A Very Big »C« in BRICS
World total cable consumption in 2004 was US$84 billion. 61% of this total (US$51 billion) was in more developed countries with relatively mature cable markets (including the US, Canada, Western Europe, Japan, Korea, Taiwan and Australasia), while the balance, US$33 billion, was in developing countries. In analysing the more attractive and more substantial opportunities that may be offered by various markets around the world, many companies use the BRICS acronym (Brazil, Russia, India, China and South Africa) as shorthand to identify those countries with the largest potential.
For cable markets this approach is too superficial, as it groups together countries whose significance varies greatly. In particular, it understates the huge importance of the Chinese cable market (and it also omits some other interesting areas, notably major countries in the Middle East.)
China Cable Market US$12 billion
For example, the total cable market in all the countries of Central and Eastern Europe amounts to US$3.6 billion, of which Russia accounts for approximately 40%, whereas China’s cable consumption in 2004 was US$12.4 billion. Similarly, the total cable market for all countries in Africa was only US$2.0 billion, of which South Africa accounted for 30%. The Brazilian cable market in 2004 was only US$1.0 billion, approximately 20% of the total for Latin America (Mexican cable demand was US$2.1 billion, twice as large as Brazil’s). Cable consumption in India, the only one of the BRICS countries that is comparable to China in terms of population, was a modest US$2.0 billion. Thus the size of the cable markets in each of these other developing countries is much smaller than China’s market. China alone accounts for 72% of the total cable demand for the BRICS countries!
Sustained Growth in China
In addition to the large absolute size of the Chinese cable market, growth rates in China have been consistently high over a period of 15 years or more. Cable market growth is currently strong in some other developing countries but none has a track record of consistent growth comparable to China. Chinese cable consumption volume has grown from 1.0 million conductor tonnes in 1995 to 2.3 million tonnes in 2004, an average growth rate of 10% per year. The average annual growth for the Indian market over this period is 2.5%, though growth has accelerated over the last two years.
China Main Focus for Investors
As a result of the high demand growth, over the last 5 years China has been the main focus of attention for most cable groups with aspirations to develop a global business. Furthermore, many international cable-makers supplying to OEMs have not been able to ignore the Chinese market as their existing customer base has relocated manufacturing operations to China.