In 2025, the linen laundry industry is facing multiple market pressures and development choices. Currently, overall market demand is weak, but competition is becoming increasingly fierce. Due to the scarcity of high-quality investment targets, a large amount of capital has flooded into the laundry industry, which is closely related to traditional service industries. The scale of newly built laundry factories has been continuously expanding. Some enterprises use low-price strategies to seize the market, which triggers fierce price wars.
Industry Downturn
From an external perspective, the global economy is still recovering slowly under the double impact of the pandemic and geopolitical conflicts. The global supply chain is undergoing restructuring, and energy prices fluctuate frequently. These all bring uncertainties to the operation of the laundry industry. As core customers in the laundry industry, tourist hotels, and medical institutions have also shown weak demand. To control costs, the hotel has kept the outsourcing fee for linen washing to a minimum. Medical institutions also list linen services as the key point of slashing costs because of budget cuts and competition from new medical institutions.
When facing this situation, there are obvious differences among the operators of laundry factories. Some operators choose to focus on expanding. By adding equipment, expanding the market, and increasing the number of personnel, they try to use economies of scale to break through the predicament. Some operators, however, tend to develop moderately and focus on refining operations based on their current scale. They build a “small but excellent” business model and refuse to blindly pursue scale expansion. The two paths have their own logic and have different potential risks. The core lies in that laundry plants should find a development direction that matches their own resources and capabilities. Suitability has become the key criterion for industry decision-making nowadays.
Road of Expansion
The laundry plants that choose to expand continuously are actually seeking a breakthrough from quantitative change to qualitative change through scale expansion. In the current market environment, these kinds of enterprises do catch the special opportunities.
❑ Opportunities
● On the one hand, the cost advantage brought by economies of scale is great.
- Large-scale purchase of detergents can obtain bulk discounts.
- The improvement of equipment utilization can reduce unit energy consumption
- The per capita output can double after the optimization of the labor force.
- If enterprises expand their territory through methods such as equity participation, opening branch factories, or acquiring small factories, they can also improve their ability to undertake large orders from hotel groups, form resource barriers, and attract more partners to follow.
● On the other hand, if the timing of expansion is precise, they can quickly capture regional market share, form an overwhelming advantage in market competition, and thereby obtain phased market dividends.
❑ Risks
The risks behind the expansion should not be ignored either. Especially in the current market environment, a little misstep may lead to a difficult situation.
● The top challenge is the pressure on the capital chain. The investment in a single high-efficiency washing production line often amounts to hundreds or even tens of millions of yuan. If market fluctuations occur during the expansion process, such as a hotel group terminating cooperation due to policy adjustments, it is very likely to lead to idle production capacity and trigger the risk of cash flow disruption.
● In addition, the cost of environmental compliance also rises. An increase in production capacity means a rise in wastewater discharge. The regulatory authorities’ supervision over environmental protection indicators becomes more and more strict, so that enterprises need to invest more funds in the upgrading, operation, and maintenance of environmental protection facilities to further intensify the cost pressure.
● From the angle of business operators, their psychological burden during expansion should not be ignored either. Some business owners are ambitious at the beginning, but as market prices continue to decline, the larger the scale, the greater the risk exposure they face. An unexpected event (a sharp increase in energy prices/the loss of core customers) may harm the overall operation. As a result, the expansion path has extremely high demands on an enterprise’s capital strength and market judgment.
Moderate Development
Laundry plants that choose moderate development are different from those that choose expansion. They pay more attention to optimizing operations on the basis of the current scale, and focus on core business and improving service quality. Their core advantage is flexibility. In a market environment where prices are falling, a moderate-scale enterprise can respond quickly to customers’ personalized demands and avoid the low-price competition. Also, they can create a differentiated advantage through high-quality and low-complaint-rate services and lock in a loyal customer base.
❑ Opportunities
The sustainability of the moderate development model is obvious. A simple cost structure reduces the operational complexity. A quick decision-making mechanism helps enterprises respond promptly to market changes without incurring huge debts from large-scale expansion, which makes it easier for them to achieve stable survival under market pressure.
Some cases of laundry factories rooted in the local market show that by strengthening brand building and focusing on specific customer groups, these enterprises can proactively select customers that match their service positioning and build complementary business structures through business diversification (related businesses like catering laundry, work uniform laundry, and customer clothing laundry). This improves their risk resistance capabilities. In addition, moderate development can let operators achieve a balance between work and life, and have more energy for business innovation and team building. This accumulates internal impetus for long-term development.
❑ Challenges
In the long run, if the market fully recovers in the future, enterprises may miss the expansion window due to scale limitations. This may lead to stagnation in development. On a psychological level, when business operators see their peers grow rapidly through expansion, they may also feel anxious about missing the opportunity.
However, these challenges can be solved by precise strategy adjustment. By delving deeply into niche markets and expanding diversified businesses, enterprises can improve their profitability and risk resistance on the basis of their current scale, achieving the development goal of being “small but strong”.
Selection of Path
At the crossroads of transformation in the textile laundry industry in 2025, there is no absolute superiority or inferiority between expansion and moderate development. The key lies in being compatible with the actual situation of the enterprise.
● If an enterprise has a stable source of funds, acute market insight, and strong risk tolerance, the expansion path may help it achieve a comeback and grow into a regional or even national industry leader.
● If an enterprise pays more attention to the stability of its operation, tends to deeply cultivate the existing market and avoid high-risk investment, a moderate development model can help it remain stable in the face of market fluctuations and avoid major ups and downs.
Conclusion
For operators of the laundry factories, they should stop and reflect on themselves even more at present:
- comprehensively assess the enterprise’s financial strength, customer structure, core competitiveness, and personal business preferences.
- formulate dynamic adjustment strategies in combination with market trends (changes in demand from tourism hotels and medical institutions).
After all, the operation of the laundry industry is inherently full of challenges.
Post time: Oct-30-2025