The Demand for Decoration Is Stable, And the Industry Concentration Needs to Be Improved

With the advancement of urbanization and the improvement of consumption concepts, the public's attitude towards the long-term home environment has changed, which has promoted the rapid development of China's building decoration industry. The construction industry is mainly composed of three major sectors: civil engineering and construction, line, pipeline and equipment installation, and survey and design. Different from the integration of building decoration in Europe and America, the domestic construction industry and the decoration industry are independent of each other. The decoration industry is downstream of the construction industry and plays a role in beautifying the space and optimizing the use of functions.

The Scale of the Domestic Decoration Industry Is Increasing Year by Year

the decoration industry is showing an upward trend as a whole. Data show that the total output value of China's building decoration industry has increased from 3.160 billion yuan in 2014 to 4.490 billion yuan in 2019. In 2019, an increase of 300billion yuan year-on-year, a growth rate of 7.2%, is higher than the national GDP growth rate. The building decoration industry can be divided into the public building decoration industry and the residential decoration industry, which are the parts with the highest consumption attributes and the highest degree of commercialization in the construction industry.

The Size and Growth Rate of the Public Installation Market Are the Same as That of Home Improvement

Public building decoration is abbreviated as public decoration. Except for home decoration, all decorations belong to the category of public decoration, such as railway stations, airports, office buildings, hotels, restaurants, and retail. In the age of the industrial Internet, the key industry for the transformation and upgrading of public decoration is to use supply chain and technology as a stepping stone to improve the delivery quality, management efficiency, and profitability of decoration companies.

In 2019, the total output value of China's public building decoration and residential decoration was 2.270 billion yuan and 2.220 billion yuan, a year-on-year increase of 6.1% and 8.3% respectively. In recent years, urbanization has developed rapidly, the decoration industry has passed its peak period of growth, and both public decoration and residential decoration have entered a relatively stable stage, and the market size and scale of the two have almost the same growth rate.

Benefiting from the optimistic overall domestic development environment, China's building decoration industry continues to grow. Today, after decades of intensive cultivation and stability, China has eliminated absolute poverty and has become more confident in pursuing a better life. The demand for a higher level is increasing, especially after the epidemic, people have different feelings about the home environment. It is expected that the market scale of the building decoration industry will continue to grow.

Industry Picks Up After the Epidemic

In the short term, under the normalized epidemic prevention and control mechanism, the domestic economy continues to improve. Many industries that have been greatly affected by the epidemic will gradually pick up after the epidemic. It is expected that the demand for the construction and decoration industry is expected to be restored in 2021. On the one hand, the demand for public installations such as schools, hospitals, and hotels will accelerate; The increase in demand for decoration.

According to recent survey results, 56% of consumers want to reorganize and renovate their houses. Most consumers mainly consider factors such as changing the decoration layout, increasing storage space, and improving the ability of houses to prevent epidemics. The demand for the residential decoration is in a new growth stage. First of all, with the progress of society, economic development, and the increase of people's consumption level, the people's home concept has changed. Second, a reasonable increase in storage space is not just a trend reflected in this epidemic. From a manufacturing point of view, the popularity of customized furniture greatly reflects the needs of consumers. Finally, many consumers are worried about the epidemic prevention capabilities of existing homes. After experiencing the new crown pneumonia virus epidemic and the previous SARS virus epidemic, the infection among neighbors and aerosol infection have been paid more attention, and people have paid more and more attention to the epidemic prevention function of houses. Therefore, the items that consumers want to purchase for the upgrade of home improvement consumption may be optional, and they will become rigid after the epidemic.

Stable Demand of the Architectural Decoration Industry

In the medium and long term, the building decoration industry has consumption attributes, and consumption upgrades and stock renovations provide stable demand for the decoration industry. The demand for the decoration industry is more sustainable than civil engineering. Unlike the civil engineering and equipment installation industries, each building must be refurbished and renovated throughout its entire service life, usually with a period of 10 years. The main reason for the renovation is the change in the functional layout and style of the working environment, or the use period of the decoration materials themselves has been reduced, so there is a periodic demand for house decoration.

Regarding the renovation of old residential quarters, the renovation of residential quarters promotes the development of industries such as decoration and home appliances and provides growth momentum for the construction and decoration industry. In April last year, the State Council executive meeting determined that this year, various regions plan to renovate 39,000 old communities in cities and towns, which is double the previous year. Public data shows that from January to November 2020, 39,700 old communities in cities and towns were newly started to renovate, and the goals and tasks set out in the government report have been completed. The advancement of the renovation project will release a large amount of demand for decoration and decoration and stimulate the development of the decoration and decoration industry.

The public decoration industry relies on manual operation, and the industry structure is very scattered. There are about 100,000 companies participating in the decoration of public buildings in China. The total revenue of the top 100 companies in the industry only accounts for 11.3% of the total value of the industry, and about 90% of the market share is occupied by small and medium-sized public decoration companies. The current construction and management model of the decoration industry relies heavily on manual operation, and it is difficult to achieve scale and homogenization. Usually, most of the projects are completed by local enterprises and enterprises mainly operating in the province, which are very regional.

The home furnishing industry is affected by market consumption and industry supply. After the epidemic, people have new understandings and feelings about life, family, and the world, and lifestyles will also undergo a certain degree of change. The change on the demand side is expected to turn the previously overlooked demand into rigid demand and provide new development for the supply side.

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