We know the hardships of silk
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August 13, 2025
The traditional processes of the silk industry, such as reeling and weaving, are not only unprofitable but also face a peculiar situation where the cost of raw materials increases even as the selling price of finished products remains stagnant or declines. This issue has become more evident since last autumn. Zhejiang Silk Road Group's Zhejiang silk factory, which is among the top performers in the country, boasts smooth raw material procurement channels, skilled workers, and high employee motivation. Despite these advantages, the factory has been losing 20,000 yuan for every ton of raw silk produced over the past six months. In total, millions of yuan have been lost this year.
After the last autumn’s cocoon harvest, the price per ton of cocoons surged to 100,000 yuan—nearly doubling from the previous year. This forced silk prices to rise rigidly. However, due to poor silk exports, local silk factories cannot afford the high-priced raw materials. As a result, rising raw material costs combined with a downturn in export markets have pushed many silk mills into a state of crisis. Factory owners are increasingly frustrated, suffering daily losses, and facing tough decisions: stop production and still incur losses, or continue operating and risk further financial strain. Many fear losing their market share and workforce.
In response, some factories have shortened working hours and increased holidays. In extreme cases, they’ve had to shut down entirely. Last winter in Huzhou, four or five silk mills were closed. Meanwhile, the Zhe Si Plant was tasked with replicating "Lake Lane" from the album, a silk piece that won an award at the first World Expo 159 years ago. This is a great honor for our company. But how can we justify halting operations or reducing shifts when international visitors might come next year? We must maintain normal production. The only way forward is to buy expensive cocoons day by day, without considering price or quality, just to keep the machines running.
This situation is unprecedented. The price of cocoons has become more expensive than wire, and the market has become more erratic than flour. Such strange phenomena in the silk industry are not new, but they have intensified recently. Some attribute the price surge to last year’s drought affecting cocoon production, but in our view, that is not the root cause. Since the new century, the prices of cocoons and silk have fluctuated dramatically, with raw silk prices soaring to 360,000 yuan and dropping to as low as 110,000 yuan—a difference of more than three times. Yet, no matter how much the price rises or falls, silk factories never make a profit—they only accumulate losses.
Why? Because there is an unwritten rule: when cocoon prices go up, they don’t come down easily. When they fall, they drop sharply. This rollercoaster-like trend leaves the silk industry dizzy and unstable. The "hit the ball" phenomenon in the market harms two main groups: silk enterprises and sericulture farmers. Enterprises struggle to invest in technology and pay fair wages, while farmers face unpredictable income, often planting mulberry trees with no guarantee of returns. Sericulture becomes like gambling, with winners and losers appearing overnight, leaving little time to focus on improving cocoon quality.
Ultimately, the real beneficiaries are a group of speculators—cocoons traders and middlemen—who profit from the volatility. The pattern is clear: when cocoons are sold at high prices, speculators drive up the market; when prices fall, farmers are forced to sell at a loss. China is the world's largest silk producer, with an annual output of 110,000 tons, accounting for about 85% of global production. The industry contributes significantly to the national economy, generating billions in value-added tax revenue annually. It also employs approximately 150,000 people in the reeling sector, many of whom earn less than 20,000 yuan per year—far below the average salary of civil servants, who earn around 50,000 yuan annually. This disparity highlights the deep challenges facing the industry and the urgent need for reform.