Konka, a pillar of China’s consumer electronics industry for four decades, revealed a catastrophic profit warning for 2025 that has left markets and creditors scrambling. The Shenzhen-listed group warned its annual revenue would fall to RMB 90–105 billion (about $1.2–1.5 billion), while an expected net loss attributable to shareholders of RMB 12.58–15.57 billion (roughly $1.8–2.2 billion) pushed its shares into consecutive daily limit-downs and triggered an official notice that the company may become *ST — the precursor to delisting.
The scale of the shock is stark: Konka expects its net asset position at year-end to flip negative, with projected shareholders’ equity between a deficit of RMB 5.33 billion and RMB 8.00 billion. That is a sobering figure against total liabilities of RMB 282.69 billion, a leverage ratio near 97 percent and a balance sheet that, even if fully liquidated, would likely be insufficient to cover debts.
This is not a single-quarter stumble. Konka’s revenues have been in steady retreat for years — 2024 sales were RMB 11.12 billion, a decline of more than 80 percent from the company’s 2019 peak — and the group has recorded cumulative net losses since 2022. The immediate catalyst for the 2025 plunge lies in a tranche of large impairment charges: the company has increased provisions for inventory, receivables, equity investments and other underperforming assets, a move Konka describes as cleaning up low-efficiency holdings that have accumulated over the past decade.
The accounting write-downs are the final act of a longer strategic drift. Konka was founded in 1980, listed in 1992 and at its height was one of China’s “big three” television makers. But as the global and domestic television market contracted after 2019, new consumer habits — streaming on phones and tablets, longer upgrade cycles for big-screen TVs — and relentless price and technology competition eroded Konka’s core position.
Rather than doubling down on a coherent, high-margin pivot, Konka diversified broadly and, critics say, indiscriminately. Over the past decade the group pursued businesses from semiconductors and environmental engineering to new materials, real estate and white goods, chasing short-term gains but also exposing itself to policy-sensitive, capital-intensive or low-return ventures. The company booked RMB 7.38 billion of fresh impairment provisions up to 2024, but the 2025 write-downs are far larger — the “hidden bomb” in executives’ own words.
Corporate governance and execution problems compounded Konka’s strategic drift. The firm has cycled through senior management frequently, and recent internal whistleblows and regulatory warnings have raised questions about disclosure and operational controls. Complaints about product quality and after-sales service have mounted, and two former senior executives were recently publicly accused of serious disciplinary and legal violations, intensifying investor alarm.
State-owned China Resources (Huarun) became Konka’s controlling shareholder after an ownership transfer late last year and has been credited with staving off immediate liquidity collapse through guarantees, debt extensions, asset monetisations and shareholder loans. Huarun’s involvement has helped stabilise short-term cash flows and offers a potential strategic corridor for Konka’s nascent semiconductor business. Yet the scale of the balance-sheet deterioration means capital injections or backstops alone will not guarantee a turnaround; what Konka needs is fewer businesses, clearer priorities and a sustained governance overhaul.
Konka’s failure matters beyond one corporate balance sheet. It is a test case for China’s consumer-electronics consolidation and for the limits of conglomerate diversification as an escape from mature product markets. It also highlights the political and financial risks local governments and state-owned entities assume when they support sprawling industrial projects. For rivals such as TCL and Hisense, which have concentrated on overseas expansion and higher-end segments, Konka’s collapse is both a market opportunity and a cautionary tale about execution and focus.
The company’s prognosis is uncertain. If impairments and investor panic have finally exposed entrenched weaknesses, a forced restructuring could follow, with asset sales, creditor negotiations and state-backed stabilisation all on the table. If those steps fail to restore confidence, Konka could become the next legacy TV brand to fade from the consumer landscape — a reminder that scale from past decades offers no immunity against strategic drift in a rapidly changing market.