A recent incident involving a sudden closure by an authorized dealer of Sofeiya's subsidiary brand, Schmidt Cabinets, in Shenzhen has left hundreds of homeowners facing financial losses, with estimated damages reaching tens of millions of yuan. This event highlights significant risks in corporate social responsibility and governance within the home furnishings industry, which relies heavily on franchise models for rapid expansion. Despite Sofeiya's ESG reports emphasizing "customer-first" values and its vision to become a "trusted, globally leading home enterprise," this crisis reveals a gap between its ESG commitments and actual practices.
The situation escalated following collective consumer complaints on social media and the Black Cat Complaints platform. In late January, the Schmidt Cabinets store in Nanshan Liqiao Financial Center abruptly shut down. Customers who had ordered cabinets and wardrobes discovered that sales staff were unreachable, orders remained undelivered, and refunds were unavailable. Multiple homeowners reported choosing this store based on Sofeiya's official endorsements—some were directed via WeChat advertisements, others through recommendations after calling Sofeiya's official hotline, and some even located the store through Sofeiya's member mini-program. To verify authenticity, some customers confirmed the store's authorized status on Sofeiya's website and were assured by sales personnel that after-sales services would be handled by the brand.
However, this official validation ultimately proved misplaced. Alarmingly, some orders paid for in late 2023 were never entered into Sofeiya's official system before the store's closure. Further complications arose from inconsistencies between the contracting party, "Shenzhen Schmidt Decoration Co., Ltd.," and the payment recipient, "Anjia Tianxia (Shenzhen) Decoration Co., Ltd.," which has no equity ties to the former. This discrepancy has hindered consumers' efforts to seek redress.
On February 5, Schmidt Cabinets Co., Ltd. issued a statement acknowledging the dealer's misconduct, citing capital chain rupture and unauthorized operations beyond its franchise scope, including hard decoration services and sales of non-Schmidt products. Notably, the statement described Schmidt as "a direct victim of these violations, alongside consumers," a characterization that sparked strong dissatisfaction among affected homeowners. Many argued that Sofeiya, as the brand authorizer, should bear responsibility for inadequate oversight rather than positioning itself as a co-victim.
By February 7, Sofeiya responded that it had initiated delivery for verifiable orders within its system, with over ten households receiving cabinet installations. For unregistered orders, the company advised consumers to file police reports and offered legal assistance to recover losses. On February 13, Sofeiya informed investors via an interactive platform that a dedicated task force was addressing order verification and fulfillment in Shenzhen, acknowledging broader industry challenges in end-point supervision.
According to Refinitiv's ESG evaluation dated January 30, Sofeiya received a C- rating, ranking last among four home furnishing companies. Its scores were 37.3 (C) for environmental factors, 27.9 (C-) for social criteria, and 27.9 (C-) for governance—all bottom-tier placements within the sector.
While Sofeiya has consistently published ESG reports outlining its supply chain management, customer service, and governance frameworks, this dealer collapse exposes a disconnect between documented policies and operational execution. The core issue appears not to be a lack of written protocols but insufficient integration of ESG management into high-risk franchise operations. When systems fail to penetrate endpoints and prevent critical risks, ESG ratings inevitably suffer.
Sofeiya's recent commitments include nationwide evaluations of partners' qualifications and operational capabilities, implementation of electronic contract systems for full order traceability, and dedicated consumer hotlines. The effectiveness of these measures will be crucial for rebuilding trust. Ultimately, the company must assume brand accountability, moving beyond a "victim" mindset to address customer compensation transparently and efficiently.
From an industry perspective, Sofeiya's predicament underscores widespread governance challenges in franchise models post-rapid expansion. Leading firms should pioneer stricter dealer certification standards, shared compliance databases, and digital traceability systems to enhance supply chain transparency. Competitiveness in the home furnishings sector must evolve beyond store count and revenue to encompass responsible value chain management. Only by embedding ESG principles into every operational segment can similar crises be prevented.