Traditional channels have hit their ceiling! Amid “internal challenges and external pressures,” how can panel‑board manufacturers leverage small and medium‑sized furniture makers to unlock new opportunities for the industry?

2026-06-26 Source: China Wood Industry Network News Department

Recently, JD.com officially launched its self-operated home‑renovation app, bringing whole‑home renovation, refurbishment, and partial remodeling under its own management. Leveraging its strengths in supply chain, fulfillment, and financing, the company is directly entering the most critical stage of home‑improvement projects: delivery.

It’s not just JD.com: in recent years, internet giants like Alibaba, Alipay, Kuaishou, and ByteDance have all heavily invested in the home‑improvement sector. Tmall has launched “Tmall Decoration Treasure” and “Tmall Design Home” to strengthen its B‑to‑B digital infrastructure; Alipay’s “Home‑Improvement Treasure” has established an industry‑wide escrow system for funds; and Kuaishou’s “Zhu Meng Jia” is expanding into the local home‑improvement market in third- and fourth‑tier cities. Unlike a few years ago, when they merely sold ads or linked users to building‑material suppliers, today they are actively building out the underlying “infrastructure.” From order placement and design to financing, construction, and material procurement, the entire value chain has been reorganized and standardized by these platforms.

For downstream players in the home‑furnishings sector, these industry giants’ cross‑sector entries represent an efficiency boost; yet for upstream panel manufacturers, they signal that traditional bulk‑supply channels are gradually being eroded and sidelined.

Tides ebb and flow; growth in traditional channels has reached its limit.

As the external market environment remains volatile, the fundamentals of the home‑improvement and building‑materials sector are also undergoing a reversal.

According to data released by the National Bureau of Statistics in January 2026, in 2025, the nationwide sales area of commodity residential properties declined by 9.2% year on year, while new-home deliveries continued to fall, leaving the custom‑home‑furnishings sector—typically a downstream industry in the real estate cycle—without its primary source of growth. Meanwhile, statistics from the China Building Materials Circulation Association show that, through the first four months of 2026, sales at national building‑materials and home‑improvement retail outlets dropped nearly 6% year on year, as weakening end‑consumer demand for home renovation further erodes market vitality.

This year’s first-quarter financial reports from publicly listed custom‑home‑furnishings companies provide stark evidence of the industry’s harsh downturn: in Q1 2026, the nine leading A‑share custom‑brand players all posted year‑over‑year revenue declines, with an average drop exceeding 27%; seven firms reported quarterly losses. Meanwhile, major custom‑brand manufacturers have sharply scaled back their panel‑material procurement volumes while continuing to push down purchase prices. The resulting contraction in production capacity has reverberated upstream, leaving panel‑material suppliers at a crossroads: growth in their key‑account channels has peaked, and profit margins are steadily eroding.

On one hand, internet platforms are squeezing distribution channels; on the other, demand from key large customers is shrinking. As a result, the board‑material industry’s traditional growth model has reached its ceiling. The previous approach—relying on capacity expansion, low‑price volume sales, and lock‑in of top-tier clients—can no longer keep pace with today’s market conditions. It has become imperative to identify new channel foundations and a fresh growth paradigm.

A springtime path emerges, and the sinking track unlocks a new fundamental framework.

As mainstream markets become increasingly crowded, the industry’s vitality often lies in the overlooked long-tail segments.

In the lower-tier markets, a vast array of small and medium-sized furniture manufacturers, regional custom‑fabrication workshops, and local turnkey‑fitout stores are demonstrating remarkable resilience, serving as a steady source of channel‑driven growth for the panelboard industry.

With new-home sales and delivery volumes shrinking sharply, and bulk, turnkey, large‑scale orders continuing to plummet, the home‑improvement market’s core demand has shifted toward fragmented, scenario‑specific, and locally tailored projects—such as renovating existing homes, giving older properties a localized refresh, undertaking whole‑building fit‑outs in residential communities, and handling small- to medium‑sized commercial fit‑outs. These small‑batch, highly flexible, regionally focused orders are poorly aligned with the standardized mass‑production systems of leading custom‑furniture companies, leaving virtually all such work in the hands of smaller, locally based furniture manufacturers.

In the past, leading custom‑home‑furnishings companies, with their substantial bulk‑procurement volumes, naturally wielded strong bargaining power. Order sizes fluctuated sharply in response to market conditions, and upstream supply channels were highly concentrated; when these brands scaled back production capacity, it imposed concentrated operational risks on panel manufacturers. By contrast, smaller and medium‑sized furniture makers lack the formidable bargaining clout and stringent entry barriers of top-tier brands, resulting in stronger collaborative ties and greater channel stability. For panel suppliers, abandoning the chaotic race to win over large clients and instead deepening engagement with a vast network of small and medium‑sized manufacturers is not a retreat—it is, amid shifting dynamics, a path toward more sustainable, better‑controlled survival.

However, beneath the surface lies an inescapable objective reality: today, most small and medium-sized custom‑manufacturing firms in China are grappling with pervasive operational pressures across the entire value chain—procurement, production, financing, technology, and customer acquisition. For panel‑board manufacturers to seize the growth opportunities embedded in this channel, they must deeply understand and address the systemic operational challenges that have long proved difficult to resolve.

On the procurement side, small and medium-sized manufacturers face limited order volumes per purchase, making it difficult to secure direct, bulk‑sourced pricing. Meanwhile, materials such as substrates, finishes, edge banding, and hardware are procured separately, leading to frequent issues like color mismatches, delivery delays, and inconsistent quality. This constrains new‑product development and the refresh of patterns and colors, leaving end‑products trapped in prolonged homogenization.

On the production side, most small and medium-sized manufacturers have limited equipment and incomplete process systems, making it impossible to achieve high‑precision edge banding, custom shaping, or integrated door–wall–cabinet delivery. As a result, they face high waste rates and rework rates on small‑batch custom orders, leading to steadily shrinking profit margins. Moreover, with the official implementation of the new national standards, environmental compliance thresholds in the industry have risen sharply. Lacking robust quality‑control and certification frameworks, these smaller firms are confronting mounting risks associated with non‑compliant operations.

On the operational front, the home‑improvement industry is characterized by long payment cycles and substantial upfront capital commitments. Small and medium‑sized manufacturers typically face weak working capital, with a business model that requires full‑payment procurement from upstream suppliers while collecting payments from downstream customers on deferred terms. This structure places sustained pressure on cash flow, making it difficult to build inventory or expand production capacity. Meanwhile, these smaller firms lack brand credibility and the ability to acquire customers through digital channels, forcing them to rely on price‑driven competition to capture fragmented orders, which further undermines their operational resilience.

Overall, the core demand of small and medium-sized furniture manufacturers has long shifted from seeking lower prices to a comprehensive supply-chain solution that reduces costs, boosts efficiency, mitigates risks, and drives revenue growth.

Dawn is breaking—turn around before embracing the dividends.

Market dynamics have always been a double-edged sword: whenever an industry faces a pressing challenge, it simultaneously creates new opportunities for collaboration. This pervasive predicament among small and medium-sized furniture manufacturers is, in fact, an opportune moment for upstream panel brands to deepen their roots in the downstream market. To forge lasting partnerships with these SMEs, panel companies must transcend their traditional role as mere raw-material suppliers and transform into comprehensive, end-to-end supply-chain service providers for the mass‑market segment, empowering them across all dimensions to cultivate mutually beneficial, symbiotic relationships.

If the goal is to address the fragmentation challenges in procurement faced by small and medium-sized manufacturers, panelboard companies can first begin by integrating base materials, Veneer panel We offer a full range of materials—including color‑matched edge banding, decorative moldings, and complementary hardware—providing integrated supply across the entire door‑wall‑cabinet system. This approach eliminates common industry pain points such as color mismatches, schedule clashes, and inconsistent quality at the source. Leveraging a regional hub‑warehouse model, we implement small‑batch mixed‑lotting and flexible delivery, reducing inventory burdens and procurement costs for small and medium‑sized manufacturers while strengthening long‑term collaborative ties.

Secondly, to address the production shortcomings of small and medium-sized furniture manufacturers, companies can consider establishing standardized pre-processing hubs to centralize core operations such as panel cutting, slotting, and PUR edge banding, thereby delivering standardized semi-finished products that ease the burden on downstream partners. This approach enables smaller factories to avoid substantial capital investments in heavy equipment while simultaneously upgrading product quality, potentially reducing material waste, labor costs, and after-sales repair expenses, thus further strengthening their bottom-line profitability.

On this basis, the multi‑dimensional support and empowerment offered by panel manufacturers also holds practical value, enabling coordinated deployment across digitalization, process compliance, and financial support. By providing partner factories with digital tools such as AI‑driven design, one‑click order splitting, and VR showrooms, downstream partners can reduce design costs and lower front‑end customer acquisition expenses. At the same time, offering comprehensive environmental‑compliance test reports and carbon‑footprint‑related certifications helps small and medium‑sized factories strengthen their operational compliance frameworks and build greater trust with end customers. Coupled with flexible supply‑chain financing solutions tailored to the home‑improvement industry’s payment cycles, these measures can effectively ease factories’ day‑to‑day cash‑flow pressures.

At a deeper level, the synergy lies in the mutual reinforcement of traffic and distribution channels. Panel‑manufacturing companies can also leverage their own industry resources to channel targeted local customers—such as those seeking home‑renovation services, turnkey residential packages, or small‑scale commercial fit‑outs—to partner SMEs. At the same time, they can share proven, hands‑on strategies for urban‑area new‑media marketing and in‑store sales negotiations, helping downstream partners break free from the trap of homogeneous, low‑price competition. Coupled with a dedicated co‑branded product lineup and region‑specific pricing‑protection frameworks, this approach enables smaller factories to build distinctive market competitiveness and sustain healthy, sustainable profitability within their respective regions.

The entry of internet giants has brought an end to the era of unchecked, traffic‑driven growth in the home‑improvement and building‑materials sectors; meanwhile, waning demand for custom furniture has marked the close of the incremental‑growth phase in the panel‑board industry, which once relied on large‑volume sales to major clients. Today’s industry reshuffle is not eliminating small and medium‑sized enterprises—it is phasing out the traditional panel‑board model that focuses solely on selling boards while neglecting customer service.

Currently, some panel‑manufacturing brands are already embracing eco‑friendly, end‑to‑end supply‑chain operations. In the future, competition in the panel industry will no longer be limited to superficial comparisons of production capacity, design variety, and pricing; instead, it will hinge on a comprehensive showdown of deep downstream channel management, supply‑chain integration, and industry‑wide value‑creation capabilities.

As the capillaries of the existing home‑improvement market, small and medium‑sized furniture manufacturers underpin the industry’s most stable core customer base. For panel‑board companies, the best way to break free from cutthroat price competition and navigate economic cycles is to deepen their presence in lower‑tier channels, strengthen supply‑chain services, and forge genuine communities of shared interests and ecosystems with these SMEs.

As the industry enters its second half, product sets the floor, service defines the ceiling, and the ecosystem shapes the future.

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Editor: Fang Fen