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The "Sorrow" of E-commerce in the Cable Industry
Although news reports have been preaching that China’s economy has rebounded, from the actual situation, the economic situation is not optimistic. Recently, various industrial funds have been disconnected in many places, and there are many companies in all walks of life. Bankruptcy, whether it is steel or real estate. In fact, the wire and cable industry is no exception, but maybe because the wire and cable industry is only a supporting industry for the power industry, and the attention is not as high as steel and real estate, so there is not too much multimedia coverage. But judging from the actual situation observed by the author, the situation of cable companies is indeed not optimistic.
    As the wire and cable industry with extremely high capital requirements, capital problems are the most serious problem. It is important to know that wire and cable is a heavy industry and light industry. The demand for raw materials is the core issue, and the price of more than fifty thousand one ton of copper as a raw material is very expensive, so the funding issue is the core issue of the wire and cable industry. Once the capital chain fails to keep up, a cable company will soon be on the verge of bankruptcy. Because there is no money to buy raw materials, it can only be out of stock, and downstream power companies’ orders cannot be delivered, and they will face various serious consequences. Wire and cable companies are in this sandwich layer.
    Whether in Wuwei, Anhui, Hebei, Yixing, Jiangsu, Henan, Shandong and other places, many small and medium-sized wire and cable companies have recently closed down due to a broken capital chain, and many large-scale wire and cable companies have also been in a situation of extremely tight funds. , It's just that there is no time to attack for a while. This situation makes people worry about the development of China's wire and cable industry. The financial problem of the wire and cable industry is really a rope stuck in the neck of the cable company. If this rope is not untied for a day, the wire and cable company can only be subject to financial problems and cannot breathe freely.
    Why are wire and cable companies so constrained by funding issues? There are not only problems with the attributes of the cable industry itself, but also many external reasons. First of all, the payment methods in the wire and cable industry are unreasonable. Compared with purchasing units, especially large customers such as power grids, wire and cable companies still lack the right to speak. Problems such as slow and difficult payment for a long period of time have been seriously highlighted. For a long time, whether it is the "3-6-1" mode or the "2-5-2-1" mode, that is, after the contract is signed, a 20% advance payment will be paid, 50% will be paid after the product is delivered, and the product will be paid after the installation is completed. 20%, and the remaining 10% will be paid as a quality guarantee deposit after the expiry of the warranty, which has caused the wire and cable manufacturers to pay back slowly, and even difficult to pay back. The payment of advance payments is even more unattainable. Because the general purchasing unit is unwilling to pay the advance payment, even before the advance payment, the supplier is required to provide an advance payment guarantee, delaying the payment of the advance payment. Some contracts stipulate that the delivery period is 20 days, and the advance payment shall be paid within 30 days after receiving the advance payment guarantee from the supplier. Because the advance payment guarantee is processed for at least one week, the customer will not pay the advance payment until more than 30 days after the delivery is in place. , Often the advance payment has not yet arrived.
    Not only is the payment method unreasonable, even the recovery of the payment will be troublesome. After the wire and cable arrives, the purchasing unit should pay the supplier, but the purchasing unit requires the supplier to provide the original delivery receipt, certificate, warranty and other materials (the actual supplier has provided it when the goods arrive), and then Only pay for the goods. There are also many installation companies or general contractors that require the owner to pay before paying the supplier. These actions have delayed the payment of the goods. Due to the deliberate delay of customers, the cycle of wire and cable products from delivery to payment is generally as long as 3-4 months.
    Difficulty in collection is also manifested in the unclear schedule of payment. This phenomenon is often caused by man-made purchases. For example, when signing a contract, the purchasing unit often requires payment after the completion of the project, power-up, installation and commissioning, etc. Many major projects even require the final payment to be settled after the project is completed. These payment links are beyond the control of the enterprise. Especially for some long-period projects, payment is required after all the goods have been delivered. This payment method allows the supplier to advance a large amount of production funds first, which will undoubtedly increase the financial pressure on the supplier. For example, government projects generally have no advance payment, and companies have to schedule production and deliver goods according to schedule. After delivery, they have to be owed payment again, which greatly increases the financial pressure on enterprises. For some transportation projects, due to the long construction period, the supply cycle may be as long as one year from the beginning of the first batch of supply to the end of the last batch. In special circumstances, the cycle is longer.
Warranty Deposit:
    At present, wire and cable companies pay about 20%-30% of the total purchase price. This part of the capital accounted for not a small proportion. It can be said that the profits of wire and cable companies are completely dependent on the quality guarantee funds. The upfront payment is just the cost and price. However, if the company defaults on the warranty money, then the wire and cable company will definitely do it in vain and still lose money, because the profit margin of the cable industry is only 34%. If the warranty money of 20-30% is not available, Naturally it is at a loss. Wires and cables belong to material products and should not pay warranty money like equipment products. However, most purchasing units still require cable manufacturers to pay 5%-20% warranty money. In the contract, the customer requires that the quality guarantee money be paid 1-2 years after the completion of the project acceptance or installation and commissioning, but the specific payment time has not been determined, so it is normal for the quality guarantee money to be in arrears for 2-3 years.
    It is undeniable that many cable companies have problems such as untimely provision of technical information and delayed delivery. These circumstances are subject to fines, and some fines are even as high as one million yuan, and the liquidated damages are obviously excessive. For manufacturing enterprises, there are many uncertain factors in production, transportation, etc. It is inevitable to cause inadvertent breach of contract, and it is unfair to assume excessive liability for breach of contract. Purchasing units deliberately or even deliberately punish, often causing wire and cable manufacturers to make ends meet, signing orders without profit, but loss.
    Wire and cable manufacturers lack the right to speak, are passive everywhere, payment methods are unreasonable, payment is difficult, and payment is slow, etc., which severely squeezes the profit space of wire and cable manufacturers, and the increase in raw material prices leads to wire and cable production Enterprises are struggling, and once there is a bad economic situation, they will inevitably face the risk of bankruptcy.