China’s textile industry faces further contraction as nearly 1,500 firms exit

China textile factory contraction is reshaping the country’s apparel supply chain. China’s textile and apparel industry is showing signs of further contraction. Around 1,500 companies are estimated to have exited official industrial-enterprise statistics in the first half of this year, according to a report by The Epoch Times (TET).

Industry stats behind China textile factory contraction

Furthermore, data from the Hong Kong General Chamber of Textiles reflects this adjustment. The count of “abovescale” textile companies dropped by 389 yearonyear to 20,806 from January to May.

Over the same months, abovescale firms within textile, clothing and apparel sectors fell by roughly 1,101. Industry organisations estimate around 1,490 firms from these two groups left the statistical pool in the first halfyear, as cited by TET.

Moreover, China’s National Bureau of Statistics defines “abovescale” textile firms. These enterprises hit minimum annual revenue of 20 million yuan ($2.98 million).

Leaving this statistical group does not equal bankruptcy. Businesses may slip under the revenue threshold, go through restructuring, or file for bankruptcy.

Market signals: order shifts & production relocation

Meanwhile, reports of factory shutdowns and overseas production transfers raise industry outlook concerns, per the TET report.

Anonymous industry insiders shared realworld market feedback. One Zhejiangbased textile business owner noted clear orderstructure changes. Orders now lean heavily toward shortterm, smallvolume contracts. In former years, one single order could sustain monthslong production. Many current orders only run for a few days without stable commitment.

Additionally, foreigninvested manufacturers also face operational pressure. Chinese trade platform AMZ 123 published news on September 9. Jiaxing Kanglong Textile Co., a USfunded Zhejiang enterprise, started windingdown procedures.

It plans to halt production by the end of 2026. Part of its denim output will shift to Mexico. The enterprise itself has not yet verified this news.

 Mixed official economic performance

Official national statistics deliver a mixed view of the whole textile sector. Data released August 27 from China’s National Bureau of Statistics covers JanuaryJuly performance.

Abovescale textile companies reached 1.238 trillion yuan ($184.6 billion) in revenue. This marks a 2.2 per cent yearonyear rise. Their combined profits grew 7.9 per cent to 32.68 billion yuan ($4.87 billion).

In contrast, the apparel segment paints a different picture. Apparel sector revenue hit 562.63 billion yuan ($84 billion) over the same period, down 3 per cent yearoveryear. Its total profits stood at 16.81 billion yuan ($2.51 billion), based on official data quoted by TET.

For more global supplychain analysis, read our related article on knitwear trends.