Financial Services Association, May 16 (Reporter Ren Chaoyu) On the 10th anniversary of its listing, Dongyi Risheng (002713.SZ), the “first home improvement company” that once had unlimited popularity, faced major trouble. Recently, on various social platforms such as Xiaohongshu and Douyin, news about Dongyi Risheng's many branches “running away” was rampant. A Financial Services Association reporter conducted interviews with consumers, company employees, etc. about this, confirming that the Wuxi branch has basically lost its ability to perform contracts. Employees say that no one has gone to work, and that there are wage arrears, etc.

In addition to the Wuxi branch, there are also rumors of “running away from the road” at the Wuhan and Zhengzhou branches, and there is plenty of information on social media about rights protection. However, many other branches of Dongyi Risheng are still live streaming operations as usual, and the Changsha branch also issued a statement on orderly operation.

No one has gone to work in the Wuxi branch and has basically lost the ability to perform contracts

Ms. Liu, a consumer from Wuxi, told the Financial Federation reporter that on January 27, 2024, she signed a home improvement contract with Dongyi Risheng's Wuxi branch. The total contract amount was more than 250,000 yuan. She has already paid more than 150,000 yuan, or about 60%. “Construction officially began on March 7. After the designer brought the floor tiles to look at, they never entered the site; construction should have been only 30,000 to 40,000 yuan.”

Ms. Liu said, “At the time, I heard rumors that Wuxi (Dongyi Risheng) was going to withdraw its investment. On May 1, I asked the designer if they could still enter the market. He said it wasn't that exaggerated; he was waiting for funding from the headquarters. When we go to the company on May 7, one of the managers said that if the company can recover, they will refund our money. If it's not good, then you think you're unlucky.”

In the WeChat Rights Protection Group - Dongyi Risheng (Wuxi) Owners' Exchange Group, the reporter saw that the group had a total of more than 90 people. As of the early morning of May 16, nearly 40 people had filled in the statistics. Most of them have paid more than 300,000 yuan.

(Source: Dongyi Risheng (Wuxi) Owners Exchange Group)

According to Ms. Liu, on May 15, consumers in the group of owners went to Dongyi Risheng's Wuxi branch to defend their rights. At first, they were unable to enter Dongyi Risheng's Wuxi branch office. They only entered after calling the police, but they did not meet the general manager of the branch, and the main leaders of Dongyi Risheng's Wuxi branch never clearly responded to the incident. Ms. Liu tried to contact Dongyi Risheng Company on the 400 phone number, but she was unable to make a call at the time. Ms. Liu also tried to contact 12345 in Beijing, where Dongyi Risheng's headquarters is located. The relevant department reported that they had contacted the executives at Dongyi Risheng's headquarters, but they had not met anyone, and there was no other response to be given.

Consumers are not the only ones affected by Dongyi Risheng's “run away”. According to Ms. Liu, many suppliers were seen defending their rights at Dongyi Risheng Wuxi Branch on May 14. Furthermore, many employees at Dongyi Risheng's Wuxi branch were forced to leave their jobs on May 16 and are looking for ways to defend their rights due to wage arrears.

The Financial Services Association reporter contacted Manager Wang, who claims to be the person in charge of Dongyi Risheng Jiangyin. According to his report, the company has defaulted on “labor costs” for many employees, and he has personally filed a lawsuit. He estimates that each employee who is in arrears has an average of 100,000 unpaid wages and expenses.

Manager Wang revealed that the so-called “labor costs” do not refer to monthly wages paid on a monthly basis, but rather expenses settled on a project basis.

Regarding the operating model of Dongyi Risheng's Wuxi branch, the staff that connected with Ms. Liu once told her that the branch collects money from customers to the head office, and the head office issues supply orders to suppliers with whom it has cooperated for a long time. This probably means that the actual financial power held by the Wuxi branch is limited.

This was also confirmed by Manager Wang. He also said that employees' wages are also funded by the head office to the branch and then paid.

Ms. Liu said that the work stoppage was not due to Dong Yi Risheng's initiative; it was due to the supplier's failure to receive payment and cessation of supply. But no matter what, now Dongyi Risheng's Wuxi branch has basically lost its ability to perform the contract. Manager Wang said that no one is working at Dongyi Risheng's Wuxi branch anymore.

Both the consumer represented by Ms. Liu and the employee represented by Manager Wang strongly demanded that Dong Yi Risheng give a clear statement, but as of the early morning of May 16, none of them had received a response.

Unfortunately, this isn't just happening in Wuxi. On social media such as Xiaohongshu and Douyin, Dongyi Risheng's Wuhan branch and Zhengzhou branch all spread “run away” news.

A media reporter visited the “Dongyi Risheng Flagship Store” located on Heping Avenue in Wuhan City on May 15 and found that the building was empty. The store posted a notice saying that due to rent expiration, it had moved to a new office address in Hankou on May 14. At the new address, several owners and material suppliers are here to inquire about the stagnation of renovation and payment. The company's staff replied that the “run away” rumor was untrue, and that they were receiving owners and material vendors to deal with related issues. However, no response has been received as to what solutions the company will come up with.

Meanwhile, in Xiaohongshu, an account with the name of Zhengzhou Dongyi Risheng Project Manager published a “Letter to the Customer”, saying that due to management issues at Dongyi Risheng Zhengzhou Branch, the majority of owners stopped work at construction sites and could not be delivered normally for the time being.

(Source: Xiaohongshu)

Many branches are still in operation, Dongyi Risheng recorded losses for two years

A Financial Services Association reporter noticed that in fact, several branches of Dongyi Risheng are still in continuous operation. On the evening of May 15, during a normal live broadcast on several Douyin Dongyi Risheng accounts, netizens always inquired about his “run away” in the Beijing Dongyi Risheng live broadcast room, but there was no response. The background board of the live broadcast has the words “Beijing branch” and “only for the Beijing region”.

On the other hand, Dongyi Risheng Changsha Branch issued a statement on multiple platforms saying, “Recently, various false rumors about Dongyi Risheng's other branches have nothing to do with the Changsha branch. Currently, the Changsha branch of Dongyi Risheng Home Decoration Group Co., Ltd. is operating normally and in an orderly manner.”

The reporter called Dongyi Risheng's Changsha branch. The staff who answered the call said, “We now have basically no connection with the group; we operate independently.” “Under normal circumstances, there should be a press conference after a while. Our Changsha branch posted it ourselves.”

(Source: TikTok)

In fact, Dongyi Risheng's business has not been good in recent years. After going public in 2014, the company achieved double-digit revenue growth until 2018. However, in 2019, 2020, and 2022, revenue growth was negative. In terms of profit, there have been three losses in the past five years, including losses of 751 million yuan in 2022 and 208 million yuan in 2023.

After 2021, the company's balance ratio remained high at over 90%. In the first quarter of 2024, the balance ratio soared to 97.13%. Both the current ratio and the liquidity ratio are less than 1, and the solvency is weak.

It is worth noting that on social platforms, many home improvement designers who have worked for Dongyi Risheng spoke out that Dongyi Risheng has achieved industry leadership and is very proud to work for the company. Currently, the home improvement industry is in serious trouble, and the boom is not good. I hope the old owners can get through the difficult times.

Regarding the above situation of Dongyi Risheng, the Financial Services Association reporter contacted the relevant person in charge of Dongyi Risheng several times on the evening of May 15, but was unable to complete the interview due to his schedule. The reporter has sent an interview letter to the company, but as of press release, no response has been received.

(In the article, Ms. Liu and Manager Wang are all pseudonyms)