Submarine cable or brings new space for cable market

In early 2013, Libya International Telecom and Huawei Marine Network Co., Ltd. announced the completion of the construction of Silphium, the first submarine cable system wholly owned by Libya. This system is one of the world’s longest non-relay submarine cable systems. This is also Huawei’s. The second submarine cable project built by the ocean in Libya.

In this regard, industry sources said that the construction of Libya’s communications infrastructure will play an important stimulating role in its economic growth, which is a great inspiration for China’s economic development. At the same time, under the condition that the domestic traditional wire and cable industry has a meager profit, the submarine optical cable will also bring new market growth potential for wire and cable companies.

Submarine cables or new growth points in the industry

In recent years, China's wire and cable industry has grown at an average annual rate of more than 15%. By 2007, the total industrial output value of the entire industry exceeded 400 billion yuan, far exceeding the United States and becoming the world's largest wire and cable producer. However, the increase in scale brought about a decline in the rate of profit. In 2002, the profit rate of China's cable was 12.9%, and by 2007, the profit rate fell to 8.56%, and by January to July 2012, the average profit of the country's wire and cable industry was only 4.11%.

Industry insiders said that even if such a profit rate is based on fake, shoddy, short and heavy, it is formed on the basis of two. At present, China's wire and cable industry has a serious excess capacity. Most of the companies are in the middle and low end of the market, and they are in the midst and low-end market. High-end markets and high-end brands have fallen into a slump. The profits are slim.

"The completion of the construction of the first fully-owned submarine fiber-optic cable system in Libya will benefit Chinese wire and cable companies," said a wire and cable distributor.

According to public information, China is a maritime country with 3 million square kilometers of sea area and 18,000 kilometers of coastline. The shallow continental shelf is 1.2 million square kilometers and there are more than 6,000 islands along the coast. From the current exploration results, it can be seen that China’s shallow continental shelf contains abundant submarine oil fields and natural gas, and in the future these regions will inevitably build offshore oil drilling and natural gas mines. The communication between the offshore drilling and the outside world cannot rely entirely on wireless communication or satellite communication. Only the submarine cable communication can be effective.

At present, several wire and cable companies have already planned submarine cable projects. Among them, Zhongtian Technology and Hengtong Optoelectronics have invested a lot of manpower and material resources. Yin Hongbing, deputy general manager of Hengtong Optoelectronics, stated that marine communications is a pyramid in the field of optical communications. At present, the center of submarine optical cable construction has shifted from European and American markets to Asia and Africa, bringing new market opportunities. At the same time, from the perspective of global ocean communications development, related companies must have system integration capabilities, including industrial chain integration and system design capabilities.

At present, the construction of Hengtong Photovoltaic Cable Production Line is in progress and will soon become a sharp tool to increase gross profit. Once it is successful, it will bring impact effects and subsequent orders for the company's performance.