Chinas Property Downturn Drives Layoffs, Cost Cuts at Home Appliance Manufacturers

China’s prolonged property downturn, weakening consumer spending, and intensifying price wars are forcing the country’s well-established home appliance manufacturers into sweeping cost-cutting measures, with industry participants warning that the pressures are spreading across the private manufacturing sector.Guangdong-based kitchen appliance maker Vanward Electric, a household name in China with more than three decades of history, recently told employees that it is facing the “most severe survival challenge in its history.” In an internal letter published on state-censored news portal NetEase by a blog specializing in home appliance manufacturing news, the company announced plans to eliminate redundant positions and implement company-wide cost reductions and efficiency measures.Business owners who spoke with The Epoch Times on condition of anonymity out of fear of reprisal said Vanward’s predicament reflects a broader crisis confronting China’s private manufacturers as the country’s once-powerful real estate sector continues to unravel.An Industry ‘Ice Age’According to the letter dated July 5, Vanward told employees that its key financial indicators have continued to deteriorate and that the company must accelerate organizational reforms to optimize resource allocation and improve efficiency.The company said the kitchen and bathroom appliance industry has entered an “ice age,” citing a sharp decline in demand from new-home construction as China’s property market undergoes a prolonged correction. It also pointed to fiercer competition in the market for existing homes, volatile raw material prices, rising customer acquisition costs, and shrinking profit margins across the industry.Headquartered in Foshan, China, Vanward manufactures gas water heaters, kitchen appliances, and residential hot water systems. In its letter, the company acknowledged that despite surviving multiple industry downturns since its founding in the early 1990s, it had underestimated market risks over the past three years, responded too slowly to emerging challenges, exercised weak cost controls, developed an overly layered organizational structure, and suffered declining operational efficiency.The company’s financial results illustrate the pressure.Vanward reported revenue of 7.23 billion yuan ($1.06 billion) in 2025, down 1.5 percent from a year earlier, while net profit attributable to shareholders plunged 67.2 percent to 216 million yuan ($31.75 million), according to an April news report on state-censored news portal Sina. Profit excluding one-time items fell 58.2 percent.The downturn accelerated in the first quarter of 2026. Revenue declined 5.4 percent year over year to 2.17 billion yuan ($319 million), while net profit dropped 55.6 percent. Adjusted net profit fell nearly 64 percent.Supply Chain Feels the PainVanward is based in one of China’s largest manufacturing centers for kitchen and bathroom products.A local business owner who runs a sanitary ware manufacturing company told The Epoch Times that Vanward has fared better than many of its peers.“The fact that Vanward has survived this long is already remarkable,” he said.“Many bathroom fixture manufacturers in Foshan shut down last year, and some have already gone bankrupt. A company in nearby Zhongshan also went under. Right now, almost every product loses money.”Chen said his own company has drastically downsized.“We laid off almost everyone and kept only the company name. When foreign customers place orders, we source products from other factories and sell them under our own brand.”Liu, a landscape architect based in Shenzhen, told The Epoch Times the collapse in housing demand has devastated her business.She said she once operated two design studios employing 10 designers and struggled to keep up with demand, even hiring three designers from the Philippines.“Back then, designers were in extremely high demand. Everyone worked more than 10 hours a day,” Liu said. “Now nobody is buying homes. There are no orders. My company has shrunk to just me, and I don’t know how much longer I can keep it going.”A Chinese financial scholar told The Epoch Times the difficulties facing Vanward stem from structural weaknesses in China’s growth model.“For years, China’s economy relied heavily on real estate investment,” he said. “Home appliance makers, building materials suppliers, and renovation companies all expanded alongside the property boom. Now that the real estate dividend has been exhausted, fewer people want to buy homes. Even many who already own homes are postponing renovations. Naturally, demand for kitchen and bathroom products has fallen sharply.”He added that weaker construction activity has also reduced demand for upstream materials such as glass, leaving manufacturers throughout the supply chain struggling with shrinking orders.Official data from China’s National Bureau of Statistics underscore the trend. China’s flat glass production fell 3 percent in 2025 from the previous year, while new housing starts dropped 20.4 percent and completed residential floor space declined 18.1 percent.Xue Xiaoguang contributed to this report.