On December 4, Hua Nai Home Furnishing, a leading distributor of home building materials, launched a new model home furnishing market in collaboration with over 20 ceramic manufacturers, including Mona Lisa, Jiu Mu, New Pearl Group, Aesthetic Group, Lehua Group, and Dongpeng Ceramics. Faced with the growing strength of the home furnishings market and rising rental costs—sometimes even the risk of being forced out at any time—ceramic merchants decided to take the initiative in establishing their own heating-up stores. For those looking to build their own investment channels, breaking away from traditional self-owned property models has become an urgent need.
A recent image highlights a romantic Korean solid wood suite, symbolizing the evolving trends in home décor and furniture. This shift is not just about aesthetics but also reflects a broader movement among industry players to gain more control over their sales channels.
Hua Nai’s initiative is backed by China Tao Investment & Development Co., Ltd., which has raised 200 million yuan and currently has 20 shareholders, each holding no more than 5% of the shares. The company's first chairman is Jia Feng, president of Hua Nai Furniture Group. Unlike many other shareholders who are ceramic manufacturers, Hua Nai itself is a retailer, representing brands such as Marco Polo, Mona Lisa, Wrigley, and Faenza Sanitary Ware. It operates over 800 chain stores nationwide and manages the Huali Lijia home store platform, which is currently operating and under development across nine projects, mainly in third- and fourth-tier cities.
According to Miao Bin, secretary general of the China Building Sanitary Ceramics Association, "Huanai, as a retailer, is better positioned to unite companies and avoid the challenges faced by others who struggle to form cohesive groups." He noted that while China Ceramics is currently dominated by 20 leading companies, there is potential for growth and expansion into other industries like sanitary ware.
"China Tao doesn’t have much operating capital—it’s more symbolic, representing a united effort against home hypermarkets," said a representative from the Brilliant Plumbing Group. The company's first major project was investing in Huali Group, a platform under Hua Nai. Unlike traditional home furnishing hypermarkets where brands rent space, Huali Lijia sells properties directly to merchants, aiming to reduce dependency on rental models.
However, Huamei Lijia still faces challenges compared to established players like Red Star Macalline and Actual Home, which have hundreds of stores. With only two projects currently operational, its ability to control large-scale retail platforms is limited. A marketing director from Red Star Macalline in Beijing pointed out that while Huamei Lijia operates as commercial real estate, it lacks the same level of expertise in location selection and store management.
Despite these challenges, some industry players believe that having more channel options is beneficial. One shareholder of China Tao Investment stated, "I hope there are more choices, but I can't abandon the channels of Red Star Macalline and Actual Home. They still dominate the first- and second-tier markets, and their sales volumes remain strong."
The move toward self-owned properties aims to avoid the issues of high rental costs and unstable business environments. As one of the shareholders, Ye Delin of New Pearl Ceramics Group explained, "Dealers are frustrated with the current hypermarket rental model, where rents increase annually, making it hard to sustain profitability."
Wen Jun, from Guangdong Huamei Lijia Investment Holding Co., Ltd., highlighted that in China, rental costs account for about 80% of sales costs, compared to just 10% in foreign markets. This model not only pushes up prices for consumers but also reduces profit margins for manufacturers.
Around 2010, as the real estate market boomed, major home furnishing chains like Red Star Macalline and Actual Home expanded rapidly, forcing brands to follow suit. However, this aggressive expansion led to challenges for manufacturers, who were often pressured to open stores even if they were unprofitable. After government regulations in 2011, some of these stores had to close, leaving merchants without clear terms or compensation.
An industry source recalled an incident in 2010 when Red Star Macalline and Actual Home competed for a commercial building in Beijing’s North Fifth Ring Road, requiring brands to choose sides. Despite mediation from the China Building Sanitation Association, few companies dared to speak out publicly.
While the attempt to establish independent channels before hypermarkets fully dominate the market is promising, the lessons from the home appliance industry show that it’s a long-term challenge. Despite efforts like grouping and self-built channels, manufacturers still rely heavily on retailers like Suning and Gome.
As the initiator of China Tao Investment, Hua Nai’s efforts in the home building materials industry will require time to prove their effectiveness. (Editor: Peter)
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