Shenzhen Haida Decoration Group Co., Ltd recently announced that due to long-term operational difficulties and the inability to resume production, the company has decided to cease providing layoff compensation benefits effective immediately. Additionally, they are unable to continue paying social insurance and housing provident fund contributions. Chairman Gao Feng later confirmed that the company has sold all assets but still couldn’t cover the massive funding gap, ultimately leading to the decision to declare bankruptcy.
On the evening of August 26th, a notice from Haida Decoration to its employees circulated online. The notice indicated that due to funding difficulties and the inability to sustain normal operations, the company would stop providing relevant compensatory benefits. The following day, Gao Feng confirmed the authenticity of the message in an interview with “Daily Economic News,” stating that despite asset disposal, the funding shortfall remained substantial.
A building materials store manager in Shenzhen, Mr. Li, stated in an interview with Epoch Times, “I have been engaged in building materials sales and related renovation work in Shenzhen for over twenty years, and Haida Decoration is quite renowned in the industry. Nowadays, office vacancy rates are high, with barely any new clients, and in recent years, many decoration companies have gone bankrupt one after another. In the end, Haida couldn’t withstand the impact of the real estate market, symbolizing the end of an era.”
Established in 1992 in Shenzhen, Haida Decoration specialized in high-end real estate decoration and commercial space projects, working with well-known real estate companies such as Vanke, Country Garden, Agile, Excellence, Cheung Kong, Wuhan Xuhui, and others.
Reports indicate that since 2023, Haida Decoration faced difficulties in recovering project funds due to financial crises among real estate partners, leading to widespread bank loan defaults. Despite attempts at self-rescue through equity transfer, the company was unsuccessful. Mr. Yang, a businessman with past business dealings with Haida Decoration in Shenzhen, revealed that internal debt issues had caused serious disagreements within Haida as early as two years ago, with top management considering divestment but finding no takers.
Gao Feng mentioned that to reduce risks, the company gradually reduced its real estate-related business, resulting in a significant decline in revenue. Currently, there are still hundreds of millions in outstanding receivables, but frozen accounts have hindered fund circulation, plunging the company into financial distress. In 2023, Gao Feng had previously disclosed the company’s and his own assets to the media, including about 100,000 square meters of office space and industrial park land, as well as a nearly 1,000 square-meter villa, with an estimated total value of around 1 billion yuan at that time.
With the Chinese real estate market continuing to struggle, a large number of upstream and downstream companies face a crisis of broken funding chains. Industry data shows that from 2022 to 2023 alone, over a hundred decoration companies nationwide have gone bankrupt, including billion-dollar industry leaders like Guangtian Group. While Haida was a well-established local company with substantial assets, it couldn’t withstand the chain-shock of successive real estate defaults.
An industry analyst in Nanshan, Shenzhen, Mr. Su Changchun, told the Epoch Times during an interview, “Once real estate firms stagnate, decoration companies have almost no bargaining power.” Currently, both ends of the real estate industry chain are under immense pressure, with many companies even falling into a state of so-called “illegal bankruptcies,” unable to compensate employees or fulfill promises to suppliers.
He added, “With the enforcement of mandatory social insurance policies starting on September 1st, Haida Decoration’s funding chain has completely collapsed.”
According to data from Tianyancha, as of August 27th, Haida Decoration and Gao Feng had 46 restrictions on consumption orders, totaling 28.1428 million yuan, and information on 30 persons subject to enforcement, with a total amount of 314 million yuan enforced.
Statistics from the China Building Decoration Association show that from 2019 to 2021, the average annual number of closures in the decoration industry was less than 200 nationwide, but since the crisis in real estate firms intensified in 2022, the number of deregistrations and bankruptcy cases surpassed 600 in 2023, with the proportion of closures of large enterprises reaching a nearly ten-year high. Since the beginning of this year, over 20 medium to large decoration companies have exited the market in Shenzhen and Guangzhou alone, and this trend is accelerating.
Su Changchun mentioned that the closure of Haida Decoration not only signifies the end of a longstanding enterprise but also reflects the fragility of the industry chain. Under a model highly reliant on real estate firms for receivables, decoration companies struggle to survive independently. Industry insiders believe that with the prolonged adjustment in the real estate market, the risk of similar companies closing down continues to rise.