According to the data of statistics departments and industry associations, poor quality cables pose huge threat to the safety of construction engineering. Among the fire accidents across the country, two thirds of them are related to cable quality problem, causing incalculable losses—wire and cable products are widely used in all fields of national economy and support various industries, national defense construction and major construction projects, making them the fundamental safeguard for modern economy and normal social operation and indispensable products for people’s daily life. Wire and cable industry is the second largest one only second to automobile industry in machinery industry. At the end of the 11th Five-year Plan period, the output volume of China’s cable and wire industry has exceeded RMB 730 billion and the annual copper consumption and aluminum consumption are respectively more than 4 million tons and nearly 2 million tons. Though the scale, output and growth speed of the industry ranks on top in the world, it is facing severe crisis. Looking from the surface, the cable and wire industry has growing contribution to national economy, but the development inside the industry is having severe crisis, which is reflected in the following ways: The industry concentration is not enough. According to the statistics data issued by National Bureau of Statistics in 2009, among 4,653 state-owned and above designated scale sized enterprises in cable industry (the actual total amount of enterprises is nearly 10,000), 98.8% are small and medium-sized companies and there are only 19 large-scale companies accounting for only 11.7% of market share. However, three major manufacturers in America accounts for 54%, 7 in Japan for 86% and 12 in UK account for 95%. Though China is a big country in manufacturing cable products, not even one company can be truly called as the leader in the industry, not to mention an industry chain scale or famous world-known brand or multinational group, making it difficult for China’s cable and wire industry to fully participate in the global competition. The production capacity is over-expanding. The problem of over-expanding production capacity is already very severe a few years ago. After the financial crisis in 2008, the nightmare of production capacity expansion began again. Driven by the policy of “expanding domestic demand and keeping economic growth”, governments at all levels put in huge investment to build factories in the name of developing new products or high-end technical persons, making the cable industry form a new round of investment boom. Take the instance of high-voltage cross-linking cable vertical production line (VCV), 32 lines was put into production in China at the end of 2008 and there are 60 lines now. The establishment of these production lines makes domestic VCV production lines with original 40% utilization rate go even idler. What is the average utilization rate of China’s cable and wire equipment? It is 20% to 30%. Maybe we are not willing to see this figure, but the rate in developed countries is generally above 70%. It’s lack of technology innovation. The average input of R&D fee in China’s cable industry is less than 1% of sales volume and more than 90% of domestic cable companies have their production concentrated in the low-end products. In the cable industry chain, there are few companies involved in high value-added products such as aerospace, submarines, nuclear power, electronics, automobile wiring harness, high-voltage cable accessories, high-voltage cable super clean cable materials and other high-end products, which are mainly imported. Take an instance of cables for nuclear power stations, according to statistics of relevant departments, China’s nuclear power installed capacity reached 20 million kilowatts at the end of 2010 and it provides a market space with a value of RMB 10 billion for cables for nuclear power stations. Because the halogen-free, low smoke, low toxicity and other technical performance requirements for nuclear power station cables are very high, China can currently only produce cables for the outer circle of nuclear island, while other cables all need to be imported. The profit is extremely meager. Due to the fierce low-end competition in China’s cable industry, according to the industrial statistics data, the cable industry only had a rate of gross profit of 12.84% in 2009, making the net profit for many companies only 2% to 3% by deducting manufacturing costs, personnel costs and financial costs. A number of companies are on the edge of at a loss. The capital quality is not good. Currently, the general asset-liability ratio of China’s cable companies is relatively at a high level of 60% to 80% or even higher than 80% for some companies. Many companies use others’ capital to build their own “business empire” and use limited short-term capital to invest in long-term development. Meanwhile, cable companies’ exterior payment for goods is continuously expanding and the bad debts are constantly increasing. Capital operation speed is obviously slowing down. The problems of operation in debt and continuous expansion bring hidden danger to many companies, easily breaking their capital chain.