A small Chinese town producing one-fifth of the world's sweaters is becoming a testing ground for the digital transformation of the wool textile industry. The 95th International Wool Textile Conference, held on June 24 in Dalang, Dongguan, under the theme 'Smart Weaving the Future: Wool's Health and Digital Life,' spotlighted how traditional industries can leapfrog through AI and green technologies.
The Dalang Sample: Scale Dividends Amid Transformation Pressure
Dalang's wool knitting industry commands impressive scale: one in five sweaters globally originates here, with annual garment output exceeding 900 million pieces and full-industry-chain transaction value surpassing 72 billion yuan. Behind these numbers lies what Sun Ruizhe, President of the China National Textile and Apparel Council, emphasized as 'the power of openness, cooperation, and industrial clustering.' Yet scale itself carries transformation pressure—as global consumer markets enter a phase of low growth and high-frequency volatility, relying solely on capacity expansion is unsustainable.
China's textile industry data from January to April this year confirms this judgment. Revenue of enterprises above designated size fell 0.3% year-on-year, but total profit surged 19.3%, with a profit margin of 2.9%. This divergence—falling revenue but rising profit—indicates that the industry is absorbing cost pressures through technology upgrades and efficiency gains. Meanwhile, retail sales of garments, footwear, hats, and textiles by units above designated size rose 8.1% year-on-year, accelerating by 5 percentage points from the same period last year, suggesting resilient end demand but with structural shifts.
Digital and Green: The Two-Wheel Drive Technology Route
The conference's core theme is not an empty slogan. China's textile industry has achieved a 63.2% digitalization rate in key processes, surpassing the national manufacturing average. In 2024, 30 textile enterprises were included in the 5G Factory list, and green technologies like non-aqueous dyeing and digital printing are accelerating deployment. These technology investments are translating into tangible competitiveness: Jiangsu Yueda Textile's 'Lighthouse Factory' reduced labor per 10,000 spindles by about 70%, quadrupled labor productivity, cut energy consumption by 15%, and lowered processing costs by 26%.
R&D investment intensity rose from 1% in 2020 to 1.3% in 2024. While the absolute figure is modest, the growth trajectory reflects the industry's urgent need for technological innovation. China now accounts for over one-third of global high-performance fiber capacity, with applications expanding from traditional textiles to aerospace, marine engineering, and other high-end manufacturing sectors. This means the technology competition in wool textiles has escalated from simple yarn quality to cross-industry material innovation.
Intelligent Economy: Reshaping Comparative Advantage
Artificial intelligence is fundamentally transforming how the wool textile industry organizes production. The global AI market is projected to reach $757.58 billion in 2025, up 18.7% year-on-year. In China, daily token calls have exceeded 140 trillion, up over 40% from the end of last year. This computing power explosion is penetrating every link of the textile chain: from Semir's AI-assisted design system improving efficiency by 35%, to Bosideng's 'AI Aesthetic Brain' reducing sample development costs by over 60%, to robots autonomously folding clothes enabling unmanned operations in non-standard flexible processes.
More notably, the intelligent economy is reshaping the foundations of comparative advantage. Sun Ruizhe's speech highlighted the deep coupling of 'energy, computing power, data, and manufacturing,' meaning future corporate competitiveness will depend less on labor costs or raw material prices and more on data governance capabilities, model application depth, and computing power access efficiency. The rise of 'one-person companies' and 'hand-crafted economy'—new OPC registrations in China grew 47% year-on-year in the first half of 2025—indicates that small-batch, personalized, quick-response production models are becoming mainstream.
Investment Divergence: A Warning Signal of Structural Adjustment
However, digital transformation comes at a cost. From January to May this year, fixed asset investment in the textile sector grew 10.8% year-on-year, but investment in the garment and chemical fiber sectors fell 10.3% and 14.5%, respectively. This divergence reveals internal structural adjustments: capital is flowing from labor-intensive garment manufacturing and basic chemical fiber production toward technology-intensive textile fabrics and smart manufacturing. For the wool textile industry, this means companies must reassess their asset allocation—whether to continue investing in traditional capacity or shift toward digital infrastructure and green technology equipment.
The export growth gap between textiles and garments is also noteworthy. In the first five months, textile exports rose 1.7% year-on-year, while garment exports fell 1.6%. This data indicates that China's comparative advantage is shifting from finished garments to intermediate textile fabrics, aligning with the global trend toward 'nearshoring' and 'friendshoring.' For export-dependent wool textile companies, relying solely on OEM is narrowing; extending upstream to fabric innovation and downstream to brand operations is inevitable.