The latest data from the National Bureau of Statistics shows that the total profits of large-scale textile enterprises increased by 7.9% year-on-year in the first seven months of 2026. Although this figure is modest compared with the 17.6% growth of the overall industrial sector, the textile industry outperformed most consumer goods categories—only four of the 13 major consumer manufacturing sectors achieved positive profit growth, and textiles was one of them.
The undercurrent of profit growth: upstream dividends and downstream divergence
A closer look at the data reveals that the profit recovery is mainly driven by the upstream segment. The chemical fiber manufacturing industry, as the raw material sector for textiles, also recorded positive growth, directly easing cost pressure on midstream textile enterprises. This indicates that the high raw material prices that troubled the industry over the past two years are easing, and the widening price spread is leaving room for profit in weaving and dyeing processes.
However, the downstream apparel industry has not recovered in tandem. In the statistical caliber, the textile industry excludes the apparel industry, which saw a profit decline of 11.4% in the first five months. This divergence suggests that terminal consumer demand has not fully recovered, and the profit improvement is more a result of cost-side concessions than demand pull.
For buyers, this divergence sends a clear signal: there may be more room for price negotiation in intermediate goods like fabrics and yarns than in finished garments. Factories should prioritize locking in the price spread benefits from upstream raw materials rather than blindly betting on downstream price increases.
Industrial cluster reactions and order transmission
Behind the profit data lies a temperature difference among industrial clusters. Weaving clusters represented by Keqiao and Shengze have benefited from lower chemical fiber raw material prices, maintaining high operating rates, but orders are mostly small-lot and quick-turnaround, with a low proportion of long-term orders. In contrast, clusters closer to consumer demand, such as Nantong home textiles and Foshan children's wear, are feeling more pronounced demand weakness, with inventory destocking slower than expected.
This regional divergence is reshaping the procurement strategies of traders. The previous model of placing orders quarterly in large batches is gradually being replaced by monthly or even weekly flexible replenishment. For foreign trade enterprises, this means delivery management is more important than price negotiation—suppliers who can quickly respond to small-batch orders will gain more market share in the second half of the year.
It is worth noting that in July, the value-added of large-scale industry grew by 4.5%, while textiles only grew by 2.3%, below the overall level. This suggests that profit growth is not due to capacity expansion, but rather to efficiency improvements and cost optimization. If companies want to maintain profitability, they need to focus on digital management and product added value, rather than simply expanding production.
H2 outlook: resilient but not elastic
Looking ahead to the second half of the year, profit growth is likely to moderate. As the base effect fades, the 7.9% year-on-year growth rate is hard to sustain, but the industry's profit bottom has been confirmed. The key variables are whether domestic demand policies can land effectively and whether overseas restocking cycles can resonate.
For textile companies, the biggest risk now is a rebound in raw material prices. If international oil prices rise and drive up chemical fiber costs, while terminal pricing power remains weak, profit margins will be squeezed again. Therefore, it is advisable for companies to use futures tools to lock in some raw material costs, while increasing the development of differentiated fibers and functional fabrics to hedge against homogeneous competition.
Practical recommendations
For buyers - Monitor chemical fiber raw material price trends and sign medium- and long-term procurement agreements when price spreads are high to lock in cost advantages. - Prioritize suppliers with small-lot, quick-response capabilities to reduce inventory risk and adapt to the fragmentation of orders. - Be cautious with apparel orders to avoid inventory buildup due to unstable terminal demand; consider placing orders in batches.
For foreign trade enterprises - Deepen the development of differentiated products, such as recycled fibers and antibacterial fabrics, to avoid price wars in conventional products. - Utilize exchange rate fluctuation windows and hedge appropriately to reduce profit erosion from currency conversion. - Explore emerging markets, such as Southeast Asia and the Middle East, to diversify dependence on traditional European and American markets and balance order fluctuations.
The profit resilience of the textile industry stems from the self-adjustment capability of the industrial chain, but the real test lies in the second half of the year. Whoever can translate cost dividends into product competitiveness will hold onto market share when growth slows.