Cash flow has plummeted nearly 80%, home appliance growth has reached its ceiling, and the hidden champion in washing machines, Qijing Machinery, is boldly betting on a new automotive story.

Ask AI · Cash Flow Plunges by Nearly 80%—How Does Qijing Machinery Safeguard the Security of Transformation Funding?

Qijing Machinery office building. Photo source: company website

By our reporter Zhang Bei, Huang Zhinan, Shenzhen

On April 7, Qijing Machinery Co., Ltd. held its 2025 annual performance briefing, with General Manager Wang Dongwei, Chief Financial Officer Yao Liqun, and Secretary to the Board of Directors Tian Lin attending the meeting.

This performance briefing reveals the latest full picture of the operating situation of this domestic washing machine clutch “invisible champion.” In 2025, it achieved total operating revenue of 8B yuan. Of this, the home appliance components business generated 2.07B yuan, up slightly by 1.38% year over year; annual sales of washing machine clutches reached 15.77 million units, still firmly securing a top position in the industry. The automotive components business generated 327 million yuan, up 17.29% year over year, becoming the only core segment maintaining double-digit growth.

Against the backdrop of home appliance markets reaching a growth peak and the industry’s earnings “center of gravity” continuing to shift downward, Qijing Machinery is tilting its strategic focus toward the automotive components track. This transformation—externally interpreted as “a renewed emphasis on a new automotive story”—not only reflects the company’s ambition to break through the ceiling of growth, but also comes with the real-world difficulties of “increased revenue without increased profit” and continuous pressure on gross margin.

The Growth Ceiling Has Been Reached

For “invisible champions” in manufacturing, a solid core business is the ballast that helps them sail through cycles. When the growth boundaries of the core business gradually become clear, finding a second growth curve becomes an inevitable choice.

Qijing Machinery’s story begins in the niche segment of washing machine clutches.

As a leading player in China’s washing machine clutch sector, Qijing Machinery’s products are deeply tied to leading domestic home appliance brands. Its 2025 annual report shows that, among the top five customers by ending balance of accounts receivable, the customers are Haier Smart Home, Hisense refrigerators, Whirlpool in the United States, Samsung Group, and Dingzhou Hanshang Electrical Appliances. The five customers together account for as much as 70.77% of accounts receivable. This figure not only confirms its market standing in the core supply chain, but also outlines the shape of its baseline in the home appliance components field.

In 2025, Qijing Machinery’s home appliance components business generated revenue of 1.55B yuan, still accounting for more than 74% of total revenue—undeniably the mainstay of both revenue and cash flow.

“Our main business is divided into three major business segments: home appliance components, automotive components, and power tool components.” At the performance briefing, General Manager Wang Dongwei clearly defined the strategic positioning of the three segments. He also disclosed that in 2025, the home appliance components business grew 1.38% year over year; despite an overall downturn in the industry, it achieved stable baseline scale. In terms of overseas deployment, Wang Dongwei said, “The Thailand factory’s clutch business has achieved normal mass production, enabling dual-track parallel operation of the clutch business and the automotive components business.” The company will inject funds into the Thailand factory in steps to expand capacity in an orderly manner, supporting the continued growth of overseas business.

But behind the slightly increased revenue data are the real constraints of a saturated incremental market in the home appliance industry and a long-term concern that Qijing Machinery’s core business lacks growth momentum.

A manufacturing industry analyst in Futian, Shenzhen, told reporters from 华夏时报: “Between 2021 and 2025, over the five-year period, the compound growth rate of domestic large home appliance shipments turned negative. The dividend of growth in incremental markets has officially ended, and stock-based competition has become an irreversible industry norm.”

He further analyzed: “In the domestic market for home appliance core components, Qijing Machinery’s market share was once the highest, reaching 24.08%. With the industry’s CR5 totaling over 70%, the marginal growth space has essentially been solidified. At the same time, from 2021 to 2025, the industry’s gross margin for home appliance components fell from 24.8% to 19%, and the profitability level of the entire industry has been continuously under pressure.”

The industry adjustment trend he mentioned is reflected clearly in Qijing Machinery’s financial reports. From 2023 to 2025, its home appliance segment revenue growth rates year over year were 1.62%, 10.57%, and 1.38%, respectively—showing substantial volatility in revenue growth.

Even more concerning is that Qijing Machinery’s home appliance business core is facing continuous pressure—its domestic sales market share for core component products has slid from the historical peak of 24.08% in 2023 down to 21.74% in 2025, indicating that its leading position at the top of the industry has continued to loosen.

Even so, the home appliance business is still the “cash cow” on Qijing Machinery’s transformation path. The analyst told reporters that from 2021 to 2025, Qijing Machinery’s home appliance business cumulatively contributed revenue of 7.3 billion yuan, accounting for 75% of the company’s total operating cash flow. It is the core source of funds for the continuous expansion of the automotive business.

The 2025 annual report also shows that in Qijing Machinery’s consolidated statements, net cash flow from operating activities was 28.9982 million yuan, down by nearly 80% year over year; the balance of cash and cash equivalents at period end was only 195 million yuan. A solid baseline in home appliances undoubtedly provides the most core safety buffer for its cross-sector transformation. But it is clear that the focus has shifted to the cash flow level: the sharp drop in operating cash flow and the tightening of cash reserves have become a concern that cannot be ignored.

At the performance briefing, when reporter from 华夏时报 asked a question, Wang Dongwei pointed out: “While consolidating existing customer strategic cooperation, we will actively expand cooperation opportunities for other product categories horizontally, and further tap customer value. We will step up efforts to advance the development process of key new products, closely coordinate with customers’ project timelines, and ensure smooth handoffs and efficient delivery during the mass production stage. We will increase efforts to open up emerging markets such as Africa, South America, and Southeast Asia, seeking new development space.”

But only in the context of the industry-wide stock competition does it remain to be verified, over time, whether expanding emerging markets can support a new round of growth for the home appliance business.

The Second Main Business Is Rushing Ahead

Under the growth ceiling of the home appliance business, the automotive components track carries all of Qijing Machinery’s imagination for the future. But the sprint to race that second curve is not without obstacles.

“Since listing, the company has expanded the automotive components business as the company’s second main business.” At the performance briefing, Secretary to the Board of Directors Tian Lin told reporters from this newspaper candidly, which clarifies Qijing Machinery’s long-term strategic direction. In 2025, its automotive components business achieved sales revenue of 327 million yuan, up 17.29% year over year—far ahead of the growth rates among the three business segments.

In terms of resource investment, Qijing Machinery’s strategic tilt is extremely clear. At the end of 2025, its balance of construction in progress was 61.17 million yuan, up 108.67% from the same period last year, mainly due to increased equipment investment. Its balance of long-term borrowings was 338 million yuan, up 64.75%. In the annual report, it said that the restructuring of borrowing is to match long-term capital needs for capacity construction. Full-year R&D expenses were 72.0944 million yuan, up 5.79%. New R&D projects mainly focused on new automotive components products and new processes.

Behind the high growth is the concentrated mass production and rollout of earlier designated projects, the continuous release of capacity, and the industry dividend from domestic substitution in China’s automotive components sector.

The annual report shows that Qijing Machinery has already established stable cooperation with global Tier-1 automotive parts suppliers such as BorgWarner, Schaeffler, and Hescio. Its products cover areas including engine components, transmission components, and components for construction machinery, among others.

In the performance briefing, Tian Lin told reporters that currently, the company’s automotive components products are still mainly centered on engine and transmission components for internal combustion and hybrid vehicles, while it is also actively expanding its business in components for pure electric vehicles.

But what sharply contrasts with the high revenue growth is the continuing decline in Qijing Machinery’s overall profitability, and the market discussions about “increased revenue without increased profit” and “scaling up to win market share” have never disappeared.

Financial report data shows that in 2025, the gross margin of its automotive components business was 19.31%. Although it was up slightly by 0.20 percentage points from the same period last year, it was significantly higher than that of the home appliance components business. However, the expansion of business scale did not translate into growth in overall net profit: full-year net profit attributable to shareholders fell by nearly 30% year over year, and the net profit margin decreased from 3.37% in 2024 to 2.30% in 2025.

For the persistent pressure on the earnings end, the explanation given in Qijing Machinery’s annual report is “multiple factors including intensifying industry competition, rising labor costs, and exchange rate fluctuations, all of which have kept the company’s profitability under continuous pressure.”

And by breaking down the financial report data, it can be seen that multiple factors dragging down profit are continuously eating into Qijing Machinery’s profit space. In 2025, its sales expenses, administrative expenses, and R&D expenses increased by 11.91%, 9.55%, and 5.79% year over year, respectively. Their growth rates were all significantly higher than the revenue growth rate of 3.16%, gradually eroding the benefits of scale. Financial expenses surged by 154.80% year over year—mainly because there were more exchange gains in the previous year, and exchange rate fluctuations in the current period led to an increase in exchange losses, further intensifying pressure on the profit side. Non-operating expenses grew by 263.53% year over year, mainly due to increased costs for rectifying real estate property certificates and increased losses from the disposal of fixed assets; non-recurring losses further expanded.

For the restoration of gross margin and net profit, Qijing Machinery did not provide a clear timeline or quantified targets at the performance briefing. But combined with the development plans disclosed in the annual report, it expects to gradually improve the profitability level of its automotive business through upgrades to product mix and improvements in capacity utilization. However, due to factors such as annual price-reduction policies by complete-vehicle manufacturers and intensifying market competition, the progress of earnings recovery remains uncertain.

The Shenzhen analyst cited by this paper said that for home appliance components companies moving into the automotive track, the core difficulties lie in a long customer certification cycle, fast technological iteration speed, and strong pressure from annual price reductions at automakers. Many companies can achieve breakthroughs in revenue scale, but it is difficult to achieve simultaneous improvement in profitability within a short timeframe.

“Qijing Machinery’s transformation is currently in a critical stage of climbing. The home appliance core business can provide it with some room for trial and error. However, at present, the company’s cash flow has contracted significantly, and monetary funds have shrunk rapidly, meaning the tolerance space for transformation is narrowing. Whether the transformation can be carried through successfully in the future mainly depends on whether upgrades in the product structure of the automotive business can be delivered, and whether the cost dilution effect brought about by improved capacity utilization can actually be realized.” He said this.

Even more worthy of caution are the multiple potential risks behind this cross-sector transformation. From the customer structure perspective, in 2025 the sales of the company’s top five customers accounted for 53.11% of total annual sales, indicating a relatively high customer concentration. In the automotive industry, customer certification cycles last 18 to 36 months, making it far more difficult to develop new customers than in the home appliance industry, and it is unlikely to achieve effective customer diversification in the short term.

From the technology iteration risk perspective, the iteration cycle of new energy vehicle models has shortened from 5 to 7 years for internal combustion vehicles to 2 to 3 years, with the technical route update cycle being 2 to 3 times faster than in the home appliance industry—raising much higher requirements for components companies’ technological reserves and R&D response speed.

From the capacity digestion risk perspective, Qijing Machinery is doubling down on capital expenditures against the trend, expanding capacity in a dual-track approach at its Thailand factory. But given that revenue has increased only slightly by 3% and downstream collections continue to deteriorate, there is extremely high uncertainty regarding the market space to absorb the newly added capacity. If future orders do not meet expectations, it will face the risk that idle capacity and further erosion of profits from depreciation and amortization will occur.

From the home appliance “invisible champion” with annual sales of 15.77 million washing machine clutch units, to a cross-sector player that is refocusing on the automotive track, Qijing Machinery’s transformation is a snapshot of how manufacturing companies in China are seeking a way out in the stock-based era.

The stability of the home appliance core business provides the confidence and capital base for trial and error. Meanwhile, the automotive track’s high growth comes hand in hand with high risk: it could either open the company’s second growth curve, or turn into a high-stakes bet that consumes core resources.

For Qijing Machinery, the endgame of this transformation has not arrived yet. Whether it can find balance between the two major tracks—home appliances and automotive—and achieve synchronized restoration of profitability while pursuing scale growth will be a core question it must answer in the coming years.

Editor in charge: Zhang Bei Chief editor: Zhang Yuning