China’s makeshift hoverboard industry is imploding after Amazon’s safety crackdown

How We Buy
How We Buy

Chinese companies that helped fuel the global hoverboard craze are unraveling rapidly, after Western retailers like Amazon demanded new safety and legality standards earlier this month. Some are so upset by Amazon’s actions they plan to protest outside Amazon’s Guangzhou office later today (Dec. 29).

“The whole industry has been wiped clean,” Lou Bin, a Hangzhou-based hoverboard re-seller whose business has suffered after Amazon introduced new requirements, told Quartz. “Small factories have exited the market, and everyone is paying more attention to safety and patents.”

In mid-December, Amazon, one of the last major Western retailers where US and UK consumers could buy no-name Chinese hoverboards, introduced strict new requirements that wiped out most of its online listings, in response to a string of fires linked to the boards (which don’t actually hover, but roll on the ground).

Amazon told vendors they must submit documents proving the boards met specific safety standards, along with a letter from a lawyer promising they would not implicate Amazon if they were sued for patent infringement by Razor, the American toy company that owns the US patent for the hoverboard (though it still remains in legal limbo). After Amazon’s missive, e-commerce sites like Overstock stopped carrying them altogether (although Alibaba, China’s e-commerce giant, continues to offer them).

As a result, only seven hoverboard brands are currently listed on Amazon in the US, a fraction of the dozens of importers and exporters that sold hoverboards on the site just a month ago. Amazon’s UK site now only sells hoverboard accessories, not actual hoverboards.

Millions of the boards were exported from China’s electronics manufacturing center of Shenzhen in the past year, but now that production has stalled.

Feng Jian of Shenzhen Bojulong Display Technology, a manufacturer, told Quartz he estimates more than half of of Shenzhen’s hoverboard factories have stopped making the product completely. His company’s orders fell 50% after Amazon’s crackdown, he said, and he cut his staff from 500 to 100.

“Before we were making about 1,000 hoverboards a day. Now we’re doing few hundred,” Feng Jian said. “As soon as Amazon sent out the notice, I went and laid off a few staff,” he adds.

British importers who sold hoverboards from China on Amazon have been hit hard too. Amazon advised all of its hoverboard customers to chuck devices bought before the crackdown, and told UK customers they’d be eligible for refunds. This caused a surge in returns, which ended up coming out of the UK vendors’ pockets. Amazon has not made a similar promise about refunds in the US.

Meanwhile, many Chinese hoverboard distributors allege Amazon illegally froze their online accounts on the e-commerce site, cheating them out of millions of dollars of sales they made before the crackdown. Today, dozens of these Chinese companies are planning to protest outside of Amazon’s Guangzhou office, several told Quartz, demanding the cash they say Amazon owes them.

“These are not requirements, this is a violation of the rights of sellers,” one former Amazon merchant based in Shenzhen told Quartz. “Amazon never negotiated with us, and what they have done is illegal.”

Amazon has not responded to multiple requests for comment or an interview.

Another seller, Ma Ning, told Quartz he sold 600 hoverboards in October over the course of ten days, earning 1 million yuan (about $154,000) in sales, but still hasn’t received any payment from Amazon.

“The patent and safety requirements are fair,” he told Quartz, but Amazon should not be deducting refunds from sales they made before the crackdown. “They’re like kings, and we’re getting massacred.”

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