Fashion
China’s textile sector needs $40.8 bn to halve emissions by 2030
China produces over half of the world’s fibre output and accounts for more than 30 per cent of global apparel exports, valued at $294 billion, positioning it as a pivotal force in lowering fashion’s carbon footprint. However, while national ‘dual carbon’ targets, green finance policies, and clean energy progress have created a favourable backdrop, decarbonisation efforts remain uneven in practice, Aii and Development Finance International (DFI) said in their latest report, ‘Landscape and Opportunities for the Decarbonization of China’s Textile and Apparel Manufacturing Sector’.
Aii identified around 44,000 ‘scaled enterprises’—companies with annual turnover above CN¥20 million (~$2.85 million)—as the segment best positioned to act. These manufacturers, many clustered in industrial parks, have the operational scale, emissions impact, and data readiness to drive near-term reductions, but face persistent barriers beyond financing.
China’s textile and apparel sector needs at least $40.8 billion to cut emissions by 50 per cent by 2030, as per Aii.
Despite supportive ‘dual carbon’ policies, decarbonisation remains uneven.
Around 44,000 scaled enterprises are best placed to act but face technical and financing gaps.
Industrial parks, green finance, and coordinated action are seen as key to scaling emissions reductions.
Manufacturers report gaps in technical know-how, planning tools, and localised support, alongside difficulty interpreting evolving brand and regulatory requirements. Although domestic green finance is widely available, aligning standard loan and equity models with diverse factory needs remains a challenge.
International financial institutions are playing a growing role, with $4.3 billion across eight active green credit lines confirmed as of 2024. However, uptake is often limited as local loans priced at 3-4 per cent are preferred over IFI-backed financing, which ranges from 3-7 per cent and can involve stricter conditions.
Industrial parks are highlighted as a strategic platform for scaling action. More than 11,000 textile enterprises operate across over 1,300 parks, offering shared infrastructure and governance models that can lower transition costs. China’s nationwide zero-carbon industrial park initiative, launched in 2025, further strengthens this pathway.
The report also pointed to emerging best practices, including digital tools, factory-level diagnostics, and bundled solutions piloted by local governments, brands, and technical partners. Aii’s Climate Solutions Portfolio identified priority interventions such as energy efficiency upgrades, renewable energy adoption, chemical innovation, and thermal energy recovery.
Aii calls for stronger collaboration across brands, manufacturers, financial institutions, and local authorities. Key recommendations include diversifying financing mechanisms, improving alignment between brand expectations and supplier capabilities, embedding low-carbon planning into core business strategy, expanding local technical assistance, and strengthening data-sharing platforms.
The report added that coordinated action and aggregated demand will be critical to translating strong climate ambition into tangible emissions reductions across China’s textile and apparel value chain.
Fibre2Fashion News Desk (SG)
Wholesale revenue dropped 12.8 per cent on a currency-adjusted basis to €4.9 billion, while direct-to-consumer (DTC) sales increased 3.4 per cent, lifting the DTC share to 32.4 per cent from 28.9 per cent.
Regionally, sales fell 6.9 per cent in Europe, Middle East and Africa (EMEA), 7.4 per cent in Asia-Pacific and 10 per cent in the Americas, with North America driving much of the decline.
Puma has reported sales of €7.3 billion (~$8.61 billion) in FY25, with currency-adjusted revenue down 8.1 per cent amid strategic reset actions.
Wholesale declined while DTC share increased.
Margins contracted and EBIT turned negative, leading to a net loss.
Q4 saw sharper declines across regions and categories.
Puma expects further sales softness and negative EBIT in FY26.
By product segment, footwear sales decreased 7.1 per cent, apparel declined 9.7 per cent and accessories fell 8.5 per cent, although selective growth was observed in running, training and premium sport style lines, Puma said in a press release.
Profitability weakened significantly during the year. Gross margin contracted 260 basis points to 45.0 per cent, impacted by promotional activity, inventory reserves, unfavourable mix and currency effects. Adjusted EBIT turned negative at €165.6 million, while reported EBIT declined to -€357.2 million after €191.6 million in one-off costs related mainly to the cost efficiency programme and goodwill impairments.
Loss from continuing operations widened to -€643.6 million, translating to earnings per share of -€4.37 versus €1.88 in the prior year.
From a balance sheet perspective, inventories rose 2.3 per cent to €2.06 billion as inventory takebacks from wholesale partners supported distribution clean-up. Working capital increased 20.2 per cent, while trade receivables and payables declined sharply in line with reduced sales and purchasing activity. Puma ended the year with additional financing capacity, including €1,202.2 million in unutilised credit lines.
Fourth quarter (Q4) performance reflected the peak impact of the strategic reset. Currency-adjusted sales declined 20.7 per cent to €1,564.9 million, with reported revenue down 27.2 per cent due to currency headwinds. The decline was driven by deliberate reductions in wholesale exposure, inventory clearance actions and lower promotional intensity.
Wholesale sales fell 27.7 per cent in Q4, while DTC revenue decreased 8.0 per cent, although DTC share increased to 41.1 per cent from 35.5 per cent. Regionally, sales dropped 12.6 per cent in Asia-Pacific, 22.2 per cent in the Americas and 24.3 per cent in EMEA.
Across product divisions, footwear sales declined 25.4 per cent, apparel fell 13.7 per cent and accessories dropped 18.2 per cent, with selective resilience in training and performance running categories.
Profitability deteriorated sharply. Gross margin declined to 40.2 per cent from 47.7 per cent due to promotions, inventory provisions and currency effects. Adjusted EBIT fell to -€228.8 million, while reported EBIT reached -€307.7 million following one-off costs linked to restructuring and impairment charges. The quarter ended with a loss from continuing operations of -€335 million.
Arthur Hoeld, CEO of Puma, said: “2025 was a reset year for us. We want to establish Puma as a top 3 sports brand globally, return to above-industry growth and generate healthy profits in the medium term. It is crucial to make the Puma brand less commercial and ensure we once again excite our consumers with attractive products, compelling storytelling and distribution in the right channels. I am satisfied with the progress we have made so far. We cleaned up most of our distribution by reducing promotions in our own channels and cutting our exposure to those wholesale channels that damage our brand’s desirability. To better position our product icons and our performance offering and tell more engaging product stories, we created the right structures inside our company. We also addressed operational inefficiencies and further optimised our cost base.”
Looking ahead, Puma expects currency-adjusted sales in fiscal 2026 to decline in the low- to mid-single-digit percentage range, with EBIT projected between -€50 million and -€150 million. Capital expenditure of around €200 million is planned as the company continues investments in brand repositioning and digital capabilities, added the release.
Fibre2Fashion News Desk (SG)
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