Abstract: At present, China is the largest producer of colored spun yarn in the world, accounting for more than 90% of the world’s total production capacity. And a number of manufacturers with market influence have emerged. Taking Huafu Fashion Co., Ltd. and Bros Eastern Co., Ltd. as examples, this paper analyzes the market structure, market conduct, and market performance of China’s colored spun yarn industry based on the SCP paradigm. It is found that although the market share of the industry grew with the increased terminal demand, high entry barriers and product differentiation and specialization will maintain the duopoly structure. For one thing, the flagship companies stabilize their market structure through M&A as well as product price control. For another, they promote industrial innovation through technological progress to ensure the industry’s high profit. In the future, the trend of sustainable fashion and carbon neutrality strategies create more growth potential for China’s colored spun yarn industry. However, the industry also faces uncertain risks such as repeated pandemics and changing foreign trade environment.

Key words: China’s colored spun yarn industry; SCP paradigm; Huafu Fashion Co., Ltd.; Bros Eastern Co., Ltd.