A significant reshaping of the global apparel industry has taken place as a result of retail disruptors such as Shein and Temu, which are exploiting IT to directly match the consumer demand for low-cost garments to rapid production by textile manufacturing clusters in China.

These platforms are constantly and very closely monitoring what’s selling where through the latest AI techniques and testing the water with small, commissioned orders, before rapidly mobilising in response to significant market demand.

Singapore-headquartered Shein uses data and software to match consumer demand for designs to the capabilities of particular members of its manufacturing network, and also keeps close tabs on customer outreach, order receipt, payment guarantees, and direct shipping services offered by manufacturers to customers, monitoring manufacturer performance as closely as it monitors customer preferences. This tight integration has persuaded many Chinese factories to work exclusively with it, moving away from competing platforms.

In addition, between April to June 2022, Shein engaged three leading international audit agencies – TUV Rheinland, SGS and Intertek – to conduct a salary investigation across its suppliers’ facilities in South China.

This revealed that, on average across South China, workers at Shein’s supplier factories are paid over 40 per cent more than the average pay for private employees in the region. Shein supplier factories in Zhongshan were even found to pay their workers about 75 per cent more on average.

LATR Models

Shein offers around 900 times more products than traditional European brands, sometimes releasing more than 7,200 new models of clothing per day, with a total of 470,000 different products available on the platform at any one time, enabling it to achieve vast economies of scale and charge ever lower prices.

Shein calls this the large-scale automated test and re-order (LATR) model and there is no doubt it has badly shaken up both established apparel brands and online channels.

In June, for example, Amazon announced plans to launch its own new storefront featuring low-priced clothing and home products from Chinese sellers, while the European Commission is currently advancing plans to close a loophole that currently enables Shein and Temu to import their low-cost goods without paying duty on them.

At the time of writing, Shein was planning to float on the London Stock Exchange, having been valued at $66 billion during a previous funding round held in May 2023.

Protectionism

Pointers to how this situation has arisen were provided by Sun Ruizhe, president of the China National Textile and Apparel Council (CNTAC) at the annual conference of the Zurich, Switzerland-headquartered International Textile Manufacturers Federation (ITMF), held in Keqiao, China, from November 4-6 last year.

The intensified politicisation of economic issues has led to a rapid adjustment of the global textile manufacturing and supply chain, he said, and the share of Chinese-made textile and apparel products exported to the US and the EU declined significantly between 2018 and 2022. This was largely as a result of protective legislation such as the US Inflation Reduction Act and the EU’s European Economic Security Strategy.

“The rise of unilateralism and protectionism is breaking the rules of economy and trade, weakening the foundation of trust and increasing cost risks,” Ruizhe said. “Since 2019, the number of newly introduced trade barrier policies around the world has nearly doubled every year and reached nearly 3,000 by 2022. The WTO’s 2023 Annual Report points out that globally, the number of export restrictions on key raw materials has increased by more than five times over the past decade.”

Clusters

China’s textile industry has responded with intensive development focusing on the establishment of clusters, encouraging collaboration and promoting the integration of large, medium and small enterprises.

CNTAC has now set up some 210 textile clusters integrating more than 200,000 businesses, including ten clusters with total industrial output value surpassing an annual $10 billion and 100 clusters worth more than $1 billion.

These clusters have, in turn, enabled the LATR models of Shein and Temu to thrive, while enjoying higher profits for themselves.

New Reality

As a result, it appears that even faster fast fashion enabled by digitalisation and automation is now the new reality and with it the generation of even more textile waste – even as the European Union is poised to make the separate collection of textile waste mandatory for all of its member states on January 1, 2025.

Turning all of that textile waste into new raw materials represents an enormous challenge.

Speaking during a recent ITMAconnect webinar, Automation and Digital Future, Thomas Fischer, deputy director of management research at German research institute ITA Denkendorf, observed that Europe will suddenly become a region with a lot of raw material and the more waste that is collected, the more sense it will make to establish recycling hubs.

“This will be another really disruptive and systemic change that will require collaboration across the supply chain and a shift in mind set,” he said. “It is about closing the loop at the information level.

“What is needed is a move from producing a million T-shirts and selling them afterwards, to near-shoring and producing only what has been sold through the on-demand-production of individual items in terms of shape and colour. This changes the business model and is also a sustainable solution. It is a shift that will take time but is being pushed by the technology and supported by legislation.”

Slow Fashion

Technology is largely neutral and reliant on the intentions of those using it, he added, arguing that while currently enabling Shein and Temu, it can equally support ‘slow fashion’ – the development and production of individualised, long-lasting, on-demand products – and will also be used to gather reliable data on environmental and life cycle issues that will both heavily influence public opinion and galvanise legislators into action.

“The longer-term impact of AI is unpredictable, but digital networks of smaller players and microfactories will eventually arise, with centralised AI predicting which partner has availability and immediately responding at a regional level,” Fischer predicted.

Rotor Spinning

The digital networks of smaller players are already here, but for the moment, they are all in China. As a result, the country will be central to achieving any immediate fibre recycling goals globally, with its mills currently consuming more than 50 per cent of all of the world’s fibres and its synthetic fibre manufacturers responsible for over 70 per cent of global production.

This is a huge opportunity that many of China’s major players are certainly aware of. In fact, many Chinese cotton spinning companies have been processing yarn mill waste for decades using rotor

spinning technology, which is best suited for such yarns that contain a high short-fibre content. Virgin cotton already has an average short-fibre content of around 25 per cent, but short-fibre content in recycled pre-consumer yarn waste has an average short fibre content of around 47 per cent.

In the past, the practice of incorporating a percentage of recycled content into yarn blends has not been anything to do with meeting sustainability goals, but simply about achieving an acceptable quality with the cheapest available fibres.

Now, however, these mills are in the position of potentially being able to charge a premium for yarns containing such recycled content, as the international brands look to meet their sustainability targets.

ITMSS

The ITMF compiles its International Textile Machinery Shipment Statistics (ITMSS) annually, in cooperation with more than 200 textile machinery manufacturers, to provide a comprehensive overview of world production.

More than anything, the just-published 46^th ITMSS underlines the continued dominance of China in making new investments in textile technology.

As far as new rotor machinery spinning sales are concerned, China invested in some 633,744 new rotor spinning positions in 2023 alone, and since 2015, has installed just under four million of them.

At this year’s ITMA ASIA + CITME 2024 textile machinery exhibition in Shanghai from October 14-18, it will be very evident that China’s spinning industry is looking for the latest technologies that will enable the incorporation of even higher percentages of recycled fibre into yarns to meet suddenly extremely high demand from the EU and elsewhere.

Two of the major manufacturers of spinning technology are the Swiss companies Saurer and Rieter, both of whom will be demonstrating their latest developments at the exhibition.

Mingshuo

One major Rieter customer in China is Mingshuo, based in Wenzhou, Zhejiang province, which specialises in the production of Ne 6-16 recycled yarns with between 70-95 per cent recycled content for denim production.

The company is operating five Rieter R 37 semi-automated rotor spinning machines to overcome the typical challenges in processing recycled fibres – variations in composition, colour and fabric structure with each batch.

The exact properties of batched recycled raw material are not predictable, and the challenge is to find the correct settings to ensure all impurities are removed.

In addition, Mingshuo is confronted with high electricity prices, making the balance between cost control and quality improvement crucial.

Rieter’s R 37 rotor spinning machine offers benefits that bring recycled yarn production to new heights. Its spinning box is equipped with sensitive fibre opening and the ability to selectively extract impurities in order to process a broader spectrum of raw materials. The R 37 spinning box also achieves a better mass variation and a significant reduction in thin and thick places, as well as neps. In terms of energy efficiency, it is equipped with a highly efficient main drive and suction system.

Because Mingshuo also operates rotor machines from a competing manufacturer, it has been able make an assessment of the R 37’s advantages by direct comparison. These include a 45 per cent reduction in yarn imperfections and a 6 per cent increase in productivity as a result of the higher rotor speeds, and improved yarn strength. In addition, the R 37 machines consume 15 per cent less energy than the other machines.

“The yarns produced on the R 37 machines prove popular in the downstream weaving process due to their high strength and minimal hairiness,” said the mill’s vice general manager Liang Shixiao. “This results in high efficiency in warping and weaving.”

Hengbang Zhifang

Having installed three complete blowroom lines, 42 JSC 230 cards and ten BD 8 rotor spinning machines with 6,000 positions from Saurer in 2023 meanwhile, Hengbang Zhifang has this year ordered eight more BD 8 machines in order to meet the demand for its recycled yarns.

The company, active in the textile industry for over forty years, is based in Lianyungang in Jiangsu and currently has an annual capacity of 120,000 tons of yarn. It is part of the Hengbang Group which owns six major production facilities in China and Vietnam.

Hengbang Zhifang specialises in recycled yarns in counts ranging from Ne 6 to Ne 40 which are Global Recycling Standard (GRS) and Better Cotton Initiative (BCI) certified and suitable for a wide variety of textile applications. Global customers include both Nike and Uniqlo.

Again, because Hengbang obtains its raw materials from textile waste there can be significant variations in quality.

“Every day the raw material is changing, because it is never the same waste material which is delivered and Saurer BD rotor spinning machines were the first choice for us because they are flexible enough to cover all raw material deviations,” says the company’s president Li De. “It was also important to choose a rotor spinning machine that has a long history of spinning recycled material and Saurer specialists were on hand to help us to choose the right spinning elements, enabling us to run new materials on the BD 8 without a lot of trials, gaining high quality and at high speed.”

Saurer’s BD machines are equipped with numerous components specifically for dealing with recycled fibres, such as rotors with special grooves and coatings, special opening rollers and spinning navels.

The BD machines are also highly energy efficient, as a result of their main drive, the Twinsuction suction system, and an impurity channel which reduces negative pressure by 40 per cent. High quality bearings and leading rotor bearing technology also contribute to low energy consumption.

PET Bottles

China has set ambitious goals to recycle 25 per cent, or 6.5 million tons of its own textile waste by as early as next year.

However, around 70 per cent of the 26 million tons of textile waste currently generated in China each year is based on synthetic fibres, primarily polyester, rather than cotton or other cellulosics.

China is not only the world’s largest PET producer but also currently accounts for 78 per cent of all PET transformed into recycled PET (r-PET), at the moment largely from discarded PET bottles, but in the near future increasingly likely to be from recycled textile waste.

Many r-PET manufacturers in China already benefit from the synthetic fibre technologies of Oerlikon and this year, FixDye, based in Huai’an, Jiangsu is installing a new polycondensation system engineered by Oerlikon Barmag Huitong Engineering (OBHE) in China.

By expanding its production capacities in melt preparation – as the production stage upstream of the spinning mill – FixDye will be able to better influence filament yarn quality, but also keep an eye on the supply chain of its products, regardless of external influences. This is an unbeatable advantage when it comes to the company’s ambitious goals.

The FixDye plant has a capacity of 540 tons per day of recycled PET bottle flakes for textile filament yarn. From mid-2025, it will mainly produce FDY and POY/DTY for the European and US markets. The yarns produced are spun-dyed using a zero-water dyeing method.

“In the medium term, FixDye also aims to offer materials produced using the fibre-to-fibre recycling process,” said Kevin Wang, general manager of FixDye. “Confidence in the reliability of the highly efficient systems and the sustainable, energy-saving concept were the decisive aspects in choosing Oerlikon as the supplier of the new polycondensation system.”

Chemical Recycling

Substantial chemical recycling infrastructure will also need to be established in China to enable its recycling industry to significantly accelerate.

While many such recycling systems are currently being developed domestically within China, in a significant move in this direction, in February 2023, Zhejiang Jianxin Jiaren New Materials became the world’s first company to be licensed by RePEaT.

RePEaT is a joint venture established at the end of 2022 by the major Japanese corporations Teijin, JGC Holdings Corporation and Itochu Corporation to license polyester recycling technology based on Teijin’s expertise.

Zhejiang Jianxin specialises in operating chemical-recycling plants and is a member of the Jinggong Holding Group which operates businesses in China focused on environmental management in the steel, textiles, building materials and beverage sectors. It already operates Teijin technology for recycling PET bottles into fibres.

RePEaT will provide a technology that uses the organic compound DMT (dimethyl terephthalate) for the chemical decomposition, conversion and repolymerisation of polyester (PET). Notably, the DMT method removes dyes and impurities, making it possible to manufacture recycled PET with the same quality as petroleum-derived PET.

Zhejiang Jianxin will use the technology in a polyester waste recycling plant it is starting up this year in Shaoxing, Zhejiang province.

Pioneer

Teijin initially also pioneered the chemical recycling of PET bottles into fibres since the introduction of its Eco Circle system in 2002 and this was further introduced in China in 2009, when leading sports brand Li Ning Company launched a range of tennis and training garments. These were based on Eco Circle recycled PET fibres woven into textiles and dyed by Nantong Teijin in China.

Subsequent programmes were established in China for collecting and recycling used uniforms from corporations, to be recycled by the Eco Circle system.

The company has now developed extensive experience in using DMT technology for the commercial production of polyester products from polyester textile waste, while JGC specialises in general engineering and plant construction, and Itochu has a global network spanning diverse industries.

Carbon Capture

Another powerful Japanese-led consortium aiming to establish a global supply chain for more sustainable PET polyester fibre has this year been established by Mitsubishi Corporation and Goldwin – the North Face brand in Japan – and will also be looking to do business with China’s polyester producers.

Polyester produced from renewable and bio-based materials, as well as the key monomer paraxylene produced via carbon capture and utilisation (CCU), are being developed by members of the consortium, which in addition to Mitsubishi and Goldwin, comprises the Japanese companies Chiyoda Corporation and Toyobo, Thailand-headquartered Indorama Ventures, SK geo centric of South Korea, India Glycols, and Neste in Finland.

Goldwin, which specialises in high-performance sportswear and outdoor apparel, will first incorporate the new fibres in sports uniforms before further planned launches.

Neste is supplying renewable naphtha from biobased waste and residue oil and fats, while Chiyoda is supplying the CCU paraxylene produced from CO₂. SK geo centric will also supply renewable paraxylene.

Indorama Ventures will then produce PTA utilising these monomers and India Glycols will supply bio ethylene glycol, and Toyobo will produce the renewable bio-CCU PET polyester.

A mass balancing approach will be adopted to ensure credible traceability of material streams throughout the supply chain.

Enzymatic Depolymerisation

Finally, in a further move in this direction, in June this year, Carbios has signed an agreement with Zhink Group to establish a new recycled PET polyester plant in China.

Headquartered in Clermont-Ferrand, France, Carbios is pioneering recycling via its enzymatic depolymerisation technology and is currently constructing a €54 million plant in Longlaville, in the Grand-Est region of France. This is expected to start delivering significant quantities of new recycled feedstocks in 2026.

Zhink Group, headquartered in Hangzhou City, Zhejiang Province, is one of China’s Top 500 private enterprises with both PET polyester and textile production.

The two companies are planning a long-term partnership beginning with a first licensing contract to build a plant with a minimum annual processing capacity of 50,000 tons of prepared PET waste.

“There is currently great momentum in China to accelerate the circular economy and meet its target of carbon neutrality by 2060,” says Carbios CEO Emmanuel Ladent. “Our technology makes perfect sense in this context because it is capable of recycling all types of PET waste, promotes a circular economy with high-quality products and significantly reduces the carbon footprint of industries. As a leader in PET production, Zhink will be a key partner for introducing our technology into China and we believe this will stimulate its international deployment.”

Conclusion

The entire textile chain is currently in a state of flux, with the rise of Shein, Temu and other highly digital online retail disruptors completely at odds with the desire to put the brakes on fast fashion and cut the industry’s substantial carbon footprint.

Upcoming legislation in the EU and the US though, is likely to severely temper the current operational models of these digital brands.

However, while this plays out at the consumer level, China will remain the powerhouse of the global textile industry, and its output will be central to the sustainable future of everyone. The ability of China’s textile manufacturers to plan ahead and move very rapidly in response to changing market conditions has been amply demonstrated by its recent focus on clusters and collaboration.

A willingness to invest heavily, whenever the time is right, makes the forthcoming ITMA ASIA + CITME 2024 exhibition an ideal opportunity to check the supply chain’s pulse.