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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2022.

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

For the transition period from to

Commission file number: 001-38696

Niu Technologies

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name into English)

Cayman Islands

(Jurisdiction of incorporation or organization)

No.1 Building, No. 195 Huilongguan East Road,

Changping District, Beijing 102208

People’s Republic of China

(Address of principal executive offices)

Fion Wenjuan Zhou, Chief Financial Officer

Telephone: +8610-6432-1899

Email: ir@niu.com

No.1 Building, No. 195 Huilongguan East Road,

Changping District, Beijing 102208

People’s Republic of China

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class

    

Trading
Symbol (s)

    

Name of each exchange on which registered

American depositary shares (one American depositary
share representing two Class A ordinary shares, par
value US$0.0001 per share)

Class A ordinary shares, par value US$0.0001 per
share
*

NIU

The Nasdaq Stock Market LLC

(The Nasdaq Global Market)

The Nasdaq Stock Market LLC

(The Nasdaq Global Market)

*   Not for trading, but only in connection with the listing on The Nasdaq Global Market of American depositary shares.

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

137,719,542 Class A ordinary shares and 16,542,020 Class B ordinary shares, par value US$0.0001 per share, as of December 31, 2022.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes   No  

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes   No 

Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes   No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes   No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer 

Accelerated filer 

Non-accelerated filer 

Emerging growth company

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b))by the registered public accounting firm that prepared or issued its audit report. Yes  No 

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP 

International Financial Reporting Standards as issued

Other

by the International Accounting Standards Board

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

 Item 17  Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes   No 

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes  No 

TABLE OF CONTENTS

INTRODUCTION

1

FORWARD-LOOKING INFORMATION

1

PART I

2

Item 1.

Identity of Directors, Senior Management and Advisers

2

Item 2.

Offer Statistics and Expected Timetable

2

Item 3.

Key Information

2

Item 4.

Information on the Company

61

Item 4A.

Unresolved Staff Comments

91

Item 5.

Operating and Financial Review and Prospects

91

Item 6.

Directors, Senior Management and Employees

108

Item 7.

Major Shareholders and Related Party Transactions

117

Item 8.

Financial Information

118

Item 9.

The Offer and Listing

119

Item 10.

Additional Information

120

Item 11.

Quantitative and Qualitative Disclosures about Market Risk

130

Item 12.

Description of Securities Other than Equity Securities

131

PART II

134

Item 13.

Defaults, Dividend Arrearages and Delinquencies

134

Item 14.

Material Modifications to the Rights of Security Holders and Use of Proceeds

134

Item 15.

Controls and Procedures

134

Item 16.

[Reserved]

Item 16A.

Audit Committee Financial Expert

136

Item 16B.

Code of Ethics

136

Item 16C.

Principal Accountant Fees and Services

136

Item 16D.

Exemptions from the Listing Standards for Audit Committees

136

Item 16E.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

136

Item 16F.

Change in Registrant’s Certifying Accountant

136

Item 16G.

Corporate Governance

137

Item 16H.

Mine Safety Disclosure

137

Item 16I.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

137

PART III

138

Item 17.

Financial Statements

138

Item 18.

Financial Statements

138

Item 19.

Exhibits

138

SIGNATURES

141

i

INTRODUCTION

In this annual report, except where the context otherwise requires and for purposes of this annual report only:

“ADRs” are to the American depositary receipts that evidence the ADSs;
“ADSs” are to the American depositary shares, each of which represents two Class A ordinary shares;
“Class A ordinary shares” are to our Class A ordinary shares, par value US$0.0001 per share;
“Class B ordinary shares” are to our Class B ordinary shares, par value US$0.0001 per share;
“NIU,” “we,” “us,” and “our” are to Niu Technologies, our Cayman Islands holding company, its subsidiaries, and, in the context of describing our operations and consolidated financial information, the VIE and the subsidiaries of the VIE. The VIE is a domestic company incorporated in mainland China in which we do not have any equity ownership but whose financial results have been consolidated into our consolidated financial statements based solely on contractual arrangements in accordance with U.S. GAAP. See “Item 4. Information on the Company—C. Organizational Structure” for an illustrative diagram of our corporate structure;
“ordinary shares” are to our Class A and Class B ordinary shares, par value US$0.0001 per share;
“our company” is to Niu Technologies, our Cayman Islands holding company;
“the variable interest entity” and “the VIE” are to Beijing Niudian Technology Co., Ltd., or Beijing Niudian;
“our WFOE” are to Beijing Niudian Information Technology Co., Ltd., or Niudian Information;
“RMB” and “Renminbi” are to the legal currency of mainland China; and
“US$,” “U.S. dollars,” “$,” and “dollars” are to the legal currency of the United States.

Unless otherwise noted, all translations from Renminbi to U.S. dollars and from U.S. dollars to Renminbi in this annual report were made at a rate of RMB6.8972 to US$1.00, the exchange rate in effect as of December 30, 2022 as set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System. We make no representation that any Renminbi or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at any particular rate, or at all.

FORWARD-LOOKING INFORMATION

This annual report on Form 20-F contains forward-looking statements that reflect our current expectations and views of future events. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as “may,” “will,” “expect,” “anticipate,” “future,” “intend,” “plan,” “believe,” “estimate,” “is/are likely to” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include, but are not limited to:

our mission, goals and strategies;
our future business development, financial conditions and results of operations;
the expected growth of smart electric two-wheeled vehicle industry;
our expectations regarding demand for and market acceptance of our products and services;
our expectations regarding our relationships with our users/customers, suppliers, strategic partners and other stakeholders;
competition in our industry; and
relevant government policies and regulations relating to our industry.

We would like to caution you not to place undue reliance on these forward-looking statements and you should read these statements in conjunction with the risk factors disclosed in “Item 3 Key Information— D. Risk Factors.” Those risks are not exhaustive. We operate in a rapidly evolving environment. New risks emerge from time to time and it is impossible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ from those contained in any forward-looking statement. We do not undertake any obligation to update or revise the forward-looking statements except as required under applicable law.

1

PART I

Item 1.Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2.Offer Statistics and Expected Timetable

Not applicable.

Item 3.Key Information

Our Holding Company Structure and Contractual Arrangements with the VIE

Niu Technologies is not an operating company in mainland China but a Cayman Islands holding company with operations primarily conducted through (i) our mainland China subsidiaries and (ii) contractual arrangements with the VIE based in mainland China. The laws and regulations of mainland China restrict and impose conditions on foreign direct investment in internet content, value-added telecommunication-based online marketing, audio and video services and mobile application distribution businesses. Accordingly, we operate these businesses in mainland China through the VIE, and rely on contractual arrangements among our mainland China subsidiaries, the VIE and its shareholders to conduct the business operations of the VIE. The VIE is consolidated for accounting purposes, but is not an entity in which our Cayman Islands holding company, or our investors, own equity. Revenues contributed by the VIE accounted for all of our total revenues for the year ended December 31, 2020, 2021 and 2022, respectively. As used in this annual report, “our company” refers to Niu Technologies, whereas “NIU,” “we,” “us,” and “our” refer to Niu Technologies, its subsidiaries, and, in the context of describing our operations and consolidated financial information, the VIE and its subsidiaries. Investors in our ADSs are not purchasing equity interest in the VIE in mainland China, but instead are purchasing equity interest in a holding company incorporated in the Cayman Islands.

A series of contractual agreements, including power of attorney, second amended and restated equity pledge agreement, amended and restated exclusive business cooperation agreements, second amended and restated exclusive option agreements and spousal consent letters, have been entered into by and among our subsidiaries, the VIE and its shareholders. Terms contained in each set of contractual arrangements with the VIE and its shareholders are substantially similar. As a result of the contractual arrangements, we have conducted the business operations and are considered the primary beneficiary of these companies, and we have consolidated financial results of these companies in our consolidated financial statements. For more details of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements with the VIE.”

However, the contractual arrangements may not be as effective as direct ownership in the VIE and we may incur substantial costs to enforce the terms of the arrangements. If the VIE or its shareholders fail to perform their respective obligations under the contractual arrangements, we could be limited in our ability to enforce the contractual arrangements with the VIE, and these agreements have not been tested in courts of mainland China. Furthermore, if we lose our right to direct the activities of the VIE or our right to receive substantially all the economic benefits and residual returns from the VIE and we are not able to restructure our ownership structure and operations in a satisfactory manner, we would not be able to continue to consolidate the financial results of these entities in our financial statements. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure— We rely on contractual arrangements with the VIE and its shareholders for a large portion of our business operations, which may not be as effective as direct ownership.” and “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—The shareholders of the VIE may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.”

2

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

Graphic

(1)

Token Yilin Hu, Yi’ nan Li, Yuqin Zhang and Changlong Sheng each holds 89.74%, 5.00%, 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 of our company.

3

There are also substantial uncertainties regarding the interpretation and application of the current and future laws, regulations and rules of mainland China regarding the status of the rights of our Cayman Islands holding company with respect to its contractual arrangements with the VIE and its shareholders. It is uncertain whether any new laws or regulations of mainland China relating to variable interest entity structures will be adopted or if adopted, what they would provide. If we or any of the VIE is found to be in violation of any existing or future laws or regulations of mainland China, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure—If the PRC government finds that the agreements that establish the structure for operating some of our operations in mainland China do not comply with the regulations of mainland China relating to the relevant industries, or if these regulations or the interpretation of existing regulations change or are interpreted differently in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations” and “—Uncertainties exist with respect to the interpretation and implementation of the newly enacted Foreign Investment Law of the PRC and how it may impact the viability of our current corporate structure, corporate governance and business operations.”

Our corporate structure is subject to risks associated with our contractual arrangements with the VIE. Our company and its investors may never have a direct ownership interest in the businesses that are conducted by the VIE. Uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements, and these contractual arrangements have not been tested in a court of law. If the PRC government finds that the agreements that establish the structure for operating our business in mainland China do not comply with the laws and regulations of mainland China, or if these regulations or the interpretation of existing regulations change or are interpreted differently in the future, we and the VIE could be subject to severe penalties or be forced to relinquish our interests in those operations. This would result in the VIE being deconsolidated. The majority of our assets, including the necessary licenses to conduct business in mainland China, are held by the VIE. A significant part of our revenues are generated by the VIE. An event that results in the deconsolidation of the VIE would have a material effect on our operations and result in the value of the securities of our company diminish substantially or even become worthless. Our company, our mainland China subsidiaries and the VIE, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with the VIE and, consequently, significantly affect the financial performance of the VIE and our company as a whole. Our company may not be able to repay its indebtedness, and the ADSs of our company may decline in value or become worthless, if we are unable to assert contractual control over the assets of our mainland China subsidiaries and the VIE that conduct all or substantially all of our operations. For a detailed description of the risks associated with our corporate structure, please refer to risks disclosed under “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure.”

Our company and the VIE face various legal and operational risks and uncertainties associated with being based in or having the majority of our operations in China and we are subject to the complex and evolving laws and regulations of mainland China. For example, we face risks associated with regulatory approvals on offshore offerings, the use of the VIE, anti-monopoly regulatory actions, and oversight on cybersecurity and data privacy. These risks could result in a material adverse change in our operations and the value of our ADSs, significantly limit or completely hinder our ability to continue to offer securities to investors, or cause the value of such securities to significantly decline or become worthless. For a detailed description of risks related to doing business in China, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China.”

PRC government’s significant authority in regulating our operations and its oversight and control over offerings conducted overseas by, and foreign investment in, China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. Implementation of industry-wide regulations, including data security or anti-monopoly related regulations, in this nature may cause the value of such securities to significantly decline. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The PRC government’s significant oversight over our business operation could result in a material adverse change in our operations and the value of our ADSs.”

Risks and uncertainties arising from the PRC legal system, including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations of mainland China, could result in a material adverse change in our operations and the value of our ADSs. For more details, see “Item 3. Key Information—D. Risk Factors— Risks Related to Our Corporate Structure—Uncertainties exist with respect to the interpretation and implementation of the newly enacted Foreign Investment Law of the PRC and how it may impact the viability of our current corporate structure, corporate governance and business operations.”

4

The Holding Foreign Companies Accountable Act

Pursuant to the Holding Foreign Companies Accountable Act, or the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares or the ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States. On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong, including our auditor. In May 2022, the SEC conclusively listed us as a Commission-Identified Issuer under the HFCAA following the filing of our annual report on Form 20-F for the fiscal year ended December 31, 2021. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. For this reason, we do not expect to be identified as a Commission-Identified Issuer under the HFCAA after we file this annual report on Form 20-F. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we continue to use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the Securities and Exchange Commission, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year. There can be no assurance that we would not be identified as a Commission-Identified Issuer for any future fiscal year, and if we were so identified for two consecutive years, we would become subject to the prohibition on trading under the HFCAA. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry—The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections.” And “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry—Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in mainland China and Hong Kong. The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.”

Cash Flows through Our Organization

Niu Technologies is a holding company with no material operations of its own. We conduct our operations primarily through our subsidiaries, the VIE and its subsidiaries in mainland China. As a result, although other means are available for us to obtain financing at the holding company level, Niu Technologies’ ability to pay dividends to the shareholders and to service any debt it may incur may depend upon dividends paid by our mainland China subsidiaries and license and service fees paid by the VIE. If any of our subsidiaries incurs debt on its own behalf, the instruments governing such debt may restrict its ability to pay dividends to Niu Technologies. In addition, each of our mainland China subsidiaries and the VIE is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Each of such entities in mainland China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. These reserves are not distributable as cash dividends. For more details, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Cash flows and working capital.”

We have established stringent controls and procedures for cash flows within our organization. Each transfer of cash between our Cayman Islands holding company and a subsidiary, the VIE or the subsidiaries of the VIE is subject to internal approval. The cash inflows of Niu Technologies were primarily generated from the proceeds received from Niu Technologies’ public offerings of ordinary shares, other financing activities and cash generated from our operating activities. For the years ended December 31, 2020, 2021 and 2022, Niu Technologies did not provide any capital contributions or loans to our mainland China subsidiaries. For the years ended December 31, 2020, 2021 and 2022, the VIE did not receive loans provided by Niu Technologies. For the years ended December 31, 2020, 2021 and 2022, no assets other than cash were transferred between Niu Technologies and a subsidiary, the VIE or its subsidiary, no subsidiaries paid dividends or made other distributions to Niu Technologies, and no dividends or distributions were paid or made to U.S. investors.

For the years ended December 31, 2020, 2021 and 2022, our subsidiaries did not provide capital contributions to the VIE. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.

5

Pursuant to the Amended and Restated Exclusive Business Cooperation Agreements between our WFOE and the VIE, the VIE agrees to pay our WFOE a monthly service fee at an amount that is equal to 100% of its net profits or an amount adjusted by our WFOE in its sole discretion for the relevant month, which should be paid within seven business days upon receipt of invoice from our WFOE. The VIE has paid RMB143.5 million, RMB203.4 million and RMB112.2 million (US$16.3 million) of service fee to our WFOE for the years ended December 31, 2020, 2021 and 2022, respectively. We plan to continue to determine the amount of service fee and payment method with the VIE and its shareholders through bona fide negotiation, and settle fees under the contractual arrangements accordingly in the future.

As a Cayman Islands holding company, we may receive dividends from our mainland China subsidiaries. Under the Enterprise Income Tax Law of the PRC, or the EIT Law, and related regulations, dividends, interests, rent or royalties payable by a foreign-invested enterprise, such as our mainland China subsidiaries, to any of its foreign non-resident enterprise investors, and proceeds from any such foreign enterprise investor’s disposition of assets (after deducting the net value of such assets) are subject to a 10% withholding tax, unless the foreign enterprise investor’s jurisdiction of incorporation has a tax treaty with mainland China that provides for a reduced rate of withholding tax. Undistributed profits earned by foreign-invested enterprises prior to January 1, 2008 are exempted from any withholding tax. The Cayman Islands, where Niu Technologies, the direct parent company of our subsidiaries, is incorporated, does not have such a tax treaty with mainland China. Hong Kong has a tax arrangement with mainland China that provides for a 5% withholding tax on dividends subject to certain conditions and requirements, such as the requirement that the Hong Kong resident enterprise own at least 25% of the mainland China enterprise distributing the dividend at all times within the 12-month period immediately preceding the distribution of dividends and be a “beneficial owner” of the dividends. For example, Niu Technologies Group Limited, which directly owns our mainland China subsidiary, Niudian Information, is incorporated in Hong Kong. However, if Niu Technologies Group Limited is not considered to be the beneficial owner of the dividends paid to it by Niudian Information under the tax circulars promulgated in February and October 2009, such dividends would be subject to withholding tax at a rate of 10%. If our mainland China subsidiaries declare and distribute profits to us, such payments will be subject to withholding tax, which will increase our tax liability and reduce the amount of cash available to our company. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our mainland China subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our mainland China subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business” for more details. If our holding company in the Cayman Islands or any of our subsidiaries outside of mainland China were deemed to be a “resident enterprise” under the PRC Enterprise Income Tax Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—If we are classified as a mainland China resident enterprise for mainland China income tax purposes, such classification could result in unfavorable tax consequences to us and our non-mainland China shareholders or ADS holders.”

For purposes of illustration, the following discussion reflects the hypothetical taxes that might be required to be paid within mainland China, assuming that: (i) we have taxable earnings, and (ii) we determine to pay dividends in the future.

    

Tax calculation (1)

 

Hypothetical pre-tax earnings(2)

 

100

%

Tax on earnings at statutory rate of 25%(3)

 

(25)

%

Net earnings available for distribution

 

75

%

Withholding tax at standard rate of 10%(4)

 

(7.5)

%

Net distribution to Parent/Shareholders

 

67.5

%

Notes:

(1)For purposes of this example, the tax calculation has been simplified. The hypothetical book pre-tax earnings amount, not considering timing differences, is assumed to equal taxable income in mainland China.
(2)Under the terms of VIE agreements, our mainland China subsidiaries may charge the VIE for services provided to VIE. These service fees shall be recognized as expenses of the VIE, with a corresponding amount as service income by our mainland China subsidiaries and eliminate in consolidation. For income tax purposes, our mainland China subsidiaries and the VIE file income tax returns on a separate company basis. The service fees paid are recognized as a tax deduction by the VIE and as income by our mainland China subsidiaries and are tax neutral.

6

(3)Certain of our subsidiaries and the VIE qualifies for a 15% preferential income tax rate in mainland China. However, such rate is subject to qualification, is temporary in nature, and may not be available in a future period when distributions are paid. For purposes of this hypothetical example, the table above reflects a maximum tax scenario under which the full statutory rate would be effective.
(4)The PRC Enterprise Income Tax Law imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise, or FIE, to its immediate holding company outside of mainland China. A lower withholding income tax rate of 5% is applied if the FIE’s immediate holding company is registered in Hong Kong or other jurisdictions that have a tax treaty arrangement with mainland China, subject to a qualification review at the time of the distribution. For purposes of this hypothetical example, the table above assumes a maximum tax scenario under which the full withholding tax would be applied.

The table above has been prepared under the assumption that all profits of the VIE will be distributed as fees to our mainland China subsidiaries under tax neutral contractual arrangements. If, in the future, the accumulated earnings of the VIE exceed the service fees paid to our mainland China subsidiaries (or if the current and contemplated fee structure between the intercompany entities is determined to be nonsubstantive and disallowed by Chinese tax authorities), the VIE could make a non-deductible transfer to our mainland China subsidiaries for the amounts of the stranded cash in the VIE. This would result in such transfer being non-deductible expenses for the VIE but still taxable income for the mainland China subsidiaries.

Under the laws and regulations of mainland China, we are subject to restrictions on foreign exchange and cross-border cash transfers, including to U.S. investors. Our ability to distribute earnings to the holding company and U.S. investors is also limited. We are a Cayman Islands holding company and we may rely on dividends and other distributions on equity paid by our mainland China subsidiaries, which in turn relies on consulting and other fees paid to us by the VIE, for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. When any of our mainland China subsidiaries incurs debt on its own behalf, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us.

In addition, our mainland China subsidiaries, the VIE and its subsidiaries generate their revenue primarily in Renminbi, which is not freely convertible into other currencies. As a result, any restriction on currency exchange may limit the ability of our mainland China subsidiaries to pay dividends to us. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our mainland China subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our mainland China subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business” and “—Mainland China’s regulation of loans to and direct investment in mainland China entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of our offshore offerings to make loans to or make additional capital contributions to our mainland China subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.”

7

Permissions Required from the PRC Government Authorities for Our Operations

We conduct our business primarily through our subsidiaries and the VIE in mainland China. Our operations in mainland China are governed by the laws and regulations of mainland China. As of the date of this annual report, our mainland China subsidiaries and the VIE have obtained the requisite licenses and permits from the PRC government authorities that are material for the business operations of our subsidiaries and the VIE in mainland China, including, among others, CCC certification and ICP License. Given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant government authorities, we may be required to obtain additional licenses, permits, filings or approvals for the functions and services of our platform in the future. For more detailed information, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—We may be adversely affected by the complexity, uncertainties and changes in the regulation on internet-related businesses and companies in mainland China.”

Meanwhile, the PRC government has recently sought to exert more oversight and control over capital raising activities of listed companies that are conducted overseas and/or foreign investment in China-based issuers. In December 2021, the Cyberspace Administration of China, or the CAC, together with other authorities, jointly promulgated the Cybersecurity Review Measures, which became effective on February 15, 2022 and replaced its predecessor regulation. Pursuant to the Cybersecurity Review Measures, critical information infrastructure operators that procure internet products and services and network platform operators that conduct data process activities must be subject to the cybersecurity review if their activities affect or may affect national security. The Cybersecurity Review Measures further stipulates that network platform operators that hold personal information of over one million users shall apply with the Cybersecurity Review Office for a cybersecurity review before any public offering at a foreign stock exchange. On February 17, 2023, China Securities Regulatory Commission, or the CSRC, released several regulations regarding the filing requirements for overseas offerings and listings by domestic companies, including the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies and five supporting guidelines (collectively, the “Overseas Listing Trial Measures”), which took effect on March 31, 2023. According to the Overseas Listing Trial Measures, the overseas offering and listing by a mainland China domestic company, whether directly or indirectly, shall be filed with the CSRC. Any failure to obtain or delay in obtaining such approval or completing such procedures could subject us to restrictions and penalties imposed by the CSRC, the CAC or other PRC regulatory authorities, which could include fines and penalties on our operations in China, delays of or restrictions on the repatriation of the proceeds from our offshore offerings into China, or other actions that could materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our ADSs. For more detailed information, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The filing, approval or other administration requirements of the CSRC or other PRC government authorities may be required in connection with our offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to complete such filing, obtain such approval or meet such requirements.”

8

Financial Information Related to Our Subsidiaries and the VIE

The following table presents the condensed consolidating schedule of results of operations for our subsidiaries and the VIE for the periods presented.

Selected Condensed Consolidating Statements of Income/(loss) Information

    

For the Year Ended December 31, 2022

Niu 

Other 

VIE and its 

Consolidated 

    

Technologies

    

Subsidiaries

    

WFOE

    

Subsidiaries

    

Eliminations

    

Total

RMB

(In thousands)

Revenues (4)

 

43,448

 

105,328

 

3,187,990

 

(168,169)

 

3,168,597

Cost of revenues (4)

 

(41,143)

 

(28,233)

 

(2,483,840)

 

54,300

 

(2,498,916)

Gross profit

 

2,305

 

77,095

 

704,150

 

(113,869)

 

669,681

Selling and marketing expenses (4)

 

(15,480)

 

(44,789)

 

(446,149)

 

66,009

 

(440,409)

Research and development expenses (4)

 

 

(19,770)

 

(202,940)

 

46,232

 

(176,478)

General and administrative expenses (4)

(15,415)

 

(2,343)

 

(26,944)

 

(115,490)

 

1,731

 

(158,461)

Total operating expenses

(15,415)

 

(17,823)

 

(91,503)

 

(764,579)

 

113,972

 

(775,348)

Government grants

 

 

 

16,385

 

 

16,385

Share of income (loss) from subsidiaries, consolidated VIE and VIE’s subsidiaries (3)

(39,265)

 

 

 

 

39,265

 

Interest expenses

 

 

 

(5,716)

 

 

(5,716)

Interest income

5,217

 

13

 

2

 

7,628

 

 

12,860

Investment income

 

221

 

 

10,697

 

 

10,918

Income (loss) before income taxes

(49,463)

 

(15,284)

 

(14,406)

 

(31,435)

 

39,368

 

(71,220)

Income tax benefit (expense)

 

(166)

 

(164)

 

22,087

 

 

21,757

Net income (loss)

(49,463)

 

(15,450)

 

(14,570)

 

(9,348)

 

39,368

 

(49,463)

    

For the Year Ended December 31, 2021

Niu 

Other 

VIE and its

Consolidated

    

Technologies

    

Subsidiaries

    

WFOE

    

 Subsidiaries

    

Eliminations

    

 Total

RMB

(In thousands)

Revenues (4)

 

44,397

 

192,901

 

3,768,134

 

(300,895)

 

3,704,537

Cost of revenues (4)

 

(37,772)

 

(69,322)

 

(2,879,594)

 

94,930

 

(2,891,758)

Gross profit

 

6,625

 

123,579

 

888,540

 

(205,965)

 

812,779

Selling and marketing expenses (4)

 

(11,035)

 

(44,394)

 

(358,394)

 

81,815

 

(332,008)

Research and development expenses (4)

 

 

(23,920)

 

(200,603)

 

89,305

 

(135,218)

General and administrative expenses (4)

(11,442)

 

(2,688)

 

(24,605)

 

(137,474)

 

34,410

 

(141,799)

Total operating expenses

(11,442)

 

(13,723)

 

(92,919)

 

(696,471)

 

205,530

 

(609,025)

Government grants

 

 

 

48,727

 

 

48,727

Share of income from subsidiaries, consolidated VIE and VIE’s subsidiaries (3)

235,265

 

 

 

 

(235,265)

 

Interest expenses

 

 

 

(6,168)

 

 

(6,168)

Interest income

1,998

 

52

 

2

 

3,324

 

 

5,376

Investment income

 

1,233

 

 

19,935

 

 

21,168

Income (loss) before income taxes

225,821

 

(5,813)

 

30,662

 

257,887

 

(235,700)

 

272,857

Income tax expense

 

(410)

 

(2,588)

 

(44,039)

 

 

(47,037)

Net income (loss)

225,821

 

(6,223)

 

28,074

 

213,848

 

(235,700)

 

225,820

9

    

For the Year Ended December 31, 2020

Niu 

Other 

VIE and its 

Consolidated 

    

Technologies

    

Subsidiaries

    

WFOE

    

Subsidiaries

    

Eliminations

    

Total

RMB

(In thousands)

Revenues (4)

 

12,232

 

134,684

 

2,500,024

 

(202,611)

 

2,444,329

Cost of revenues (4)

 

(9,436)

 

(55,084)

 

(1,877,070)

 

56,410

 

(1,885,180)

Gross profit

 

2,796

 

79,600

 

622,954

 

(146,201)

 

559,149

Selling and marketing expenses (4)

 

(9,982)

 

(40,804)

 

(210,861)

 

60,886

 

(200,761)

Research and development expenses (4)

 

 

(14,897)

 

(173,465)

 

83,027

 

(105,335)

General and administrative expenses (4)

(7,308)

 

(3,124)

 

(20,804)

 

(75,581)

 

1,957

 

(104,860)

Total operating expenses

(7,308)

 

(13,106)

 

(76,505)

 

(459,907)

 

145,870

 

(410,956)

Government grants

 

 

 

22,441

 

 

22,441

Share of income from subsidiaries, consolidated VIE and VIE’s subsidiaries (3)

47,711

 

 

 

 

(47,711)

 

Interest expenses

 

 

 

(7,381)

 

 

(7,381)

Interest income

5,951

 

1,750

 

438

 

648

 

 

8,787

Investment income

 

296

 

201

 

17,201

 

 

17,698

Income (loss) before income taxes

46,354

 

(8,264)

 

3,734

 

195,956

 

(48,042)

 

189,738

Income tax expense

 

(199)

 

 

(20,887)

 

 

(21,086)

Net income (loss)

46,354

 

(8,463)

 

3,734

 

175,069

 

(48,042)

 

168,652

The following table presents the condensed consolidating schedule of financial position for our subsidiaries and the VIE as of the dates presented.

10

Selected Condensed Consolidating Balance Sheets Information

    

As of December 31, 2022

Niu 

Other

VIE and its 

Consolidated

    

Technologies

    

Subsidiaries

    

WFOE

    

Subsidiaries

    

Eliminations

    

 Total

RMB

(In thousands)

Cash and cash equivalents

12,376

 

28,183

158

493,570

534,287

Term deposit—current

208,590

 

208,590

Restricted cash

176,204

 

3,906

6,230

186,340

Short-term investments

 

160,406

160,406

Accounts receivable, net

 

1,011

298,732

299,743

Inventories (1)

 

5,966

411,955

(912)

417,009

Amounts due from inter-companies (2)

 

52,932

423,025

24,252

(500,209)

Prepayments and other current assets

12,486

 

5,242

391

187,577

205,696

Total current assets

409,656

 

97,240

423,574

1,582,722

(501,121)

2,012,071

Term deposits—non-current

 

20,000

20,000

Property, plant and equipment, net

 

128

2,607

394,622

397,357

Intangible assets, net

 

492

48

1,318

1,858

Operating lease right-of-use assets

 

86,597

86,597

Investment in and amount due from subsidiaries, consolidated VIE and VIE’s subsidiaries (2)(3)

906,299

 

219,317

(1,125,616)

Deferred income tax assets

 

6,132

6,132

Other non-current assets

1

 

5

7,000

5,677

12,683

Total non-current assets

906,300

 

219,942

9,655

514,346

(1,125,616)

524,627

Total assets

1,315,956

 

317,182

433,229

2,097,068

(1,626,737)

2,536,698

 

 

Short-term bank borrowings

 

160,000

160,000

Notes payable

316,832

316,832

Accounts payable

 

60

459,407

459,467

Income taxes payable

 

396

1,502

1,898

Advances from customers

 

1,410

23,522

24,932

Deferred revenue—current

 

37,540

37,540

Amounts due to inter-companies (2)

4,262

 

18,259

1,730

476,121

(500,372)

Accrued expenses and other current liabilities

1,596

 

5,929

9,216

175,352

192,093

Total current liabilities

5,858

 

26,054

10,946

1,650,276

(500,372)

1,192,762

 

Deferred revenue—non-current

 

11,430

11,430

Deferred income tax liabilities

1,398

1,398

Operating lease liabilities

 

7,569

7,569

Other non-current liabilities

 

13,441

13,441

Amounts due to inter-companies (2)

 

115,714

(115,714)

Total non-current liabilities

 

115,714

33,838

(115,714)

33,838

Total liabilities

5,858

 

141,768

10,946

1,684,114

(616,086)

1,226,600

 

Total shareholders’ equity

1,310,098

 

175,414

422,283

412,954

(1,010,651)

1,310,098

Total liabilities and shareholders’ equity

1,315,956

317,182

433,229

2,097,068

(1,626,737)

2,536,698

11

    

As of December 31, 2021

Niu 

Other

VIE and its 

Consolidated 

    

Technologies

    

Subsidiaries

    

WFOE

    

Subsidiaries

    

Eliminations

    

Total

RMB

(In thousands)

Cash and cash equivalents

107,769

17,954

187

82,464

208,374

Term deposit—current

95,636

95,636

Restricted cash

176,141

47,830

223,971

Short-term investments

30,229

743,449

773,678

Accounts receivable, net

885

267,672

268,557

Inventories (1)

4,366

266,292

(1,021)

269,637

Amounts due from inter-companies (2)

29,726

455,990

23,235

(508,951)

Prepayments and other current assets

8,394

5,113

3,840

38,715

56,062

Total current assets

387,940

88,273

460,017

1,469,657

(509,972)

1,895,915

Term deposits—non-current

15,939

20,000

35,939

Property, plant and equipment, net

80

3,022

394,114

397,216

Intangible assets, net

2,072

63

1,533

3,668

Operating lease right-of-use assets

94,201

94,201

Investment in and amount due from subsidiaries, consolidated VIE and VIE’s subsidiaries (2)(3)

865,698

219,317

(1,085,015)

Deferred income tax assets

11,907

11,907

Other non-current assets

2,367

2,367

Total non-current assets

881,637

221,469

3,085

524,122

(1,085,015)

545,298

Total assets

1,269,577

309,742

463,102

1,993,779

(1,594,987)

2,441,213

 

Short-term bank borrowings

180,000

180,000

Notes payable

143,623

143,623

Accounts payable

15,633

523,297

538,930

Income taxes payable

295

2,588

14,719

17,602

Advances from customers

2,241

15,026

17,267

Deferred revenue—current

32,758

32,758

Amounts due to inter-companies (2)

4,262

7,431

11,541

485,717

(508,951)

Accrued expenses and other current liabilities

761

4,041

12,117

181,985

198,904

Total current liabilities

5,023

29,641

26,246

1,577,125

(508,951)

1,129,084

 

Deferred revenue—non-current

10,694

10,694

Deferred income tax liabilities

1,992

1,992

Operating lease liabilities

13,922

13,922

Other non-current liabilities

20,967

20,967

Amounts due to inter-companies (2)

114,296

(114,296)

Total non-current liabilities

114,296

47,575

(114,296)

47,575

Total liabilities

5,023

143,937

26,246

1,624,700

(623,247)

1,176,659

Total shareholders’ equity

1,264,554

165,805

436,856

369,079

(971,740)

1,264,554

Total liabilities and shareholders’ equity

1,269,577

309,742

463,102

1,993,779

(1,594,987)

2,441,213

The following table presents condensed consolidating schedule of cash flow data for our subsidiaries and the VIE for the years ended presented.

12

Selected Condensed Consolidating Cash Flows Information

    

For the Year Ended December 31, 2022

Niu 

Other

VIE and its 

Consolidated 

    

Technologies

    

Subsidiaries

    

WFOE

    

Subsidiaries

    

Eliminations

    

Total

RMB

(In thousands)

Net cash provided by (used in) operating activities

(23,565)

(29,111)

4,550

(74,417)

687

(121,856)

Cash flows from investing activities:

Cash paid for purchase of property, plant and equipment

(98)

(579)

(134,672)

(135,349)

Investments in Other Subsidiaries (5)

(12,263)

12,263

Purchase of term deposits

(635,471)

(635,471)

Cash received from redemption of term deposits

551,794

551,794

Cash paid for purchase of short-term investments

(20,000)

(2,573,000)

(2,593,000)

Cash received from sale of short-term investments

50,317

3,163,601

3,213,918

Prepayment for an investment

(4,000)

(4,000)

Others

Net cash provided by (used in) investing activities

(95,940)

30,219

(4,579)

455,929

12,263

397,892

Cash flows from financing activities:

Proceeds from the parent company (5)

12,263

(12,263)

Cash received from exercise of employee stock options

2,203

2,203

Proceeds from short-term bank borrowings

340,000

340,000

Repayment for short-term bank borrowings

(360,000)

(360,000)

Net cash provided by financing activities

2,203

12,263

(20,000)

(12,263)

(17,797)

Effect of foreign currency exchange rate changes on cash, cash equivalents and restricted cash

21,972

764

7,994

(687)

30,043

Net increase (decrease) in cash, cash equivalents and restricted cash

(95,330)

14,135

(29)

369,506

288,282

Cash, cash equivalents and restricted cash at the beginning of the year

283,910

17,954

187

130,294

432,345

Cash, cash equivalents and restricted cash at the end of the year

188,580

32,089

158

499,800

720,627

13

    

For the Year Ended December 31, 2021

Niu 

Other

VIE and its 

Consolidated 

    

Technologies

    

Subsidiaries

    

WFOE

    

Subsidiaries

    

Eliminations

    

Total

RMB

 

(In thousands)

Net cash provided by (used in) operating activities

25,840

(47,540)

1,200

354,675

334,175

Cash flows from investing activities:

Cash paid for purchase of property, plant and equipment

(93)

(1,523)

(284,129)

(285,745)

Purchase of term deposits

(287,163)

(70,000)

(357,163)

Cash received from redemption of term deposits

303,296

50,000

353,296

Cash paid for purchase of short-term investments

(205,000)

(5,827,000)

(6,032,000)

Cash received from sale of short-term investments

225,232

5,801,935

6,027,167

Prepayment for an investment

Others

(614)

(614)

Net cash provided by (used in) investing activities

16,133

20,139

(1,523)

(329,808)

(295,059)

Cash flows from financing activities:

Cash received from exercise of employee stock options

6,246

6,246

Proceeds from short-term bank borrowings

340,000

340,000

Repayment for short-term bank borrowings

(340,000)

(340,000)

Net cash provided by financing activities

6,246

6,246

Effect of foreign currency exchange rate changes on cash, cash equivalents and restricted cash

(6,108)

(1,959)

(423)

(8,490)

Net increase (decrease) in cash, cash equivalents and restricted cash

42,111

(29,360)

(323)

24,444

36,872

Cash, cash equivalents and restricted cash at the beginning of the year

241,799

47,314

510

105,850

395,473

Cash, cash equivalents and restricted cash at the end of the year

283,910

17,954

187

130,294

432,345

14

    

For the Year Ended December 31, 2020

Niu 

Other

VIE and its

Consolidated 

    

Technologies

    

Subsidiaries

    

WFOE

    

 Subsidiaries

    

Eliminations

    

Total

RMB

(In thousands)

Net cash provided by (used in) operating activities

(55,920)

53,903

(102,580)

570,196

465,599

Cash flows from investing activities:

Cash paid for purchase of property, plant and equipment

(6)

(2,404)

(109,336)

(111,746)

Payment of land use rights

(39,750)

(39,750)

Purchase of intangible assets

(86)

(86)

Purchase of term deposits

(339,653)

(56,671)

(15,000)

(411,324)

Cash received from redemption of term deposits

374,156

56,671

15,000

445,827

Investments in WFOE (5)

(66,350)

66,350

Cash paid for purchase of short-term investments

(147,000)

(41,940)

(2,537,560)

(2,726,500)

Cash received from sale of short-term investments

98,295

42,141