Regarding the outlook for the second half of the year, he stated that the building materials and home furnishings industry will enter the renovation season in the second half of the year, and performance will improve somewhat, but expectations are not high. The industry will continue to see the strong getting stronger and the weak getting weaker; it will no longer be a situation where one good thing makes everything good. Enterprise transformation and upgrading are imperative.

　　The Industry Faces Four Major Challenges

　　The National Building Materials and Home Furnishings Prosperity Index (BHI) for June, jointly released by the Circulation Industry Development Department of the Ministry of Commerce and the China Building Materials Circulation Association, was 108.10, down 1.01 points month-on-month and down 11.51 points year-on-year.

　　Industry experts said that as the concentrated release of rigid housing demand has nearly come to an end, the BHI in June declined slightly from the previous month. Although real estate sales were still growing in June, the BHI did not rise accordingly. On the one hand, various regions entered the rainy season, which affected home renovation; on the other hand, it cannot be ruled out that some real estate investment demand entered the market, thereby increasing real estate sales volume and pushing up housing prices.

　　With the development of China's national economy and the continuous improvement of people's living standards, people's requirements for quality of life are also increasing. The building materials and home furnishings industry has attracted unprecedented and growing attention from society. With its unique dual attributes—namely, the attributes of means of production and means of living—the building materials and home furnishings industry is playing an increasingly important role in the national economy.

　　Wang Xuanqing stated that the current situation facing the building materials and home furnishings industry is relatively severe. First, the continuous deepening and strengthening of national real estate regulation policies has left the potential group of "rigid demand" for real estate still waiting and watching. The actual purchasing power for building materials and home furnishings is relatively declining, and demand cannot sustain sales growth.

　　Second, there is an oversupply of building materials and home furnishings stores, and vicious competition has emerged. Due to ten years of rapid development and expansion, against the backdrop of real estate regulation, some building materials and home furnishings stores that merely collect rent on the spot can no longer sustain themselves. In some cities, the area of building materials and home furnishings stores in square meters has reached half or more of the population. In other words, every square meter of building materials and home furnishings store space in the city requires 1-2 people to maintain normal operations, which is unsustainable.

　　In addition, the existing store format can no longer meet the needs of urbanization construction, affordable housing construction, and fully furnished housing construction. Our current stores are mainly lease-based, with "one-stop shopping" as the selling point, and the service targets are mainly individual renovations and "guerrilla" renovation teams. Under the new situation, newly built houses are mostly "finely decorated" or "fully decorated." Individual "one-stop shopping" has gradually decreased and will slowly be replaced by "supplementary shopping." "Finely decorated" or "fully decorated" housing is mostly procured through bidding or supporting supply methods.

　　In terms of sales channels, the rise of e-commerce is unstoppable. With the continuous upgrading of electronic network technology and the continuous improvement of modern logistics and distribution, it will have an even greater impact on existing building materials and home furnishings stores. In addition, various "group buying" models and ever-changing off-site transactions have put considerable pressure on the current lease-based stores.

　　Upgrading and Transformation Are Imperative

　　Regarding the industry trend in the second half of the year, Wang Xuanqing told the China Securities Journal reporter that enterprises are currently deeply tapping the potential of real estate renovation. They are gradually abandoning the previous land grab battles, blind expansion by staking out territory, and vicious competition practices, and are conducting research on business formats needed to adapt to new urbanization construction, developing new customers with sustainable purchasing power, in order to smoothly pass through the painful stage that transformation and upgrading inevitably entail. Therefore, the overall situation of the building materials and home furnishings industry this year is consistent with the macroeconomic situation, entering a relatively stable period with relatively low growth rates.

　　Wang Xuanqing believes that the industry will continue to see the strong getting stronger and the weak getting weaker; it will no longer be a situation where one good thing makes everything good. Good building materials and home furnishings stores will have a "money-attracting effect." Customers and merchants will abandon poor stores and choose better ones. As real estate "rigid demand" continues to be released, the situation will be that the good get better and the poor get worse. Therefore, enterprise transformation and upgrading are imperative at present.

　　As for how to upgrade and transform, Wang Xuanqing stated that first, innovation is needed; second, services must be improved. The first direction of innovation is to develop e-commerce; the second is to adjust the supplier cooperation model and the pattern of profit distribution. In terms of improving services, efforts should be increased to serve merchants and customers, change the practice of merely collecting rent on the spot, and proactively launch various forms of promotions to attract more customers.