(Yicai) July 24 -- LJJ Home, a well-known home decorator with over 100 stores in South China, has suspended operations, telling creditors to register their claims while initiating bankruptcy procedures.

LJJ had to halt operations due to the downturn in China's real estate market, according to a closure notice posted at its brick-and-mortar outlets. After prolonged losses, the company has become insolvent, it added.

The news shocked customers because LJJ was still organizing promotional activities earlier this month, with one telling Yicai that he was receiving services until July 17, but work suddenly stopped the next day.

"Home furnishing companies are heavily reliant on a boom in the real estate market, as they are in the downstream of the sector," an industry insider told Yicai, "Around 2020, after the market entered a downward cycle, they did not anticipate the severity of subsequent issues."

It has become common for well-known Chinese home decorators to experience capital chain ruptures. For example, Dong Yi Ri Sheng Home Decoration Group had to suspend thousands of renovation projects last year, while Zhufaner ceased work at hundreds of sites last month.

"After the company expanded its business, it was a challenge to provide standardized management for construction sites scattered across residential communities," a source from a leading home furnishing firm said to Yicai. "Due to the cumbersome affairs of renovation sites, maintaining brand reputation becomes more difficult as firms scale up."

However, many small and medium-sized home decorators can operate well in the current market thanks to their light-asset models and fast capital turnover, the source pointed out.

Editors: Tang Shihua, Martin Kadiev