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The flooring industry highlights the predicament
The flooring industry is currently facing a challenging phase as the real estate bubble has burst and the once-booming market has cooled down. This has led to a noticeable decline in demand for flooring products, pushing the entire home building materials sector into an adjustment period. Retail stores are experiencing a "tide of competition," with dealers struggling to survive and manufacturers dealing with a lack of orders. The market is undergoing a deep "cleansing" of overinvestment from previous years, causing difficulties across the board for retailers, dealers, and manufacturers alike.
Industry experts have identified several key challenges faced by different players in the flooring supply chain.
**Challenges Faced by SMEs: Low Profit Margins**
Small and medium-sized enterprises (SMEs) in the flooring industry are struggling with low profit margins and limited brand recognition. Brand value depends on factors like company reputation, product quality, design, service, and overall customer experience — areas where many SMEs fall short. These companies often find it harder to attract reliable business partners compared to larger firms, leading to lower-quality franchisees and high turnover rates.
Due to their smaller scale, these companies struggle with maintaining consistent product quality and offering a wide range of products, which makes it difficult to attract strong dealers. At this year’s home building materials exhibition, a new flooring company showcased a modern design, eco-friendly materials, and competitive pricing, drawing interest from many dealers. However, when these dealers visited the factory, they were met with empty facilities, few workers, and minimal raw materials. This disappointing scene discouraged many potential partners, highlighting the gap between marketing and actual production capacity.
**Challenges Faced by Enterprises: Limited Business Models and Intense Competition**
In the construction and decoration industry, where personalized products are increasingly in demand, the trend toward small-batch and customized production is growing. In this environment, traditional large-scale, standardized production models are no longer sufficient. Companies that rely on rigid systems and outdated production structures find it hard to adapt quickly to changing market demands. As one industry professional put it, “It's hard for a big ship to turn around.â€
Many traditional flooring companies that integrated production and sales have seen slow growth in recent years. Large companies, burdened by fixed costs and extensive infrastructure, require a steady flow of orders to remain profitable. Some have opted to partner with major real estate developers to balance production and demand. However, such partnerships come with their own set of challenges, including thin profit margins, long payment cycles, high inventory levels, liquidity issues, and the unpredictable nature of the real estate market.
Additionally, due to low technical and capital barriers, thousands of SMEs have emerged in just a few years. Their rapid development and aggressive expansion have significantly impacted the traditional large enterprises, forcing them to rethink their strategies and adapt to a more competitive landscape.