China's largest building materials supermarket is on the verge of bankruptcy

The continuous real estate regulation has made the “cold winter” of home building materials companies particularly protracted. Home Depot defeated China and Bianjue suffered losses for six years, while the Oriental Home Building Materials Supermarket (the “Oriental Homeland”), once the largest building materials supermarket in China, was on the verge of bankruptcy. At the beginning of 2013, the only five stores in the Oriental Homestead Beijing were closed.

Orient Group’s second-largest shareholder, Oriental Group’s stakeholders, said that the root cause of the dilemma that caused Oriental Homeland to be in business is that its controlling shareholder, Longbai Hongyi Capital Group (“Longbai”), has not fulfilled its obligation to increase capital as promised. The Oriental Group also stated that since January 2008, the actual operations of Oriental Homeland have been controlled by Realtek Capital and Longbai.

In response to media interviews, General Manager Jiang Yuemin stated that the entire investment transaction has not yet been completed. The main reason is that the conditions for the capital increase promised by the Oriental Group have not yet been reached, and Longbai has not participated in the operation of the Oriental Home.

According to the Oriental Group, after the sale of the equity in 2008, the loss on the Oriental home has accumulated to 500 million yuan. In the first half of 2012, Oriental Homestead’s operating income was approximately RMB 190 million, and its operating profit was RMB 125 million.

“Not only is the issue of high-level replacement frequent, but the concept and mode of expansion of Orient Homeland are always changing.” People in the industry believe that, “Like the lease model of other stores, Oriental Home has used self-built stores as the mainstay, not only for cost, but also for large investment. The profit cycle was relatively long, and later it was adjusted to build both self-built and leased stores. However, the expansion of the store after the adjustment did not show results. In 2005, Dongfang Homeland Building Materials Supermarket had about 25 stores nationwide. To date, there are less than 20 Dongfang Home Garden stores (not closed).