Niu

Prospectus Summary

PROSPECTUS SUMMARY The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements appearing elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in the ADSs discussed under "Risk Factors," before deciding whether to invest in the ADSs. This prospectus contains information from an industry report commissioned by us and prepared by China Insights Consultancy, or CIC, an independent research firm, to provide information regarding our industry and our market position.

Our Mission

Our mission is to redefine urban mobility and make life better.

Our Vision

Our vision is to become the number one brand for urban mobility, powered by design and technology.

Overview

We are the world's leading provider of smart urban mobility solutions, according to CIC. We have created a new market category—smart electric two-wheeled vehicles—to redefine urban mobility. Before NIU, smart electric two-wheeled vehicles did not exist in China, and two-wheeled vehicles were perceived low-end. We have changed that perception with our smart e-scooters and premium brand "NIU."

We currently design, manufacture and sell high-performance smart e-scooters. We are the largest lithium-ion battery-powered e-scooters company in China and a leader in Europe in terms of sales volume in 2017, according to CIC. As of June 30, 2018, we had sold more than 431,500 smart e-scooters in China, Europe and other countries. According to CIC, in 2017, we led in China's lithium-ion battery-powered electric two-wheeled vehicles market with market shares of 26.0% and 39.5% in terms of sales volume and sales value, respectively, compared to 6.7% and 7.0% for the number two player, and we ranked third in the European medium-end e-motorcycle market with a market share of 11.1% in terms of sales volume.

We have a streamlined product portfolio consisting of three series, N, M and U, with multiple models or specifications for each series. We have adopted an omnichannel retail model, integrating the offline and online channels, to sell our products and provide services. We sell and service our products through a unique "city partner" system in China, which consisted of 205 city partners with 571 franchised stores in over 150 cities in China, and 18 distributors in 23 countries overseas as of June 30, 2018, as well as on our own online store and third-party e-commerce platforms.

We are the first lifestyle brand for urban mobility in China, according to CIC. Our award-winning smart e-scooters represent style, freedom and technology. Our brand "NIU" has inspired many followers and has enabled us to build a loyal user base. We offer the NIU app as an integral part of the user experience, and the app had over 457,000 registered users as of June 30, 2018. NIU fan clubs are established in over 50 cities in China, where fans actively organize NIU scooter-related events. The strong brand awareness and customer loyalty have given us exceptional pricing power. According to CIC, our volume-weighted average retail price is approximately 86% higher than that of our competitors in the industry in 2017. Capitalizing on our premium brand, we have also been able to sell lifestyle accessories, which are well received by customers.

We have adopted a user-centric philosophy to design our smart e-scooters. We collect user feedback and product performance data to develop new products or functionalities to satisfy the unmet demand. All of our products are designed to embody the themes of style, freedom and technology, and share the same design language. Our smart e-scooters have amassed strong international recognition for innovation and design. We have built our smart e-scooters based on our advanced and innovative technologies, including smart technologies, powertrain and battery technologies and automotive inspired functionalities. We integrate cutting-edge technologies from industry leaders such as BOSCH, and our own technologies into a proprietary system that delivers an excellent user experience and optimal performance. Our smart e-scooters are the first in the industry to provide updates to firmware regularly over-the-air (OTA) to fine-tune the performance, and such OTA function has only been seen in high-end electric cars.

We provide connectivity solutions and value-added services to our users. Our NIU app synchronizes with the smart e-scooters and communicates with our cloud system. Through the app, our users receive real-time information relating to their smart e-scooters. We currently collect 462 types of data points covering 72 dimensions from our smart e-scooters in real-time for monitoring and diagnostic purposes, and had accumulated over 40 terabytes (TB) of data as of June 30, 2018. We use the data collected to provide smart maintenance and services, and guide the users on when and how to properly maintain our products to extend their service life and achieve better performance. We also analyze this data to help us improve our products and create new services. In addition, we collect and analyze user behavioral data from our NIU app and our website, from which we derive insights to further engage our customers and strengthen brand loyalty.

We have grown rapidly while at the same time improving our margin. Our net revenues were RMB769.4 million (US$116.2 million) in 2017, representing an increase of 116.8% from RMB354.8 million in 2016. Our net revenues were RMB557.1 million (US$84.2 million) for the six months ended June 30, 2018, as compared to RMB285.1 million for the same period of 2017, representing an increase of 95.4%. We had a net loss of RMB184.7 million (US$27.9 million) in 2017 as compared to RMB232.7 million in 2016, with our net loss margin, defined as net loss as a percentage of net revenues, improving from 65.6% in 2016 to 24.0% in 2017. We recorded a net loss of RMB314.9 million (US$47.6 million) for the six months ended June 30, 2018, as compared to a net loss of RMB96.6 million for the same period of 2017, with our net loss margin increasing from 33.9% for the six months ended June 30, 2017 to 56.5% for the six months ended June 30, 2018. Our adjusted net loss, a non-GAAP financial measure defined as net loss excluding share-based compensation expenses and change in fair value of a convertible loan, was RMB79.1 million (US$12.0 million) in 2017 as compared to RMB154.4 million in 2016, with our adjusted net loss margin, defined as adjusted net loss as a percentage of net revenues, improving from 43.5% in 2016 to 10.3% in 2017. Our adjusted net loss was RMB46.5 million (US$7.0 million) for the six months ended June 30, 2018, as compared to RMB40.1 million for the same period of 2017, with our adjusted net loss margin improving from 14.0% for the six months ended June 30, 2017 to 8.3% for the six months ended June 30, 2018. See "—Summary Consolidated Financial and Operating Data—Non-GAAP Financial Measures."

Our Industry

Electric Two-Wheeled Vehicles Market in China

Urban mobility is defined as two-wheeled vehicles, including scooters, bicycles and motorcycles, used for short-distance and intra-city travels. As of December 31, 2017, there were approximately 700 million two-wheeled vehicles in China, and on average, one out of every two persons owns one two-wheeled vehicle. According to CIC, China is the largest market for electric two-wheeled vehicles, where sales volume and retail sales value of electric two-wheeled vehicles reached 27.0 million units and US$8.0 billion in 2017, respectively. Sales volume and retail sales value of electric two-wheeled vehicles in China are expected to reach 34.9 million units and US$13.0 billion by 2022, respectively.

Transition from lead-acid batteries to lithium-ion batteries

In the electric two-wheeled vehicles market, there is a transition from lead-acid batteries to lithium-ion batteries. According to CIC, the penetration rate of lithium-ion battery-powered electric two-wheeled vehicles, in terms of retail sales value, is expected to reach approximately 56.8% by 2022. In terms of retail sales volume, the lithium-ion battery-powered electric two-wheeled vehicles market in China grew rapidly from 0.1 million units in 2013 to 0.7 million units in 2017 and is expected to reach 15.2 million units by 2022, representing a CAGR of 49.9% from 2013 to 2017 and a CAGR of 84.4% from 2017 to 2022, respectively, according to CIC. The transition from lead-acid batteries to lithium-ion batteries is mainly driven by the cost-efficiency, convenience and environmental friendliness of lithium-ion batteries.

Penetration of smart two-wheeled vehicles

Smart two-wheeled vehicles are vehicles connected to the cloud that provide real-time communications between the users and vehicles. They are changing the way we use and interact with our vehicles. CIC estimates that connected automobiles penetration rate in terms of sales volume globally has increased from 10% in 2013 to 40% in 2017, and is expected to reach approximately 57% by 2022, driven by advancements in communication technologies. Smart two-wheeled vehicles collect telematics and driving behavior data, and that data are analyzed real-time to keep the vehicle's performance, battery, efficiency and safety in check. They provide data for vehicle makers to continually refine their existing products and come up with better designs. Smart vehicles have also accelerated the integration of information services into vehicles, which make them smarter with more features, enhancing the user experience. Smart two-wheeled vehicles are increasingly prevalent in both the Chinese and international markets. The penetration rate in terms of sales volume of smart two-wheeled vehicles is expected to grow faster than that of connected automobiles between 2017 and 2022, driven by higher electrification rate, affordability and shorter replacement cycle.

Lifestyle brands and brand loyalty

In China's electric two-wheeled vehicles market, lifestyle brands did not exist before NIU, as most electric two-wheeled vehicles were typically seen as affordable transportation means. The consumption upgrade trend has opened up opportunities for lifestyle branded electric two-wheeled vehicles, because there were no established lifestyle brands in this industry.

Lifestyle branded two-wheeled vehicles command premium pricing, larger revenue from sales of accessories, customer loyalty and repeated purchases. Brand loyalty is important, as consumers who can relate to the brand image are more likely to make repeated purchases and recommend the product to others.

Electric Two-Wheeled Vehicles Market in the European Union, Southeast Asia and India

According to CIC, there is rapid growth of the two-wheeled electric vehicles market in the European Union, Southeast Asia and India as governments and consumers seek out environmentally-friendly and cost-effective vehicles. In the European Union, retail sales volume of electric two-wheeled vehicles grew from 0.9 million units to 2.1 million units from 2013 to 2017, while sales value of electric two-wheeled vehicles in the EU grew from EUR1.5 billion to EUR3.7 billion. CIC estimates that the electric two-wheeled vehicles market in the EU is expected to reach 3.7 million units in terms of sales volume and EUR7.5 billion in terms of sales value by 2022. In the EU, electric two-wheeled vehicles market can be divided into e-bike market and e-motorcycle market. The e-motorcycle market is still at its early stage of the industry life cycle with an expected annual growth rate of around 30% in the next five years in terms of sales volume. The e-motorcycle market can be further divided into low-end, medium-end, and high-end markets by retail price. The medium-end market refers to the market with a retail price per unit ranging from EUR2,000 to EUR5,000.

In Southeast Asia, market penetration of electric two-wheeled vehicles in the two-wheeled vehicles market is lower than China, indicating huge market potential for electric two-wheeled vehicles in the region. The retail market for electric two-wheeled vehicles in Southeast Asia continued to grow steadily during the period from 2013 to 2017. Retail sales value rose from US$0.3 billion in 2013 to US$0.6 billion in 2017. Retail sales volume is expected to reach 6.9 million units and sales value is projected to reach US$2.5 billion by 2022. In India, the market for electric two-wheeled vehicles reached $17.5 million in 2017, and is projected to reach US$187.8 million by 2022.

Our Competitive Strengths

We believe that the following strengths contribute to our success and differentiate us from our competitors:

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pioneer in urban mobility solutions;


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lifestyle brand;


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well-designed smart e-scooters;


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user-centric product philosophy;


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big data capability;


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omnichannel retail model; and


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visionary and experienced management team.

Our Growth Strategies

We intend to grow our business by pursuing the following key strategies:

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strengthen our leadership in urban mobility;


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enhance our brand;


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continue our innovation;


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grow our product and service portfolio;


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expand our sales network in China; and


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drive our international strategy.

Our Challenges

Our business and successful execution of our strategies are subject to certain challenges, risks and uncertainties related to our business and our industry, regulation of our business and corporate structure and doing business in China.

The challenges, risks and uncertainties we face include, but are not limited to, our ability to:

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maintain and enhance our "NIU" brand;


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innovate and successfully launch new products and services;


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maintain and expand our offline distribution network;


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satisfy the mandated safety standards relating to our e-scooters;

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secure supply of components and raw materials used in our e-scooters;


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manufacture, launch and sell smart e-scooters meeting customer expectations;


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grow collaboration with our operation partners;


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control costs associated with our operation; and


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recruit and retain dedicated executive officers, key employees and qualified personnel.

Please see "Risk Factors" and other information included in this prospectus for a discussion of these and other risks and uncertainties that we face.

Corporate History and Structure

We commenced operations in September 2014 through Beijing Niudian Technology Co., Ltd., or Beijing Niudian, and launched our N-Series smart e-scooters in June 2015.

In November 2014, we incorporated Niu Technologies in the Cayman Islands as our offshore holding company to facilitate financing and offshore listing. Shortly following its incorporation, Niu Technologies established a wholly-owned subsidiary in Hong Kong, Niu Technologies Group Limited.

In May 2015, Niu Technologies Group Limited established a wholly-owned subsidiary in China, Beijing Niudian Information Technology Co., Ltd., or Niudian Information.

Due to the PRC legal restrictions on foreign ownership in companies that provide value-added telecommunications services in China, we operate our NIU app, our website www.niu.com and other related business through Beijing Niudian, a PRC company in which the equity interests are held by PRC citizens. In May 2015, we obtained control over Beijing Niudian and its subsidiaries through Niudian Information by entering into a series of contractual arrangements with Beijing Niudian and its shareholders. The contractual arrangements allow us to (i) exercise effective control over Beijing Niudian, (ii) receive substantially all of the economic benefits of Beijing Niudian, and (iii) have an exclusive call option to or designate any third party to purchase all or part of the equity interests in and assets of Beijing Niudian when and to the extent permitted by PRC law. As a result of our direct ownership in Niudian Information and the contractual arrangements with Beijing Niudian, we have effective control over, and are the primary beneficiary of, Beijing Niudian. Beijing Niudian is therefore our consolidated variable interest entity, which generally refers to an entity in which we do not have any equity interests but whose financial results are consolidated into our consolidated financial statements in accordance with the accounting principles generally accepted in the United States of America, or U.S. GAAP, because we have a controlling financial interest in, and thus are the primary beneficiary of, that entity. We have consolidated the financial results of Beijing Niudian and its subsidiaries into our consolidated financial statements in accordance with U.S. GAAP.

We rely on contractual arrangements to control and operate the businesses and assets held by Beijing Niudian and its subsidiaries. The contractual arrangements may not be as effective in providing operational control as direct ownership. If Beijing Niudian or any of its shareholders fails to perform their respective obligations under the contractual arrangements, we could be limited in our ability to enforce the contractual arrangements that give us effective control over Beijing Niuidan. Furthermore, if we are unable to maintain effective control over Beijing Niuidan, we would not be able to continue to consolidate the financial results of Beijing Niuidan and its subsidiaries with ours. See "Risk Factors—Risks Relating to Our Corporate Structure—We rely on contractual arrangements with our VIE and its shareholders for a large portion of our business operations, which may not be as effective as direct ownership in providing operational control." and "—Any failure by our VIE or its shareholders to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business."

The following diagram illustrates our corporate structure, including our subsidiaries, our VIE and its subsidiaries, as of the date of this prospectus:

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(1)

Token Yilin Hu, Mingming Huang, Yi'nan Li, Shichun Wu, Yuqin Zhang and Changlong Sheng each holds 79.21%, 6.32%, 5.0%, 4.21%, 2.63% and 2.63% of the equity interest in Beijing Niudian, respectively. All of the shareholders of Beijing Niudian are beneficial owners of the shares of our company. Mr. Token Yilin Hu is also a director and vice president of research and development of our company.

(2)

We plan to dissolve this entity in the near future as it does not engage in substantial business activities.

Implication of Being an Emerging Growth Company

As a company with less than US$1.07 billion in revenue for our last fiscal year, we qualify as an "emerging growth company" pursuant to the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements compared to those that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company's internal control over financial reporting. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards and we do not plan to opt out of such exemptions afforded to an emerging growth company.

We will remain an emerging growth company until the earliest of (a) the last day of the fiscal year during which we have total annual gross revenues of at least US$1.07 billion; (b) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (c) the date on which we have, during the preceding three-year period, issued more than US$1.0 billion in non-convertible debt; or (d) the date on which we are deemed to be a "large accelerated filer" under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of the ADSs that are held by non-affiliates is at least US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.

Corporate Information

Our principal executive offices are located at No. 10 Wangjing Street, Building A, 11/F, Chaoyang District, Beijing 100102, People's Republic of China. Our telephone number at this address is +86 10 6432-1899. Our registered office in the Cayman Islands is located at the offices of Maples Corporate Services Limited at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

Investors should submit any inquiries to the address and telephone number of our principal executive offices. Our main website is www.niu.com. The information contained on our website is not a part of this prospectus. Our agent for service of process in the United States is Puglisi & Associates, located at 850 Library Avenue, Suite 204, Newark, Delaware 19711.

Conventions that Apply to this Prospectus

Unless otherwise indicated or the context otherwise requires, references in this prospectus to: