Recall, change of suppliers, 3C ban, reshaping of the power bank industry landscape, "trouble is brewing"

Recently, the Civil Aviation Administration issued a "3C ban", prohibiting the boarding of domestic flights with unmarked 3C and recalled power banks. Relevant departments have taken strong measures against the use of power banks, almost making "3C certification" a "life-saving talisman" for manufacturers. According to interviews conducted by multiple reporters from Cailian Society, China will implement 3C certification management for power banks starting from August 1, 2023. Currently, there are still a considerable number of power banks in the market or in the hands of consumers that have not obtained 3C certification, and some mainstream shared power bank platforms also provide products without 3C certification labels. The power bank recall incident has been brewing for several days, with manufacturers such as Anker Innovations Technology announcing the termination of cooperation with related battery suppliers. Brands like Romoss and Ugreen Group Limited have also suspended their 3C certification. A reshaping of the industry landscape triggered by the safety ecosystem of mobile power sources has begun. Many interviewees believe that the recall incident and the Civil Aviation Administration's "3C ban" will accelerate the clearance of non-compliant products in the industry. On one hand, it will promote the concentration of the power bank industry, and on the other hand, it will reshape the domestic power bank battery market previously dominated by Amperex. Analyst Liao Tianyu from Head Leopard Research Institute told Cailian Society that brands lacking full-process quality control capabilities will face greater risks of elimination in the new round of regulatory tightening. The safety baseline of the industry will return to the standard path of "self-built production lines + transparent supply chains." The "3C ban" has a significant impact on the main usage scenarios of power banks. The urgent notice issued by the Civil Aviation Administration tightens the aviation safety control of power banks, and many domestic airports have already stated that they will implement relevant regulations. Cailian Society reporters recently observed in some mainstream commercial districts and conference centers in Guangzhou that among shared power bank platforms, only products provided by Xiao Dian and Bei Dian have a 3C label. Among three power banks purchased by the reporter, only one mainstream brand purchased in August 2024 had a 3C label, while the other two purchased before 2020 did not. In fact, China's 3C certification management for power bank products began in August 2023. A public announcement issued by the State Administration for Market Regulation on March 14, 2023, states that it will implement mandatory product certification (CCC certification) for lithium-ion batteries and battery packs used in electronics products, mobile power sources, and power adapters/chargers from August 1, 2023. Products without CCC certification and labels after August 1, 2024, may not be manufactured, sold, imported, or used in other business activities. A staff member of a power bank brand told Cailian Society reporters that the 3C certification requirements for mobile power sources were formally included in mandatory management categories last year, so currently, a large part of the power bank products used by consumers do not have 3C certification. According to the staff member, the 3C certification for mobile power sources, as a whole product consisting of multiple components, includes two levels: core component compliance, where all major components including the battery cells must pass 3C certification, and comprehensive testing after the product is assembled, including cycle life testing, drop protection testing, etc., to ensure compliance with national 3C certification standards. The performance improvements, larger screens, and widespread availability of 5G have significantly increased the power consumption of mobile phones. Coupled with the increasing frequency of use, this has created a general "battery anxiety" among mobile phone users, providing market space for power banks. The prohibition by the Civil Aviation Administration has directly impacted the main usage scenarios of this product, which will have obvious effects on manufacturers and the industry. Regarding the suspension of 3C certification for some manufacturers, the staff member revealed that the suspension is not a revocation; it is akin to a temporary production and sales ban, and the certificate does not lose its validity. During the suspension period, products cannot be manufactured, sold, or exported, and once the company passes the review within the specified period, the certificate can be reinstated. However, in their opinion, the storm in the power bank industry may continue for some time, as the battery cells from the involved suppliers have been circulating in the market for about three years, and incidents like explosions occur when a product reaches the critical safety threshold. Disordered supply chains lead to self-harm in competition Due to explosion incidents on civil aviation passenger aircraft, the safety of Romoss power banks has attracted market attention. After public outcry, Romoss announced the recall of about 490,000 products; subsequently, Anker Innovations Technology also announced a global recall of over 1.8 million products. Digging deeper into the root cause of this power bank safety crisis, industry insiders believe it can be attributed to cutthroat competition due to low prices. In 2024, Anker Innovations Technology had a gross margin as high as 43.67%, and Ugreen Group Limited had a gross margin of 37.38%. Under the backdrop of low product prices and high brand margins, the quality of suppliers' products has become one corner of the "impossible triangle." Liao Tianyu told Cailian Society that based on their long-term research data, the main safety risks of power banks are centered around the use of low-cost battery cells and uncontrollable quality of contract manufacturing. The cost of lithium battery cells usually accounts for over 50%, and the observed brands such as Romoss and Anker Innovations Technology used low-cost battery cells and simplified separator structures to significantly weaken the products' thermal stability and safety redundancy. Furthermore, Liao Tianyu further stated that according to the tracking statistics of the market in the second half of recent years, models priced below 200 yuan have shown a concentrated outbreak of fire and explosion accidents, especially in batches of battery cells with unidentified origins. Insufficient quality of battery cells, defects in the battery management system, and inadequate separator thickness are the main causes of accidents. Specifically, Romoss's recall notice mentioned the "origin of the battery cell raw materials," while Anker Innovations Technology pointed out that "unauthorized changes in raw materials by suppliers may lead to insulation failure in the separator." In this power bank safety crisis caused by battery cells, many interviewees mentioned Amprius Wuxi Co., Ltd. (referred to as "Amprius"). Amprius is jointly invested in by the American Amprius subsidiary and Wuxi Industrial Development Group Co., Ltd., mainly engaged in the production and sales of consumer lithium-ion batteries and components. The staff member told Cailian Society that Amprius is a strong power bank battery cell supplier in the industry. At its peak, Amprius had a market share of over 90% in the power bank battery cell field. According to publicly available information, in addition to Romoss and Anker Innovations Technology, Amprius has also provided battery cells to several leading mobile power source brands like Xiaomi, Ugreen, and Bei Si. Regarding the recent crisis, a representative from Bei Si told Cailian Society that they have inspected all past and current power bank products of Bei Si and have not used the risk batch of battery cells mentioned in the industry. A representative from Anker Innovations Technology told Cailian Society that the information about suppliers changing battery cell materials without authorization is true, and the company has already terminated all cooperation with the involved battery cell suppliers. When asked if the production suspension would affect their business, the representative stated that the company has multiple battery cell suppliers and strong supply chain management capabilities, so the impact on production is minimal. Behind the disorder in the supply chain, price may play a role. Mo Ke, the founder of TrueLithium Research Institute, believes that in this situation, traditional battery cell manufacturers such as Zhu Hai Guangyu, Lishen, and ATL are likely to benefit. "The recall incident may make more power bank manufacturers realize the need to choose products from larger manufacturers." A representative from Anker Innovations Technology stated that the company had signed a cooperation agreement with ATL, a subsidiary of Contemporary Amperex Technology, on June 18 for the purchase of 45 million battery cells. The staff member told Cailian Society that Amprius may find it difficult to survive in the industry, and the company is currently cooperating with battery cell manufacturers such as Eve Energy Co., Ltd. The consequences of the safety crisis are evident on the sales end. Cailian Society reporters did not find any Romoss power bank products on sale on the Taobao platform on June 27, when searched for "Romoss power bank." Romoss's flagship store on JD.com also did not show any related power bank products for sale. Many interviewees believe that the current 3C certification storm may continue to lead to a concentration of production capacity among leading brands. "After the relevant regulations were issued by the Civil Aviation Administration, the sales volume of power banks from leading brands increased," said the staff member. "In the future, 'safety, compliance, and transparency' will become the industry's main theme, and the advantages of leading companies will be further highlighted. The trend of low-quality products at low prices is being eliminated by the market," said Qian Yuandong, an analyst at Head Leopard Research Institute. This round of recalls marks a significant milestone in the deep reshuffling of the industry, with companies possessing full-chain quality control, technological, and brand strength being long-term beneficiaries, while those unable to keep up with regulatory and market expectations will be marginalized. Qian Yuandong further mentioned that this incident has actually promoted the stratification of the industry. Smaller brands affected by the recall, relying on supply chain transparency and self-owned production lines, have seen an increase in sales against the trend. Emerging brands and some regional manufacturers have also seized the opportunity to enter the market. For example, based on the 618 battle report of the brand, Bei Lian's magnetic wireless power bank topped the JD wireless power bank bestseller list. Furthermore, the power bank safety crisis will also drive the industry evolution. Liao Tianyu told Cailian Society that they have noticed that some brands display 3C certification but fail to go through timely inspections after changing contract manufacturing or battery cell models, with the actual failure rate of certification reaching over 18%. Mo Ke stated that the power bank industry is moving towards greater standardization. In the past few years, cases of using counterfeit batteries and C-grade battery cells in power banks were not uncommon, and after the issues were exposed, regulatory authorities gradually improved inspection and related regulations. Following the recall incident, the Ministry of Industry and Information Technology recently initiated the revision of national standards. While battery factories used to send samples for testing, it may now be adjusted to have authorized inspection agencies directly conduct on-site sampling tests at production lines, effectively preventing companies from using "specially selected" or perfect quality samples to pass tests. "Overall, our research indicates that brands lacking full-chain quality control capabilities will face greater risks of elimination in the new round of regulatory tightening. The safety baseline of the industry will return to the standard path of 'self-built production lines + transparent supply chains,'" Liao Tianyu further stated. This article is reproduced from Cailian Society. Editor: Chen Yufeng.