Shenwan Hongyuan has released a research report stating that from January to February 2026, both domestic demand and export consumption in the textile and apparel sector exceeded expectations. With current low fund allocation ratios, the sector presents a window for strategic positioning at lower levels. In textile manufacturing, stronger cycles are associated with stronger growth; upstream price-increase varieties are favored, and recovery in sportswear manufacturing is being monitored. 2026 is expected to mark an inflection point for consumption in the apparel and home textiles industry, with opportunities identified in areas with potential for further market penetration. Looking ahead to the first half of 2026, the firm anticipates that upstream price increases, midstream margin pressure, and downstream differentiation will gradually align as the industry chain recovery progresses. Key views from Shenwan Hongyuan are as follows:
Textile Manufacturing: Following industry consolidation, stronger cycles correlate with stronger growth. Upstream price-increase varieties are preferred, with attention on sportswear manufacturing recovery. Upstream price cycles, such as Australian wool and U.S. cotton, show high elasticity with simultaneous volume and price increases: years of low prices have triggered production cuts, with Australian wool output declining over 20% cumulatively in the past two years. Global cotton production may also enter a reduction phase in 2026. Supply contraction coupled with recovering demand is expected to drive an upward price cycle. Since the resumption of auctions in late August 2025, Australian wool prices have risen 52% cumulatively, effectively boosting order volumes and prices. High-quality wool textile companies are recommended. Looking forward, cotton prices are expected to follow a similar trajectory, benefiting global suppliers with ample low-cost inventories. Bloomage is recommended.
Midstream Sportswear Manufacturing: Facing short-term pressure but fostering medium- to long-term growth. Global tariff disputes and geopolitical conflicts have introduced demand uncertainty, weakening downstream orders in the second half of 2025 and delaying margin recovery for large sportswear manufacturers still expanding capacity. The firm expects continued recovery in 2026, though the pace depends on the rebound of key downstream client Nike, which is preparing a new innovation cycle. The medium- to long-term industry chain stands to benefit. Shenzhou International, Huali Group, Yue Yuen, and Weixing are recommended, with Crystal International suggested for monitoring.
Apparel and Home Textiles: 2026 may be a turning point for consumption, with focus on future trends and segments with penetration potential. High-performance outdoor apparel currently has low penetration but significant future potential: China’s high-performance outdoor apparel market reached RMB 102.7 billion in 2024 (up 17% year-on-year), with the top 10 brands holding only 27% market share, indicating an unconsolidated landscape. Li Ning, Anta Sports, Bosideng, 361 Degrees, Topsports, and Xtep are recommended, with Perseverance—which has submitted an H-share listing application—suggested for monitoring.
Social Apparel: Recovery in tourism and business scenarios is boosting high-end consumption. Demand for mid-to-high-end apparel correlates positively with travel activity. After completing destocking and channel adjustments in recent years, recovery signs are emerging. Biem.L.Fdlkk and Ellassay are recommended, with JNBY and Jinhao Group suggested for monitoring.
Sleep Economy: A multi-hundred-billion-yuan market continues to spawn hit home textile products. From the popularity of duvets in 2023 to the breakout success of ergonomic pillows and functional mattress protectors in 2024–2025, acceptance among younger consumers is rising rapidly, creating market increments. Luolai Lifestyle and Mercury Home Textile are recommended.
Risks include slower-than-expected consumption recovery, intensified market competition, tariff uncertainties, exchange rate fluctuations, and raw material price volatility.