Summary of Key Points
Recently, several companies from the consumer sector that had nothing to do with batteries—such as Zhong Zhaozha, which sells water; Ribi Fashion, which operates in the fashion industry; and Shanshan Co., Ltd., which started in the clothing business—have all ventured into the lithium battery materials field. However, their approaches are quite different:
- Zhong Zhaozha: He used his spare money to invest in a solid-state electrolyte company, akin to playing the lottery. For him, with Nongfushanquan’s stable cash flow, this investment was like using spare cash on the lottery. If it succeeds, he could gain a foothold in the next generation of battery materials; if not, it won’t be a major setback (since it’s just a small equity stake).
- Ribi Fashion: The company completely shifted its focus to lithium battery binders and even changed its name to “Puyuan Chemical Materials Group”, investing 1.42 billion yuan in the acquisition and another 300 million yuan in capacity expansion. This means giving up its original clothing business entirely and betting on lithium battery materials, which carries significant risks.
- Shanshan Co., Ltd.: It took 20 years to transition from the clothing industry to become a global leader in lithium battery anode materials. This transformation involved gradual accumulation of technology, capacity, and customer base.
The rationale behind this is that while the consumer sector’s growth has slowed down, lithium battery materials have become a hot target for capital due to the surge in demand from new energy vehicles and energy storage applications.
However, crossing over into this field is not about easy profits; there are also risks associated with immature technology, long transformation periods, and significant skill gaps.
Different Approaches to Crossing Over
The three companies’ approaches can be seen as three different types of “gambling strategies”:
- Zhong Zhaozha: Investing in the future with spare money. He didn’t establish his own battery factory but used funds from Yangshengtang to invest 500 million yuan in Zhibang Lithium Battery, a company that had been established for only two years and specializes in solid-state electrolytes. For him, this was like using cash to buy lottery tickets; if successful, it would put him in the right position for the next generation of battery materials; if not, it wouldn’t be too detrimental.
- Ribi Fashion: Betting everything on a new industry by acquiring a lithium battery binder company and changing its name. This move carries high risks, as failure could impact the entire listed company’s performance.
- Shanshan Co., Ltd.: A gradual transition over 20 years to become a leader in the field. It started in the clothing business but took until 2013 for lithium battery revenue to exceed that of its clothing business, and by 2020, lithium battery sales accounted for nearly 80% of its total revenue.
Why the Focus on Lithium Battery Materials?
The reason these companies are turning to lithium battery materials is that their traditional businesses are facing challenges:
- Slow growth in the consumer sector: Zhong Zhaozha’s Wanta Biology (vaccine business) reported its first loss in 2025, and while bottled water sales are stable, there’s a need for new growth points. The clothing industry has shifted from a seller’s market to a buyer’s market, with fierce competition and thin profits.
- Lithium battery materials are attractive:
- Large market: The demand for new energy vehicles and energy storage is driving the expansion of the lithium battery industry chain.
- Easy entry: These companies can enter the market without directly competing with giants like CATL and BYD by focusing on material segments (binders, anodes, solid-state electrolytes), making it easier to establish barriers.
- Many opportunities: Rapid technological advancements (e.g., solid-state batteries) could lead to the reconfiguration of existing industry chains, providing new opportunities for companies.
Solid-State Electrolytes: The Key to the Next Generation of Batteries
Zhong Zhaozha’s investment in solid-state electrolytes highlights their importance. Traditional lithium batteries use liquid electrolytes, which can leak and catch fire; solid-state electrolytes, made from solid materials, are safer and can store more energy (resulting in longer battery life). If all-solid-state batteries become mainstream, the current electrolyte and separator markets may be replaced, creating a new market for solid-state electrolytes.
Current Status of Solid-State Electrolytes
Ningde Times’ chairman described solid-state batteries as being only at “Level 4” out of a possible 9 levels, indicating that there’s still much to be done before mass production is feasible. Challenges include converting laboratory technology into stable, cost-effective products and meeting the strict certification requirements of battery manufacturers. Zhibang Lithium Battery also acknowledges the difficulties in scaling up from laboratory research to commercial production.
Crossing Over Is Not About Easy Profits
Despite Shanshan Co., Ltd.’s success, most companies facing this transition may encounter obstacles:
- Long transformation periods: It took Shanshan 20 years to succeed; Ribi Fashion’s rapid transition would be very challenging.
- High technical barriers: The requirements for producing lithium battery materials (chemical technology, supply chain management, customer certification) are completely different from those of the consumer industries they were in.
- Market risks: If solid-state batteries cannot be mass-produced in time, investments could be lost. Similarly, if the cost of materials like binders doesn’t decrease, there may be no demand.
Consumers Capital Seeking New Opportunities
Behind these cross-over moves is the search for new growth opportunities by consumer sector companies. While their cash flows are stable, growth is slow, and lithium battery materials offer higher returns. However, it’s important to distinguish between genuine strategic investments (like Shanshan Co., Ltd.) and mere follow-ups (entering the market without considering one’s own capabilities).
In summary, consumer companies’ entry into the lithium battery materials field is not the beginning of a “miracle story of wealth creation” but rather a long-term battle that requires strength and patience.