The Tragedy of the Cycle and the Dilemma of Heavy Assets: Lessons from the High-End Home Furnishings Industry Amid Merck Home's Full Equity Freeze

From a real estate dividend benchmark to nearly 3 billion yuan in four years of losses, the rise and fall of a home furnishing brand and its warnings

Investor.com Zhang Jincheng

In March 2026, Meco Home announced that 488 million shares held by its controlling shareholder, Meco Investment Group, were fully frozen, accounting for 33.99% of the company’s total share capital, due to a debt restructuring compensation dispute with Jiangsu Asset Management involving 117 million yuan.

On the day of the announcement, in the A-share market trading screen, Meco Home’s stock price plummeted with a nearly vertical bearish candlestick, marking the most striking note in this years-long downward trend.

The brutal data from the capital market directly reflects the company’s fate. Since reaching a peak of 10.2 yuan in 2021, the stock price has steadily declined, hovering around 2.6 yuan in March 2026, a cumulative drop of over 75% in four years, with a market value evaporating by over 10 billion yuan from its high.

Financially, the situation is even more dire, with consecutive losses from 2022 to 2024, losing 289 million yuan, 463 million yuan, and 864 million yuan respectively; the 2025 earnings forecast shows an expected full-year loss of 1.2 to 1.8 billion yuan, bringing the four-year cumulative loss close to 3 billion yuan. Once a high-end home furnishing blue-chip, it has fallen into an unprecedented liquidity and operational crisis amid cyclical downturns and mismatched business models.

Artistic Entrepreneurship and Brand Beginnings: From OEM exports to high-end retail breakthroughs

Meco Home’s origins are rooted in strong artistic and foreign trade DNA. Rewinding to the 1990s, founder Feng Dongming, with a background in oil painting, started at the Decorative Arts Research Institute. At that time, Urumqi was filled with pinewood logs from across Xinjiang, where workers cut, sanded, and painted these natural woods, eventually assembling simple pine furniture for export to Europe and America. This early practice of “wood + artistic sense” helped Meco quickly grow into a core OEM manufacturer of pine furniture in Asia, opening international markets through export OEM and earning the nickname “Pine King.”

In 2000, Meco was listed on the Shanghai Stock Exchange, becoming one of the earliest publicly traded home furnishing companies in China. During the listing ceremony, Feng stood under the spotlight, with posters of Meco products behind him, symbolizing the company’s initial leap from manufacturing to capital markets. But the true transformation began in 2002.

That year, the Meco Meijia brand was officially launched. The company moved beyond pure OEM, partnering with American Ethan Allen to introduce a scene-based retail model previously unheard of in China. No longer cold shelves and single products, but a 1,000-square-meter real scene showroom that recreated American country living rooms, neoclassical dining rooms, and modern minimalist studies.

Young designers in uniform guided customers through simulated home scenes, pointing at sofas, dining tables, lamps, and describing their ideal home. This “experiential home setup” completely overturned traditional domestic furniture logic, quickly establishing Meco Meijia as a unique brand among high-end consumers.

The glory of the real estate golden era: nationwide layout and high-end branding

2010-2020 was Meco Home’s golden decade, also reflecting China’s real estate boom. During this period, new urban developments sprouted like mushrooms, with surging demand for upgraded homes, large apartments, and villas. Residents’ home needs shifted from “just livable” to “beautiful and tasteful.”

Meco Meijia precisely seized this opportunity. In major cities across the country, experience stores emerged rapidly in prime commercial districts. In the morning, sunlight streamed through large floor-to-ceiling windows into meticulously decorated real scene model rooms, where the textures of wooden furniture appeared warm and high-end under the light; in the evening, warm yellow lighting and delicate soft furnishings created an inviting atmosphere, attracting families with new house keys to inquire.

These stores typically covered several thousand square meters, with high rent but equally impressive space efficiency and customer spend per visit. At that time, Meco Meijia was a “standard” choice for high-end home decoration. A store manager who worked in a first-tier city recalled that at peak times, they could serve dozens of families a day, with full-house furnishing plans often exceeding 200,000 yuan, far above industry average.

During this period, Meco’s revenue steadily grew to around 5 billion yuan, with net profit peaking over 460 million yuan, and store count surpassing 120, covering more than 40 key cities. Through overseas acquisitions to expand high-end product lines, advancing smart manufacturing to improve delivery efficiency, and forming a “domestic retail + international brand + smart manufacturing” synergy, it became a rare high-end finished furniture stock in A-shares. Its success relied on precisely capturing the demand dividend of the real estate cycle, establishing a brand moat through high-end direct-operated stores, and delivering premium value via scene-based experiences and design services.

Cycle crushing and model failure: the backlash of heavy assets in a declining real estate market

2021 marked a turning point. The real estate market entered a deep adjustment, with new home delivery volumes declining continuously, and renovation demand for existing homes gradually becoming mainstream. Meco’s highly tied-in new home and luxury renovation needs were hit hardest.

Once bustling experience stores began to see a significant drop in foot traffic. Even on weekends, showrooms appeared quiet, with only a few scattered customers browsing. The sales cycle extended from an average of 1-2 months to 3-4 months or longer.

More critically, this long-standing heavy asset direct-operated store model turned from a competitive advantage into a fatal burden during the industry downturn. Over 120 stores nationwide faced enormous fixed costs—rent, property fees, depreciation, staff salaries—that could not be reduced proportionally with declining sales, continuously eroding profits.

Meanwhile, the company’s slow response to renovation of existing homes and online channels, along with product styles increasingly stuck in American classical, made it difficult to keep up with younger consumers’ preferences for modern minimalist and light luxury styles. Competition in the high-end segment intensified, with industry leaders and emerging brands vying for market share, gradually eroding Meco’s position.

In an attempt to ease the pressure, Meco explored cross-industry transformation, asset disposals, and debt restructuring, but these efforts failed to reverse the decline. The recent full freeze of its controlling shareholder’s equity is a concentrated reflection of the ongoing liquidity crisis: less than 120 million yuan in cash on hand, nearly 1.9 billion yuan in short-term interest-bearing debt, 172 bank accounts frozen, core factories in Tianjin shut down, production lines halted, and the once busy workshops now only with cold machinery and piled-up inventory, with operations and credit systems under severe stress.

Meco’s predicament fundamentally stems from a high-end finished furniture heavy-asset model that is mismatched with new consumer trends, cycles, and channels. As real estate dividends fade, consumer preferences become more rational, and online and lightweight channels rise, over-reliance on large stores, high premiums, and slow turnover has become unsustainable.

From a high-end benchmark to debt-laden collapse, Meco’s rise and fall is a microcosm of China’s home furnishing industry’s cyclical changes. Its story proves that no matter how strong the brand premium, it cannot withstand the tide of industry cycles; no matter how successful the business model, it must adapt to changing demand and cost structures. For the entire home furnishing industry, Meco’s lesson is clear and heavy—diversify away from real estate dependence, focus on the stock market, balance experience and efficiency, and continuously iterate products and channels to navigate long-term cycles.