I. Industry Risk Analysis

(1) Policy Risk

The artificial leather sofa set industry currently faces three policy risks: tightened environmental protection policies, restrictions on raw material use, and upgraded consumer rights protection. The state continues to strengthen the VOCs emission standards for household products and the environmental protection certification requirements for synthetic materials. Environmental protection compliance transformation will drive up production costs. Regulations such as the “Instructions for the Use of Consumer Products” have tightened the supervision on the authenticity of the labeling of “artificial leather” materials, and the penalties for false advertising have been increased. The new cross – border e – commerce regulations have extended the inspection and quarantine process for the cross – border transportation of leather products. At the same time, some regions are piloting the collection of environmental taxes on synthetic leather. Enterprises need to be vigilant against the regional market access barriers and the sharp increase in compliance costs caused by the gradient differences in policy implementation.

(2) Economic Risk

The artificial leather sofa set industry faces multiple risks under the economic cycle fluctuations. Against the backdrop of the current slowdown in global economic growth, consumers’ sensitivity to the demand for non – essential goods has increased. Mid – to high – end artificial leather sofas are the first to be affected. The contraction of the home decoration budget directly impacts the market growth. The price of upstream chemical raw materials (PU leather substrates) is significantly affected by the fluctuations in the crude oil market. Coupled with the rising international logistics costs, the profit margins of enterprises are continuously compressed. The homogeneous competition in the industry has intensified. Small and medium – sized enterprises have difficulty in making breakthroughs in product innovation and channel expansion. Some manufacturers sacrifice product quality for low – price competition, triggering a trust crisis in the industry. At the same time, the tightening of environmental protection policies has led to a sharp increase in the cost of upgrading production processes, and small and medium – sized manufacturers are under increasing pressure for technological iteration.

(3) Social Risk

The differentiation of inter – generational consumption preferences has intensified the social risks in the industry. Generation Z and millennials pursue environmental protection and personalization. The non – degradable characteristics of traditional artificial leather materials and homogeneous designs cannot meet the young consumers’ needs for sustainable development and differentiation, facing a crisis of brand value depreciation. Although the middle – aged and elderly customers are price – sensitive, their consumption ability is limited. The fierce competition in the sinking market has led to profit compression. Social media has magnified the public opinion on the environmental defects of products, and the emerging plant – based synthetic materials are accelerating the substitution process. The industry faces the risk of losing market share due to lagging technological iteration.

(4) Legal Risk

The legal risks faced by the artificial leather sofa set industry are concentrated in the areas of raw material compliance, intellectual property rights, and false advertising. Using synthetic leather containing excessive harmful substances such as formaldehyde violates the “Product Quality Law” and will face product recall and administrative penalties. If the product design is highly similar to the patented appearance of well – known brands, it may trigger infringement lawsuits. The abuse of uncertified expressions such as “environment – friendly” and “zero – formaldehyde” in advertising is suspected of violating the “Advertising Law” and is likely to lead to collective consumer rights protection actions. In addition, ignoring chemical registration regulations such as REACH in the export country when selling through cross – border e – commerce may lead to cross – border trade disputes and high fines. In the production process, enterprises also need to prevent the risk of production suspension and rectification due to non – compliance with fire protection acceptance.

II. Entrepreneurship Guide

(1) Suggestions on Entrepreneurship Opportunities

Currently, entrepreneurship opportunities in the artificial leather sofa set industry are concentrated in three major directions: the application of high – cost – performance environmental protection new materials, scenario – based marketing in short – video e – commerce live broadcasts, and the consumption upgrade of the轻奢 style in the sinking market. Entrepreneurs can focus on developing zero – formaldehyde water – based PU leather process products. Test small – living – room combination packages (such as a 1.8 – meter main sofa + footrest + cushion set priced at 1,999 yuan) on platforms like Pinduoduo and Douyin. Combine 3D virtual trial – placement technology to lower the experience threshold. Focus on setting up experience stores in furniture building materials cities in third – and fourth – tier cities and a community group – buying leader distribution system. Simultaneously, research and develop functional fabrics such as detachable and washable and pet – scratch – resistant fabrics to avoid the price threshold of traditional genuine leather sofas and the cleaning pain points of fabric sofas.

(2) Suggestions on Entrepreneurship Resources

Entrepreneurs in the artificial leather sofa set industry should prioritize the integration of supply – chain resources. Select artificial leather material suppliers with environmental protection certifications (such as factories in industrial clusters in Guangdong and Zhejiang) to reduce procurement costs. Screen cost – effective OEM enterprises through B2B platforms such as 1688 to achieve asset – light production. Simultaneously, layout e – commerce channels in the sinking market such as Douyin and Pinduoduo. Sign consignment agreements with small and medium – sized furniture stores to reduce inventory risks. Utilize the technological transformation subsidy policies of local governments for the furniture manufacturing industry to obtain funds for equipment upgrading. Cooperate with home designers to develop modular combination styles to increase the product premium space. Focus on maintaining good relationships with logistics partners to ensure that the regional delivery time is less than 48 hours.

(3) Suggestions on Entrepreneurship Teams

Entrepreneurs in the artificial leather sofa set industry should prioritize the formation of a complementary team. The core members should cover three core capabilities: product R & D (familiar with the application of new environmental protection leather materials), production management (proficient in the manufacturing process and cost control of soft furniture), and e – commerce operation (good at live – streaming sales and private – domain traffic conversion). The founder must personally control the insight into design trends and the integration of supply – chain resources. It is recommended to adopt a “1 + 3” equity structure (the founder holds 51% + core executives each hold 10% + reserved option pool). Hold cross – departmental cooperation meetings every week to synchronize market feedback data. Focus on training two types of positions: supply – chain negotiation specialists and visual marketing specialists. Bind partners with furniture store channel resources through performance – based betting agreements. At the same time, establish an external designer database (sign 3 – 5 independent furniture designers and share profits according to sales volume).

(4) Suggestions on Entrepreneurship Risks

Entrepreneurs in the artificial leather sofa set industry should prioritize the control of the raw material supply chain. Select artificial leather suppliers that meet environmental protection standards and are durable, and sign long – term quality agreements to reduce the return risk caused by material problems. Product design should be modularly developed according to the preferences of young consumers (such as detachable and washable, multiple combination forms). Combine online pre – sales and pop – up store models in experience stores to test market reactions and reduce inventory pressure. Establish a flexible supply – chain system and form flexible cooperation with 3 – 5 local processing factories to ensure the ability of small – order and quick – response production. When focusing on short – video e – commerce channels, a professional content team should be configured. Strengthen the selling point of “high – cost – performance 轻奢” through scenario – based content. At the same time, reserve a 15% profit margin to cope with price competition in the platform price – comparison system.