China’s textile and apparel industry is showing signs of further contraction, with about 1,500 companies estimated to have dropped out of the regime’s official industrial-enterprise statistics during the first half of this year.
Data cited by the Hong Kong General Chamber of Textiles show that the number of textile companies classified as “above-scale” fell by 389 from a year earlier to 20,806 between January and May. The number of “above-scale” textile, clothing, and apparel companies declined by about 1,101 over the same period. Industry organizations estimate that roughly 1,490 companies in the two categories had exited the statistical pool by the first half of the year.
The category of “above-scale” textile companies covers companies with annual revenue of at least 20 million yuan ($2.98 million), according to China’s National Bureau of Statistics. Leaving the category does not necessarily mean a company has gone bankrupt. Companies can fall below the revenue threshold, undergo restructuring, or be declared bankrupt.
Reports of factory closures and foreign companies shifting production overseas are adding to concerns about the industry’s outlook. Several individuals from the industry spoke to The Epoch Times on condition of anonymity out of fear of reprisal.
An owner of a textile business in Zhejiang Province, surnamed Yan, told the publication that orders this year have increasingly consisted of short-term and small-volume contracts.
“In the past, one order could be made for several months. Now many orders can only be made for a few days, and they are not fixed,” Yan said.
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The pressure is also being reflected in the operations of foreign-owned manufacturers.
Chinese online trade platform AMZ 123 reported on Sept. 9 that Jiaxing Kanglong Textile Co., a U.S.-invested company in Zhejiang, had entered the process of winding down operations. The company is planning to halt production by the end of 2026, with some denim production to be transferred to Mexico. The company has yet to confirm the report.
The Epoch Times reached out to the company for comment but did not receive a reply as of publication.
Pressure on Workers
A labor rights activist in Jiaxing, Zhejiang Province, surnamed Xu, told The Epoch Times that workers had begun paying attention to compensation following reports that the Jiaxing Kanglong factory would close.
“I believe foreign-funded factories will not shortchange their employees,” Xu said. “[But] if it is a Chinese private enterprise or state-owned enterprise, it is hard to say.”
In Guangzhou, China, the Guangzhou Panyu Hengyi Garment Co. bankruptcy liquidation case was accepted by a Chinese court in January. The court subsequently declared the company bankrupt in May.
A garment-industry insider in the region, surnamed Chen, told The Epoch Times that many factories are struggling to stay in business as orders dry up.
“The factory has no orders, but it has so many workers to support. It is burning money every day, so it can only close,” Chen said.
He said rural migrant workers from other provinces have increasingly been returning home.
The contraction is affecting companies across the supply chain, including fiber producers, dyeing and finishing companies, and garment manufacturers.
An employee at a foreign manufacturing company in the Yangtze Delta, surnamed Li, told The Epoch Times that multinational companies may respond to weaker Chinese orders by moving production elsewhere or eliminating individual product lines while retaining sales and technical operations in China.
“Some [companies] moved production capacity to Vietnam or other countries,” Li said. “Others shut down one product line but retain sales and technical services. Now even many upstream companies are closing. The environment next year should be even worse than this year.”
Official Data
Official Chinese economic data paint a more mixed picture.
According to data released by China’s National Bureau of Statistics on Aug. 27, above-scale textile companies recorded revenue of 1.238 trillion yuan ($184.6 billion) between January and July, up 2.2 percent from a year earlier. Their total profits rose 7.9 percent to 32.68 billion yuan ($4.87 billion).
The apparel and clothing sector, however, recorded revenue of 562.63 billion yuan ($84 billion) during the same period, down 3 percent year over year, while total profits reached 16.81 billion yuan ($2.51 billion).
Li disputed the picture presented by the official figures, saying they do not reflect conditions on the ground.
“These data are for officials to look at themselves,” Li said. “The contraction of the textile industry did not start today. How could profits grow? That is simply a fantasy, utter nonsense.”
Ye Zilong contributed to this report.
