Workers, customers and suppliers stage joint protests as interior design companies collapse

The sudden closure of two major interior design companies in China led to a wave of protests by laid-off workers, angry customers and suppliers last month and exposed serious flaws in the country’s highly competitive online economy.

At least 22 of the 150 incidents recorded on CLB’s Strike Map in May were directly related to the bankruptcy of the Apple Group and Yihao Jiaju (一号家居) at the end of April. In many cases, it was the customers who had lost substantial deposits who were the most vocal protesters but the demonstrations were remarkably inclusive with everybody understanding they had been the victim of an overly aggressive business model.

Much like the share bike market, which saw dozens of business failures last year, online interior design platforms grew rapidly in China with little or no regulation, creating an ultra-competitive market in which business owners sought to establish dominance by expanding as quickly as possible. This of course was a very fragile business model and it took just one crack in the capital flow chain for the whole edifice to collapse.

See below for a brief summary of some of the protests at stores owned by the Apple Group and Yihao Jiaju.

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The Apple Group

Within one week, from 28 April to 3 May, the more than 300 stores established by Apple Interior Design had all closed down. Other Apple Group brands such as N8House (泥巴公社), which had 59 shops in 26 cities,  Lemon Tree Design, ML-Villa, etc. quickly followed, closing down one by one during May and sparking more protests.

In Fuzhou, Lemon Tree Design reportedly owed customers, suppliers and employees more than 30 million yuan. In Nanchang, construction workers were owed 2.25 million yuan in back pay by N8House, and one labour contractor in Hangzhou said he and his team of construction workers were owed 400,000 yuan in wages from N8House.

Yihao Jiaju

Yihao Jiaju, which also had more than 300 stores in 69 cities across China, closed down at about the same time as Apple Interior Design. In the central city of Wuhan, it was reported that Yihao Jiaju owed its customers more than 10 million yuan, its suppliers more than 200 million yuan and the workers more than three million in wage arrears.

Employees stated that their wage arrears dated back to the end of 2017 and alleged that the closure of Yihao Jiaju was directly related to the speculative business practices of company executives. The CEO had reportedly funnelled money from Yihao Jiaju into a high-risk investment company which had ultimately failed.

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