to reduce product costs. From the actual situation of low-profit products, the quality of raw materials and the level of prices determine the cost of the company. One of the important factors, according to statistics, is that the most effective of the first eleven items that use cost reduction techniques are procurement negotiations, early suppliers, leveraged procurement, joint procurement, design for convenient procurement (DFP), centralized procurement, etc. The item is related to the supply chain. Therefore, cable companies need to have a spirit of rushing to the forefront, strive to cultivate the supply chain, and work together with suppliers to create a stable industrial chain to compress their own funds and increase the product qualification rate. Accelerate the turnover of funds so as to ensure that they have appropriate profit margins.

Eighth, we must increase the implementation of the “going out” strategy, guide and encourage powerful cable companies, and establish “China Cable Industry Park” or “production and processing” in Central and South America, the Middle East, Eastern Europe, Africa, and South Asia. "Base" to carry out cross-border resource allocation and open up diversified markets.

Finally, we must work on improving the quality management capabilities of cable industry, corporate social responsibility construction, and industrial early warning. We should actively participate in the activities of industry associations and put forward our own opinions on the coordination of price mechanism.

Do not participate in price wars, avoid vicious competition, maintain basic wages in the same industry, participate in equal competition in quality and service, improve the credibility of corporate credit management, and enable the industry to develop in an orderly, efficient and standardized manner, so as to avoid disorderly development Excessive competition and unfair competition issues. This is not only conducive to industrial upgrading and the improvement of industry profit levels, but also has far-reaching practical and historical significance for establishing a good image of the Chinese cable industry.