Arrow Home Group has sought to polish its public image with a high‑profile tie‑up: on January 28 the company signed a strategic cooperation agreement with CCTV’s programme on national brands, securing a formal endorsement of its market standing. Wind places the company’s ESG rating at BBB, a middling score that signals compliance without leadership on environmental, social or governance issues.
Beneath that veneer, persistent product quality complaints and weak after‑sales service have eroded consumer trust. The Black Cat Complaints platform records more than 1,400 complaints against the company’s official account for its sanitaryware line—targeting smart toilets, faucets and showers—while users on social platforms such as Xiaohongshu report chronic breakdowns and slow or unresponsive service channels. In one widely publicised Zhejiang case, a smart toilet required four repair visits before the retailer agreed to replace it only after media intervention, yet still resisted admitting a product fault.
Employee relations are an acute social risk for Arrow. Staff exposed practices of enforced ‘‘make‑up’’ workdays that truncated statutory holiday entitlements: a Dragon Boat arrangement left workers with only two of three mandated days off, and a National Day schedule required four days off but three make‑up days that left some employees working eight consecutive days. Reports also allege that paid annual leave and overtime compensation have not been properly implemented in some factories and offices, exacerbating morale and legal exposure.
Governance weaknesses amplify these operational problems. Internal reports and investigative pieces describe a workplace culture marked by ritualised deference to senior figures, including company leaders’ devotion to Buddhist rites and encouragement of employee participation in religious practices—an approach local media have dubbed ‘‘pray‑at‑work’’ management. That cultural tilt sits alongside a highly concentrated, family‑centred shareholding structure: a company investment vehicle holds about 49.6% of shares, and the founder’s family—through direct and concerted stakes—exerts effective control. Such concentration narrows independent oversight and increases the risk that personal preferences, rather than market signals, determine management choices.
Those governance and social shortcomings show up on the bottom line. Since listing the company has suffered a prolonged earnings squeeze: revenue fell in the listing year, grew only marginally in 2023 to around RMB 7.65 billion while net profit slumped 28% year‑on‑year, and in 2024 revenue slid about 6.8% while net profit plunged roughly 84% to RMB 67 million. Investors have punished the shares: the stock rose to a 2023 peak around RMB 25 but fell back to roughly RMB 8.5 by late January. Yet management still proposed a cash dividend of RMB 1.32 per ten shares—totaling about RMB 126 million—greater than last year’s net profit, a distribution policy that risks draining capital when the business is under stress.
For foreign customers, buyers and institutional investors, these developments matter for several reasons. Sanitaryware is a trust product: failures and patchy after‑sales service can cascade into reputational damage that affects distribution partners and export markets. Labour‑practice complaints and potential breaches of Chinese labour law invite regulatory scrutiny at a time when Beijing has been intensifying enforcement of worker rights and corporate governance. Finally, family‑dominated control combined with dividend policies that outstrip profits reduce the company’s capacity to invest in quality control, product development and digital after‑sales systems—areas that are increasingly decisive in the global appliance and home‑furnishing markets.
Arrow’s case is not unique in China’s mid‑market consumer sector, but it is illustrative. Companies with concentrated ownership and weak board independence often default to short‑term shareholder payouts and informal internal cultures that can undercut operational rigour. As ESG considerations become a routine part of procurement, financing and index inclusion, firms that fail to shore up labour practices, product quality controls and independent oversight risk shrinking investor pools and losing shelf space, both at home and abroad.
Repairing those fractures will require visible changes: transparent governance arrangements, credible independent directors, clear complaint‑handling metrics, and an urgent investment in after‑sales logistics. For Arrow, the strategic choice is stark—double down on brand partnerships and public relations, or address the structural issues that are hollowing out the company’s competitive position and creating material ESG liabilities.