One out of every five sweaters globally is produced in Dalang, Dongguan, a wool knitting town that manufactures over 900 million garments annually, with a total industrial chain transaction value exceeding 72 billion yuan. At the just-concluded 95th International Wool Textile Conference, these figures served as a starting point for discussing the resilience of the global wool supply chain. More importantly, the industry now faces three simultaneous pressures: slowing global economic growth, the disruptive penetration of artificial intelligence into production models, and the stratification and upgrading of consumer demand.
The Reality Behind the Numbers
Dalang's scale is not an isolated case. According to public data from the China National Textile and Apparel Council (CNTAC), from January to April 2025, revenue of textile enterprises above designated size fell slightly by 0.3% year-on-year, but total profit surged 19.3%, with a profit margin of 2.9%. This indicates a shift from volume expansion to quality competition. During the same period, retail sales of clothing, shoes, hats, and knitwear at units above designated size grew 8.1% year-on-year, showing resilient consumer demand. However, exports diverged: textile exports grew 1.7%, while garment exports fell 1.6%, reflecting stable intermediate demand but cautious final demand due to overseas inventory and consumption expectations.
Investment data reinforces this trend: fixed asset investment in the textile industry grew 10.8%, while clothing and chemical fiber sectors fell 10.3% and 14.5%, respectively. Capital is flowing into intelligent and green transformation rather than simple capacity expansion. This reflects the industry's proactive response to the dual paradigm shifts of the 'experience economy' and 'intelligent economy.'
AI and Experience Economy: Two New Variables for Wool
The conference theme 'Smart Weaving the Future: Wool for Health and Digital Life' is no empty slogan. AI is reshaping every step from design to production. China's textile industry has achieved a digitalization rate of 63.2% in key processes, above the manufacturing average. For example, the 'Lighthouse Factory' Jiangsu Yueda Textile reduced labor per 10,000 spindles by about 70% and processing costs by 26% through smart manufacturing. This efficiency is crucial for wool, a category characterized by high mix and low volume. AI-assisted design, intelligent inspection, and flexible manufacturing are making 'rapid response' feasible.
On the demand side, consumers' pursuit of 'experience' is reshaping the supply chain. They no longer settle for warmth; they demand health, sustainability, and emotional connection. As a natural fiber, wool has inherent advantages in the green consumption trend. The challenge lies in using digital technologies (e.g., blockchain traceability, smart labels) to translate wool's eco-story into a tangible consumer experience. Wool enterprises must not only spin and weave well but also learn to communicate with consumers through data.
Geopolitical Risks and Global Layout: Supply Chains No Longer Pursue Single-Point Efficiency
The IMF has downgraded its 2026 global growth forecast to 3.1%. Geopolitical conflicts, energy volatility, shipping disruptions, and financial tightening have made uncertainty the new norm. For the wool industry, this means no longer relying on a single production base or single market. Chinese textile companies like Erdos and Shenzhou International have diversified risks through cross-border M&A and overseas factories. While the Dalang model—a highly clustered industrial ecosystem—is efficient, it must also consider 'distributed flexible capacity' in the face of trade barriers and logistics volatility.
Practical Recommendations
For Buyers - Prioritize suppliers with digital capabilities: factories using AI quality inspection and MES systems offer more stable lead times and quality. - Test small-batch, quick-response orders: leverage flexible manufacturing to reduce inventory risk, especially for seasonal sweater categories. - Demand traceability: sustainable certifications (e.g., RWS) are becoming entry requirements for European and American buyers; early adoption mitigates compliance risk.
For Exporters - Adjust product mix: increase the proportion of intermediate goods like fabrics and yarns, which are less affected by end-consumer fluctuations. - Invest in smart manufacturing: use AI-assisted design tools to shorten sampling cycles and improve responsiveness to overseas clients. - Diversify markets: while maintaining European and American markets, explore emerging markets like Southeast Asia and the Middle East to reduce single-market dependence.
The wool industry stands at the crossroads of old and new paradigms. Dalang's data proves the enduring scale advantage of Chinese manufacturing, but future competitiveness will increasingly come from digital depth, green transparency, and global reach. For the entire industry, this is both a challenge and an opportunity to redefine value.