Ask AI · How the shift in middle-class consumption concepts impacts the highly profitable funeral industry?

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Original First Publish | Jinjiao Finance (ID: F-Jinjiao)

Author | Chester

Just past the Qingming Festival, no longer hear the term “sky-high priced graves.” But the companies selling such expensive graves have already lost their footing.

“Funeral industry leader” Fushouyuan announced before Qingming that its board meeting would be postponed, and the release of its 2025 full-year performance and annual report was delayed. This is Fushouyuan’s second postponement of board meetings and financial disclosures this year.

The first was on March 19. The company suddenly announced that the board meeting scheduled for that day would be delayed until March 31, citing “discovery of approximately 3 million RMB in asset procurement transactions and payment arrangements requiring further verification and assessment.” The next morning at 9 am, trading was suspended.

A transaction of not very large amount triggering suspension and multiple delays is already unusual.

Market interpretations quickly became extreme. On platforms like Xueqiu, guesses ranged from “management internal strife” to “financial manipulation,” with various speculations.

But if we extend the timeline, this storm has been brewing for a long time.

In the first half of 2025, Fushouyuan experienced its first loss since listing, with a scale between 235 million and 265 million yuan; whereas a year earlier, in the same period, it nearly achieved 300 million yuan in net profit.

Looking further back, the full-year net profit attributable to the parent in 2024 was 373 million yuan, a 52.8% plunge year-on-year, the largest decline since listing, with revenue also dropping over 20%.

In other words, the “loss of speed” on the financial side had already begun. The suspension and delayed disclosure this time are just dragging the problem from beneath the water to the spotlight.

Once a leader in the funeral industry, Fushouyuan was known for high profit margins and high growth, once called the “Maotai of the funeral world.” This label essentially reflects the long-standing consensus outside that the funeral industry is “highly profitable.”

In the film “Break the Hell,” Kenneth Ma describes the funeral industry: “To put it nicely, it’s eating the food of ten directions; to put it bluntly, it’s making money off the dead.” The core of this phrase boils down to two words: necessity.

No matter how the world changes, businesses related to death will never disappear.

But as macro cycles shift and perceptions change, death is being re-understood, and the emotional and cultural premiums attached to it are beginning to loosen.

In other words, Fushouyuan’s problem is never just a single 2.63B yuan transaction. It’s that the once-effective way of making money — called “sky-high graves” — is failing.

And the name of this method is “Sky-high priced graves.”

“Profitable industry”

If we only look at financial data before 2025, Fushouyuan is almost a textbook example of a “good business.”

In 2024, Fushouyuan’s gross profit margin reached 78.51%, compared to Pop Mart’s 72.1%. Looking further back, 2023 marked its tenth anniversary as a listed company and was its peak: net profit attributable to the parent nearly 800 million yuan, revenue reaching 259.8k yuan, more than quadrupling from ten years earlier.

As an industry leader, Fushouyuan, founded in 1994, was among the earliest private funeral companies in China to operate compliantly. Its core business has long been cemetery services, which contribute over 80% of revenue, serving as the absolute pillar.

From an industry structure perspective, Chinese funeral services roughly divide into four segments: first, body handling (mainly cremation), provided by official agencies, with prices strictly regulated; second, cemetery services, the most marketized and flexible segment; third, funeral services such as transportation and funeral processions, mainly led by funeral homes; fourth, other supporting services and funeral product sales.

Within this structure, cemetery services are undoubtedly at the top of the value chain. Traditional notions of “burial in the earth” and “respect for the dead,” combined with filial piety ethics, almost strip consumers of bargaining power; once factors like “feng shui” and “location” are added, prices can quickly diverge.

In the movie “If You Are the One,” the protagonist played by Ge You encounters a cemetery salesperson disguised as a matchmaker, who, under the moral pressure of “filial piety,” persuades him to buy a grave. When the female salesperson’s “plot” is exposed, the camera slowly pans out, revealing that their “date spot” isn’t a park, but a park-like cemetery:

This scene is undoubtedly comedic, but for Fushouyuan, the narrative of “park-like cemeteries” was key to its early differentiation.

At its founding, Shanghai already had 40 cemeteries. Fushouyuan chose to break away from the traditional “selling graves” path, after overseas visits, introducing the concept of “cultural memorial parks,” redefining cemeteries as spaces combining landscape and memorial functions, gradually establishing the development direction of “turning cemeteries into parks.”

This repositioning quickly reflected in pricing structures.

Annual reports show that from 2012 to 2017, the price of customized artistic graves rose from 259.8k yuan to 421.8k yuan, while finished artistic graves increased from 89.6k yuan to 100.8k yuan; meanwhile, traditional finished graves actually decreased from 49.1k yuan to 40.3k yuan. Structural upgrades replaced simple scale expansion, becoming the core driver of profit growth.

After listing in 2013, this model was further validated: net profit grew from 167 million yuan to over 400 million yuan in 2017; from 2018 to 2023, average net profit reached 670 million yuan, with a long-term net profit margin above 30%.

Meanwhile, the label of “profitable industry” gradually solidified.

In 2004, media summarized “Top 10 Profitable Industries in China,” with the funeral industry ranking third, repeatedly appearing in subsequent years. In 2015, the Ministry of Civil Affairs and other agencies released the “Funeral Green Paper,” showing that in 2014, funeral expenses in Beijing averaged 42,837 yuan, with urban residents paying as much as 80k yuan — “unable to afford death,” and “unable to afford burial,” became internet buzzwords.

High-priced graves even once became a form of financial investment.

In “If You Are the One,” after the female salesperson successfully persuades with “filial piety,” she then turns around and says: “Actually, this is also an investment. For just 30,000 yuan, you can buy a royal feng shui grave… After a few years, if you resell it, you can earn ten times.”

This absurd scene undoubtedly reflects the harsh reality of the funeral industry at that time.

Between 2018 and 2023, the average selling price of Fushouyuan graves rose from 102.5k yuan per grave to 119.5k yuan, a 17% increase. Meanwhile, the average new home transaction price in Shanghai rose from 53.1k yuan per square meter to 56.9k yuan, a 7% increase.

Assuming about 2 square meters per grave, the unit price of Fushouyuan graves is close to 60k yuan per square meter, comparable to first-tier cities’ housing prices in Beijing, Shanghai, Guangzhou, and Shenzhen. The earning power of “ancestral graves” has already rivaled or even surpassed that of urban residential properties.

The Myth of Scale Collapse

Fushouyuan’s growth is not only from “selling at high prices” but also from “selling to many.”

Funeral services are highly regionalized; land approval is strict, cycles are long, and new constructions are difficult. The most practical way to expand across regions is through mergers and acquisitions.

As early as 2001, Fushouyuan began attempts at cross-provincial M&A. In its 2013 prospectus, the company mentioned two typical cases: acquiring Anle Tang and a cemetery in Henan. Both cemeteries were previously loss-making, but after acquisition, Fushouyuan adopted the “cemetery parkification” approach:

By systematically transforming the layout, landscape design, and operational management of the parks, they gradually reversed the poor performance and achieved profitability.

Post-listing, this path was amplified by capital. According to broker data, from 2014 to 2022, the company initiated over 167M&A projects related to cemetery business, totaling about 2.06 billion yuan, mainly in regions outside Shanghai, rapidly covering over 40 cities. Since 2023, it has continued to expand into Shaanxi, Shandong, and other areas.

But M&A is a double-edged sword. Buying good assets is a bonus; buying “bad ones” means bearing the consequences.

The 2021 annual report disclosed that Fushouyuan planned to inject 63 million yuan into Yuanbaoshan Company to acquire a 70% stake in Zhuolu Yuanbaoshan. However, just a year later, it was found that the project had a third-party debt of up to 57.83 million yuan, which the company had to compensate.

Compliance risks also surfaced gradually: in July 2023, Shandong Zaozhuang Fushouyuan was found in a “double random” inspection to have “unauthorized construction of cemeteries” and “illegal land occupation,” with issues like “building more graves than approved.” In November of the same year, Nanchang Fushouyuan faced disputes over forest land and tree ownership; in July 2024, Shandong Fushouyuan was listed for owing about 958.3k yuan in corporate income tax.

As the industry enters a stage of stock competition, these legacy issues become more apparent. With revenue growth slowing, the goodwill and related assets from M&A are beginning to impair. The 2024 financial report shows the company recognized about 104 million yuan in goodwill and asset impairments for cemeteries in Shandong and Liaoning.

In the first half of 2025, this figure increased to 218 million yuan, involving four cemetery projects, with goodwill impairment accounting for over 75%. In other words, assets accumulated through M&A are now turning into a drag on profits.

Tax compliance costs are also rising. The company’s 2025 semi-annual report states that one of the main reasons for losses is increased tax costs. Some market opinions suggest that one-time tax payments have significantly squeezed profits.

This is not an isolated case. Hong Kong-listed China Wantongyuan disclosed last May that its subsidiary Langfang Wantong was required to pay 11.6 million yuan in taxes for cemetery leasing and related activities that no longer qualified for tax reductions, directly turning the company from profit to loss.

As the dividends from M&A fade and compliance costs rise, the original growth model relying on “scale expansion + asset premiums” begins to show its limits.

However, more profound changes than asset impairments and tax adjustments are not reflected in financial statements but are rooted in people’s minds.

“People’s hearts are no longer pure”

The most direct reason for the decline in performance remains the core issue: graves are becoming harder to sell.

In 2024, Fushouyuan sold only 12,569 operational graves, a sharp drop of 3,816 graves, or 23%. In the first half of 2025, sales further declined to 6,253 graves, down 6.7% year-on-year.

More strikingly, prices plummeted: in the first half of 2025, the average selling price of operational graves dropped from 120.7k yuan in 2024 to 63.4k yuan per grave — nearly halved. Even with “fire sale” discounts, customers remain unmoved.

In the 2025 semi-annual report, Fushouyuan attributes the performance pressure mainly to “customers’ cautious consumption behavior.” This somewhat restrained wording essentially means — middle-class consumers are re-evaluating and no longer willing to pay high premiums for their after-death arrangements.

Meanwhile, regulators have also started to act. On March 31, the State Administration for Market Regulation and the Ministry of Civil Affairs jointly issued the “Regulations on Clear Pricing in the Funeral Sector (Trial),” demanding more detailed disclosure of charges and prices, directly targeting longstanding issues like arbitrary charges and “sky-high prices,” requiring clear pricing, no hidden surcharges, and no vague descriptions. Once policies are in place, it’s like pressing pause on the high-price logic of the industry.

But what truly unsettles Fushouyuan is not just the double blow of declining sales and prices, but a deeper shift in perceptions.

The phrase “burial in the earth” is losing its once-unchallengeable status. Ecological burial methods like tree burial, sea burial, and lawn burial, which were once fringe experiments a decade ago, are now mainstream alternatives.

Data shows the trend: in 2024, ecological burials nationwide reached 194.7k cases, a 67% increase from 2019; among these, tree burials surged about 90%, sea burials increased 26%. By 2025, ecological burials accounted for 27% of all burials nationwide, with first-tier and emerging first-tier cities exceeding 45%. The market share of traditional graves is quietly being eroded.

This change is also beginning to influence popular culture narratives.

In the 2022 film “Big Life Events,” Zhu Yilong’s funeral director character boldly challenges the “burial in the earth” tradition, using “firework burial” to send his father to heaven:

In the 2024 film “Break the Hell,” Kenneth Ma’s character challenges industry norms, allowing his daughter to “break the hell” for himself, using a ritual to bridge the father-daughter gap:

These films resonate not because of their novelty but because they accurately capture the emotional shift of the times: Chinese perceptions of death are quietly shifting from “elaborate burial to show filial piety” to “rich care for the living”; from “impressing the deceased” to “giving the living dignity.”

When the standards of evaluation change, prices naturally lose their anchors.

More and more middle-class people realize: true filial love is never about spending hundreds of thousands on a feng shui land after death, but about spending more time with parents while they are alive. Once they pass, the real care should be for the living family members. Wasting limited resources on “ancestral graves” is neither rational nor moral.

Fushouyuan’s myth has shattered, but China’s evolving view of death is accelerating.

Reference materials:

21st Century Business Review “421.8k Shanghai Funeral Industry Leader, High-priced Graves Begin to Stall”

Yicai “200k per square meter! ‘Funeral industry leader’ announces first loss”

Kanjian Finance “Down 50%! Funeral industry leader’s performance collapses”

Author’s note: Personal opinions, for reference only