Sichuan Changhong disclosed its preliminary results for the first half of 2025 as Liu Jiang completed his second year as Chairman of Changhong Holding Group. Net profit attributable to shareholders is projected between 439 million yuan and 571 million yuan, soaring 56.53% to 103.59% year-over-year. Stripping away non-recurring gains, however, reveals a stark contrast: profits plummet to 138-182 million yuan, marking a 2.17% to 25.82% decline. This signals the company's first drop in recurring net profit since 2021.
Despite generating over 100 billion yuan in annual revenue, Sichuan Changhong consistently underperforms competitors like Hisense and Skyworth in profitability. Revenue growth remains sluggish while net profit expansion decelerates annually, hinting at impending negative territory. Compounding these challenges, Xiaomi's smart appliance factory in Wuhan is slated for full-scale production by November 2025, threatening the revenue stream Changhong derives from manufacturing Xiaomi air conditioners.
The apparent profit surge stems entirely from non-recurring gains—primarily fair-value increases from Sichuan Huafeng Technology. Without this lifeline, shrinking margins in real estate and overseas appliance operations dragged down core profitability. In 2024, real estate revenue plunged 33.87%, while overseas business gross margins contracted by 3.86 percentage points. Both segments have become persistent drags on growth.
Historical data underscores a worrying trajectory. Between 2021 and 2024, net profit growth rates collapsed from 527.35% to 2.30%. Similarly, recurring net profit expansion nosedived from 500.94% to 6.53%. Profitability metrics deteriorated across the board last year: gross margins slipped from 11.18% to 10.02%, while net margins faded from 1.85% to 1.74%. The appliances division—contributing 43.93% of total revenue—achieved 15.29% growth but sacrificed 2.05 percentage points in gross margin amid 18.06% higher costs. Margins eroded sharply across core products including TVs, air conditioners, refrigerators, and washing machines.
Liu Jiang’s two-year tenure has yielded mixed results. While revenue recovered, profit growth and margins deteriorated significantly versus rivals. Industry voices express concern over Changhong’s strategic pivot toward low-margin contract manufacturing following past missteps in TV technology. "This shift trapped them in a cycle of thin profits despite revenue scale," noted one analyst, "undermining premium market competitiveness."
The Xiaomi partnership now poses acute risks. Since 2017, Changhong’s subsidiary has served as primary contract manufacturer for Xiaomi air conditioners, producing over 200,000 units by mid-2023. Yet Xiaomi’s Wuhan facility—targeting 3 million annual units by 2026—could eliminate nearly half of Changhong’s orders, based on 2024’s 680,000-unit output. While Changhong insists current cooperation remains "stable," the automation-driven factory’s November launch threatens long-term order volumes and pricing power.
After a decade of restructuring following its TV sector decline, Changhong’s 2024 revenue surpassed 100 billion yuan—but recurring net profit of just 418.6 million yuan laid bare its margin crisis. As appliance industry competition intensifies, reversing profit erosion and boosting sustainable earnings will test Liu Jiang’s leadership like never before.