China’s Home Interiors Sector Faces Survival Test
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China’s home-furnishing sector, a sprawling industry with more than 100,000 firms nationwide, has entered a precarious “do-or-die” phase as lingering weakness in the property market and relentless price competition compress profit margins and unsettle small and medium manufacturers across the country.
Industry analysts and company executives warn that millions of workers tied to home decor production and distribution could be affected this year as weaker demand and deflationary pressures make sustainable operations increasingly difficult.
Property Market Slump Underpins Weak Demand
Historically, China’s home-furnishing demand has been closely linked to its property sector, with robust real estate sales fueling strong purchases of furniture, décor, flooring, and other home interior products. However, with housing prices now stagnating or declining in many urban centres and no strong rebound in sight, that linkage has weakened significantly.
Without the “halo effect” of solid property growth, millions of households are delaying or scaling back décor and renovation projects — key drivers of demand for home furnishings. This slowdown has undermined sales volumes and revenue potential for many domestic firms, especially those without strong brand recognition or export channels.
Price Wars and “Involution” Worsen Sector Prospects
One executive in Shanghai described the current market dynamics as “involution” — a term in Chinese business lexicon that refers to hyper competitive behaviour where firms cut prices dramatically, even below cost, in efforts to secure limited sales.
“Clients want to save on furnishing costs and keep bargaining down prices, while competitors desperate for business are willing to offer huge discounts,” said Yan Jun, a senior executive at Shanghai-based Jinghan Stainless Products, which makes household steel window systems.
This downward spiral of price cuts has further eroded margins and eroded profitability across the sector, making it harder for smaller players to stay afloat against larger competitors that can weather short-term losses.
Revenue Growth Masks Underlying Stress
Despite the bleak conditions, industry data shows that the home décor segment still posted a modest revenue gain in 2025, reaching 2.68 trillion yuan (about US $387.9 billion) — a year-on-year increase of roughly 2.8%.
However, this headline growth figure masks deeper challenges. Revenue gains were concentrated among larger manufacturers and exporters, while thousands of smaller micro businesses struggled to break even or turned to aggressive discounting to sustain order volumes.
Outlook: Consolidation and Survival of the Fittest
Industry observers say the next 12–18 months could see significant consolidation in the home-furnishing sector, as weaker firms exit the market or restructure through mergers and acquisitions. Some analysts believe only companies with strong brands, diversified product lines, or export-oriented strategies will survive the current downturn.
With ongoing uncertainty in China’s broader economy, particularly in property and consumer spending, the home-furnishing sector could continue to face tough conditions before meaningful recovery takes hold.
10:58 AM, Feb 18
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China’s Home Interiors Sector Faces Survival Test
10:58 AM, Feb 18.webp)
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