abstract： Low voltage electrical industry model and industry chain

1. Low voltage electrical industry model and industry chain

(1) Industry business model

The upstream enterprises in the low-voltage electrical industry are mainly suppliers of raw materials such as copper, iron, silver, plastics, electronic components and parts. Enterprises in the industry generally purchase relevant raw materials and parts by directly purchasing raw materials for independent processing or customizing product parts from raw material manufacturers.

Downstream customers are distributed in various industries of the national economy, and the combination of direct selling and distribution is widely used in the industry to sell products to downstream customers.

(2) Upstream industry

The upstream of low-voltage electrical industry is metal materials (copper, iron, silver, etc.), plastics, electronic components, etc., and the output and price are closely related to these materials. The price changes of copper, iron, silver, plastic and other large raw materials and electronic components will directly affect the purchase cost, thus affecting the profit level of the industry.

(3) Downstream industry

The downstream of low-voltage electrical products involves a wide range of industries, such as industry, electric power, military industry, communication, real estate, transportation and so on.

Related report: Beijing Puhua Youce Information Consulting Co., Ltd

2. Low voltage electrical industry downstream market demand

Data source: PwC's strategy

(1) Overall domestic market demand

Low voltage apparatus is the basic component of complete electrical equipment, which is widely used in various basic departments. The wide range of application also makes the low-voltage electrical industry consistent with the long-term trend of the national economy. The scale and growth rate of fixed asset investment determine the market demand and scale growth of the low-voltage electrical industry on the overall level. From 2010 to 2020, the growth of fixed asset investment in the whole society is stable, with an average annual compound growth rate of about 6.61%. Benefited from the scale of fixed asset investment, China's low-voltage electrical industry will also maintain a stable growth trend.

(2) Industrial development creates opportunities for the industry

The industrial field is not only a large consumer of electricity, but also an important application field of low-voltage electrical industry. China's industrial added value will grow steadily from 2010 to 2020, with an average annual compound growth rate of about 6.61%. In 2020, China's industrial added value will reach 31307.110 billion yuan. Driven by the national energy conservation and emission reduction policy, enterprises (especially manufacturing industry) have a strong demand for energy-saving control products and intelligent electrical products, which further creates opportunities for the development of low-voltage electrical industry.

(3) The development of electric power industry drives the demand of the industry

Low voltage electrical appliances are the structural cornerstone of low-voltage distribution system and low-voltage distribution network. Low voltage power supply is mostly used in industry, agriculture, transportation, national defense and general residential power fields. After the power is transmitted through the high-voltage circuit, it must step down through the substations at all levels, and then distribute through the distribution system at all levels, and finally enter the end users. As low-voltage electrical appliances are widely used in low-voltage distribution system and play the role of circuit on-off, protection and control, its performance and quality directly affect the power safety of power end users and the reliability of power supply system. The development of low-voltage electrical industry is closely related to the prosperity of the power industry, and its demand in power construction mainly comes from two aspects: one is the new demand, the other is the update demand of existing equipment.

According to the social responsibility report 2020 issued by the State Grid, in 2020, the total investment in the development of the State Grid is 556.9 billion yuan, of which 460.5 billion yuan is invested in the power grid, which is higher than that in 2019. The development commitment in 2021: 473 billion yuan is invested in the power grid, with a year-on-year increase of 12.5 billion yuan. It provides a strong guarantee for stabilizing the market demand of low-voltage electrical appliances in the power industry.

(4) Industrial automation brings new growth point for low voltage electrical industry

As one of the most important technologies in the field of modern manufacturing in the 21st century, industrial automation technology mainly solves the problems of production efficiency and consistency. Low voltage electrical apparatus is the basic component of all kinds of electrical control system. The early electrical engineering automation control was realized by low voltage electrical apparatus such as contactor and relay. No matter high-speed mass manufacturing enterprises or enterprises pursuing flexibility, flexibility and customization, they must rely on the application of automation technology. China is in the middle stage of industrialization construction, the investment demand for industrial manufacturing equipment is very large, and the investment demand for industrial automation equipment and intelligent equipment is correspondingly large. With the optimization and upgrading of industrial structure in recent years, China's automation industry has a bright future. With the adjustment of China's industrial economic structure and the development of industrial upgrading, it has brought unprecedented market opportunities for the domestic industrial automation industry. In the future, with more and more manufacturing enterprises stepping into the ranks of automation, it will bring new growth points for the industry.

(5) "one belt, one road" promotes global development opportunities for low voltage electrical appliances industry.

The "one belt, one road" strategy is an important goal of energy input and infrastructure output. As a leading industry, the low voltage electrical appliance industry is facing a major opportunity to move towards the world.

From the perspective of input, the country is based on the construction of energy channel, which directly benefits the related infrastructure construction industry. At present, China's oil and natural gas imports from Central Asia, which is rich in oil and gas resources, account for a low proportion. In order to meet the growing domestic demand for oil and gas resources, the state plans to build a number of energy channels leading to Central Asia and Russia, as well as supporting oil and gas pipelines and power grid facilities to meet important development opportunities.

One belt, one road, is a large number of developing countries in Southeast Asia, Central Asia and Africa. China's electricity consumption level is very low. There is a broad potential for upgrading. With the increase of electricity consumption, there will be a large demand for power equipment in the future. On the one hand, China's power equipment technology level in some areas has international competitiveness. In the field of hydropower, China has undertaken major global projects; In the field of photovoltaic, the conversion rate of solar cells is at the international advanced level. On the other hand one of the "one belt, one road" involves weak manufacturing bases in non OECD countries and regions, and a large number of equipment is dependent on imports. One belt, one road, and the other underdeveloped countries and regions, infrastructure is very weak. In the field of construction and equipment manufacturing, there will be a large demand. With the support of national policies, the domestic low-voltage electrical industry will benefit significantly.

(6) 5g communication creates broad prospects for low voltage electrical industry

The telecommunication industry is one of the most important fields in the use of high-end products in the low-voltage electrical industry. Due to the specific technical requirements of the telecommunication industry, telecom customers often have high requirements for the reliability and stability of low-voltage electrical products. In 2020, the total amount of national telecom services will reach 1.36 trillion yuan, an increase of 3.6% over the previous year. In 2020, the total number of mobile communication base stations in China will reach 9.31 million, with a net increase of 900000 throughout the year. The construction of 5g network has been carried out smoothly, and the continuous outdoor coverage of key urban areas of 5g network has been realized in many cities. More than 600000 new 5g base stations have been built, and more than 718000 5g base stations have been opened. Among them, China Telecom and China Unicom have jointly built and shared more than 330000 5g base stations. 5g network has covered cities above prefecture level and key counties and cities in China, and investment in 5g base stations will continue to increase in the future. Under the 5g technology architecture, the density of base station construction and the power consumption of key base station equipment such as AAU and BBU are greatly increased. The large-scale construction of 5g base station will also bring further demand increment to the low-voltage electrical industry.

3. Barriers to entry

After years of development, China's low-voltage electrical industry has formed a number of enterprises with strong competitiveness. By strengthening technology research and development, building sales network, strengthening brand building and training professionals, leading enterprises in the industry have formed a certain degree of competitive advantage. In the future, with the continuous improvement of customers' comprehensive requirements for products, industry integration will continue to strengthen, leading enterprises' market share will gradually increase, and industry barriers will become more obvious.

(1) Technical barriers to production

From the production point of view, the quality, performance and service life of low-voltage electrical products are closely related to the structure design, modern production capacity, quality and cost control ability of the products. As customers have higher and higher requirements for the product processing process and process standards, it is necessary for the enterprises to carry out automatic production, automatic detection, automatic control, and so on At the same time, enterprises need to improve the level of lean production, so that the production system can quickly adapt to the changing needs of users, improve production efficiency and product quality.

From a technical point of view, low-voltage electrical products have entered a new stage of development, customers' requirements for the comprehensive performance of products are constantly improving, and enterprises need to continue to invest in R & D in order to maintain the competitiveness of products. At present, the industry is facing fierce competition and serious homogenization of products. Many enterprises have been eliminated due to the problems of backward quality, service, production technology and low scientific and technological content of products. Only by continuously integrating talents and resources in materials, mechanical engineering, power electronics and other fields, can we follow the industry trend and effectively carry out R & D work. Weak enterprises can not effectively integrate technical resources to carry out R & D work, products will be difficult to adapt to the requirements of customers in the new era.

(2) Low voltage electrical professionals barriers

Low voltage electrical industry has a large demand for comprehensive skilled personnel, management personnel, professional and technical personnel, and lean production related personnel. In R & D and production, professionals need to master multi-disciplinary knowledge such as power electronics, electronic information science, mechanical and material science, and have strong interdisciplinary comprehensive literacy; In terms of operation and management, relevant personnel should be familiar with enterprise operation, proficient in enterprise management, be able to effectively carry out multi department cooperation, and establish an effective management system; In addition, enterprises have strong demand for talents in the development strategy formulation, sales channel development, information system construction and other aspects. Enterprises need to constantly introduce all kinds of talents in order to maintain sustainable competitiveness.

The personnel training of low-voltage electrical industry needs to experience long-term practice accumulation. It usually takes several years or even decades to grow from new talents to professional talents. High level compound talents are particularly scarce. Due to the high cost of investment, excellent enterprises in the industry have established an effective incentive mechanism to provide rich returns for expert talents, maintain the stability of the enterprise core team, and build a high talent barrier for new enterprises.

(3) Low voltage electrical products certification barriers

For example, the low-voltage electrical products of some enterprises are used in the field of industrial automation, which have higher requirements for reliability and safety. According to the provisions of the regulations on the administration of compulsory product certification, the products listed in the catalogue of products subject to compulsory product certification of the people's Republic of China must be certified by the certification body designated by the state, obtain the certification certificate issued by the designated certification body, and apply the certification mark before they can be sold, imported and used in business activities. In China, it needs to pass CCC certification, in the United States, it needs to pass UL certification, and in the European Union, it needs to pass CE, t Ü V certification, etc. Due to the long time and high cost of product certification, product certification barriers are formed.

(4) Brand barriers of low voltage electrical enterprises

Low voltage electrical products play a bridge role in the process of power distribution, which is directly related to the safety of electricity, so the final customers have higher requirements for the stability and reliability of the products. Customers pay special attention to product quality, especially reliability, and often have a high recognition of brands with high popularity and good business experience. Therefore, the lack of brands accepted by customers is an important obstacle for new enterprises to enter the industry. The brand barriers of medium and high-end product market are more obvious. When choosing suppliers, the medium and high-end customers of low-voltage electrical appliances generally establish a relatively strict supplier selection system and selection criteria. Generally, it takes up to 2-5 years from the initial contact to the establishment of a stable partnership. During this period, customers will conduct a comprehensive evaluation on suppliers, focusing on the evaluation of supplier R & D, procurement, production process, product quality, etc Quality management and other aspects of strength, only to meet the full range of customer requirements, suppliers will establish a stable cooperative relationship with them. Brands with high reputation and popularity are more likely to be recognized by middle and high-end customers, while a new brand or low-end brand product often needs to cross higher brand barriers to be recognized by customers.

(5) Sales channel barrier

Low voltage electrical industry involves many downstream industries, with a wide distribution of end customers and obvious diversity characteristics. Therefore, leading enterprises in the industry invest a lot of manpower and material resources to build a marketing network: for key customers in key areas, relevant departments and personnel of the company conduct long-term contact, and try to solve customer product problems from pre-sales or even R & D, Realize all-round service to customers, improve user experience and enhance customer stickiness; For other areas, build a marketing network in major regions of the country, and formulate sales strategies suitable for the local business environment. At the same time, the formation of a clear positioning of the product line strategy to meet the needs of different users of products, forming a comprehensive coverage of different market segments. New entrants can not form a comprehensive sales network in a short time, and can not effectively overcome the barriers of sales channels.