"Ming Yang will offer 1.4 to 1.5 billion euros ($1.72 billion to $1.97 billion) to buy the Danish company," said the source, who declined to be named.
Ming Yang Wind Power, a large Chinese wind power company, makes the 10th largest amount of turbines in the world, whereas Vestas produces the most.
In the first quarter of 2012, Ming Yang’s revenue plunged by more than 70 percent year-on-year, the result mainly of overcapacity in the industry and government tightening policies.
China’s wind power industry has started to expand at a slower pace as wind projects are being required to go through a stricter approval process.
An increase in price competition and a decrease in demand have reduced Chinese wind turbine manufacturers’ profit margins, according to Zhang Chuaiwei, chairman and CEO of Ming Yang.
"It is expected that the wind power industry in China will continue to face difficulties and will see further reductions in newly installed capacity in 2012," Zhang said earlier.
"Nevertheless, the unusually demanding conditions now prevalent in the industry may prompt further market consolidation, which we believe we will benefit from as a leading market player."
Vestas also reported that it saw a larger-than-expected loss in the first quarter, the result largely of delayed deliveries and rising costs.
The Danish company closed its factory in Hohhot, Inner Mongolia autonomous region, last month.
Vestas installed only 501 megawatts worth of wind turbines in China in 2011, down 42 percent from a year earlier. Several of the company’s global counterparts have also seen their operations reduced in the world’s largest wind market.
India-based Suzlon sold its Chinese manufacturing subsidiary to China Power (Tianjin) New Energy Development Co Ltd for $60 million.
Chinese wind companies are meanwhile facing tougher competition as spats that have arisen over trade in clean-energy products become more intense.
In May, the US Department of Commerce imposed taxes of up to 26 percent on imports of wind turbines from China.
In response, Chinese wind energy companies established plants in Europe and India, hoping to circumvent the duties that were imposed on products made in China.
Last month, Titan Wind Energy announced it would acquire a factory where wind turbine towers are made in Denmark. The seller in the deal is to be Vestas, which is trying to reduce its costs.
Titan Wind Energy makes the most wind turbine towers among Chinese companies.
Meanwhile, Ming Yang recently announced a plan to move into India, saying it wants to acquire a significant stake in the Reliance Group unit Global Wind Power Ltd and develop up to 2,500 mW of clean energy projects in the country.