The Ministry of Water Resources and China Meteorological Bureau jointly issued the first meteorological warning of red mountain torrents this year.

The Ministry of Water Resources and the China Meteorological Bureau jointly issued a meteorological warning for red mountain torrents at 18: 00 on June 19:

From 20: 00 on June 19 to 20: 00 on June 20, some areas in northeastern Jiangxi and western Zhejiang are likely to have mountain torrents (orange warning), and the possibility of mountain torrents in northeastern Jiangxi is very high (red warning). Please pay attention to real-time monitoring, flood prevention and early warning, transfer and avoidance.

(Source: Editor of Central Meteorological Observatory: Yan Xin)

The latest announcement! The General Administration of Market Supervision announced the recall of automobiles and consumer goods nationwide in 2022

In 2022, the General Administration of Market Supervision insisted on overall development and safety, strengthened recall supervision, and earnestly safeguarded consumer rights and social public safety. At the same time, in view of the new trend of technological development, a number of policies have been issued to encourage technological innovation of enterprises, advocate the best safety design practice and promote the high-quality development of the industry. According to the Regulations on the Management of Defective Automobile Product Recall, the Interim Provisions on the Management of Consumer Goods Recall and the Regulations on the Management of Motor Vehicle Emission Recall, the relevant information about the national automobile and consumer goods recall in 2022 is hereby notified as follows:

I. Implementation of the recall

(1) Automobile safety recall

In 2022, China carried out 204 automobile recalls, involving 4.488 million vehicles, which were 12.4% and 48.6% lower than the previous year (see Figure 1). Affected by the defect investigation by the General Administration of Market Supervision, there were 26 recalls involving 1.759 million vehicles, accounting for 39.2% of the total number of recalls in the whole year. With the increase in the number of new energy vehicles, the number of new energy vehicle recalls reached a record high. In the whole year, 47 new energy vehicle recalls were carried out, involving 1.212 million vehicles, accounting for 27.0% of the total number of recalls in the whole year, with a year-on-year increase of 31.5%. Remote upgrade (OTA) has gradually become an important way to improve vehicle safety, with 17 recalls involving 887,000 vehicles, accounting for 19.8% of the total number of recalls in the whole year. By the end of 2022, China has carried out a total of 2,628 vehicle recalls, involving 95.787 million vehicles.


Figure 1 The number and frequency of automobile product recalls from 2004 to 2022.

In terms of defect clues, in 2022, the General Administration of Market Supervision received 35,896 reports of automobile defects provided by consumers, involving engine assembly (accounting for 30.7%), electrical equipment (accounting for 23.3%), body (accounting for 18.1%) and transmission system (accounting for 12.5%). Among them, 4,300 new energy vehicle defect clues were reported, reflecting that the problems of power batteries, motors and electronic control systems accounted for 41.9% of the new energy vehicle defect clues.

From the assembly involved in the defect, electronic appliances and transmission system are the main parts causing the defect, accounting for 67.1% of the total number of recalls. There are obviously fewer recalls involving engine problems, accounting for a decrease of 33.8% compared with the previous year. 54 recalls due to electronic and electrical defects, involving 2.191 million vehicles, accounting for 48.8% of the total number of recalls; 15 recalls due to transmission system defects, involving 822,000 vehicles, accounting for 18.3% of the total number of recalls; There were 16 recalls due to brake system defects, involving 485,000 vehicles, accounting for 10.8% of the total recalls (see Figure 2).


Fig. 2 Distribution of automobile defects related to assembly recalls in 2022

In terms of defects, there were 105 recalls due to manufacturing reasons, involving 1.728 million vehicles, accounting for 38.5% of the total number of recalls, an increase of 23.1% over the previous year; 95 recalls due to design reasons, involving 2.757 million vehicles, accounting for 61.4% of the total number of recalls; There were 5 recalls due to signs, involving 3,000 vehicles, accounting for 0.1% of the total number of recalls.

(2) Safety recall of consumer goods

In 2022, China recalled 690 consumer goods, involving 9.966 million products, up by 25.7% and 37.7% respectively over the previous year (see Figure 3). Affected by the market supervision department’s investigation, the number of recalls was 649, involving 3.443 million products, accounting for 94.1% and 34.5% of the total number of recalls, respectively. Defect investigation is still the main way to promote consumer goods enterprises to implement recalls. By the end of 2022, a total of 4,114 consumer product recalls were carried out, involving 90.238 million products.


Figure 3 Number and quantity of consumer product recalls from 2008 to 2022

Judging from the defect clues, in 2022, the General Administration of Market Supervision received 15,230 reports of consumer goods defect clues, involving electronic appliances (83.8%), daily textiles and clothing (7.8%), other transportation equipment (4.2%) and other products. The problems mainly involved overheating of some electronic products, charging failure, battery bulging, abnormal screen display of some smart household appliances, abnormal biometric function, and some homes.

In terms of product categories, in 2022, there were 50 recalls of daily necessities, involving 6.426 million products, accounting for 64.5% of the total number of recalls; 149 recalls of electronic appliances, involving 1.126 million products, accounting for 11.3% of the total number of recalls; Children’s products were recalled 208 times, involving 978,000 products, accounting for 9.8% of the total number of recalls; There were 105 recalls of food-related products, involving 918,000 products, accounting for 9.2% of the total number of recalls (see Figure 4).


Figure 4 Distribution of main categories of recalled products of consumer goods in 2022

From the perspective of defects, in 2022, there were 106 recalls due to product design problems, involving 822,000 products; 537 recalls due to manufacturing problems, involving 9.059 million products; There were 47 recalls due to labeling problems, involving 85,000 products (see Figure 5).


Figure 5 Classification of defects in consumer goods in 2022 (recall quantity and proportion)

According to the types of defects, there were 674 recalls due to standard compliance, involving 3.312 million products, accounting for 97.7% and 33.2% of the total number of recalls, respectively. The standard compliance is still the main reason for the recall of consumer goods. Household daily necessities, electronic appliances and children’s products are the top three in the number of recalls, which should attract the attention of production enterprises.

(3) Motor vehicle emission recall

In 2022, the General Administration of Market Supervision worked closely with the Ministry of Ecology and Environment to strengthen the exchange and sharing of emission information, establish a joint technical consultation mechanism, and push the motor vehicle emission recall work on the right track. In 2022, the General Administration of Market Supervision collected 1,662 clues related to emission hazards, jointly organized 3 expert technical consultations, initiated 4 related case investigations, and urged producers to carry out 11 emission recalls involving 4,634 vehicles. By the end of 2022, China had implemented 1.463 million vehicles with emission recalls.

Second, the recall management

The first is to improve the recall system. Improve the recall management mechanism of unified management and graded implementation throughout the country, and strengthen the guidance and supervision of the recall of local consumer goods. The second is to highlight the key points of the recall work. Focusing on new energy and intelligent networked vehicles, we will focus on the recall of consumer goods and key products related to the monitoring catalogue, improve the technical analysis and emergency response capabilities of defects, and increase the investigation of defects. The third is to innovate safety supervision methods. In the automotive aftermarket stage, aiming at the cutting-edge technology of vehicle application, we explored the automotive safety sandbox supervision system, and issued the Notice on Trial Implementation of the Automotive Safety Sandbox Supervision System (No.6 of the General Administration of Market Supervision and other five ministries and commissions in 2022) and the Notice of the General Office of the General Administration of Market Supervision on Starting the Pilot Application of Automotive Safety Sandbox Supervision (No.1708 of the Municipal Supervision Letter [2022]), which fully stimulated the innovation vitality of enterprises on the premise of adhering to the safety bottom line. In the field of consumer goods, improve the supervision of online sales of consumer goods recall, guide e-commerce platforms to strengthen the safety management of online sales products, carry out product safety and recall commitments of online platform operating enterprises, improve product traceability system, strengthen recall information tips, prevent defective products from continuing to be sold, and promote co-governance cooperation in online sales of consumer goods recall.

Third, the focus of the next step

In 2023, the General Administration of Market Supervision will continue to deepen the recall work around the Party Central Committee and the State Council to speed up the decision-making and deployment of building a quality power and the objectives and tasks of the modernization of market supervision during the 14 th Five-Year Plan:

The first is to deepen the innovation of product safety supervision.Steadily promote the supervision system of automobile safety sandbox to ensure that the innovation system is safe, moderate and controllable. Deepen the OTA safety assessment of smart cars, promote enterprises to continuously improve product design and manufacturing, reduce product safety risks, and explore a new mode of product safety supervision based on the new product safety problems brought by Internet of Things technology.

The second is to strengthen the supervision of automobile product recall.Focus on large and medium-sized vans, new energy and intelligent networked vehicles, etc., increase the intensity of defect investigation, urge production enterprises to earnestly fulfill the main responsibility of product safety, and keep the bottom line of product safety. Strengthen the implementation of the accident reporting system for new energy vehicle manufacturers and increase the investigation of accidents of new energy vehicle products. Strengthen the investigation of motor vehicle emission recall cases with the Ministry of Ecology and Environment to protect and improve the ecological environment.

The third is to improve the operation mechanism of consumer goods recall management.Strengthen the guidance and supervision of the national consumer goods recall, strengthen the responsibility of territorial management, enhance the recall management ability, and increase the coordination of consumer goods recall management in various places. Strengthen the key monitoring of consumer goods recall and implement key management. Strengthen the management of online sales of consumer goods recall, and further promote the cooperation between e-commerce platform security and recall.

The fourth is to strengthen the construction of technical support system for recall.Promote the construction of accident investigation system for new energy vehicles, improve the product injury monitoring system, and strengthen the statistical analysis and safety assessment of product injuries. Improve the ability of hazard identification and experimental verification of automobiles and consumer goods, and strengthen the analysis of product defects and failures. Strengthen the research on the safety analysis method of intelligent network connection and new technology of new energy vehicles. Establish a motor vehicle emission recall information system and strengthen information sharing among departments.

The fifth is to optimize the linkage mechanism between recall and quality improvement.Cooperate with industry associations and enterprises to carry out the project of "implementing a recall and upgrading an industry" to promote the improvement and upgrading of the overall quality level of related industries. In view of the internal quality and safety management problems of enterprises, improve the ability of defect analysis and identification, strengthen product safety testing, and promote the quality upgrading of automobile and consumer goods industry chain.

The first coverage report: the car networking terminal "Little Giant" benefited from the prosperity of its own brand passenger cars.

  The company is the "little giant" of the car networking terminal, deeply binding big customers. The company’s main products include intelligent terminals of the Internet of Vehicles, intelligent modules of the Internet of Things, software and technical services; It is in the leading position in the automotive Bluetooth /WiFi module, vehicle networking TBOX, automotive eCall system, new energy management system and other fields. The intelligent terminal of vehicle networking is the company’s main business, with revenue accounting for 78.33% in 2023. Thanks to the prosperity of downstream industries, the company’s revenue has maintained rapid growth in recent years. From 2023 to 2024 H1, the operating income was 580/8.13/430 million yuan respectively, and YOY was 37.53%/40.18%/31.13% in turn. At the same time, based on the first-Mover advantage, the company deeply binds the industry leader, and the sales volume of SAIC ranked first in China in 23 years. The company has been cooperating with SAIC since 2012, and currently ships TBOX and eCall terminals in batches. SAIC Venture Capital, a subsidiary of SAIC Group, holds 2.14% of the company’s shares and is the fifth largest shareholder of the company. The company will continue to deepen its application expansion in the field of vehicle networking with SAIC and promote strategic coordination.

  TBOX: Benefiting from the sales boom of self-owned brand passenger cars, the market space reached 10 billion, and domestic manufacturers gradually broke through. In 2023, the sales volume of self-owned brand passenger cars in China was about 14.596 million, achieving a rapid growth of 24.1%. TBOX, as the carrier of the interaction between car networks, plays an important role as a bridge, and the assembly rate is increasing year by year. According to the forecast of Gai Shi Automobile Research Institute, the market scale of TBOX for passenger cars will reach 13.78 billion yuan in 27 years. In terms of competition pattern, local suppliers mainly supply their own brands. In 2023, there were six domestic manufacturers in the top ten manufacturers of TBOX for passenger cars in China, and the domestic substitution trend was remarkable. At present, the company’s Internet of Things TBOX has a market share of 5.59% in the passenger car market. At the same time, it raises investment funds to lay out the research and development and industrialization projects of 5G vehicle networking TBOX, and seize the technical highland, which is expected to continuously increase the market share.

  ECall: The company preempted the layout and benefited from the tide of independent car companies. ECall terminal is an important passive safety system unit after seat belt and airbag, which requires high strength and accuracy of its components. The European Union, Eurasian Economic Union, Britain, India, United Arab Emirates and other countries and organizations all require mandatory standard eCall smart terminals. Driven by the export growth of self-owned brand passenger cars (24Q1-Q3 increased by 27.8%), the demand for eCall terminals increased significantly. Since 13 years ago, the company has been deeply involved in the research and development of eCall. It is one of the few suppliers in China that has obtained eCall certification from the European Union, UN-R144 standard certification from the United Nations Economic Commission for Europe, and eCall certification from the United Arab Emirates. It has provided eCall terminals for local independent brands such as SAIC, Chery Automobile, Geely Automobile, Great Wall Motor, BYD, Weilai Automobile and other overseas markets, which will fully benefit from the increase in the export volume of independent brand passenger cars.

  Investment suggestion: Huihan Co., Ltd. is one of the major manufacturers of domestic car networking terminals and modules. It has been deeply involved in TBOX and eCall systems for many years and has rich industry experience and customer accumulation, which will fully benefit from the increase in domestic sales of self-owned brand passenger cars and the export boom. It is estimated that the company’s net profit for 24-26 years will be RMB 192 million, RMB 257 million and RMB 319 million respectively, and the closing price on October 31, 2014 will be 29, 21 and 17 times of PE, which will be covered for the first time and given a "recommended" rating.

  Risk warning: the risk of intensified market competition; Risk of price and profit rate changes; The sales volume of the company’s products is less than expected.