China's Transformers: Conquering Global Energy Markets

In the first half of 2026, China’s exports demonstrated strong resilience amid a complex external environment. In the first five months alone, total export value reached RMB 11.91 trillion, marking an 11.8% year-on-year increase. Beyond the widely discussed “the three new key export products” —electric vehicles, lithium batteries, and photovoltaic products—a category with higher technological intensity and deeper industrial integration — transformers — is quietly shifting from a supporting role to a front-runner.

Behind every kilowatt-hour of electricity in daily life, transformers operate silently and continuously. From intercontinental transmission and renewable energy grid integration to industrial facilities, residential consumption, and even AI data centers, transformers serve as critical nodes in the lifeline of the power system. Today, this essential sector is being profoundly reshaped by Chinese manufacturing capabilities. In the first four months of 2026, China’s total transformer exports reached RMB 21.77 billion, representing a year-on-year increase of 27%, with export value repeatedly hitting new record highs.

Why have transformers emerged as a new driver of foreign trade exports? The answer lies in the complete “journey” of a smart transformer—from an overseas order to its commissioning and integration into the power grid.

Order Surge:

Chinese Solutions Expand Global Footprints

In early 2026, a 280 MVA / 400 kV three-phase autotransformer independently developed by Chinese enterprises was successfully commissioned at a key substation of the Greek national power grid. This project represents one of the largest single transformer export orders from China to the European Union, comprising a total of 20 units deployed for both new construction and grid expansion and upgrade works.

In the broader global market, transmission and transformation equipment manufacturers continue to secure growing overseas orders, spanning multiple regions including Southeast Asia, the Middle East, Europe, the Americas, and Africa.

Of even greater symbolic significance is a project implemented in Saudi Arabia. Located in a tropical desert climate zone, the country experiences extremely high electricity demand during the summer months. With the full rollout of its “Vision 2030” initiative, urgent grid expansion has become imperative. However, conventional transformers supplied by international brands typically require lead times of 12 to 18 months, whereas the project required the substation to go into operation within 6 months

Qingdao TGOOD Electric Co., Ltd., a Chinese power equipment and solution provider, ultimately took on this challenge. The company developed a prefabricated mobile substation system, in which transformers and other power modules are manufactured and integrated in the factory. Once transported to the project site, only on-site connection work is required before energization can be completed.

Facing extreme summer temperatures exceeding 45°C in Saudi Arabia, TGOOD’s project team achieved full-cycle delivery—from manufacturing and shipment to commissioning and energization—in less than six months, fully demonstrating the speed and technological strength of China’s infrastructure and power engineering capabilities.

“Delivery speed is our biggest ‘competitive edge,’” said Lyu Xiaolong, Assistant to the President and Executive Deputy General Manager of TGOOD GLOBAL, in an interview with Securities Daily.

He noted that, at the technological level, Chinese enterprises have already reached the standards of leading global players, and in certain application scenarios even outperform them. In terms of product value, characteristics such as high reliability, low losses, maintenance-free operation, and long service life give Chinese transformers a significant competitive edge in international markets.

Driven by these combined advantages, Chinese companies continue to secure major overseas contracts in global bidding competitions.

In recent years, Europe has witnessed a wave of aging power grid challenges, prompting countries such as Germany, France, and Poland to launch large-scale grid upgrade programs. Amid surging demand, domestic transformer manufacturing capacity in Europe and the United States remains severely constrained, with delivery cycles measured in years, whereas Chinese enterprises typically offer delivery timelines compressed to around 6 to 9 months.

According to a research report by Huaxin Securities, as power grid renewal and upgrading in Europe and the United States enters a concentrated investment cycle, the construction of AI data centers accelerates, and the scale of renewable energy grid integration continues to expand rapidly, the global transformer industry is currently experiencing its strongest growth phase in recent years.

From a supply chain perspective, leading domestic transformer manufacturers are generally operating at high-capacity utilization levels, with sufficient overseas order backlogs. In some cases, order visibility has extended through 2027 to 2028.

Technological Upgrading:

Continuous Advancement in Intelligent Transformation and Upgrading

The surge in transformer exports is also closely linked to the technological upgrading and leap in capabilities among Chinese transformer manufacturers.

Taking ultra-high voltage (UHV) transformers as an example—often regarded as the “crown jewel” of global power transmission equipment—this category of products was long dominated by international industrial giants. Through sustained independent R&D, Chinese enterprises have not only broken through the core technological barriers of 1,000 kV UHV transformers, but have also achieved advancements and, in some cases, leadership in cutting-edge capabilities such as intelligent monitoring, online diagnostics, and digitalized operation and maintenance.

“We do not engage in cutthroat price competition; instead, we build competitive barriers through supply chain autonomy, large-scale manufacturing, and integrated system solutions,” said Lü Xiaolong. He noted that at comparable technical levels, Chinese products are priced lower than international brands, while project gross margins remain relatively high.

According to the introduction, TGOOD does not win overseas bids by undercutting prices, but by offering superior cost-performance under equivalent specifications to secure customer trust. More than 90% of its standard materials are domestically sourced, and core components are 100% localized.

Currently, China is the world’s largest producer of transformers, accounting for approximately 60% of global capacity, and has established the most complete transformer manufacturing system worldwide. From upstream copper and silicon steel smelting to electromagnetic wire processing, core manufacturing, and insulation board production, China has built the most comprehensive and fully integrated industrial chain globally. In the field of UHV (ultra-high-voltage) transmission, Chinese enterprises have achieved global technological leadership in R&D capabilities, while next-generation technologies such as solid-state transformers are moving from lab research to engineering applications

Intelligent transformation and upgrading have provided strong support for delivery capabilities. Numerous power equipment manufacturers have deployed digital factories and automated production lines, achieving a stable product qualification rate of over 99.9%, while significantly enhancing delivery assurance through full-process quality traceability and improved production coordination.

“This reflects the three underlying logics driving the overseas expansion of China’s high-end manufacturing: technological maturity has crossed a critical threshold, industrial chain completeness has built a strong competitive moat, and intelligent transformation has unleashed efficiency dividends,” said Liu Ying, a researcher at the Chongyang Institute for Financial Studies, Renmin University of China, in an interview.

System Going Global:

From Exporting Equipment to Building Ecosystems

The global “journey” of a single transformer reflects the deeper logic behind the overseas expansion of China’s high-end manufacturing “new infrastructure going global.”

The three new key export products reach end consumers directly in overseas markets. Yet when massive fleets of electric vehicles charge simultaneously, countless rooftop photovoltaic panels feed electricity into the grid on a self-generation basis, and lithium-ion batteries undergo frequent charge-discharge cycles across the globe, the core challenge confronting power systems is no longer “how to generate an extra kilowatt-hour of electricity”, but rather “how to reliably absorb every single kilowatt-hour produced”.

Against this backdrop, global demand for transformers, ultra-high-voltage (UHV) equipment, and smart grid systems have continued to grow in recent years. The buyers of these products are typically governments and public utility companies, with long decision-making chains, high technical barriers, and significant switching costs. Once a company is included in the approved supplier list, such partnerships often last for more than a decade.

This means that the globalization of transformers is not merely about exporting products, but also about exporting standards, systems, and long-term service relationships. When Chinese smart transformers are integrated into European power grids, subsequent operation and maintenance, system upgrades, and data services will continue to generate revenue, forming a deeper and more enduring form of industrial integration and interdependence.

From an investment perspective, this also explains why capital markets’ enthusiasm for the power equipment sector continued to rise in 2026. Zhang Cuixia, Chief Investment Advisor at Jufeng Investment and an interviewee of Securities Daily, stated that the rapid growth in transformer exports reflects the deep dependence of the global energy transition on China’s high-end manufacturing capabilities.

Transformers are the “heart” of new infrastructure, yet they are rarely placed in the spotlight. Within the industrial landscape of “new infrastructure going global,” transformers remain a low-profile but indispensable presence. These steel structures, weighing tens of tons, are now crossing oceans and operating day and night in substations abroad, quietly powering the overseas journey of Chinese manufacturing.

In this context, industry competition is shifting from standalone equipment performance toward integrated system solutions and engineering delivery capabilities. TGOOD focuses on the system-level delivery of complex overseas energy projects, including solution adaptation and cross-regional project execution. Looking ahead, TGOOD will continue to strengthen its engineering delivery and solution customization capabilities, participate in global power grid upgrades and renewable energy integration, and further deepen long-term cooperation in overseas energy infrastructure projects.