Core Viewpoint - The outdoor apparel industry in China is experiencing a growth opportunity driven by multiple positive factors, with the industry scale expected to double in the next five years and long-term growth potential exceeding three times [1][2]. Industry Overview - The domestic outdoor apparel industry has gone through three development phases: rapid growth from 2010 to 2014, a slowdown from 2015 to 2019, and a resurgence since 2020. The slowdown was attributed to macroeconomic shifts, uneven industry development, and intensified competition. Current positive factors include standardized industry practices, increased outdoor demand due to the pandemic, and a younger consumer base [2][3]. Market Potential - The high-performance outdoor apparel market in China is projected to reach 102.7 billion yuan by 2024, with a compound annual growth rate (CAGR) of 13.8% from 2019 to 2024. The market is expected to double in the next five years, with long-term growth potential exceeding three times [3][4]. Competitive Landscape - The market is relatively fragmented, with the top 10 brands holding a combined market share of 27.2% in 2024. International brands dominate, while domestic brands are gradually increasing their market share through competitive pricing and fashionable designs [4]. Company Spotlight: BERSHKA - BERSHKA, established in 2012, is the seventh largest brand in China's high-performance outdoor apparel market, holding a market share of 1.7%. The brand focuses on mid-to-high-end pricing, with most products priced under 1,000 yuan, differentiating itself from international brands. Revenue is projected to grow from 378 million yuan in 2022 to 1.766 billion yuan in 2024, with a CAGR of 116%, while net profit is expected to rise from 24 million yuan to 283 million yuan, with a CAGR of 241% [5].

Group 1: Market Overview - In the first half of 2025, retail sales of clothing, shoes, hats, and textiles reached 742.6 billion yuan, showing a year-on-year growth of 3.1% [1] - The resilience and vitality of China's clothing consumption market continue to be released, driven by policies promoting consumption [1] Group 2: Material Trends - Natural materials, particularly linen and ramie, are leading a new wave of consumer trends, permeating the fashion industry from high-end custom to mass-produced garments [1] - In Shenzhen's Nanyou clothing market, linen apparel has become a mainstream category since its rise in the second half of 2024, with vibrant colors boosting sales significantly [3] Group 3: Functional Apparel Growth - The demand for functional apparel is experiencing explosive growth, with consumers seeking comfort and visual relaxation, leading to a significant increase in raw material prices [4] - The market for high-performance outdoor apparel is projected to grow from approximately 102.7 billion yuan in 2024 to 121.3 billion yuan in 2025, reflecting a year-on-year increase of 16.6% [10] Group 4: Innovation in Fabric and Design - Fabric innovation is rapidly reshaping consumer experiences, with a rising demand for functional apparel driven by the popularity of sports trends [5] - Designers are utilizing special eco-friendly fabrics that combine leather-like gloss with wind and water resistance for upcoming collections [7] - A textile company has developed functional silk fabric that addresses traditional silk's shortcomings, expanding its applications and becoming a new profit growth point [8] Group 5: Fast Fashion Adaptation - The fast fashion industry is under pressure to meet increasing consumer demands for rapid product updates, leading to the adoption of a "small batch quick response" model [15] - This model allows manufacturers to compress the production cycle from over three months to under a week, achieving zero inventory goals by aligning production with market demand [15]

Core Insights - The report emphasizes the distinction between "capital expenditure reduction," "capacity reduction," and "output reduction" in the context of anti-involution policies, drawing parallels to supply-side reforms from 2016-2017 [1][10] - The current anti-involution policies are expected to lead to a significant decline in capital expenditure growth in the midstream manufacturing sector, with the growth rate hitting a new low since 2012 [2][10] - The report predicts that by mid-2026, the fixed asset formation growth rate of listed midstream manufacturing companies will fall below the nominal GDP growth rate, indicating a visible turning point in supply-demand dynamics [3][10] Summary by Sections Section 1: Anti-Involution Policies - The report identifies three core elements of the supply-side reform experience from 2016-2017: "capacity reduction," "output reduction," and the significant impact of demand-side stimulation [1][10] - The current anti-involution policies are seen as a systematic correction of excessive investment in advanced manufacturing driven by local government subsidies from 2022-2024 [2][10] - The report suggests that the current environment is not conducive to strict "output reduction" policies due to the lack of mechanisms for implementation in privately-owned advanced manufacturing sectors [2][10] Section 2: Market Trends and Predictions - The report anticipates that the supply-demand dynamics in the midstream manufacturing sector will improve significantly by 2026, with a focus on sectors such as electric equipment, steel, and building materials [3][10] - The report maintains a bullish outlook for the Hong Kong stock market, despite concerns over liquidity fluctuations [3][10] Section 3: Outdoor Apparel Industry - The outdoor apparel market in China is projected to reach a scale of 102.7 billion yuan in 2024, with a year-on-year growth of 17%, driven by factors such as increased health awareness and a shift towards experiential consumption [15][16] - The brand "Berghaus" has shown remarkable growth, with a projected revenue of 1.77 billion yuan in 2024, reflecting a year-on-year increase of 94.5% [15][16] - The report highlights the competitive landscape of the outdoor apparel industry, noting that the top ten brands account for only 27.2% of the market, indicating significant room for growth [15][16]