Current situation of domestic high and low voltage electrical industry

Most domestic low voltage electrical appliance manufacturers are small in scale and too many in number. More than 85% of them are engaged in repeated production of medium and low-end products. The structure of low voltage electrical appliances needs to be further adjusted in the future. Products with backward technology, large size, high energy consumption and environmental pollution will be eliminated.

At present, among my country's low voltage electrical appliance manufacturers, there are only dozens of large enterprises with annual sales revenue and total assets of more than 500 million yuan. The vast majority are small and medium-sized enterprises, resulting in the lack of economies of scale and competitiveness of enterprises; moreover, my country's low voltage electrical appliance manufacturers have developed from more than 600 in the early days of the founding of the People's Republic of China to thousands of enterprises today. The excessive number of enterprises has led to excessive dispersion of economic resources and lack of efficiency. Due to blindly launching projects and spreading stalls, the phenomenon of regional industrial convergence is serious, the economic benefits are low, and low-level repeated construction has caused product backlogs, energy and material waste, and low economic benefits.

From the market situation, the medium and low-end low-voltage electrical appliances produced in my country basically occupy most of the domestic market, but except for some domestic high-end low-voltage electrical appliances that can compete with similar foreign products, the domestic market share of other domestic high-end low-voltage electrical appliances is still very low. The performance of the first and second generation low-voltage electrical appliances is backward and the profit is meager, and the third generation products cannot meet the demand. It is urgent to develop a new generation of low-voltage electrical appliances.

In addition, with the shortage of funds, the increase in financial costs and the rapid increase in employee wages, the increase in labor costs is irreversible, which will inevitably cause the profit of low-voltage electrical appliances to continue to decline. At present, many enterprises are in a state of small profits and losses, which brings difficulties to enterprises to increase investment in scientific research, new product development and technical transformation.

Due to the increase in demand for low-voltage electrical appliances, many large foreign enterprises have increased their investment in the field of low-voltage electrical appliances, and while developing high-end products, they have also entered my country's medium and low-end markets one after another, resulting in more intense competition in the industry. The impact of foreign brands on domestic enterprises cannot be underestimated. It has largely restricted the development of domestic enterprises, and currently high-end products are still mainly imported brands.

Developing intelligent low-voltage electrical products that adapt to the terminal market is undoubtedly a huge opportunity and a severe test for domestic low-voltage electrical appliance manufacturers.

The technical shortcomings of the low-voltage electrical appliance industry have become a major bottleneck for the industry to move forward. According to statistics, excellent foreign companies can invest about 7% of their total sales in scientific research and R&D of new low-voltage electrical products. The average investment in my country's low-voltage electrical appliance industry is 1% to 2% of total sales, and excellent companies are only about 3%. This topic has also become the focus of the General Low-voltage Electrical Appliance Branch of the China Electrical Equipment Industry Association this year, which shows that the issue has attracted great attention from the entire industry.

The low-voltage electrical appliance market has gradually expanded with the construction of power facilities. In recent years, the demand for low-voltage electrical appliances at home and abroad has generally been in an expansionary state. However, while the low-voltage electrical appliance market is developing well, industry enterprises lack sufficient independent R&D capabilities and lack high-end market competitiveness. According to analysis, compared with international advanced large manufacturers, low-voltage electrical appliance manufacturers have a large difference in overall technology and production levels, especially low-voltage electrical appliance companies are small in overall scale, and resources in all aspects are relatively scattered. Companies often have repeated R&D or mutual imitation in the low-end and mid-end fields. Due to the increasing demand for low-voltage electrical appliances, many large foreign companies have increased their investment in the field of low-voltage electrical appliances. While developing high-end products, they have also entered my country's mid- and low-end markets, leading to more intense competition in the industry.

There are many manufacturers in the low-voltage electrical appliance industry, and counterfeiting and price competition still exist, which makes general low-voltage electrical appliances in a state of low profit. The products that used to play a major role in the development of the low-voltage electrical appliance industry, such as the DW45 universal circuit breaker, have also seen a significant decline in profits.

The change in the research and development model of low-voltage electrical appliances has brought difficulties. With the continuous development of the market economy, the pattern of joint design of new products by the research institute has been completely broken, and what follows is the independent research and development of differentiated new products by enterprises. This has caused a significant increase in the trial production workload and trial production costs of the internal and external accessories of low-voltage electrical appliances and the main component manufacturers, while the production batch of each accessory or component has been reduced, making it difficult to form a production scale and generate profits. The low enthusiasm of the accessory manufacturer also brings difficulties to the development of new products for the whole machine factory.

Moreover, there are many low-voltage electrical appliance companies. Except for some large companies, there is not much difference between them. The product structure is similar, the technical content is not high, and the industry entry barrier is low. This structure leads to some excessive competition in the industry. Due to the existence of excessive competition, even in the face of a good market demand environment, its benefits are difficult to improve fundamentally. The large number of market participants has led to price cuts to gain more market share, the industry profit margin has shown a downward trend, and the upward rush to buy tight raw materials has caused a sharp rise in raw material prices, further deteriorating the industry's profit level.

The impact of foreign famous brands and the participation of domestic monopoly industries have made the domestic low-voltage electrical appliance excellent companies worse. In the construction of smart grids, State Grid Corporation and many design departments prefer foreign famous brands. In addition, domestic monopoly industries directly participate in the manufacture of low-voltage electrical appliances, which puts domestic existing companies, including excellent companies, at a disadvantage in market competition.

The investment in scientific research and new product development in the low-voltage electrical appliance industry is obviously insufficient, which hinders the sustainable development of the low-voltage electrical appliance industry. Low-voltage electrical appliance products span multiple disciplines and are comprehensive and technology-intensive majors. With the development of related technologies, related new materials, and new processes, a new generation of low-voltage electrical appliances will be born, but a lot of investment is still needed. According to statistics, excellent foreign companies can invest about 7% of their total sales in research and development of new low-voltage electrical products, while the average investment of my country's low-voltage electrical industry is 1% to 2% of total sales, and excellent companies are about 3%.

The rising trend of low-voltage electrical manufacturing costs is irreversible. Among my country's low-voltage electrical appliances, low-end products are still produced in large quantities. These products are large in size and consume a large amount of precious metals such as silver, copper, ferrous metals, and plastics. Many materials are subject to international market prices, so the situation of high prices of main raw materials for low-voltage electrical appliances or even continuing to rise will be difficult to change.

Against the backdrop of the continuous development of new technologies and new products for low-voltage electrical appliances, as well as the increasing attention paid to the development of smart grids and safe electricity use, if my country's low-voltage electrical appliance industry does not increase investment in scientific research and new product development, does not increase basic common technology research, and rapidly improves the independent innovation capabilities of enterprises, it will inevitably hinder the sustainable development of my country's low-voltage electrical appliance industry and lose its market competitiveness.

In addition, with the shortage of funds, rising financial costs, and the rapid increase in employee wages, the increase in personnel costs is also irreversible. It will inevitably cause the continuous decline in profits from low-voltage electrical appliance production, and many companies are already in a state of micro-profit and loss. At the same time, it brings difficulties to enterprises to increase investment in scientific research, new product development and technological transformation.