The submarine cable market, such as the “surrounded city” Chinese cable companies need to be cautious
- March 4, 2014
- Industry News
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“China’s submarine cable market is still small. Although the country is strengthening the development of the ocean, but for Zhongtian, it is now in the ‘besieged city’ state, the peers want to come in, we want to go out.” February On the 25th, Xue Jianling, general manager of Zhongtian Technology Submarine Cable Co., Ltd., shared his experience at the second member conference of Jiangsu Optical Cable.
Xia Chongyao, chairman of Ningbo Dongfang Cable Co., Ltd, agrees. He believes that submarine cable is an area with high barriers to entry and high exit barriers. If you successfully intervene, you can enjoy high-end profits, and failure will suffer huge losses.
Regarding the profit of the production of submarine cables, Zhang Rongzhen, director of the Heavy Equipment Division of the Equipment Industry Department of the Ministry of Industry and Information Technology, said that the average profit margin of the domestic cable industry is only around 3%–4%, and the research and development and production of high-margin submarine cables will help enterprises achieve Significant growth in sales.
In the face of profits, how can domestic cable companies not be tempted? However, the funding problem is an important factor that cable companies need to consider when investing in submarine cable production.
Xue Jianling said that the production of submarine cables is large and the output is small. It takes hundreds of millions of yuan for a submarine cable project. Xie Shuhong, director of the Cable Research Institute of Zhongtian Science and Technology Research Institute, also believes that some powerful private enterprises have been willing to invest in research and development of submarine cables, which is a good thing for domestic cable development. However, at present, the investment in market funds is still insufficient, and the industry’s investment in research and development of submarine cables needs to increase.
The laying of submarine cables is demanding and the process is difficult. The relevant person in charge of China Southern Power Grid once said that the unique customer demand for laying submarine cables requires that submarine cable manufacturers be tied up with a mature construction company, but not every cable company is willing to pay for it.
In recent years, the specifications for the design and acceptance of submarine cable laying engineering have become more and more specific.
Gao Junshi, deputy director of the Cable Institute of China Mobile Design Institute, said that the state has formulated the “Code for Design of Submarine Cable Projects” and “Code for Acceptance of Submarine Cable Projects”, which is to improve the standardization of design, ensure the quality of service to users, and promote new technologies. Application in engineering design to improve network security.
In addition, technology is also a factor that domestic cable companies need to pay attention to when entering the submarine cable field.
“At present, the biggest difficulty in developing submarine cable in China is technology.” He Zaihua, a senior researcher at China Investment Consulting, believes that there are fewer domestic cable manufacturers that can manufacture submarine cables. There are fewer complete technical support such as design, research and development, production, transportation, laying, maintenance and supporting facilities for submarine cables like foreign giants.
Tao Xinhua, a professor-level engineer in the domestic submarine cable field, believes that from the two important technical indicators of the submarine cable: deep sea tightness and deep sea mechanical strength, the domestic sea cable is still weak in the international market.
“Most of China’s contacts with other countries on the other side of the ocean are to be completed by submarine cables.” Zhao Yusen, an academician of the Chinese Academy of Engineering, said that in recent years, with the increase in national marine development, the submarine cable market is gradually expanding.
As Academician Li Lizhen, chairman of the China Southern Power Grid Expert Committee, said, the submarine cable became the next growth point. He Sheng, director of the Institute of Marine Strategy of China Modern International Relations Institute, said that by 2020, China’s demand for submarine cable will reach more than 30,000 kilometers, and the total market capacity will be about 35 billion yuan. From a global perspective, He Sheng believes that the majority of submarine cables are imported and laid, and Southeast Asian countries relying on foreign aid and the Arctic, which will be developed on a large scale, are potentially huge submarine cable markets.
Faced with such a huge market, many cable companies around the world are paying more and more attention, which is undoubtedly a big challenge for Chinese cable companies planning to enter the submarine cable field.
Bob, an analyst with Navigant Research, a foreign authority, said that companies around the world have begun to develop submarine cables, enter the market to digest industry demand, and spend huge sums of money to upgrade equipment to better meet customer needs and seize the market.
Therefore, Chinese cable companies must enter the submarine cable field. In addition to seeing their high profits, they need to carefully intervene after considering various factors such as capital and technology.
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