Do you want to know how to import hoverboards? This article might make you think twice. In fact, in this case study, we show you the results of our market research in the hoverboard industry and explain why these results are important for buyers in almost every industry.
We also explain why we believe that reported incidents will lead to the ratification of stricter regulations and the implementation of standard procedures for the presentation of certificates. But, first, let’s recap everything that went wrong with hoverboards.
What went wrong with hoverboards?
The first reports of dangerous hoverboards, also called balanced scooters, were released in the last quarter of 2015. Less than a year later, in July 2017, the CPSC recalled half a million non-compliant hoverboards in the United States.
So, what has ruined the reputation of such an otherwise promising product to this extent? The same thing that temporarily grounded the Boeing 787 Dreamliner fleet: the lithium-ion battery.
As explained in this article, a damaged lithium-ion battery can catch fire very quickly and can even explode.
In this article, we try to explain what went wrong from the beginning and why these incidents continue to happen. We start by sharing the results of our market research conducted in January 2016 and then we will share what we think about the causes.
This is what we found out while selecting hoverboard manufacturers in Shenzen
Before going into details, let’s present our method of investigation. At first, we created a list of nearly 60 suppliers who claim to be hoverboard manufacturers.
For the record, almost all of these suppliers are based in the delta of the Perla river.
Based on their share capital, their scope of activity and the availability of audit reports, we have chosen 12 candidate suppliers on which to carry out further due diligence checks.
Before proceeding, it is important to remember that the primary objective of this research is to identify manufacturers of balanced scooters who could prove their compliance with the relevant safety regulations.
Out of 12 suppliers, only 3 made the list. That’s why:
1. Most balanced scooter sellers are not qualified manufacturers
This is no surprise. Out of 60 suppliers on our initial list, about 55 were wholesalers or even agents.
This is extremely common in many product segments, especially for products that are considered “trendy” – including, of course, hoverboards.
This is also one of the main causes of the problem, since many inexperienced buyers choose their suppliers based on pricing, web design, and other irrelevant factors.
2. Only a small fraction of these sellers can produce compliance documents. However, none of them can prove full compliance
Out of 60 suppliers, we have chosen 12. Of these, only 3 can produce at least one valid and verifiable test report, thus demonstrating that they have some experience in making products that comply with the safety regulations of the European Community and the United States.
Despite all this, among these 3 suppliers none of them can produce the compliance documents valid for all components, which include the following:
- Hoverboard
- Lithium-ion battery
- AC adapter (including cable and power socket)
Therefore, a complete set of documents is required for each subsystem, which cannot be produced.
This was not a surprise either, at least not for us. In fact, all this seems to be much better than we initially expected.
As with all products, testing is the responsibility of the buyer, not the supplier. At least these hoverboard factories could claim to have the technical capabilities to make compliant products.
That is, more or less, what we can ask for.
That said, it’s important to note that, a year ago, there were no special safety regulations for hoverboards. But more on that later.
3. You still get what you pay for
Finally, here’s the least surprising discovery of all: you get what you pay for.
A hoverboard that, for example, complies with the Low Voltage Directive and the RoHS regulation, costs more than a non-compliant one. We have actually asked suppliers to submit a quote for the same product, i.e. one that “complies with European Union directives” and one that is “ready to explode”.
The first hoverboard costs 20% more.
How can “dangerous products” continue to pass customs controls?
The fact is that hoverboards, and other dangerous products, do not pass customs checks by mistake. The door is wide open.
It happens that many people assume that a series of control procedures are applied to ensure that the goods entering the market comply with legal safety regulations – but this is not the case. Well, at least not yet.
Until now, customs authorities have carried out spot checks, but they often focus their checks on essential labelling requirements and, at best, documents.
Most shipments, however, are cleared through customs without control. In fact, it is impossible to control all shipments. On the other hand, until a few years ago, these checks were not actually necessary.
Today, anyone can get in touch with Asian suppliers via the internet. As a result, the market is flooded with poor quality and, potentially, dangerous products – imported by inexperienced and, sometimes, unscrupulous people.
Who is to blame?
Most people, of course, would blame the producers. But things are not so simple.
Based on my experience, I can say that many small importers may not care that much about the safety of the product.
I have heard that entrepreneurs reduce and even ridicule the importance of ensuring that a product complies with minimum safety requirements – and this is also partly due to the fact that the competent authorities do not enforce the laws.
Such entrepreneurs also tend to think that all these procedures should be the responsibility of the supplier. Perhaps it should be so, but this is not yet applicable to reality.
So, what do they worry about?
Of the price.
Since making a safe product is “boring”, shaving another 20 cents off the unit price is, for many buyers, a top priority. You get what you pay for, and this principle also applies to lithium-ion batteries and balanced scooters.
Product safety comes at a price, albeit a lot less than most people might think.
“I still want to import hoverboards. What can I do to manage the risks”?
As our research has shown, there are, of course, qualified manufacturers of balanced scooters in China, who can make compliant products.
That said, you need to check that the supplier uses components that comply with all relevant safety regulations. This means, for example, that you have to have the hoverboard tested by third parties in charge of such checks, and you have to make sure that the supplier gets the batteries and AC adapters from reputable companies like TDK and Samsung.
One problem faced by importers, at least in the United States, has been the lack of mandatory safety regulations to apply specifically to hoverboards.
Underwriter Laboratories develops regulations for electronic products. Although they have developed a procedure for testing hoverboards, UL 2272, it is not, however, a mandatory regulation.
That said, U.S. importers should still ensure compliance with all applicable UL standard regulations, including those that apply to lithium-ion batteries, AC adapters, and electrical outlets.
Even if not mandated by law, you will not be able to sell your product on Amazon unless you comply with UL regulations.
On the other hand, European importers can continue to refer, as usual, to the Low Voltage Directive and the Electromagnetic Compatibility Directive.
What are the long-term effects of these accidents?
At the beginning of 2016, we received an email from a European hoverboard importer. The buyer was desperate, as the entire shipment had been left pending until he had submitted all relevant (and verifiable) compliance documents.
Of course, the buyer did not possess such documentation. This wasn’t the only email we’ve received, as we continue to receive numerous emails from bankrupt buyers – but this time something has emerged.
This buyer explained to us that the shipment had been seized by the customs authorities. Once the goods were left pending, he was contacted by customs and given the opportunity to submit documentation.
As mentioned above, the buyer had no documents, but what happened next marks the point where the “fun” began.
Customs had sent a unit of product to the laboratory of the National Agency for the Safety of Electronic Products (which is not the actual name of the agency), to have safety tests carried out.
Most likely, customs authorities are tasked with controlling certain types of goods such as, for example, hoverboards.
Since this information must be specified on the bill of lading and other documents in the shipment, it is relatively easy for them to know which shipments should be left pending.
Next, we see closer cooperation between the various authorities, starting from the point of entry, with further surveillance of products already on the market.
In the future, there will probably also be mandatory procedures for the submission of documents, which will essentially oblige importers to hand over all relevant test reports and product certificates to the customs authorities – in order to have the goods cleared through customs.
This would be a revolution and, perhaps, the only solution to a very serious problem.
Standard document compliance audits will be implemented not only by governments around the world, but also by private companies.
For example, Amazon.com.
Amazon is already asking sellers of children’s products to produce documentation for the CPSIA regulation.
It is not unreasonable to think that it is only a matter of time before Amazon and other online marketplaces require the submission of compliance documents for most other product categories as well.
There is a lot to learn from hoverboard-related accidents. After all, something good might come up.
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