Factory closures and layoffs hit China's textile sector over shrinking domestic demand
New Delhi, Oct 15
China's once‑dominant textile industry is showing clear signs of strain as shrinking demand, factory closures and layoffs accelerate and production shifts increasingly overseas, a new report has said.
The report from Mekong said factory floors across Zhejiang, Guangzhou and other manufacturing hubs reported a sharp fall in order sizes, with contracts that once ran for months now lasting only days.
Such volatility has squeezed profit margins and made long‑term planning difficult. The report attributed the slump to persistent weakness in domestic demand.
"Beijing sought to transition the Chinese economy from export dependence towards consumer-led growth. However, weak consumer confidence, a prolonged property sector crisis, economic uncertainty and slowing income growth have undermined household spending," the report noted.
Industry estimates indicated roughly 1,500 textile and apparel firms dropped out of China's official industrial‑enterprise statistics in the first half of 2026.
The publication noted that the layoffs are becoming increasingly visible as demand weakens.
Migrant workers who once flocked to China's industrial zones reportedly came to their hometowns as factories failed to guarantee employment.
Many manufacturers shortened work shifts, halted recruitment, or implemented layoffs to survive, even as thousands of families remain dependent on manufacturing wages.
"Fibre producers, yarn manufacturers, dyeing facilities, finishing companies, logistics providers and apparel exporters are all experiencing the effects of reduced demand," the report said.
A Jiaxing Kanglong Textile Co. Ltd, in Zhejiang Province, reportedly plans to halt production in China while transferring part of its denim manufacturing operations to Mexico, a broader signal that manufacturing capacity is leaving China.
For manufacturers seeking access to the North American market, Mexico has emerged as one of the primary beneficiaries of this industrial migration due to proximity to the United States and lower logistics costs, the report noted.
Critics argued that China's growing investment in manufacturing facilities in Mexico could eventually weigh on the American textile sector, as many Chinese companies establish production platforms closer to the United States market.
— IANS
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