In recent months, the home furnishings industry has been hit hard by a combination of factors including a prolonged downturn in the real estate sector, leading to the collapse of at least four industry giants. Reports indicate that nearly 80% of home building material enterprises have seen a decline in net profits or are operating at a loss in the first half of this year. Experts point out that the home furnishings industry is undergoing a deep restructuring and is entering a period of brutal reshuffling, with only about 40% of enterprises likely to survive.
On July 16th, it was announced that properties A, B, C, and D of Foshan (International) Home Expo City in Guangdong Province will be auctioned off, with a starting price of 10.6 billion yuan and an evaluation price of 15.17 billion yuan. The public notice revealed that as of November 30, 2024, the expo city owed approximately 161 million yuan in rent. Foshan (International) Home Expo City Limited Company, established in 2008, has been listed as a dishonest debtor and has faced enforcement orders exceeding 1.4 billion yuan in the past two years.
Public records show that Foshan International Home Expo City was once promoted as having the largest single-area in the world, with a total investment of up to 9 billion yuan.
Apart from the Foshan (International) Home Expo City, at least two other home furnishing companies have also faced financial crises in the recent period.
In early July, Jiangsu Bai’anyi Home Group Co., Ltd. successfully auctioned off multiple commercial office assets in Huadu Shopping Plaza in Nantong City for a total transaction amount exceeding tens of millions of yuan. However, recent data from Tianyancha shows that the company is struggling with a debt crisis, with enforcement amounts reaching 480 million yuan. The company, previously a benchmark enterprise in the Nantong home industry, boasted an 80,000-square-meter one-stop home shopping center and had expanded its business into various fields such as automobile trade and theme parks.
On July 17th, the founder of Jingjiaju, Zeng Yuzhou, tragically passed away in a fall from an office building in Guangzhou’s Tianhe District. A closure notice for Jingjiaju cited prolonged losses and insolvency as reasons for ceasing operations effective immediately.
Jingjiaju, founded in 2001, operated nearly a hundred chain retail stores. Since September 2024, the company has been involved in 11 legal disputes as the defendant, primarily due to decoration and renovation contract disputes and sales contract disputes.
In addition to these three home furnishing companies, the start-up “Dark Horse” in the home improvement industry also faced financial collapse in early June.
21st Century News reported that the CEO of Dark Horse, Liu Xianran, admitted that the company’s financial chain had broken, with a cash flow gap of up to 100 million yuan. Approximately 30,000 clients with unfinished renovation projects were left holding IOUs and queuing indefinitely for refunds. The company’s construction workers, suppliers, and employees have been actively seeking repayment through various rights protection groups. Dark Horse, founded by four Tsinghua graduates, had raised over 300 million yuan in funding.
Recently, 21 listed home building material companies have successively issued performance forecasts for the first half of the year. According to the “Dacai Research” new media, nearly 80% of enterprises have seen a decline in net profits.
For example, Red Star Macalline announced an estimated loss of 1.59 to 1.92 billion yuan for the first half of 2025, a decrease of 53.22% to 26.88% compared to the previous year. This comes after a net loss of 2.983 billion yuan reported in the 2024 annual report.
On June 30th, Changsha Red Star Macalline Home Life Plaza Co., Ltd. notified all merchants that the Shaoshan Shopping Mall in Changsha will be closed by September 30, 2025, due to property and market issues.
It’s worth noting that this isn’t the first time Red Star Macalline has closed malls this year. According to China Ceramics Network, first-quarter operational data shows that the company has shut down 12 home furnishing malls in cities including Chongqing, Zhejiang Leqing, Hebei Handan, Hebei Qinhuangdao, Henan Zhoukou, Anhui Lu’an, Sichuan Mianyang, Sichuan Leshan, Guangdong Heyuan, Liaoning Benxi, Jiangsu Huaian, and Hunan Jishou.
Sun Weige, former Vice President of Jinpai Cabinets, recently spoke on social media about the deep reshuffling in the home building materials industry, warning that the years 2025 to 2026 are not a turning point but a life-and-death line, with a large number of operators likely to exit the market, leaving only 40% of the bosses standing.
Sun explained that the home building materials industry is downstream of the real estate sector, and the sluggish real estate market has triggered a merciless price war in the home furnishings industry, destroying many physical stores. Moreover, what makes the situation even more daunting is that previously effective pricing strategies are no longer viable in the current market environment.
Blogger “Fuyao Discusses Decoration” shares a similar perspective to Sun Weige. She pointed out that in her ten years as a third-party observer in the industry, about 40% of decoration company owners are facing bankruptcy, becoming dishonest debtors, or changing careers. Those who remain are either laying off staff, taking on all tasks themselves, barely repaying debts, with only a few managing to navigate the challenges smoothly.
A recent analysis by China Ceramics Network on Monday, July 21st, attributes the upheaval in the home building materials industry to a combination of factors such as profound adjustments in the real estate sector, declining foot traffic in offline retail spaces, the rise of new retail e-commerce channels, and significant shifts in consumer habits, leading to a ruthless reshuffling in the market.
Particularly, the impact of new retail e-commerce on traditional offline home retail has accelerated the pace of restructuring, with e-commerce platforms continuously capturing market share through competitive pricing and convenience. The era of traditional store sales has come to an end.
As for why so many home furnishing and decoration companies have recently faced financial collapses, according to blogger “Fuyao Discusses Decoration,” there are three main reasons.
Firstly, companies have expanded rapidly with high leverage, resulting in fragile financial chains. Large companies employing a combination of direct operations and franchise models have aggressively expanded their store networks, leading to excessive management costs, high labor costs, and steep rent.
Secondly, poor cash flow management has been a significant issue. The practice of large companies collecting payments in advance before carrying out construction projects can blur the lines between prepaid funds and company assets, causing vulnerabilities in cash flow management that can lead to sudden collapses. Moreover, companies often require suppliers to front capital for supplies. If sales fall short of expectations, this can result in unpaid supplier debts, triggering a cascade of problems. In addition, the use of low-price marketing strategies by large companies has further eroded profits.
Lastly, managing the complexities of these companies while maintaining efficiency has proven challenging. Large companies have struggled to adapt quickly to market changes, as project managers vary in operational skills, leading to increased customer complaints and rising after-sales costs. Issues such as warehouse managers accepting kickbacks from material suppliers and subcontracting projects have further depleted corporate profits.