Recent tensions between the U.S. and Iran, including the temporary closure of the Strait of Hormuz, have reignited market interest in the new energy sector. However, this enthusiasm has so far been viewed as event-driven, with limited recognition of the long-term structural shifts that the geopolitical situation could bring to the green power industry. Regardless of the outcome of the U.S.-Iran conflict, the episode has underscored the importance of energy security and self-sufficiency. Unlike oil, which is subject to geographic and political constraints, green power generation is a domain where progress can be actively pursued through technological and industrial effort. As a result, the global transition to green energy, previously slowed by political factors, is set to resume and accelerate—a trend evident in recent relaxations of import restrictions on Chinese green power products by the EU and the U.S.
Currently, fossil fuels account for over 60% of the global energy mix, remaining the dominant source, while wind and solar power together represent only about 15%. This leaves substantial room for substitution, presenting long-term opportunities for the green power sector. Related companies, particularly ETFs that stand to benefit from the global green energy transition—such as the Green Power ETF (562550) and the Grid Equipment ETF (159326)—are worthy of attention. Index-based products offer advantages over individual stocks by diversifying risk and capturing broad industry growth, making them a more convenient and reliable option for ordinary investors over the long term.
For instance, the Green Power ETF (562550) primarily holds major domestic green energy companies that not only support China’s energy security but are also positioned to become key players in the global green energy market. Meanwhile, the Grid Equipment ETF (159326) may benefit even more significantly, as both the global energy transition and the new wave of power system construction depend heavily on Chinese electrical equipment. This ETF’s portfolio consists mainly of grid equipment manufacturers.
Sieyuan Electric Co.,Ltd. (002028), the focus of today’s analysis, is the second-largest holding in the latter ETF, with a weighting close to 10%. Other top holdings include Tebian Electric Apparatus Stock Co.,Ltd. and NARI Technology Co.,Ltd., widely recognized as leading companies in the grid equipment sector with strong growth potential. While previous discussions highlighted long-term opportunities brought by the AI technology boom, this analysis explores another, more fundamental yet often overlooked logic behind Sieyuan Electric’s prospects.
01 Historic Opportunity Arising from De-risking from China It has often been said that “Made in China is unbeatable.” This is not an exaggeration but a reflection of reality, as data previously shared has demonstrated China’s overwhelming manufacturing advantage. China has become a super industrial power, dominating nearly half of global industrial output—a position previously held only by post-industrial revolution Britain and post-World War II America. However, this situation is unlikely to persist indefinitely. Both the aspirations of the Chinese people for better living standards and the economic and security interests of other nations make it unsustainable for one country to maintain such a large share of global manufacturing. History suggests that when one nation nearly monopolizes industrial production, others will inevitably seek to rebalance.
Moreover, a significant part of China’s industrial advantage has been based on labor costs. With China now entering a phase of population decline, labor costs are set to rise, making the transfer of low-end manufacturing irreversible. In the long run, China is expected to follow the path of advanced economies by retaining high-end industries while relocating lower-end production. Although China’s share of global manufacturing may peak at around 45%, a gradual decline to below 30% is a more plausible long-term equilibrium.
Energy is the foundation of manufacturing—without it, nothing can be produced. For most other countries, upgrading or rebuilding power grids is an inevitable step. China has become the global leader in the power industry, capable of exporting electricity to neighboring countries and, more importantly, supplying power equipment worldwide. The latter offers particularly strong certainty, as nations prioritize energy security and aim to control their own power infrastructure rather than relying on others.
While the theme of overseas expansion is frequently discussed, the logic underpinning it within the broader context of global manufacturing rebalancing may have been first articulated here—and it is arguably the most fundamental and enduring driver. Even the opportunities presented by AI should be viewed within this framework. Therefore, the overseas expansion of grid equipment manufacturers represents a long-term, reliable trend and forms a core part of the investment thesis for many companies in this sector.
02 Seeking Growth Through Global Expansion The intense competition within China’s domestic market is well-known. With China’s population having peaked, many long-term trends—especially those tied to demographic demand—face downward pressure. Going global has become essential for nearly every industry. The question for companies is not whether to expand overseas, but how.
Based on this outlook, a bold conclusion was previously offered: for most enterprises, failure to succeed internationally implies limited long-term value. Sieyuan Electric stands out as a company that has excelled in global expansion. Since 2009, it has engaged in equipment exports and EPC turnkey projects, building an international presence over more than a decade. Today, its products are sold in over 100 countries and regions, and the company has evolved from a simple equipment exporter into a global provider of power equipment and solutions.
Overseas business has become Sieyuan’s second growth engine. Overseas orders reached RMB 110 billion in 2025, up 45% year-on-year, with international revenue accounting for over 33% of the total in the first half of 2025—far exceeding most domestic state-owned peers. The company is widely regarded as one of the most compelling and well-executed examples of the overseas expansion theme within the power equipment sector.
In terms of high-market access, Sieyuan is also ahead of its peers. Its products have obtained international certifications such as UL, TÜV, and DNV, enabling entry into high-end supply chains including the UK National Grid, Italy’s ENEL, Saudi Electricity Company, and U.S. grid operators. Overseas business gross margins range between 35% and 41%, significantly higher than domestic operations, driving overall profitability upward.
Beyond exporting products, the company has established strong local production and delivery capabilities, with subsidiaries or joint ventures in 20 countries including India, Saudi Arabia, and Mexico. Local production in India has reduced costs by 15%, while a planned Mexico base—scheduled to begin operations in 2026—will help bypass tariff barriers and strengthen supply capabilities in North America. Compared to giants like Siemens and ABB, which often require 3–5 years for project delivery, Sieyuan can complete deliveries within 12 months—a competitive advantage that becomes even more valuable amid global shortages of grid equipment.
Thanks to its product strength, technological capability, and overseas strategy, Sieyuan Electric is positioned as one of the primary beneficiaries of the ongoing global rebalancing of industrial capacity. The additional boost from AI-driven acceleration in power system upgrades worldwide only adds to this long-term opportunity.
Investment involves risks. The content above is for reference only and does not constitute investment advice or a guarantee of returns. Past performance is not indicative of future results. Investors should make rational decisions based on their own risk tolerance.
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