Building materials are a basic supporting category in the construction field. With the ups and downs of the infrastructure, home decoration, and public decoration markets, many practitioners and industry observers want to understand the current development status, existing pain points, and future trends of the building materials field.
This article combines the overall development of the industry, dismantles the core logic of the building materials industry from multiple dimensions, sorts out the development status, existing pain points, market structure and future trends, and helps everyone establish a complete understanding of the industry.
1. Current overall development status of the building materials industry
From the overall market environment, the building materials industry has bid farewell to the extensive growth stage in the early years and has gradually entered a development cycle of stock competition and quality improvement and upgrading.
Industry surveys show that the domestic building materials market remains relatively large in size, but its growth rate has tended to be flat, and the overall market is characterized by “stable total volume and differentiated structure.”
On the one hand, the traditional rigid demand market supports the basic building materials market.
The demand for renovation of old urban and rural houses, renovation of existing residential buildings, construction of municipal infrastructure, and decoration of commercial places continues to exist. Basic building materials categories such as cement, sheets, pipes, ceramics, and coatings have always had stable consumer groups and market space, and are also the most widely circulated categories in the industry.
On the other hand, the growth rate of new construction projects has slowed down, and the advantage of relying solely on the volume of new construction projects is no longer there. In the past, the business model of low-price distribution and small profits but quick turnover has continued to compress the living space.
At the same time, regional differences in the market are obvious.
First- and second-tier cities tend to consume quality, personalized, and environmentally friendly building materials. Users pay more attention to product performance, safety standards, and design matching. Lower-tier markets still focus on cost-effectiveness, and basic and practical building materials are still the mainstream. However, consumers’ environmental awareness and brand awareness are also gradually increasing, and the gap in consumption concepts in regional markets is constantly narrowing.
2. Common core pain points in the building materials industry
Under the appearance of stable development, the pain points accumulated over a long period of time in the building materials industry have gradually become apparent, and are also key factors restricting the further development of the industry. Both offline business entities and upstream production ends are deeply affected.
First, market competition is intensifying and the problem of price involution is prominent.
The building materials industry has relatively low entry barriers, a large number of upstream and downstream practitioners, and a large number of small and medium-sized business entities.
Similar products are highly homogeneous, and most merchants lack differentiated competitiveness and can only compete for customers through price reduction, and profit margins are continuously squeezed.
Especially in the field of basic general building materials, price wars have almost become the norm, and many practitioners are trapped in the dilemma of “quantity but no profit”.
Second, environmental protection policies have tightened and production and operating costs have increased.
In recent years, environmental protection-related standards have been continuously updated, putting forward more stringent requirements for the production process, raw materials, pollutant emissions, and harmful substance content of building materials.
Upstream production companies need to update equipment, optimize production lines, and select higher-standard raw materials, which directly drives up production costs; and cost pressure will be transmitted to the circulation and sales links step by step, increasing operational pressure on the entire industry chain.
Low-end building materials products that do not meet environmental protection standards are also gradually being eliminated during market consolidation.
Third, the circulation chain is cumbersome and supply and demand information is asymmetric.
The traditional building materials circulation model has many levels, from factories to regional general agents and distributors, to offline stores and decoration teams, with intermediate links increasing prices step by step.
It is difficult for consumers to visually identify product quality, and it is easy to buy ordinary products at high prices; and the upstream production end cannot accurately meet the real needs of terminals, and problems such as overcapacity and inventory backlog are prone to occur, and the operation efficiency of the entire circulation system is low.
Fourth, the progress of online and offline integration is uneven.
With the popularization of the Internet, all walks of life are on the transformation line, but building materials are a category that emphasizes experience, distribution, and after-sales. The transportation of large items, on-site installation, and after-sales maintenance cannot be separated from offline.
Many practitioners tried to operate online, but they only stayed at the stage of simply releasing information. They did not open up a complete link between online traffic, offline transactions, and full services. Online channels failed to exert actual value.
3. Market Structure and Category Differentiation Characteristics of the Building Materials Industry
After years of market reshuffle, the building materials industry has now formed a clear pattern division. Products of different categories and different positionings have obvious differentiation in their development trends, and industry resources are gradually concentrating on high-quality entities.
From a category perspective, the basic demand building materials market has stabilized, with competition concentrated on price and channel levels; while functional and new building materials are facing development opportunities.
For example, new building materials with fireproof, thermal insulation, sound insulation, waterproof, and prefabricated properties meet the needs of modern construction, industrial equipment projects, and home decoration renovations, and their market acceptance continues to increase.
At the same time, healthy building materials that are green, environmentally friendly, low-aldehyde, and pollution-free have become the mainstream choice in the home decoration market and the core direction of category upgrades.
From the perspective of operating entities, leading companies rely on large-scale production, complete quality control systems, and mature channel networks to occupy a major share of the mid-to-high-end market and have stronger risk resistance; medium-sized companies focus on segmented tracks, focusing on specialty categories, deep regional cultivation, and relying on localized services to gain a foothold; a large number of small workshops and scattered merchants mainly take root in the low-end rigid demand market, and are under the greatest pressure to survive.
The industry is no longer an era of “making money everywhere”. Refined operations and deep cultivation of segmented tracks have become the key to survival.
In addition, engineering channels and retail channels are completely differentiated.
Engineering building materials focus on large quantities and standardization, focusing on cooperation qualifications, supply capabilities and account period management; retail home decoration building materials focus on personalization, service experience, and after-sales guarantee. The operating logic, customer groups, and pricing systems of the two are completely different. Most practitioners will choose a single channel for deep cultivation, making cross-border operations more difficult.
4. Future development prospects and trend prediction of the building materials industry
Based on various factors such as policy orientation, consumer demand, and technological development, the building materials industry will not experience explosive growth in the future, but the overall industry will steadily upgrade in the direction of standardization, greenness, intelligence, and integration, and it will still have development potential in the long term.
First of all, green and low-carbon will become the core development line of the building materials industry.
Dual-carbon related policies continue to advance, and green buildings and low-carbon buildings have become the mainstream direction of the industry. Low-energy consumption, recyclable, environmentally friendly and pollution-free building materials will fully replace traditional high-pollution products.
In the future, whether it is production standards or market purchases, environmental protection indicators will become mandatory requirements, and green building materials will become standard equipment for all practitioners.
Secondly, the popularity of prefabricated building materials is accelerating, reshaping the industry’s production and construction model.
Prefabricated buildings have the advantages of fast construction, low losses, and low labor costs. They adapt to the development pace of modern construction, and the corresponding demand for integrated and modular building materials will continue to rise.
This type of new building materials has changed the traditional on-site processing model, requires higher product standardization and matching, and will also give rise to new industrial chain forms.
Furthermore, digitalization and onlineization have deeply penetrated the entire industry chain.
The pure offline business model will gradually be weakened, and digital product selection, online display, intra-city distribution, online after-sales and other models will gradually become popular.
In the future, building materials practitioners will need to master basic online operation capabilities, open up online and offline service links, and use digital means to improve customer acquisition and service efficiency. Traditional and old business thinking will be gradually eliminated.
Finally, the value of services continues to increase, and the shift from simply selling products to “products + services” has occurred.
Consumers no longer only pay attention to the building materials themselves. Additional services such as distribution, installation, maintenance, matching design, and after-sales guarantee have become important factors affecting the transaction.
In the future, industry competition will no longer only focus on product prices, but comprehensive service capabilities and word-of-mouth experience will become core competitiveness.
V. Overall Summary
Taken together, building materials, as the basic category that supports the construction and decoration industries, always have strong market demand and the industry has a solid foundation.
The industry is currently in a critical stage of transformation and upgrading. It is bidding farewell to barbaric growth and moving toward standardized, refined, and high-quality development. Price involution, rising costs, and difficulties in transformation are the main challenges at this stage.
Looking to the future, adhering to environmental protection standards, deepening the subdivision of categories, embracing digital transformation, and strengthening comprehensive service capabilities are the core directions for all building materials practitioners to break through difficulties.
As the demand for stock renovation, green buildings, and prefabricated buildings continues to be released, there is still ample room for development for high-quality, compliant building materials products that meet market demand.
If you have any other opinions on the current building materials market, or if you want to know about the development of specific categories, you can leave a message in the comment area for exchange.
