On July 18, the China Furniture Association Market Committee was officially established. During the meeting, Wang Xuanqing, Deputy Director of the Department of Circulation Development at the Ministry of Commerce, highlighted that the performance of the building materials and home industry in the first half of the year has been less than satisfactory. In June alone, sales at large-scale building materials stores reached 102.8 billion yuan, marking a 2.71% decline from the previous month. From January to June, total sales amounted to 519.6 billion yuan, representing a 6.19% year-on-year decrease.
Looking ahead, Wang noted that the second half of the year typically brings a construction and renovation season, which may lead to improved performance for building materials companies. However, expectations remain low. The industry is expected to continue facing challenges, with stronger players growing even stronger while weaker ones struggle further. This trend indicates that the industry is no longer in a favorable position, making transformation and upgrading essential for survival and growth.
Industry experts pointed out that the National Building Materials Boom Index (BHI) for June stood at 108.10, down 1.01 points from the previous month and 11.51 points lower than the same period last year. According to the joint release by the Ministry of Commerce's Department of Circulation Development and the China Building Materials Distribution Association, this decline reflects the slowing pace of demand in the real estate sector.
Wang explained that the slight drop in BHI compared to the previous month was due to the saturation of "rigid demand" in the real estate market. Although real estate sales continued to grow, the index did not follow suit. Local weather conditions, such as the rainy season, also impacted home renovation activities. Additionally, some real estate investment demands may have contributed to increased sales and rising prices.
With China's economic development, people's living standards have improved, leading to higher demands for quality of life. As a result, the building materials industry has gained more attention than ever before. It holds unique dual attributes: it serves both production data needs and lifestyle information, playing an increasingly vital role in the national economy.
However, the current situation for the building materials industry is quite challenging. First, the ongoing tightening of real estate policies has made potential homebuyers hesitant, reducing the actual purchasing power of building materials stores and making it difficult to sustain sales growth.
Second, there is a surplus of building materials stores, leading to intense competition. Many of these stores, particularly those that only rely on land leases, are struggling to stay afloat. In some cities, store occupancy rates have dropped to 50% or more, with each square meter requiring 1-2 staff members to operate—clearly unsustainable.
Moreover, traditional store formats are no longer suitable for modern urbanization, affordable housing projects, and the rise of customized homes. Most existing stores are lease-based, offering "one-stop shopping" as their main selling point. However, new homes are often pre-decorated or fully renovated, reducing the need for "one-stop shopping" and shifting toward "supplemental purchasing," "fine decoration," or "full decoration" models, which are usually handled through tenders or tailored supply chains.
In addition, the rapid rise of e-commerce has significantly impacted traditional building materials stores. With advancements in digital technology and logistics, online platforms are reshaping consumer behavior and putting pressure on physical retail spaces. Meanwhile, group-buying models and offline transaction trends are further challenging the viability of rental-based stores.
Given these challenges, Wang emphasized that transformation and upgrading are now imperative. Companies must adapt to new urbanization trends, shift away from land-based expansion and cutthroat competition, and focus on sustainable customer acquisition. While the transition may be painful, it is necessary for long-term survival.
Wang believes that the industry will continue to see a divide between strong and weak players. Stronger stores will attract more customers and merchants, while weaker ones will be left behind. As real estate demand gradually increases, the gap between good and poor stores will widen. Therefore, the time for transformation is now.
To achieve this, Wang suggested two key directions: innovation and service improvement. Innovation could involve developing e-commerce platforms and rethinking supplier cooperation and profit-sharing models. Enhancing services means providing better support to both merchants and customers, actively launching promotions, and moving away from a purely rent-seeking model to one that attracts more visitors and fosters loyalty.
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