With the real estate and home furnishing markets showing increasingly weak consumption, board material suppliers feeling the chill are beginning to grow anxious. In July 2026, QNZS, a mid-to-high-end board supplier, signed a project investment agreement with the Chengdu Qingbaijiang District government to establish its Southwest Regional Headquarters and Intelligent Manufacturing Base, with a planned total investment of approximately 1 billion yuan. The Hangzhou-headquartered company has chosen to set down roots in Chengdu, aiming to expand beyond the East China market and strengthen its manufacturing presence in the southwest, while also using this platform to target emerging markets in Southeast Asia and the Middle East for further overseas expansion.
However, the financial pressure from this 1 billion yuan investment is evident. As of the end of 2025, QNZS held 542 million yuan in monetary funds and 60.34 million yuan in trading financial assets, totalling just over 602 million yuan. As early as April 2026, QNZS proposed applying for a comprehensive credit line of no more than 2 billion yuan from banks for the company and its wholly-owned subsidiaries. Just one month later, on May 28, it announced the signing of a tutoring agreement with Galaxy Securities for a Beijing Stock Exchange IPO. On one hand, performance urgently needs new growth curves for support; on the other, expansion faces capital chain pressure. How will QNZS break through this dilemma?
Planning a 1 Billion Yuan Plant Investment, Where Will the Money Come From?
On July 13, Lu Tonghua, the actual controller of QNZS, convened a meeting at the company's Hangzhou headquarters. Subsequently, more details from this meeting emerged. Specifically, the company plans to invest in the "Southwest Regional Headquarters and Southwest Intelligent Manufacturing Base" project in Chengdu's Qingbaijiang District, integrating R&D, production, sales, urban distribution, and export functions, with a planned total investment of approximately 1 billion yuan. Yet, with five intelligent factories already in place, why is QNZS suddenly investing 1 billion yuan in new plants? This stems from QNZS's channel layout strategy.
QNZS started its journey in Hangzhou and has long treated East China as its primary domestic market. In the first 10 months of 2023, East China contributed nearly 72% of its main business revenue. In overseas markets, QNZS has struggled to gain traction. In 2025, revenue from overseas regions reached 10.77 million yuan, accounting for roughly 0.2% of total revenue of 4.912 billion yuan. Dragged down by weak downstream real estate and home furnishing consumption, QNZS's performance began to soften from 2024, with revenue and profits declining alternately. An imbalanced channel layout has further reduced the company's ability to withstand industry cyclical fluctuations.
As for why QNZS cannot expand beyond East China and its overseas efforts have yielded poor results, is the channel imbalance a strategic error or a reflection of limited brand influence? QNZS responded to enquiries only by stating it would not accept interviews. Regarding this move into Chengdu, the Qingbaijiang District government stated that it represents a key step for QNZS to improve its national production capacity and channel layout, filling the gap in its southwest manufacturing base. Leveraging the openness advantages of the Chengdu International Railway Port and international freight trains, this project will also target emerging markets such as Southeast Asia and the Middle East in the future.
QNZS wants to kill two birds with one stone, but its capital chain struggles to support such expansion ambitions. As of the end of 2025, the company had 542 million yuan in monetary funds and 60.34 million yuan in trading financial assets, totalling 602 million yuan, which can fully cover its 304 million yuan in short-term borrowings. However, this is built on the back of a large accumulation of supplier payments. During the same period, the company had 819 million yuan in accounts payable and 214 million yuan in notes payable, together exceeding 1 billion yuan. In fact, QNZS's thirst for capital has long been apparent. On April 28, 2026, QNZS proposed applying for a comprehensive credit line of no more than 2 billion yuan from banks for the company and its wholly-owned subsidiaries. One month later, on May 28, QNZS announced it had signed a listing tutoring agreement with Galaxy Securities, planning to prepare listing application documents from November to December, targeting a Beijing Stock Exchange IPO.
This is not QNZS's first attempt to enter the capital markets. As early as March 2023, the company submitted an IPO application to the Shenzhen Stock Exchange; by the end of June that year, it voluntarily withdrew the application. After withdrawing, QNZS triggered a valuation adjustment mechanism agreement related to the listing timeline. In September 2023, Yongrui Investment demanded a share buyback, and Tonghua Investment, wholly owned by Lu Tonghua and his son Lu Shanbin, repurchased the shares at an annual interest rate of 10%, at a cost of approximately 38.12 million yuan, along with a previously paid performance compensation of about 6.79 million yuan. In March 2025, investors Simi Investment and Fuhuan Investment each transferred their 1.97% and 0.66% stakes in QNZS to Tonghua Investment at a price of 6.85 yuan per share, completely exiting their positions. Amid the turbulent capital seas, the QNZS vessel has not sailed smoothly.
Board Products Not Selling Well? Failing to Break the 5 Billion Yuan Barrier
Lu Tonghua's story began in a small village by Qiandao Lake in Chun'an County, Zhejiang. Born in the 1960s, Lu had a difficult childhood, running a small retail shop, contracting orange groves, selling popsicles, and working as a construction contractor. Later, through introductions, he became an inspector at a township timber checkpoint, gaining deep insight into wood products. From 1990, Lu began trading timber and plywood in Hangzhou, later venturing into the building materials and home furnishing industry. In 1999, he founded Huahai Wood Industry, the predecessor of QNZS, and the following year the "QNZS" brand was officially born, breaking through with its environmentally friendly features and charting a path toward mid-to-high-end board products.
In 2023, QNZS became the official board supplier for the 19th Asian Games in Hangzhou, cementing its position as an industry leader. However, the building materials business is closely tied to the fortunes of downstream real estate and home furnishing industries, making it difficult to reverse broader industry trends single-handedly. For example, when developers collectively defaulted, the impact quickly transmitted upstream, and QNZS was not spared. In 2021, dragged down by bad debts from developers like Evergrande, Yashe Construction's net profit attributable to shareholders suffered losses of nearly 900 million yuan. At the time, Yashe Construction and its affiliates were QNZS's largest customer. In 2022, QNZS provisioned for bad debts on receivables from Yashe Construction and its affiliates at a rate of 50%, amounting to 7.56 million yuan. In the first 10 months of 2023, it again provisioned 50% for Yashe Construction and its affiliates, while also provisioning 100% and 50% respectively for receivables from Dexin China's subsidiary Binhai Real Estate, which had been deregistered, and Hangzhou Yiguang Real Estate, a joint venture between Guangyu Group and Sunshine City.
It was during this critical period of concentrated developer defaults that QNZS voluntarily withdrew its Shenzhen Stock Exchange IPO application, triggering the valuation adjustment mechanism. However, after weathering the toughest times, QNZS's performance began to soften from 2024. In 2024, the company's net profit attributable to shareholders was 94.72 million yuan, a sharp year-on-year decline of 37.16%, while revenue rose to 4.978 billion yuan, just shy of the 5 billion yuan mark. But by 2025, revenue declined 1.34% year-on-year to 4.912 billion yuan, still failing to cross the 5 billion yuan threshold. Among this, revenue from core businesses such as decorative materials and custom home furnishing fell 5.75% year-on-year, dragging down overall revenue. So, what caused the decline in sales of decorative materials and custom home furnishing products? How will sales be boosted amid the weak real estate and home furnishing market? Will the company fall into a revenue contraction trap?
It is worth noting that compared to Tubao, also based in Zhejiang and deeply engaged in the board business, QNZS has been left far behind. Tubao, which listed on the Shenzhen Stock Exchange as early as 2005, saw revenue decline in 2025 but still reached 8.883 billion yuan, nearly double QNZS's scale; its net profit attributable to shareholders of 702 million yuan is 3.5 times that of QNZS's 198 million yuan. In fact, QNZS has been extending its business boundaries, attempting to build a second growth curve. The company has entered custom home furnishing and prefabricated wooden structure construction, creating brands such as Bafflon for high-end custom home furnishing, Shounake for whole-home custom storage, and Zhimuyushu for prefabricated wooden structures. However, competition in the custom home furnishing industry has long been intense, with most companies facing challenges such as shrinking demand and declining foot traffic, putting widespread pressure on revenue. In this environment, QNZS must directly compete with giants like Oppein, Sofa, and Sunpina, and the difficulty is clear to see.
Pressing Both Production and Sales, the Lu Family Reaps Rewards
QNZS's board products have long been known for their environmental and green credentials, synonymous with mid-to-high-end quality. But beneath the brand veneer, many products are merely white-label items. QNZS operates a production model combining in-house manufacturing with OEM outsourcing. Among these, woodworking boards and multilayer boards, which have lower levels of automation, are primarily OEM-produced, with finished boards purchased from OEM suppliers and ultimately sold under the company's brand. In the first 10 months of 2023, revenue from outsourced products reached 2.016 billion yuan, accounting for 57.66% of sales. This reveals the extent of QNZS's reliance on OEM manufacturing. This outsourcing model expands the management radius, making quality control difficult. On social platforms, consumers have not been shy about complaining about issues with QNZS products, citing "strong odours" and "warped or cracked door panels".
Compared to production, QNZS has poured significant resources into brand operations. In 2025, the company's selling expenses reached 288 million yuan, more than six times its R&D expenses of 45.27 million yuan. Among these, advertising and promotional expenses amounted to 90.28 million yuan. On the sales front, the company has aggressively expanded its dealer network, with over 1,000 dealers by the end of October 2023. The two parties operate on a buyout basis; except for goods shipped incorrectly due to company error or quality issues confirmed by the company, all sold products are non-returnable and non-exchangeable. Through this approach, QNZS shifts inventory pressure onto its dealers. A more sophisticated design lies within its "brand comprehensive services" business. In its operations, QNZS charges dealers technical brand service fees, OEM manufacturers production licence fees, and decorative paper suppliers brand licensing fees, collectively constituting brand comprehensive service fees. In 2025, QNZS's brand comprehensive service revenue reached 634 million yuan, up 46.06% year-on-year, with a gross margin as high as 95.78%, more than ten times that of its core business gross margin of 9.52% - a truly "one investment, a thousand returns" business model.
Upstream suppliers bear the manufacturing and labour costs, while downstream dealers shoulder inventory pressure and market fluctuation risks, allowing QNZS, as the middleman, to sit back and reap brand dividends. A significant portion of these accumulated profits flows into the pockets of Lu Tonghua and his son. In 2024, QNZS paid cash dividends of 30.39 million yuan; in 2025, it distributed another 22.79 million yuan, totalling 53.18 million yuan over two years. During this period, Lu Tonghua and Lu Shanbin maintained a shareholding ratio of around 90%, making them the biggest beneficiaries. Moreover, related-party transactions between QNZS and the Lu family are also on the rise. On April 28, QNZS announced that its expected total daily related-party transactions for 2026 would reach 45.9 million yuan, a substantial increase of 284% from the 11.95 million yuan actually incurred in 2025. These related-party transactions involve other enterprises controlled by Lu Tonghua, as well as multiple companies controlled by Lu Tonghua's wife Xu Junlan, her relative Wang Xiahang, and Lu Tonghua's brother Lu Zhonghua.
Amid the substantial dividends and related-party transactions, is there an issue of benefit transfer to the Lu family? During the industry's upward cycle, QNZS could achieve rapid expansion through its OEM model and capitalise on brand premiums. But now, with the home furnishing and building materials market weakening and competition at unprecedented levels, the era of "lying flat and winning" is over. At this critical juncture of industry transformation, whether Lu Tonghua and his son can lead QNZS forward will be the true test of their capabilities.
*Note: The cover image in this article is sourced from QNZS's official website.