This publicly traded company faces survival challenges due to internal troubles and external pressures.

As a leading brand in China’s mattress industry, Xilinmen has secured a position in the market through its deep focus on the sleep sector. However, its development has become increasingly difficult amid adjustments in the real estate cycle and the changing landscape of competition in the high-end smart mattress industry. Especially since 2026, the company has repeatedly exposed internal control scandals, such as illegal transfer of hundreds of millions of yuan by subsidiaries and non-operational occupation of controlling shareholders’ funds. Coupled with intensified industry competition and slow transformation efforts, Xilinmen is facing its most severe development test since listing. Under the intertwined pressures from internal issues and external challenges, this veteran home furnishing enterprise faces a survival challenge that is difficult to resolve.

The “Damocles Sword” Hanging Over Xilinmen’s Head

Internal control failures and governance loopholes have become the “Damocles Sword” hanging over Xilinmen. On March 27, 2026, Xilinmen announced that 100 million yuan of funds from its controlling subsidiary, Xitu Technology, had been illegally transferred by internal personnel. What is perplexing is that the involved Xitu Technology has only eight insured employees but manages over a billion yuan in funds, and key personnel do not hold director or senior management positions in the listed company, making effective supervision by the parent company difficult. The critical steps of fund approval and transfer lack separation of duties and delegation mechanisms. Moreover, this incident is not isolated; subsequent revelations of non-operational fund occupation by the controlling shareholder further exposed governance weaknesses. As of April 1, 2026, the funds occupied by the controlling shareholder and related parties totaled 190 million yuan, exceeding the regulatory red line of 5% of the company’s most recent audited net assets. If not repaid within one month, the company’s stock will be subject to other risk warnings. Additionally, the fund turmoil triggered regulatory responses, with the Shanghai Stock Exchange swiftly issuing a regulatory letter, and the company and its actual controller being under investigation by the China Securities Regulatory Commission for suspected information disclosure violations. The failure of internal control systems, disjointed management of parent and subsidiary companies, and irregular related-party transactions have become core internal obstacles restricting the company’s development.

Intensified Competition in Post-Real Estate Cycle Business and Being Entrenched

The industry downturn following the real estate cycle has placed Xilinmen under dual pressure of shrinking demand and intensified competition. The Chinese home furnishing industry’s growth has always been closely tied to the real estate cycle. Since 2021, real estate sales peaked and then declined, with lagging effects expected to fully manifest in 2024-2025, leading the home furnishing sector into a “overcapacity + demand cliff + high leverage” triple dilemma. New home sales area has declined for consecutive years, retail sales of home furnishings and revenue growth of listed companies have continued to slow, and leading enterprises’ net profits have generally fallen sharply. Xilinmen has not been immune. Amid overall demand contraction, market competition in mattresses has become fiercer, with industry fragmentation making market share battles more brutal. According to Euromonitor International, in 2024, Xilinmen’s market share was only 7%, while Mousse Co., Ltd. held 8%. The top five industry players combined held less than 30%, with many small and white-label brands occupying large market segments, intensifying price wars and channel battles. Meanwhile, as real estate dividends fade, industry entry barriers have risen further, with low-price competition from small brands and channel expansion by leading companies forming a squeeze on Xilinmen’s market share in existing markets.

Slow transformation has caused Xilinmen to miss industry opportunities driven by demand-side reforms.

In the era of new consumption, the core competitiveness of the home furnishing industry has shifted from supply-side production capacity to demand-side product development and user insight. Business logic needs to shift from “product-oriented” to “solution-oriented.” However, Xilinmen’s transformation efforts remain superficial, with slow substantive progress. Although the company launched the high-end smart mattress brand Xilinmen Bao Bao and enlisted Elon Musk’s mother as a spokesperson, and its precision control deep sleep system ranked first in the 2025 Top 10 Smart Mattress Brands, these are only part of the company’s transformation strategy. The development of the smart mattress business still faces many constraints.

From the industry landscape, in 2025, China’s smart mattress market was led by Mousse Co., Ltd. with a 15% share, followed by Xilinmen with 12%. The industry remains highly fragmented, with other major brands including Sui Bao Mattress, Serta, MLILY, Lovloud, TEMPUR, MPEbedding, Sealy, 8H, and D-Superieur. These brands compete with Xilinmen Bao Bao in the smart mattress market. Notably, Serta, Sealy, and Sofitel either have a century-old technical heritage or are pioneers in international electric beds, possessing higher global brand influence.

Regarding the company itself, Xilinmen’s R&D investment and proportion of smart products lag behind key competitors. In 2024, R&D accounted for 6% of revenue, and smart products made up 25%. In comparison, Mousse’s R&D ratio was 8%, with 30% of its products being smart, and MLILY’s smart product share reached 35%. Additionally, the smart mattress industry faces common issues such as reliance on imported core components, sensor accuracy deficiencies, and low consumer awareness. Xilinmen’s efforts in technological breakthroughs, market education, and supply chain optimization have yet to form core competitive advantages, making it difficult to achieve significant performance growth through smart products. In terms of channel transformation and user operations, Xilinmen still relies on traditional offline and engineering channels. The engineering channel has been affected by project defaults and bad debts from real estate companies. Online channels are underdeveloped; in 2024, online sales accounted for 38.7% of the home furnishing industry, but Xilinmen has not fully tapped into new growth points like live-streaming e-commerce and social commerce, nor has it effectively built its brand through traditional or new media. Although some offline initiatives, such as private domain high-end sample rooms, have been explored, their impact on smart product sales remains limited.

Persistent Cash Flow Tensions Create a Vicious Cycle

Cash flow pressures and financial risks have further worsened Xilinmen’s development difficulties. Repeated financial scandals have strained the company’s capital chain. The recovery of the 100 million yuan illegally transferred funds remains uncertain, and the freezing of 900 million yuan in accounts directly impacts daily operations and cash flow. If the controlling shareholder’s fund occupation is not resolved promptly, it could trigger further chain financial risks. Financial statements show that Xilinmen’s debt levels remain high: as of June 2025, total assets were 8.64B yuan, with total liabilities of 4.82B yuan, and a debt-to-asset ratio exceeding 55%. Operating cash flow has been negative since the first quarter of 2025, with -449 million yuan in Q1 and -39.62 million yuan in the first half of 2025, indicating weakened cash recovery ability. In the context of industry-wide cash flow tightness, Xilinmen’s financial pressure could further propagate, affecting R&D, channel expansion, and strategic deployment in emerging sectors like smart mattresses, creating a vicious cycle of “tight funds – limited growth – declining performance – even tighter funds.”

As a leading domestic mattress brand, Xilinmen’s main competitors include high-end market leaders, emerging players in the smart sector, veteran national brands, and international well-known brands. These competitors have advantages in market layout, technological R&D, and revenue performance, and have all undergone strategic upgrades to varying degrees in response to the post-real estate cycle environment, forming differentiated competitive patterns with Xilinmen. Some rivals have significantly better cash flow, some are more popular among young consumers, and others benefit from the ecosystems of large internet companies.

For Xilinmen, to break through the industry upheaval, it must first address internal control and governance issues, accelerate internal system reforms, improve subsidiary fund management, and rebuild market trust. Second, it needs to firmly advance demand-side transformation by increasing R&D investment in core products like smart mattresses, enhancing branding and marketing strategies, optimizing supply chains to reduce reliance on imported key components, and accelerating online channel development. Deepening user insights and shifting from “selling products” to “providing sleep solutions” are essential. Additionally, strengthening cash flow management, optimizing debt structures, and speeding up capital recovery are crucial to prevent further financial risks.

The golden era of the home furnishing industry has ended. In the era of stock competition, comprehensive strength is more important than ever. Xilinmen’s difficulties stem not only from adverse industry cycles but also from internal governance and strategic layout issues. Only by facing challenges head-on and actively transforming can it stabilize in the industry’s clearing process and seize new development opportunities. This challenge is not only for Xilinmen but also for all home furnishing enterprises.