According to a new report, China has more than 2,000 companies that manufacture rotating electrical machines including motors and generators. China Research and Intelligence says that 90% of them are small and medium sized businesses and that price-cutting and the “uneven quality of products” is threatening many of these concerns.

Between 2001 and 2007, the Chinese electrical machinery industry expanded at an average annual rate of more than 20%. In 2008, the sector was hit by the global downturn but still recorded a growth rate of 16% and was worth around RMB270bn ($40bn).

Most of the Chinese machinery products are targeted at the low end of the market and have low added value, CRI reports. China’s traditional export advantages of relying on cheap labour and domestic resources no longer exist, it adds, and the industry “is in urgent need of re-integration to eliminate inferior enterprises and retain competitive enterprises”.

This, and other factors such as widely fluctuating raw material prices and an inability to compete, mean that many electrical machinery enterprises in China face the prospect of reduced production “or even bankruptcy”, CRI suggests.