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NFI GroupTable of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 20-F(Mark One)☐REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934OR☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2023.OR☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934OR☐SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934Date of event requiring this shell company reportFor the transition period from toCommission file number: 001-38696Niu 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 102208People’s Republic of China(Address of principal executive offices)Fion Wenjuan Zhou, Chief Financial OfficerTelephone: +8610-6432-1899Email: ir@niu.comNo.1 Building, No. 195 Huilongguan East Road,Changping District, Beijing 102208People’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 whichregisteredAmerican 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*NIUThe 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) Table of ContentsSecurities 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.138,575,010 Class A ordinary shares and 16,542,020 Class B ordinary shares, par value US$0.0001 per share, as of December 31, 2023.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 SecuritiesExchange 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 theirobligations 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 thepreceding 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 past90 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(P32.405 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 definitionsof “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 theextended 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 StandardsCodification 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 overfinancial 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 thecorrection 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 theregistrant’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 issuedOther ☐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 18If 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 SecuritiesExchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.Yes ☐ No ☐ Table of ContentsiTABLE OF CONTENTSINTRODUCTION1FORWARD-LOOKING INFORMATION2Part I3Item 1.Identity of Directors, Senior Management and Advisers3Item 2.Offer Statistics and Expected Timetable3Item 3.Key Information3Item 4.Information on the Company60Item 4A.Unresolved Staff Comments90Item 5.Operating and Financial Review and Prospects90Item 6.Directors, Senior Management and Employees103Item 7.Major Shareholders and Related Party Transactions112Item 8.Financial Information112Item 9.The Offer and Listing113Item 10.Additional Information114Item 11.Quantitative and Qualitative Disclosures about Market Risk129Item 12.Description of Securities Other than Equity Securities129Part II132Item 13.Defaults, Dividend Arrearages and Delinquencies132Item 14.Material Modifications to the Rights of Security Holders and Use of Proceeds132Item 15.Controls and Procedures132Item 16.[Reserved]134Item 16A.Audit Committee Financial Expert134Item 16B.Code of Ethics134Item 16C.Principal Accountant Fees and Services134Item 16D.Exemptions from the Listing Standards for Audit Committees134Item 16E.Purchases of Equity Securities by the Issuer and Affiliated Purchasers134Item 16F.Change in Registrant’s Certifying Accountant134Item 16G.Corporate Governance135Item 16H.Mine Safety Disclosure135Item 16I.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections135Item 16J.Insider Trading Policies135Item 16K.Cybersecurity135Part III137Item 17.Financial Statements137Item 18.Financial Statements137Item 19.Exhibits137SIGNATURES140 Table of Contents1INTRODUCTIONIn 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 ofdescribing our operations and consolidated financial information, the VIE and the subsidiaries of the VIE;●“ordinary shares” are to our Class A and Class B ordinary shares, par value US$0.0001 per share;●“our company” is to Niu Technologies, our Cayman Islands holding company;●“the variable interest entity” and “the VIE” are to Beijing Niudian Technology Co., Ltd., or Beijing Niudian. The VIE is a domesticcompany incorporated in mainland China in which we do not have any equity ownership but whose financial results have beenconsolidated into our consolidated financial statements based solely on contractual arrangements in accordance with U.S. GAAP. See“Item 4. Information on the Company—C. Organizational Structure” for an illustrative diagram of our corporate structure;●“WFOE” are to Beijing Niudian Information Technology Co., Ltd., or Niudian Information, a wholly foreign-owned entity in China;●“RMB” and “Renminbi” are to the legal currency of mainland China; and●“US$,” “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 rateof RMB7.0999 to US$1.00, the exchange rate in effect as of December 29, 2023 as set forth in the H.10 statistical release of the Board ofGovernors 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. Table of Contents2FORWARD-LOOKING INFORMATIONThis annual report on Form 20-F contains forward-looking statements that reflect our current expectations and views of future events. Thesestatements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify theseforward-looking statements by terminology such as “may,” “will,” “expect,” “anticipate,” “future,” “intend,” “plan,” “believe,” “estimate,” “is/arelikely to” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections aboutfuture 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●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 conjunctionwith the risk factors disclosed in “Item 3. Key Information— D. Risk Factors.” Those risks are not exhaustive. We operate in a rapidly evolvingenvironment. New risks emerge from time to time and it is impossible for our management to predict all risk factors, nor can we assess the impactof 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 inany forward-looking statement. We do not undertake any obligation to update or revise the forward-looking statements except as required underapplicable law. Table of Contents3PART IItem 1.Identity of Directors, Senior Management and AdvisersNot applicable.Item 2.Offer Statistics and Expected TimetableNot applicable.Item 3.Key InformationOur Holding Company Structure and Contractual Arrangements with the VIENiu Technologies is not an operating company in mainland China but a Cayman Islands holding company with operations primarily conductedthrough (i) our mainland China subsidiaries and (ii) contractual arrangements with the VIE based in mainland China. The laws and regulations ofmainland China restrict and impose conditions on foreign direct investment in internet content, value-added telecommunication-based onlinemarketing, audio and video services and mobile application distribution businesses. Accordingly, we operate these businesses in mainland Chinathrough the VIE, and rely on contractual arrangements among our mainland China subsidiaries, the VIE and its shareholders to conduct thebusiness operations of the VIE. The VIE is consolidated for accounting purposes, but is not an entity in which our Cayman Islands holdingcompany, or our investors, own equity. Revenues contributed by the VIE accounted for 99.8%, 99.7%, and 99.6% of our total revenues for the yearended December 31, 2021, 2022 and 2023, 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 financialinformation, the VIE and its subsidiaries. Investors in our ADSs are not purchasing equity interest in the VIE in mainland China, but instead arepurchasing 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 restatedexclusive business cooperation agreements, second amended and restated exclusive option agreements and spousal consent letters, have beenentered into by and among our subsidiaries, the VIE and its shareholders. Terms contained in each set of contractual arrangements with the VIE andits shareholders are substantially similar. As a result of the contractual arrangements, we have conducted the business operations and are consideredthe 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—ContractualArrangements 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 theterms of the arrangements. If the VIE or its shareholders fail to perform their respective obligations under the contractual arrangements, we couldbe limited in our ability to enforce the contractual arrangements with the VIE, and these agreements have not been tested in courts of mainlandChina. Furthermore, if we lose our right to direct the activities of the VIE or our right to receive substantially all the economic benefits and residualreturns from the VIE and we are not able to restructure our ownership structure and operations in a satisfactory manner, we would not be able tocontinue to consolidate the financial results of these entities in our financial statements. See “Item 3. Key Information—D. Risk Factors—RisksRelated to Our Corporate Structure— We rely on contractual arrangements with the VIE and its shareholders for a large portion of our businessoperations, which may not be as effective as direct ownership.” and “Item 3. Key Information—D. Risk Factors—Risks Related to Our CorporateStructure—The shareholders of the VIE may have potential conflicts of interest with us, which may materially and adversely affect our businessand financial condition.” Table of Contents4The following diagram illustrates our corporate structure, including our principal subsidiaries, the VIE and its principal subsidiaries, as of the dateof this annual report:(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 BeijingNiudian, respectively. All of the shareholders of Beijing Niudian are beneficial owners of the shares of our company. Table of Contents5There are also substantial uncertainties regarding the interpretation and application of the current and future laws, regulations and rules of mainlandChina regarding the status of the rights of our Cayman Islands holding company with respect to its contractual arrangements with the VIE and itsshareholders. It is uncertain whether any new laws or regulations of mainland China relating to variable interest entity structures will be adopted orif 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 mainlandChina, or fail to obtain or maintain any of the required permits or approvals, the PRC regulatory authorities would have broad discretion to takeaction in dealing with such violations or failures. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—Ifthe PRC government finds that the agreements that establish the structure for operating some of our operations in mainland China do not complywith the regulations of mainland China relating to the relevant industries, or if these regulations or the interpretation of existing regulations changeor 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 itmay 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 neverhave a direct ownership interest in the businesses that are conducted by the VIE. Uncertainties in the PRC legal system could limit our ability toenforce these contractual arrangements, and these contractual arrangements have not been tested in a court of law. If the PRC government finds thatthe agreements that establish the structure for operating our business in mainland China do not comply with the laws and regulations of mainlandChina, or if these regulations or the interpretation of existing regulations change or are interpreted differently in the future, we and the VIE couldbe subject to severe penalties or be forced to relinquish our interests in those operations. This would result in the VIE being deconsolidated. Themajority of our assets, including the necessary licenses to conduct business in mainland China, are held by the VIE. A significant part of ourrevenues are generated by the VIE. An event that results in the deconsolidation of the VIE would have a material effect on our operations and resultin the value of the securities of our company diminish substantially or even become worthless. Our company, our mainland China subsidiaries andthe VIE, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability ofthe contractual arrangements with the VIE and, consequently, significantly affect the financial performance of the VIE and our company as awhole. 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 areunable to assert contractual control over the assets of our mainland China subsidiaries and the VIE that conduct all or substantially all of ouroperations. For a detailed description of the risks associated with our corporate structure, please refer to risks disclosed under “Item 3. KeyInformation—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 ouroperations in China and we are subject to the complex and evolving laws and regulations of mainland China. For example, we face risks associatedwith regulatory approvals on offshore offerings, the use of the VIE, anti-monopoly regulatory actions, and oversight on cybersecurity and dataprivacy. These risks could result in a material adverse change in our operations and the value of our ADSs, significantly limit or completely hinderour ability to continue to offer securities to investors, or cause the value of such securities to significantly decline or become worthless. For adetailed description of risks related to doing business in China, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Businessin China.”PRC government’s significant authority in regulating our operations and its oversight and control over offerings conducted overseas by, and foreigninvestment 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 ofsuch securities to significantly decline. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business inChina—The PRC government’s significant oversight over our business operation could result in a material adverse change in our operations andthe value of our ADSs.”Risks and uncertainties arising from the PRC legal system, including risks and uncertainties regarding the enforcement of laws and quicklyevolving rules and regulations of mainland China, could result in a material adverse change in our operations and the value of our ADSs. For moredetails, see “Item 3. Key Information—D. Risk Factors— Risks Related to Our Corporate Structure—Uncertainties exist with respect to theinterpretation and implementation of the newly enacted Foreign Investment Law of the PRC and how it may impact the viability of our currentcorporate structure, corporate governance and business operations.” Table of Contents6The Holding Foreign Companies Accountable ActPursuant to the Holding Foreign Companies Accountable Act, which was enacted on December 18, 2020 and further amended by the ConsolidatedAppropriations Act, 2023 signed into law on December 29, 2022, or the HFCAA, if the SEC determines that we have filed audit reports issued by aregistered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit ourshares or the ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States. OnDecember 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigatecompletely registered public accounting firms headquartered in mainland China and Hong Kong, including our auditor. In May 2022, the SECconclusively listed us as a Commission-Identified Issuer under the HFCAA following the filing of our annual report on Form 20-F for the fiscalyear ended December 31, 2021. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination andremoved mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered publicaccounting firms. For this reason, we were not identified as a Commission-Identified Issuer under the HFCAA after we filed the annual report onForm 20-F for the fiscal year ended December 31, 2022 and do not expect to be so identified after we file this annual report on Form 20-F for thefiscal year ended December 31, 2023. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms inmainland China and Hong Kong, among other jurisdictions. If PCAOB determines in the future that it no longer has full access to inspect andinvestigate completely accounting firms in mainland China and Hong Kong and we continue to use an accounting firm headquartered in one ofthese jurisdictions to issue an audit report on our financial statements filed with the Securities and Exchange Commission, or the SEC, we would beidentified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year. There can be noassurance that we would not be identified as a Commission-Identified Issuer for any future fiscal year, and if we were so identified for twoconsecutive 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 workperformed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investorswith the benefits of such inspections.” And “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry-Our ADSsmay be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completelyauditors located in mainland China and Hong Kong. The delisting of the ADSs, or the threat of their being delisted, may materially and adverselyaffect the value of your investment.”Cash Flows through Our OrganizationNiu Technologies is a holding company with no material operations of its own. We conduct our operations primarily through our subsidiaries, theVIE 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 ourmainland China subsidiaries and license and service fees paid by the VIE. If any of our subsidiaries incurs debt on its own behalf, the instrumentsgoverning such debt may restrict its ability to pay dividends to Niu Technologies. In addition, each of our mainland China subsidiaries and the VIEis 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 itsregistered 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 employeewelfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. These reserves are notdistributable 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 Islandsholding company and a subsidiary, the VIE or the subsidiaries of the VIE is subject to internal approval. The cash inflows of Niu Technologieswere primarily generated from the proceeds received from Niu Technologies’ public offerings of ordinary shares, other financing activities andcash generated from our operating activities. For the years ended December 31, 2021, 2022 and 2023, Niu Technologies did not provide any capitalcontributions or loans to our mainland China subsidiaries. For the years ended December 31, 2021, 2022 and 2023, the VIE did not receive loansprovided by Niu Technologies. For the years ended December 31, 2021, 2022 and 2023, no assets other than cash were transferred between NiuTechnologies and a subsidiary, the VIE or its subsidiary, no subsidiaries paid dividends or made other distributions to Niu Technologies, and nodividends or distributions were paid or made to U.S. investors.For the years ended December 31, 2021, 2022 and 2023, our subsidiaries did not provide capital contributions to the VIE. We currently intend toretain most, if not all, of our available funds and any future earnings to operate and expand our business. Table of Contents7For the years ended December 31, 2021, 2022 and 2023, the VIE has paid RMB203.4 million, RMB112.2 million and RMB56.8 million (US$8.0million) of service fee to our WFOE, respectively. We plan to continue to determine the amount of service fee and payment method with the VIEand 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 ofthe PRC and related regulations, dividends, interests, rent or royalties payable by a foreign-invested enterprise, such as our mainland Chinasubsidiaries, 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 ofincorporation 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 directparent company of our subsidiaries, is incorporated, does not have such a tax treaty with mainland China. Hong Kong has a tax arrangement withmainland China that provides for a 5% withholding tax on dividends subject to certain conditions and requirements, such as the requirement thatthe Hong Kong resident enterprise own at least 25% of the mainland China enterprise distributing the dividend at all times within the twelve-monthperiod immediately preceding the distribution of dividends and be a “beneficial owner” of the dividends. For example, Niu Technologies GroupLimited, which directly owns our mainland China subsidiary, Niudian Information, is incorporated in Hong Kong. However, if Niu TechnologiesGroup Limited is not considered to be the beneficial owner of the dividends paid to it by Niudian Information under the tax circulars promulgatedin February and October 2009, such dividends would be subject to withholding tax at a rate of 10%. If our mainland China subsidiaries declare anddistribute profits to us, such payments will be subject to withholding tax, which will increase our tax liability and reduce the amount of cashavailable to our company. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—We may rely on dividendsand other distributions on equity paid by our mainland China subsidiaries to fund any cash and financing requirements we may have, and anylimitation on the ability of our mainland China subsidiaries to make payments to us could have a material and adverse effect on our ability toconduct our business” for more details. If our holding company in the Cayman Islands or any of our subsidiaries outside of mainland China weredeemed to be a “resident enterprise” under the PRC Enterprise Income Tax Law, it would be subject to enterprise income tax on its worldwideincome 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 amainland China resident enterprise for mainland China income tax purposes, such classification could result in unfavorable tax consequences to usand 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 timingdifferences, 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 feesshall be recognized as expenses of the VIE, with a corresponding amount as service income by our mainland China subsidiaries and eliminatein 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.(3)The VIE and one of its subsidiary qualifies for a 15% preferential income tax rate in mainland China. However, such rate is subject toqualification, is temporary in nature, and may not be available in a future period when distributions are paid. For purposes of this hypotheticalexample, the table above reflects a maximum tax scenario under which the full statutory rate would be effective. Table of Contents8(4)The PRC Enterprise Income Tax Law imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise to itsimmediate holding company outside of mainland China. A lower withholding income tax rate of 5% is applied if the foreign investmententerprise’s immediate holding company is registered in Hong Kong or other jurisdictions that have a tax treaty arrangement with mainlandChina, subject to a qualification review at the time of the distribution. For purposes of this hypothetical example, the table above assumes amaximum 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 subsidiariesunder tax neutral contractual arrangements. If, in the future, the accumulated earnings of the VIE exceed the service fees paid to our mainlandChina subsidiaries (or if the current and contemplated fee structure between the intercompany entities is determined to be non-substantive anddisallowed by Chinese tax authorities), the VIE could make a non-deductible transfer to our mainland China subsidiaries for the amounts of thestranded cash in the VIE. This would result in such transfer being non-deductible expenses for the VIE but still taxable income for the mainlandChina subsidiaries.Under the laws and regulations of mainland China, we are subject to restrictions on foreign exchange and cross-border cash transfers, including toU.S. investors. Our ability to distribute earnings to the holding company and U.S. investors is also limited. We are a Cayman Islands holdingcompany and we may rely on dividends and other distributions on equity paid by our mainland China subsidiaries, which in turn relies onconsulting and other fees paid to us by the VIE, for our cash and financing requirements, including the funds necessary to pay dividends and othercash distributions to our shareholders and service any debt we may incur. When any of our mainland China subsidiaries incurs debt on its ownbehalf, 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 freelyconvertible into other currencies. As a result, any restriction on currency exchange may limit the ability of our mainland China subsidiaries to paydividends to us. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—We may rely ondividends and other distributions on equity paid by our mainland China subsidiaries to fund any cash and financing requirements we may have, andany limitation on the ability of our mainland China subsidiaries to make payments to us could have a material and adverse effect on our ability toconduct our business” and “—Mainland China’s regulation of loans to and direct investment in mainland China entities by offshore holdingcompanies and governmental control of currency conversion may delay or prevent us from using the proceeds of our offshore offerings to makeloans to or make additional capital contributions to our mainland China subsidiaries, which could materially and adversely affect our liquidity andour ability to fund and expand our business.” Table of Contents9Permissions Required from the PRC Government Authorities for Our OperationsWe conduct our business primarily through our subsidiaries and the VIE in mainland China. Our operations in mainland China are governed by thelaws and regulations of mainland China. As of the date of this annual report, our mainland China subsidiaries and the VIE have obtained allrequisite licenses, permits and approvals from the PRC government authorities for the business operations of our subsidiaries and the VIE inmainland China. These permissions and approvals include, among others, China Compulsory Certification, the Value-added TelecommunicationsBusiness Operation Licenses for Information Services via Internet, Production License for National Industrial Products, and Motorcycle ProductionAccess Certificate. For more information, see “Item 4. Information on the Company—B. Business Overview— Regulations.” Our mainland Chinasubsidiaries and the VIE have not been denied for any permission or approval from any PRC government authority with respect to the operation ofour business. As of the date of this annual report, under current PRC laws, regulations and rules, we, our mainland China subsidiaries and the VIEare not required to obtain permissions from the China Securities Regulatory Commission, or the CSRC, or go through cybersecurity review by theCyberspace Administration of China, or the CAC, or obtain permission or approval from other PRC government authorities with respect to theoperation of our business and previous issuances of securities by our company to foreign investors, except for the permissions or approvals listedabove that have been obtained. However, given the uncertainties of interpretation and implementation of the laws and regulations and theenforcement practice by the government authorities, we may be required to obtain additional licenses, permits, filings or approvals to operatebusiness or offer securities to foreign investors, and may not be able to maintain or renew our current licenses, permits, filings or approvals. If we,our mainland China subsidiaries and the VIE (i) do not receive or maintain any necessary permissions or approvals from PRC authorities to operatebusiness or offer securities being registered to foreign investors, or (ii) inadvertently conclude that such permissions or approvals are not required,or if applicable laws, regulations, or interpretations change and we are required to obtain such permissions or approvals in the future, we cannotassure you that we will be able to obtain the necessary permissions or approvals in a timely manner, or at all, and such approvals may be rescindedeven if obtained. Any such circumstance could subject us to penalties, including fines, suspension of business and revocation of required licenses,significantly limit or completely hinder our ability to continue to offer securities to investors, and cause the value of our ADSs to significantlydecline or be worthless. For more detailed information, see “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business andIndustry—We may be adversely affected by the complexity, uncertainties and changes in the regulation on internet-related businesses andcompanies in mainland China.”Permissions Required from the PRC Authorities for Overseas Financing ActivitiesThe PRC government has sought to exert more oversight and control over capital raising activities of listed companies that are conducted overseasand/or foreign investment in China-based issuers. In December 2021, the CAC, together with other authorities, jointly promulgated theCybersecurity Review Measures, which became effective on February 15, 2022 and replaced its predecessor regulation. Pursuant to theCybersecurity Review Measures, critical information infrastructure operators that procure internet products and services and network platformoperators 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 usersshall apply with the Cybersecurity Review Office for a cybersecurity review before any public offering at a foreign stock exchange. On February17, 2023, 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,or collectively, the Overseas Listing Trial Measures, which took effect on March 31, 2023. According to the Overseas Listing Trial Measures, PRCdomestic enterprises that have completed overseas listings are not required to make any immediate filing with the CSRC. However, suchcompanies will be required to comply with the filing requirements under the Overseas Listing Trial Measures if and when they pursue any futuresecurities offerings or listings outside of mainland China, including but not limited to follow-on offerings and secondary listings. Any failure toobtain or delay in obtaining such approval or completing such review or filing procedures under the Overseas Listing Trial Measures or otherwise,for any future securities offerings and listings outside of mainland China, including but not limited to follow-on offerings and secondary listings,could subject us to restrictions and penalties imposed by the CSRC, which could include fines and penalties on our operations in mainland China,delays to or restrictions on the repatriation of the proceeds from our offshore offerings into mainland China, restrictions on or delays to our futureoffshore financing transactions, 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. Table of Contents10As of the date of this annual report, under current PRC laws, regulations and rules, we, our mainland China subsidiaries and the VIE are notrequired to obtain permissions from the CSRC, or go through a cybersecurity review by the CAC, or obtain permission or approval from other PRCgovernment authorities with respect to the previous issuances of securities by our company to foreign investors. 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 requirementsof the CSRC or other PRC government authorities may be required in connection with our offshore offerings under PRC law, and, if required, wecannot predict whether or for how long we will be able to complete such filing, obtain such approval or meet such requirements.”Financial Information Related to Our Subsidiaries and the VIEThe following table presents the condensed consolidating schedule of results of operations for our subsidiaries and the VIE for the periodspresented. In this table:●“Niu Technologies” refers to our Cayman Islands holding company.●“Other Subsidiaries” refer to the sum of Niu Technologies Group Limited, Beijing Niudian Information Technology Co., Ltd. and otherwholly-owned subsidiaries.●“WFOE” refers to Beijing Niudian Information Technology Co., Ltd., or Niudian Information.●“VIE and VIE’s Subsidiaries” refer to the sum of Beijing Niudian Technology Co., Ltd., or Beijing Niudian, and all of its subsidiaries inmainland China.Consolidating Statements of Income/(Loss) Information For the Year Ended December 31, 2023Niu Other VIE and its Consolidated Technologies Subsidiaries WFOE Subsidiaries Eliminations TotalRMB(In thousands)Revenues (4)— 28,543 53,552 2,645,570 (75,907) 2,651,758Cost of revenues (4)— (17,183) (621) (2,075,462) 12,255 (2,081,011)Gross profit— 11,360 52,931 570,108 (63,652) 570,747Selling and marketing expenses (4)— (19,242) (36,693) (486,171) 46,371 (495,735)Research and development expenses (4)— — (20,766) (145,968) 15,748 (150,986)General and administrative expenses (4) (17,739) (2,308) (19,551) (206,654) 1,734 (244,518)Total operating expenses (17,739) (21,550) (77,010) (838,793) 63,853 (891,239)Government grants— — — 2,969 — 2,969Share of (loss) income from subsidiaries, consolidated VIEand VIE’s subsidiaries (3) (270,499) — — — 270,499 —Interest expenses— — — (1,424) — (1,424)Interest income 16,402 4 5 19,081 — 35,492Investment income— — — 1,426 — 1,426(Loss) income before income taxes (271,836) (10,186) (24,074) (246,633) 270,700 (282,029)Income tax benefit (expense)— 2 (1) 10,192 — 10,193Net (loss) income (271,836) (10,184) (24,075) (236,441) 270,700 (271,836) Table of Contents11 For the Year Ended December 31, 2022Niu Other VIE and itsConsolidated Technologies Subsidiaries WFOE Subsidiaries Eliminations TotalRMB(In thousands)Revenues (4)— 43,448 105,328 3,187,990 (168,169) 3,168,597Cost 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) 669,681Selling 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 — 16,385Share of (loss) income from subsidiaries, consolidated VIEand VIE’s subsidiaries (3) (39,265) — — — 39,265 —Interest expenses — — — (5,716) — (5,716)Interest income 5,217 13 2 7,628 — 12,860Investment income — 221 — 10,697 — 10,918(Loss) income before income taxes (49,463) (15,284) (14,406) (31,435) 39,368 (71,220)Income tax (expense) benefit — (166) (164) 22,087 — 21,757Net (loss) income (49,463) (15,450) (14,570) (9,348) 39,368 (49,463) For the Year Ended December 31, 2021Niu Other VIE and its Consolidated Technologies Subsidiaries WFOE Subsidiaries Eliminations TotalRMB(In thousands)Revenues (4)— 44,397 192,901 3,768,134 (300,895) 3,704,537Cost 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) 812,779Selling 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 — 48,727Share of income (loss) from subsidiaries, consolidated VIEand VIE’s subsidiaries (3) 235,265 — — — (235,265) —Interest expenses — — — (6,168) — (6,168)Interest income 1,998 52 2 3,324 — 5,376Investment income — 1,233 — 19,935 — 21,168Income (loss) before income taxes 225,821 (5,813) 30,662 257,887 (235,700) 272,857Income tax expense — (410) (2,588) (44,039) — (47,037)Net income (loss) 225,821 (6,223) 28,074 213,848 (235,700) 225,820The following table presents the condensed consolidating schedule of financial position for our subsidiaries and the VIE as of the dates presented. Table of Contents12Selected Condensed Consolidating Balance Sheets Information As of December 31, 2023Niu OtherVIE and its Consolidated Technologies Subsidiaries WFOE Subsidiaries Eliminations TotalRMB(In thousands)Cash and cash equivalents 233,959 13,007 5,122 620,485— 872,573Term deposit—current 77,556 —— 20,000— 97,556Restricted cash 107,522 —— 145— 107,667Accounts receivable, net— 2,981— 91,975— 94,956Inventories (1)— 7,014— 386,967 (1,191) 392,790Amounts due from inter-companies (2)— 81,551 395,888 44,221 (521,660) —Prepayments and other current assets 12,034 4,167 673 177,957 241 195,072Total current assets 431,071 108,720 401,683 1,341,750 (522,610) 1,760,614Property, plant and equipment, net— 73 1,826 321,213— 323,112Intangible assets, net— 171 32 1,103— 1,306Operating lease right-of-use assets— — — 76,821— 76,821Investment in and amount due from subsidiaries,consolidated VIE and VIE’s subsidiaries (2)(3) 671,329 219,317 — — (890,646) —Deferred income tax assets — — — 20,747 — 20,747Other non-current assets — 10 — 6,721 — 6,731Total non-current assets 671,329 219,571 1,858 426,605 (890,646) 428,717Total assets 1,102,400 328,291 403,541 1,768,355 (1,413,256) 2,189,331Short-term bank borrowings— —— 100,000— 100,000Notes payable——— 167,283— 167,283Accounts payable— 489— 575,235— 575,724Income taxes payable— 163— 1,195— 1,358Advances from customers— 2,905— 16,400— 19,305Deferred revenue—current— —— 41,755— 41,755Amounts due to inter-companies (2) 4,564 39,986 10 467,282 (511,842) —Accrued expenses and other current liabilities 4,220 4,682 5,323 151,286 — 165,511Total current liabilities 8,784 48,225 5,333 1,520,436 (511,842) 1,070,936Deferred revenue—non-current— —— 13,168— 13,168Deferred income tax liabilities——— 2,362— 2,362Operating lease liabilities— —— 280— 280Other non-current liabilities— —— 8,969— 8,969Amounts due to inter-companies (2)— 120,235— — (120,235) —Total non-current liabilities— 120,235— 24,779 (120,235) 24,779Total liabilities 8,784 168,460 5,333 1,545,215 (632,077) 1,095,715Total shareholders’ equity 1,093,616 159,831 398,208 223,140 (781,179) 1,093,616Total liabilities and shareholders’ equity 1,102,400 328,291 403,541 1,768,355 (1,413,256) 2,189,331 Table of Contents13 As of December 31, 2022Niu OtherVIE and its Consolidated Technologies Subsidiaries WFOE Subsidiaries Eliminations TotalRMB(In thousands)Cash and cash equivalents 12,376 28,183 158 493,570 — 534,287Term deposit—current 208,590 — — — — 208,590Restricted cash 176,204 3,906 — 6,230 — 186,340Short-term investments — — — 160,406 — 160,406Accounts receivable, net — 1,011 — 298,732 — 299,743Inventories (1) — 5,966 — 411,955 (912) 417,009Amounts 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 — 205,696Total current assets 409,656 97,240 423,574 1,582,722 (501,121) 2,012,071Term deposits—non-current — — — 20,000 — 20,000Property, plant and equipment, net — 128 2,607 394,622 — 397,357Intangible assets, net — 492 48 1,318 — 1,858Operating lease right-of-use assets — — — 86,597 — 86,597Investment 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 — 6,132Other non-current assets 1 5 7,000 5,677 — 12,683Total non-current assets 906,300 219,942 9,655 514,346 (1,125,616) 524,627Total assets 1,315,956 317,182 433,229 2,097,068 (1,626,737) 2,536,698Short-term bank borrowings — — — 160,000 — 160,000Notes payable — — — 316,832 — 316,832Accounts payable — 60 — 459,407 — 459,467Income taxes payable — 396 — 1,502 — 1,898Advances from customers — 1,410 — 23,522 — 24,932Deferred revenue—current — — — 37,540 — 37,540Amounts 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 — 192,093Total current liabilities 5,858 26,054 10,946 1,650,276 (500,372) 1,192,762Deferred revenue—non-current — — — 11,430 — 11,430Deferred income tax liabilities — — — 1,398 — 1,398Operating lease liabilities — — — 7,569 — 7,569Other non-current liabilities — — — 13,441 — 13,441Amounts due to inter-companies (2) — 115,714 — — (115,714) —Total non-current liabilities — 115,714 — 33,838 (115,714) 33,838Total liabilities 5,858 141,768 10,946 1,684,114 (616,086) 1,226,600Total shareholders’ equity 1,310,098 175,414 422,283 412,954 (1,010,651) 1,310,098Total liabilities and shareholders’ equity 1,315,956 317,182 433,229 2,097,068 (1,626,737) 2,536,698The following table presents condensed consolidating schedule of cash flow data for our subsidiaries and the VIE for the years ended presented. Table of Contents14Selected Condensed Consolidating Cash Flows Information For the Year Ended December 31, 2023Niu OtherVIE and its Consolidated Technologies Subsidiaries WFOE Subsidiaries Eliminations TotalRMB(In thousands)Net cash provided by (used in) operatingactivities 14,393 (19,986) 4,964 93,729 635 93,735Cash flows from investing activities:Cash paid for purchase of property, plant andequipment— (11) — (78,924)— (78,935)Purchase of term deposits (379,419)———— (379,419)Cash received from redemption of term deposits 513,238———— 513,238Cash paid for purchase of short-term investments— —— (420,000)— (420,000)Cash received from sale of short-term investments— —— 581,426— 581,426Net cash provided by (used in) investing activities 133,819 (11) — 82,502 — 216,310Cash flows from financing activities:Cash received from exercise of employee stockoptions 654———— 654Proceeds from short-term bank borrowings ——— 100,000— 100,000Repayment for short-term bank borrowings ——— (160,000)— (160,000)Net cash provided by financing activities 654 —— (60,000) — (59,346)Effect of foreign currency exchange rate changes oncash, cash equivalents and restricted cash 4,035 915— 4,599 (635) 8,914Net increase (decrease) in cash, cash equivalentsand restricted cash 152,901 (19,082) 4,964 120,830— 259,613Cash, cash equivalents and restricted cash at thebeginning of the year 188,580 32,089 158 499,800— 720,627Cash, cash equivalents and restricted cash at theend of the year 341,481 13,007 5,122 620,630— 980,240 Table of Contents15 For the Year Ended December 31, 2022Niu OtherVIE and its Consolidated Technologies Subsidiaries WFOE Subsidiaries Eliminations TotalRMB (In thousands)Net cash provided by (used in) operatingactivities (23,565) (29,111) 4,550 (74,417) 687 (121,856)Cash flows from investing activities:Cash paid for purchase of property, plant andequipment — (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 — — — — 551,794Cash 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 — 3,213,918Prepayment for an investment — — (4,000) — — (4,000)Net cash provided by (used in) investing activities (95,940) 30,219 (4,579) 455,929 12,263 397,892Cash flows from financing activities:Proceeds from the parent company (5) — 12,263 — — (12,263) —Cash received from exercise of employee stockoptions 2,203 — — — — 2,203Proceeds from short-term bank borrowings — — — 340,000 — 340,000Repayment 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 oncash, cash equivalents and restricted cash 21,972 764 — 7,994 (687) 30,043Net increase (decrease) in cash, cash equivalentsand restricted cash (95,330) 14,135 (29) 369,506 — 288,282Cash, cash equivalents and restricted cash at thebeginning of the year 283,910 17,954 187 130,294 — 432,345Cash, cash equivalents and restricted cash at theend of the year 188,580 32,089 158 499,800 — 720,627 Table of Contents16 For the Year Ended December 31, 2021Niu OtherVIE and itsConsolidated Technologies Subsidiaries WFOE Subsidiaries Eliminations TotalRMB(In thousands)Net cash provided by (used in) operatingactivities 25,840 (47,540) 1,200 354,675— 334,175Cash flows from investing activities:Cash paid for purchase of property, plant andequipment — (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— 353,296Cash 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— 6,027,167Prepayment 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 stockoptions 6,246 — — —— 6,246Proceeds from short-term bank borrowings — — — 340,000— 340,000Repayment for short-term bank borrowings — — — (340,000)— (340,000)Net cash provided by financing activities 6,246 — — — — 6,246Effect of foreign currency exchange rate changes oncash, cash equivalents and restricted cash (6,108) (1,959) — (423)— (8,490)Net increase (decrease) in cash, cash equivalentsand restricted cash 42,111 (29,360) (323) 24,444— 36,872Cash, cash equivalents and restricted cash at thebeginning of the year 241,799 47,314 510 105,850— 395,473Cash, cash equivalents and restricted cash at theend of the year 283,910 17,954 187 130,294— 432,345(1)It represents the elimination of the unrealized profit from inter-company sales.(2)It represents the elimination of inter-company balances among our company, our WFOE, other subsidiaries of our company and the VIE andits subsidiaries.(3)It represents the elimination of the investment in the VIE and our subsidiaries.(4)It represents the elimination of the inter-company technical services, marketing services, research and development services and inter-company sales.(5)It represents cash received as the investment in other subsidiaries from our company and our WFOE from other subsidiaries, which waseliminated as inter-company transaction upon consolidation.A. [Reserved]B. Capitalization and IndebtednessNot applicable. Table of Contents17C. Reasons for the Offer and Use of ProceedsNot applicable.D. Risk FactorsSummary of Risk FactorsInvesting in the ADSs involves significant risks. You should carefully consider all of the information in this annual report before making aninvestment in the ADSs. Below please find a summary of the principal risks we face, organized under relevant headings.Risks Related to Our Business and IndustryRisks and uncertainties related to our business and industry include, but are not limited to, the following:●Our success depends upon the continued strength of our brand. If we are not able to maintain and enhance our brand, our business andoperating results may be adversely affected;●Our success is dependent on the continued popularity of our existing products and services and our continued innovation and successfullaunches of new products and services, and we may not be able to anticipate or make timely responses to changes in the preferences ofconsumers;●We rely heavily on city partners and franchised stores for sales and distribution of our products and our success depends on our offlinedistribution network;●We rely substantially on external suppliers for certain components and raw materials used in our products;●We may not be able to maintain profitability;●Our products and services may experience quality problems from time to time, which could result in decreased sales, adversely affect ourresults of operations and harm our reputation;●We may be compelled to undertake product recalls or take other actions, which could adversely affect our brand image and results ofoperations;●We may face intense competition in the electric two-wheeled vehicles industry;●Our marketing strategy of appealing to and growing sales to a more diversified group of users may not continue to be successful; and●We may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitiveposition.Risks Related 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 donot comply with the regulations of mainland China relating to the relevant industries, or if these regulations or the interpretation ofexisting regulations change or are interpreted differently in the future, we could be subject to severe penalties or be forced to relinquishour interests in those operations;●Uncertainties exist with respect to the interpretation and implementation of the newly enacted Foreign Investment Law of the PRC andhow it may impact the viability of our current corporate structure, corporate governance and business operations; and●We rely on contractual arrangements with the VIE and its shareholders for a large portion of our business operations, which may not be aseffective as direct ownership. Table of Contents18Risks Related to Doing Business in China●Changes in China’s economic, political or social conditions or government policies could have a material and adverse effect on ourbusiness and results of operations;●The filing, approval or other administration requirements of the CSRC or other PRC government authorities may be required inconnection with our offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able tocomplete such filing, obtain such approval or meet such requirements;●Uncertainties in the interpretation and enforcement of the laws and regulations of mainland China could limit the legal protectionsavailable to you and us;●The PRC government’s significant oversight over our business operation could result in a material adverse change in our operations andthe value of our securities;●We may be adversely affected by the complexity, uncertainties and changes in the regulation on internet-related businesses and companiesin mainland China;●The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements andthe inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of suchinspections; and●Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect orinvestigate completely auditors located in mainland China and Hong Kong. The delisting of the ADSs, or the threat of their beingdelisted, may materially and adversely affect the value of your investment.Risks Related to Our ADSs●The trading price of the ADSs is likely to be volatile, which could result in substantial losses to investors;●If securities or industry analysts do not publish research or publishes inaccurate or unfavorable research about our business, or if theyadversely change their recommendations regarding the ADSs, the market price for our ADSs and trading volume could decline;●The sale or availability for sale of substantial amounts of the ADSs could adversely affect their market price;●Our dual-class voting structure will limit your ability to influence corporate matters and could discourage others from pursuing anychange of control transactions that holders of our Class A ordinary shares and the ADSs may view as beneficial; and●The dual-class structure of our ordinary shares may adversely affect the trading market for the ADSs.Risks Related to Our Business and IndustryWe face intense competition in the electric two-wheeled vehicles industry.We operate in the electric two-wheeled vehicles industry and face intense competition. We expect additional competitors to enter this market. Ourfuture competitors may enjoy competitive advantages, such as (i) greater capacity to leverage their sales efforts and marketing expenditures acrossa broader portfolio of products, (ii) more established relationships with a larger number of suppliers, contract manufacturers and channel partners,(iii) access to larger and broader user bases, (iv) greater brand recognition, (v) greater financial, research and development, marketing, distributionand other resources, (vi) more resources to make investments and acquisitions and (vii) larger intellectual property portfolios. We may facecompetition from both domestic players and established international electric scooter manufacturers. Table of Contents19Moreover, some of the mass-market electric scooter manufactures have also been adopting lithium-ion battery and app connectivity technologies toenter the electric two-wheeled vehicles market, which further intensifies direct competition. We believe our exclusive focus on smart electricscooters and the benefits we receive by manufacturing in China are the basis on which we can compete in the electric two-wheeled vehicles marketin spite of the challenges posed by market competition. We believe that we are strategically positioned in the electric two-wheeled vehicles market,given the quality, performance and unique design of our products. Nonetheless, increasing competition may lead to lower unit sales and thesubsequent increase in inventory may result in a further downward price pressure and adversely affect our business, financial condition, operatingresults and prospects. Our ability to successfully compete in our industry will be fundamental to our future success in existing and new markets andour market share. There can be no assurance that we will be able to compete successfully in our markets. If our competitors introduce new productsor services that compete with or surpass the quality, price or performance of our products or services, we may be unable to satisfy existingcustomers or attract new customers at the prices and levels that would allow us to generate attractive rates of return on our investment.Our success depends on the continued strength of our brand. If we are not able to maintain and enhance our brand, our business andoperating results may be adversely affected.We believe that our brand has significantly contributed to the success of our business and that maintaining and enhancing the brand is critical toretaining and expanding our customer base. Our marketing, design, research and products are aimed at reinforcing consumer perceptions of our“NIU” brand as a premium smart e-scooter brand. Therefore, failure to protect our brand or to grow the value of our “NIU” brand may have amaterial adverse effect on our business and results of operations, including losing our customers.We focus on promoting awareness of our “NIU” brand generally and in particular as a premium brand for high-quality smart e-scooters globally.We seek to maintain and strengthen our brand image through marketing initiatives, including advertising, consumer promotions and tradepromotions. Maintaining and strengthening our brand image depends on our ability to adapt to a rapidly changing media environment andpreferences of customers to receiving information, including our increasing reliance on social media and online dissemination of advertisingcampaigns. If we do not continue to improve, maintain and strengthen our brand, we may lose the opportunity to build a critical mass of customers.Additionally, promoting and positioning our brand will likely depend significantly on our ability to provide high-quality products and services andengage with our customers as intended. If we are unsuccessful in doing so, our business, financial condition, results of operations and prospectscould be materially and adversely affected.In addition, we rely heavily on our brand image in selling our products. Negative publicity relating to our products and services, shareholders,management, employees, operations, distributors, business partners, industry or products similar to ours, could materially and adversely affectconsumer perceptions of our brand and result in decreased demand for our products. There have been various negative reports regarding ourproducts, our company and our shareholders in the past, in both online and traditional media, and there can be no assurance that we will notexperience negative publicity in the future or that such negative publicity will not have a material adverse effect on our business, results ofoperations, financial condition or prospects.Our success depends on the continued popularity of our existing products and services and our continued innovation and successful launchesof new products and services, and we may not be able to anticipate or make timely responses to changes in the preferences of consumers.The success of our operations depends on our ability to introduce new or enhanced smart e-scooters, and other new products. Consumerpreferences differ across and within each of the regions in which we operate or plan to operate and may shift over time in response to changes indemographic and social trends, economic circumstances and the marketing efforts of our competitors. There can be no assurance that our existingproducts will continue to be favored by consumers or that we will be able to anticipate or respond to changes in consumer preferences in a timelymanner. Our failure to anticipate, identify or react to these particular preferences could adversely affect our sales performance and our profitability.In addition, demand for many of our products, including accessories, are closely linked to customers’ purchasing power and disposable incomelevels, which may be adversely affected by unfavorable economic developments in the countries in which we operate.We devote significant resources to product development. However, we may not be successful in developing innovative new products, and our newproducts may not be commercially successful. To the extent that we are not able to effectively gauge the direction of our key markets andsuccessfully identify, develop and manufacture new or improved products in these changing markets, our financial results and our competitiveposition may suffer. Moreover, there are inherent market risks associated with new product introductions, including uncertainties about marketingand consumer preference, and there can be no assurance that we will be successful in introducing new products. We may expend substantialresources developing and marketing new products that may not achieve expected sales levels. Table of Contents20Additionally, our competitive advantage also depends on the smart features and data services we provide to our users. Our smart e-scooters areconnected to our NIU app. By using smart e-scooters’ built-in GPS, on-board computer, algorithms and cloud technology, our NIU app enablesriders to seamlessly receive real-time data including, among others, anti-theft alerts, daily riding habits and power supply, real-time diagnostics andmaintenance and service station directory. We cannot assure you that we will be able to continue to innovate and develop new smart features anddata services, which may jeopardize customer experience and affect both our sales of scooters and provision of related services.We rely heavily on city partners and franchised stores for sales and distribution of our products and our success depends on our offlinedistribution network.We have established a distinct omnichannel retail network to sell our products and services to our customers. In China, our offline retail channelsconsist of city partners and franchised stores, whereas in European and other countries, we rely on overseas distributors. Our “city partner” systemplays an important role in our offline sales strategy in China. City partners are our exclusive distributors who either open and operate franchisedstores or sign up franchised stores. As of December 31, 2023, we had 288 city partners and 2,856 franchised stores in China. Our offlinedistribution network plays a crucial role in our omnichannel retail system. We rely on these city partners and franchised stores in China to directlyinteract with and serve our users, but the interest of city partners and franchised stores may not be entirely aligned with ours or with that of othercity partners and franchised stores. There can be no assurance that we will be able to maintain our existing relationships with city partners andfranchised stores. Additionally, our existing city partners and franchised stores may not be able to maintain past levels of sales or expand theirsales. In addition, as we seek to expand into new regions in China, we cannot assure you that we will be able to successfully establish and maintainrelationships with new city partners and franchised stores in these regions on favorable terms or at all.Furthermore, we manage our franchised stores in a real-time and interactive manner. We closely monitor their sales performance, service levels andactivities within the franchised stores through the store level management system that was implemented by us since early 2018. However, wecannot assure you that we will be successful in managing our city partners and franchised stores and detecting inconsistencies with our brand imageor values or non-compliance with the provisions of our distribution agreements by them. Any non-compliance by our city partners or franchisedstores could, among other things, negatively affect our brand reputation, demands for our products and our relationships with other city partnersand franchised stores. Any of these could have a material and adverse effect on our business, financial condition, results of operations andprospects.We rely substantially on external suppliers for certain components and raw materials used in our products.We purchase certain key components and raw material, such as batteries, motors, tires, battery chargers and controllers from external suppliers foruse in our operations and production of products, and a continuous and stable supply of these components and raw materials that meet ourstandards is crucial to our operations and production. We normally enter into one-year procurement agreements with our external suppliers andexpect to continue to rely on external suppliers for a substantial percentage of our production requirements in the future. We had one supplieraccounting for greater than 10% of our total purchases in each of 2021, 2022 and 2023. We cannot assure you that we will be able to maintain ourexisting relationships with these suppliers and continue to be able to source electric motors, batteries or other key components and raw materials weuse in our products on a stable basis and at a reasonable price or at all. For example, our suppliers may increase the prices for the components ormaterials we purchase and/or experience disruptions in their production of the components or materials.The supply chain also exposes us to multiple potential sources of delivery failure or component shortages. While we obtain components frommultiple sources whenever possible, similar to other scooter manufacturers, some of the components used in our products are purchased by us froma single source. To date, we have not found qualified and cost-efficient alternative sources for most of the single sourced components used in ourproducts and we generally do not maintain long-term agreements with our single source suppliers. We have integrated the suppliers’ technologieswithin our products such that having to change to an alternative supplier may cause significant disruption to our operations. In the event that thesupply of key components is interrupted for whatever reason or there are significant increases in the prices of these key components, our business,financial condition, results of operations and prospects may be materially and adversely affected. Additionally, changes in business conditions,force majeure, governmental changes and other factors beyond our control or that we do not presently anticipate could also affect our suppliers’ability to deliver components to us on a timely basis. Table of Contents21We incur significant costs related to procuring components and raw materials required to manufacture and assemble our products. The prices forthe components and raw materials fluctuate depending on factors beyond our control including market conditions and demand for thesecomponents and materials. Substantial increases in the prices for the components or raw materials we use in producing our products would increaseour costs and reduce our margins. Any of the foregoing could materially and adversely affect our results of operations, financial condition andprospects.We may not be able to achieve or maintain profitability.We have incurred net losses in the past. Although we had a net profit of RMB225.8 million in 2021, we had a net loss of RMB49.5 million andRMB271.8 million in 2022 and 2023, respectively. We had net cash provided by operating activities of RMB334.2 million and RMB93.7 million in2021 and 2023, respectively, and net cash used in operating activities of RMB121.9 million in 2022. We cannot assure you that we will be able toachieve profitability again and maintain net profits or positive cash flow from operating activities in the future. Our ability to achieve or maintainprofitability depends in large part on our ability to increase sales of our products and services, increase cost efficiency and manage operatingexpenses. We intend to continue to increase our sales of products, improve gross margin, manage and further reduce our operating expenses as aproportion of our total revenues, but there can be no assurance that we will achieve this goal and maintain profitability in the future.Our products and services may experience quality problems from time to time, which could result in decreased sales, adversely affect our resultsof operations and harm our reputation.Our products and services can contain design and manufacturing defects. Sophisticated cloud electric central unit and software, such as thosedeveloped by us, often contain “bugs” that can unexpectedly interfere with the software’s intended operation. Defects may also occur incomponents and products that we purchase from third-party suppliers. There can be no assurance we will be able to detect and fix all defects in thehardware, software and services we offer. Failure to do so could result in lost in revenue, significant warranty and other expenses and harm toour reputation.Additionally, we source and purchase key components or accessories in our operations and production of products from third-party suppliers, suchas batteries, motors, tires, battery chargers, helmets and controllers. We cannot assure that the quality and functions of these key components oraccessories supplied by third-party suppliers will be consistent with and maintained at our high standard. Any defects or quality issues in these keycomponents or accessories or any non-compliance incidents associated with these third-party suppliers could result in quality issues with ourproducts and hence compromise our brand image and results of operations.We may be compelled to undertake product recalls or take other actions, which could adversely affect our brand image and results ofoperations.Our products may not perform consistently with customers’ expectations or with other scooters currently available on the market. Any productdefects or any other failure of our products to perform as expected could harm our reputation and result in adverse publicity, lost revenue, deliverydelays, product recalls, product liability claims, harm to our brand and reputation, and significant warranty and other expenses, and could have amaterial adverse impact on our business, financial condition, operating results and prospects.On November 21, 2019, the State Administration for Market Regulation, or the SAMR, issued the Interim Provisions on the Administration ofRecall of Consumer Goods, which became effective on January 1, 2020. Pursuant to such provisions, if a manufacturer is aware of any potentialdefect in its products or receives such notice from the government authorities, it must investigate in a timely manner and report the results of suchinvestigation to the authorities. Where any defect is found during the investigation, the manufacturer must immediately cease to manufacture, sellor import the relevant products and recall such products. As of the date of this annual report, we have not received any such notice fromgovernment authorities, or initiated, voluntarily or involuntarily, any product recalls in accordance with such provisions.In the future, we may at various times, voluntarily or involuntarily, initiate a recall if any of our products, including any systems or parts sourcedfrom our suppliers, prove to be defective or non-compliant with applicable laws and regulations. Such recalls, whether voluntary or involuntary orcaused by systems or components engineered or manufactured by us or our suppliers, could involve significant expense and could adversely affectour brand image in our target markets, as well as our business, prospects, financial condition and results of operations. Table of Contents22Our marketing strategy of appealing to and growing sales to a more diversified group of users may not continue to be successful.We have been successful in marketing our smart e-scooters in large part by promoting the NIU brand experience and lifestyle. Our marketing,design, research and products are aimed to reinforcing customer perceptions of as a premium smart e-scooter brand. We aim to provide users with agood user experience, including by providing our users with access to a full suite of services conveniently through our NIU app and services stores.In addition, we seek to engage with our users on an ongoing basis using online and offline channels, such as NIU community and clubs. We cannotassure you that our services, including NIU Care and NIU Cover, or our efforts to engage with our users using both our online and offline channels,will be successful, which could impact our revenues as well as our customer satisfaction and marketing.To sustain and grow our business over the long term, we must continue to be successful in selling products and promoting the NIU brandexperience and lifestyle to a broader and more diverse set of users. We must also execute our diversification strategy without adversely impactingthe strength of the brand with core users. Failure to successfully increase demand for our smart e-scooters may have a material adverse effect onour business and results of operations.We may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitiveposition.We consider our copyrights, trademarks, trade names, internet domain names, patents and other intellectual property rights invaluable to our abilityto continue to develop and enhance our brand recognition. We have invested significant resources to develop our own intellectual property. Failureto maintain or protect these rights could harm our business. We rely on a combination of patents, patent applications, trade secrets, including know-how, copyright laws, trademarks, intellectual property licenses, contractual rights and any other agreements to establish and protect our proprietaryrights in our technology. In addition, we enter into confidentiality and nondisclosure agreements with our employees and business partners. See“Item 4. Information On the Company—B. Business Overview —Intellectual Property.” Statutory laws and regulations are subject to judicialinterpretation and enforcement and may lack consistency. Contractual rights may be breached by counterparties, and there may not be adequateremedies available to us for any such breach.The measures we take to protect our intellectual property rights may not be sufficient or adequate to prevent infringement on or misuse of ourintellectual property. Any unauthorized use of our intellectual property by third parties may adversely affect our current and future revenues andour reputation. Preventing unauthorized uses of intellectual property rights could be difficult, costly and time-consuming. Litigation may benecessary to enforce our intellectual property rights. Initiating infringement proceedings against third parties can be expensive and time-consuming,and divert management’s attention from other business concerns. We may not prevail in litigation to enforce our intellectual property rights againstunauthorized use. We may have to resort to litigation to protect our intellectual property rights. Failure to adequately protect our intellectualproperty could harm our brand name and materially affect our business and results of operations.We may need to defend ourselves against patent, trademark or other proprietary rights infringement claims, which may be time-consuming andwould cause us to incur substantial costs.Companies, organizations or individuals, including our competitors, may hold or obtain patents, trademarks or other proprietary rights that wouldprevent, limit or interfere with our ability to make, use, develop, sell or market our products, which could make it more difficult for us to operateour business. From time to time, we may receive communications from holders of patents or trademarks regarding their proprietary rights.Companies holding patents or other intellectual property rights may bring suits alleging infringement of such rights or otherwise assert their rightsand urge us to take licenses. Our applications and uses of trademarks relating to our design, software or artificial intelligence technologies could befound to infringe upon existing trademark ownership and rights.Additionally, we may fail to own or apply for key trademarks in a timely fashion, or at all, which may damage our reputation and brand.Additionally, we receive from time to time letters alleging infringement of patents, trademarks or other intellectual property rights by us. Table of Contents23As our patents may expire and may not be extended, our patent applications may not be granted and our patent rights may be contested,circumvented, invalidated or limited in scope, our patent rights may not protect us effectively.As of December 31, 2023, we owned 582 patents, 936 registered trademarks and 27 copyrights relating to various aspects of our operations and 2registered domain names, including www.niu.com. Of the 936 registered trademarks, 155 are registered in mainland China and 781 in othercountries and regions. As of the same date, we had 316 applications for patents and trademarks pending in mainland China, Europe and otherjurisdictions. For our pending applications, we cannot assure you that we will be granted patents pursuant to our pending applications. Even if ourpatent applications succeed and we are issued patents in accordance with them, it is still uncertain whether these patents will be contested,circumvented or invalidated in the future.In addition, the rights granted under any issued patents may not provide us with proprietary protection or competitive advantages. The claims underany patents that issue from our patent applications may not be broad enough to prevent others from developing technologies that are similar or thatachieve results similar to ours. It is also possible that the intellectual property rights of others will bar us from licensing and from exploiting anypatents that are issued from our pending applications. Numerous patents and pending patent applications owned by others exist in the fields inwhich we have developed and are developing our technology. These patents and patent applications might have priority over our patentapplications and could subject our patent applications to invalidation. Finally, in addition to those who may claim priority, any of our existing orpending patents may also be challenged by others on the basis that they are otherwise invalid or unenforceable.We may be subject to product liability or warranty claims that could result in significant direct or indirect costs, or we could experience greaterreturns from retailers than expected, which could harm our business and operating results.We may become subject to product liability claims, which could harm our business, prospects, operating results and financial condition. Theelectric two-wheeled vehicles industry experiences significant product liability claims and we face inherent risk of exposure to claims in the eventour products do not perform as expected or malfunction resulting in property damage, personal injury or death. A successful product liability claimagainst us could require us to pay a substantial monetary award. Moreover, a product liability claim could generate substantial negative publicityabout our products and business and inhibit or prevent commercialization of our future products which would have material adverse effect on ourbrand, business, prospects and operating results. Any insurance coverage might not be sufficient to cover all potential product liability claims. Anylawsuit seeking significant monetary damages may have a material adverse effect on our reputation, business and financial condition.We generally provide various warranties on different components and parts of our products and across different markets. In China, we provideextended quality warranty to our users for terms varying from six months to three years, subject to certain conditions, among others, including thatwarranty only applies to normal use and quality issues. The occurrence of any material defects in our products could make us liable for damagesand warranty claims in excess of our current reserves. In addition, we could incur significant costs to correct any defects, warranty claims or otherproblems, including costs related to product recalls. Any negative publicity related to the perceived quality of our products could affect our brandimage, decrease retailer, distributor and customer demand, and adversely affect our operating results and financial condition. While our warranty islimited to repairs and returns, warranty claims may result in litigation, the occurrence of which could adversely affect our business and operatingresults.We may fail to comply with legal or regulatory requirements or to obtain or maintain the licenses, permits, registrations or certificates.Our manufacturing and other production facilities as well as the packaging, storage, distribution, advertising and labeling of our products, aresubject to extensive legal and regulatory requirements. For example, pursuant to the Regulation on the Administration of Production Licenses forIndustrial Products of the PRC and Measures for the Implementation of the Regulation on the Administration of Production Licenses for IndustrialProducts of the PRC, we must maintain the Production License for National Industrial Products for the production of our products. Loss of orfailure to renew or obtain necessary permits, licenses, registrations or certificates could delay or prevent us from meeting product demand,introducing new products, building new facilities or acquiring new businesses and could materially and adversely affect our operating results. If weare found to be in violation of applicable laws and regulations, we could be subject to administrative punishment, including fines, injunctions,recalls or asset seizures, as well as potential criminal sanctions, any of which could have a material adverse effect on our business, financialcondition, results of operations and prospects. Table of Contents24In addition, future material changes in industry standards, laws and regulations, such as increased restrictions on manufacturers, could result inincreased operating costs or affect our ordinary operations, which could also have a material adverse effect on our operations and our financialresults. See “Item 4. Information on the Company—B. Business Overview—Regulations” for additional details regarding the permits, licenses,registrations and other requirements applicable to us, our subsidiaries and affiliates. We largely rely on our own standards concerning theproduction and quality control of such products. While we are committed to producing high-quality products, there can be no assurance that ourcurrent production or quality control standards will satisfy any applicable laws and regulations that may come into effect in the future.Our products are subject to safety standards and failure to satisfy such mandated standards would have a material adverse effect on ourbusiness and operating results.Our products must comply with the safety standards of the market where they are sold. In mainland China, electric bicycles and electricmotorcycles must meet or exceed all mandated safety standards, including national level and local level standards. It is required under thesestandards to conduct rigorous testing and use approved materials and equipment.Electric bicycles shall meet the safety requirements set out in the Safety Technical Specification for Electric Bicycle (GB17761-2018), or theElectric Bicycle Standard, which was jointly issued by the SAMR and the National Standardization Administration of China on May 15, 2018 andcame into effect on April 15, 2019. Besides, a technical resolution on the interpretation and implement of the Electric Bicycle Standard waspromulgated jointly by an expert group on TC12 motorcycle and component technology of Certification and Accreditation Administration of thePRC and China National Motorcycle Testing Centre (Tianjin) on March 25, 2019, which set some more specific and stricter requirements for thedesign of the electric bicycles. Although this resolution has not been adopted by the PRC national government as a national regulation, suchinterpretations that may be promulgated by the government authorities from time to time may still cause uncertainty regarding the compliance ofour business. See “Item 4. Information on the Company—B. Business Overview—Regulations” for further details.Electric motorcycles, as one type of the power-driven vehicles, shall meet the safety requirements set out in the Technical Specifications for Safetyof Power-Driven Vehicles Operating on Roads (GB7258-2017), which was jointly issued by the AQSIQ and National StandardizationAdministration of China on September 29, 2017, and last amended on February 20, 2021. The latest version took effect on January 1, 2022.Furthermore, the Safety Specifications for Electric Motorcycles and Electric Mopeds (GB24155-2020), which issued by the SAMR and theNational Standardization Administration of China in May 2020 and became effective on January 1, 2021, also stipulates some specific safetyrequirements for electric motorcycles.There is no guarantee that our products will satisfy the standards and requirements for electric bicycles or motorcycles, and we may be required tosatisfy additional industry standards and face regulation changes relating to electric bicycle and motorcycle business in the future. If our modelswere found to be non-compliant with laws and regulations, the models in question would be prohibited from being sold in the Chinese market,which would in turn materially and adversely affect our sales and revenue, and cause damage to our brand and result in liabilities. See “Item 4.Information on the Company—B. Business Overview—Regulations—Regulations Relating to Production of E-Scooter—Regulations onProduction of Electric Bicycle” and “—Regulations on Qualification of Production of Electric Motorcycle.”Furthermore, the electric bicycles and motorcycles must pass various tests, undergo a certification process and finally be affixed with ChinaCompulsory Certification prior to being delivered from the factory, being sold or being used in any commercial case, and such certification is alsosubject to periodic renewal. On March 14, 2019, the Opinions of the State Administration for Market Regulation, the Ministry of Industry andInformation Technology and the Ministry of Public Security on Intensifying Supervision of the Execution of National Standards for ElectricBicycles was promulgated. The opinions provide that the market supervision department shall strengthen the management of the ChinaCompulsory Certification for electric bicycles, strengthen inspections of certification agencies and manufacture enterprises and only allow vehiclesthat meet the Electric Bicycle Standards and obtained the China Compulsory Certification flowing into the market. We have obtained the ChinaCompulsory Certification for all of our current products, and will try to obtain the China Compulsory Certification for our future products. There isno guarantee, however, all series of our products will always comply with the China Compulsory Certification standard and satisfy therequirements of the China Compulsory Certification, or we will be able to renew our current certification or certify timely our new products in thefuture. If our products were found to be non-compliant with the China Compulsory Certification standard, we would be prohibited from sellingsuch e-scooters in the Chinese market, which would in turn materially and adversely affect our sales and revenue and cause damage to our brandand result in liabilities. See “Item 4. Information on the Company—B. Business Overview—Regulations—Regulations Relating to Production ofE-Scooter—Regulations on Product Quality.” Table of Contents25We retain certain personal information about our users and may be subject to various privacy and consumer protection laws.We use our NIU Inspire system to log information about each smart e-scooter’s use in order to aid us in smart e-scooter diagnostics, repair andmaintenance, as well as to help us collect data regarding the user’s charge time, battery usage, mileage, efficiency habits and location information.Our users may object to the use of these data, which may harm our business. Possession and use of users’ personal information in conducting ourbusiness may subject us to regulatory burdens in mainland China and other jurisdictions, such as the European Union, which would require us toobtain users’ consent, restrict our use of such personal information and hinder our ability to expand our user base. In the event of a data breach orother unauthorized access to our user data, we may have obligations to notify users about the incident and we may need to provide some form ofremedy for the individuals affected by the incident. For example, in May 2018 the European Union’s new regulation governing data practices andprivacy called the General Data Protection Regulation, or the GDPR, became effective and substantially replaced the data protection laws of theindividual European Union member states. The law requires companies to meet more stringent requirements regarding the handling of personaldata of individuals in the EU than were required under predecessor EU requirements. In the United Kingdom, a Data Protection Bill thatsubstantially implements the GDPR also became law in May 2018. The law also increases the penalties for non compliance, which may result inmonetary penalties of up to 20.0 million Euros or 4% of a company’s worldwide turnover, whichever is higher. In the U.S., various federal, stateand foreign legislative and regulatory bodies, or self-regulatory organizations, may expand current laws or regulations, enact new laws orregulations or issue revised rules or guidance regarding privacy, data protection, information security. For example, California enacted theCalifornia Consumer Privacy Act, which, among other things, requires new disclosures to California consumers and afford such consumers newabilities to opt out of certain sales of personal information. Outside of the European Union and the U.S., many countries and territories have laws,regulations or other requirements relating to privacy, data protection, information security and consumer protection, and new countries andterritories are adopting such legislation or other obligations with increasing frequency.If users allege that we have improperly used, released or disclosed their personal information, we could face legal claims and reputational damage.We may incur significant expenses to comply with privacy, consumer protection and security standards and protocols imposed by law, regulation,industry standards or contractual obligations. Additionally, we use third-party cloud services to store the data collected. If third parties improperlyobtain and use the personal information of our users, we may be required to expend significant resources to resolve these problems. A major breachof our network security and systems could create serious negative consequences for our businesses and future prospects, including possible fines,penalties, reduced customer demand for our products and harm to our reputation and brand. See “Item 4. Information on the Company—B.Business Overview—Regulations” for further details.We are subject to a variety of costs and risks due to our continued expansion internationally that may not be successful and could adverselyaffect our profitability and operating results.We face challenges and risks associated with expanding our business globally into new geographic markets. Our smart e-scooters have internationalmodels that are manufactured for sales and distribution in international markets. International expansion represents a large opportunity to furthergrow our business and enhance our competitive position, and is one of our core strategies.We may enter into new geographic markets where we have limited or no experience in marketing, selling, and localizing and deploying our smarte-scooters. International expansion has required and will continue to require us to invest significant capital and other resources and our efforts maynot be successful. International sales and operations may be subject to risks such as:●limited brand recognition (compared with our home market in China);●costs associated with establishing new distribution networks;●difficulty to find qualified partners for overseas distribution;●inability to anticipate foreign consumers’ preferences and customs;●difficulties in staffing and managing foreign operations;●burdens of complying with a wide variety of local laws and regulations, including personal data protection, battery, motor, packagingand labeling;●political and economic instability; Table of Contents26●trade restrictions;●lesser degrees of intellectual property protection;●tariffs and customs duties and the classifications of our goods by applicable governmental bodies; and●a legal system subject to undue influence or corruption.The occurrence of any of these risks could negatively affect our international business and consequently our business and operating results. Inaddition, the concern over these risks may also prevent us from entering into or releasing certain of our smart e-scooters in certain markets.We rely on third-party logistic service providers to deliver our online direct sales orders and certain overseas orders.We typically rely on third-party logistic service providers to deliver our online direct sales orders and certain overseas orders. Damage or disruptionto our distribution logistics due to disputes, weather, natural disasters, fire, explosions, terrorism, pandemics, geopolitical turmoil or labor strikescould impair our ability to distribute or sell our products. Inadequate third-party logistics services could also potentially disrupt our distribution andsales and compromise our business reputation. Failure to take adequate steps to mitigate the likelihood or potential impact of such events, or toeffectively manage such events if they occur, could adversely affect our business, financial condition and results of operations, as well as requireadditional resources to restore our supply chain.Our operations may be interrupted by production difficulties due to mechanical failures, utility shortages or stoppages, fire, natural disaster orother calamities at or near our facilities.We are reliant on equipment and technology in our facilities for the production and quality control of our products, and our operations are subject toproduction difficulties such as capacity constraints of our production facilities, mechanical and systems failures and the need for construction andequipment upgrades, any of which may cause the suspension of production or/and reduced output. There can be no assurance that we will notexperience problems with our equipment or technology in the future or that we will be able to address any such problems in a timely manner.Problems with key equipment or technology in one or more of our production facilities may affect our ability to produce our products or cause us toincur significant expense to repair or replace such equipment or technology. Also, scheduled and unscheduled maintenance programs may affectour production output. Any of these could have a material adverse effect on our business, financial condition, results of operations and prospects.Furthermore, we depend on a continuous supply of utilities, such as electricity and water, to operate our production facilities. Any disruption to thesupply of electricity or other utilities to our production facilities may disrupt our production. This could adversely affect our ability to fulfill oursales orders and consequently may have an adverse effect on our business and results of operations. In addition, our operations are subject tooperational risks. Fire, natural disasters, pandemics or extreme weather, including earthquakes, droughts, floods, typhoons or other storms, orexcessive cold or heat could cause power outages, fuel shortages, water shortages, damage to our production facilities, any of which could impairor interfere with our operations. We cannot assure you that similar events will not happen again in the future or that we will be able to takeadequate measures to mitigate the likelihood or potential impact of similar events, or to effectively respond to such events if they occur, whichcould materially and adversely affect our business, financial condition and results of operations.If we fail to maintain an effective system of internal control over financial reporting, we may be unable to accurately report our financialresults or prevent fraud.We are subject to reporting obligations under the U.S. securities laws. Among other things, the SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, adopted rules requiring every public company, including us, to include a management report on the company’sinternal control over financial reporting in its annual report, which contains management’s assessment of the effectiveness of the company’sinternal control over financial reporting. In addition, an independent registered public accounting firm must attest to and report on the effectivenessof the company’s internal control over financial reporting. Table of Contents27In connection with the preparation of our financial statements for the fiscal year ended December 31, 2023, we did not identify any materialweakness in our internal controls and our financial reporting. Our management has concluded that our internal control over financial reporting waseffective as of December 31, 2023. See “Item 15. Controls and Procedures.” In the future, however, if we fail to maintain effective internal controlover financial reporting, our management may not be able to conclude that we have effective internal control over financial reporting at areasonable assurance level. A failure to maintain effective internal controls over financial reporting could result in inaccuracies in our financialstatements and could also impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timelybasis. As a result, our business, financial condition, results of operations and prospects, as well as the trading price of our ADSs, may be materiallyand adversely affected. Moreover, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse ofcorporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminalsanctions. We may also be required to restate our financial statements from prior periods.Furthermore, even if our management concludes that our internal control over financial reporting is effective, our independent registered publicaccounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls orthe level at which our controls are documented, designed, operated or reviewed, or if it interprets the requirements differently from us. In addition,since we have been a public company, our reporting obligations may place a significant strain on our management, operational and financialresources and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation. If wefail to maintain an effective internal control environment, we could suffer material misstatements in our consolidated financial statements and failto meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turnlimit our access to capital markets, harm our results of operations, and lead to a decline in the trading price of the ADSs. Additionally, ineffectiveinternal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delistingfrom the stock exchange on which we list, regulatory investigations and civil or criminal sanctions. We may also be required to restate ourconsolidated financial statements for prior periods.If our suppliers or distributors fail to use ethical business practices and comply with applicable laws and regulations, our brand image could beharmed due to negative publicity.Our core values, which include developing high-quality smart e-scooters while operating with integrity, are an important component of our brandimage, which makes our reputation sensitive to allegations of unethical business practices. We do not control the business practices of our suppliersor distributors. Accordingly, we cannot guarantee their compliance with ethical business practices, such as environmental responsibilities, fair wagepractices and compliance with child labor laws, among others. A lack of demonstrated compliance could lead us to seek alternative suppliers ordistributors which could increase our costs and results in delayed delivery of our products or other disruptions of our operations.Violation of labor or other laws by our suppliers or distributors or the divergence of their labor or other practices from those generally accepted asethical in the markets in which we do business could also attract negative publicity for us and our brand. This could diminish the value of our brandimage and reduce demand for our products if, as a result of such violation, we were to attract negative publicity. If we, or other players in ourindustry, encounter similar problems in the future, it could harm our brand image, business, prospects, results of operations and financial condition.Any significant cybersecurity incident or disruption of our information technology systems or those of third-party partners could materiallydamage user relationships and subject us to significant reputational, financial, legal and operation consequences.We depend on our information technology systems, as well as those of third parties, to develop new products and services, host and manage ourservices, store data, process transactions, respond to user inquiries, and manage inventory and our supply chain. Any material disruption orslowdown of our systems or those of third parties whom we depend upon could cause outages or delays in our services, particularly in the form ofinterruption of services delivered by our mobile app, which could harm our brand and adversely affect our operating results. We rely on cloudservers maintained by cloud service providers to store our data, and all of the data we collected are hosted at third-party cloud service providers. Table of Contents28Problems with our cloud service providers or the telecommunications network providers with whom they contract could adversely affect the userexperience delivered by us. Our cloud service providers could decide to cease providing us services without adequate notice. Any change in servicelevels at our cloud servers or any errors, defects, disruptions or other performance problems with our information technology systems could harmour brand and may damage the data of our users. If changes in technology cause our information technology systems, or those of third partieswhom we depend upon, to become obsolete, or if our or their information systems are inadequate to handle our growth, we could lose users, andour business and operating results could be adversely affected.Our success depends on our ability to retain our core management team and other key personnel.Our performance depends on the continued service and performance of our directors and senior management as they are expected to play animportant role in guiding the implementation of our business strategies and future plans. If any of our directors or any members of our seniormanagement were to terminate their service or employment with us, there can be no assurance that we would be able to find suitable replacementsin a timely manner, at acceptable cost or at all. The loss of services of key personnel or the inability to identify, hire, train and retain other qualifiedand managerial personnel in the future may materially and adversely affect our business, financial condition, results of operations and prospects.Additionally, we rely on our research and development personnel for product development and technology innovation. If any of our key researchand development personnel were to leave us, we cannot assure you that we can secure equally competent research and development personnel in atimely manner, or at all.We may not be able to effectively manage our growth or implement our business strategies.We were formed in September 2014, and we launched our first product, the NQi Series scooter, in June 2015. Despite experiencing experiencedsignificant growth since our inception, we have been facing uncertainties and pressures since 2022, which have affected our growth and results ofoperations. However, although we expect that our sales will return to the growth track in 2024 with the launches of our new products, our historicalgrowth rate may not be indicative of our future performance.We believe that our future growth will depend on many factors, including launch of new products, effective marketing, successful entry into otherinternational markets and operating efficiency. You should consider our business and future prospects in light of the risks and challenges we face inour industry, including, among other things, with respect to our ability to:●produce safe, reliable and quality smart e-scooters;●build a well-recognized brand;●establish and expand our customer base;●successfully market our products and services;●improve and maintain our operational efficiency;●develop and protect our core technologies;●maintain a reliable, secure, high-performance and scalable technology infrastructure;●attract, retain and motivate talented employees;●anticipate and adapt to changing market conditions, including technological developments and changes in competitive landscape;●navigate an evolving and complex regulatory environment; and●identify suitable facilities to expand manufacturing capacity.If we fail to address any or all of these risks and challenges, our business may be materially and adversely affected. Table of Contents29We cannot assure you that we will be able to develop or ensure efficient, automated, low-cost manufacturing capability and processes, and reliablesources of component supply that will enable us to meet the quality, price, engineering, design and production standards, as well as the productionvolumes required to successfully mass-market our currently available products and future scooters. We may not be able to achieve similar results orgrow at the same rate as we had in the past. As our business grows, we may adjust our product and service offerings. These adjustments may notachieve expected results and may have a material and adverse impact on our financial conditions and results of operations.Higher employee costs and inflation may adversely affect our business and our ability to achieve or maintain profitability.China’s overall economy and the average wage in mainland China have increased in recent years and are expected to grow. The average wage levelfor our employees has also increased in recent years. We expect that our employee costs, including wages and employee benefits, will continue toincrease. Unless we are able to pass on these increased employee costs to those who pay for our products and services, our ability to achieve ormaintain profitability and our results of operations may be materially and adversely affected.We outsource our production labor needs to third-party labor service companies. Typically, we enter into agreements with labor service companies,pursuant to which labor service companies send their employees to work on our assembly and production lines. The labor service companies areresponsible for entering into labor contracts with their employees and provide, among others, social benefits and bear costs relating to accidents orinjuries happened at the work place in accordance with the laws and regulations of mainland China. We may be unable to enter into newagreements or extend existing agreements with them on terms and conditions acceptable to us, and therefore may need to contract with other thirdparties and incur additional labor costs. Despite our price resilience, the rising employee costs as a result of higher labor cost of our contractmanufacturers and operation staff and increasing raw material price cannot be easily passed to end consumers in the form of higher retail prices dueto competition in the electric two-wheeled vehicles market. Our ability to achieve or maintain profitability therefore may be adversely affected iflabor cost and inflation continue to rise in the future.We may need additional capital, and financing may not be available on terms acceptable to us, or at all.We believe our cash and cash equivalents, restricted cash and term deposits will be sufficient to meet our current and anticipated needs for generalcorporate purposes for at least the next 12 months. We may, however, need additional cash resources in the future if we experience changes inbusiness conditions or other developments. We may also need additional cash resources in the future if we find and wish to pursue opportunities forinvestment, acquisition, capital expenditure or similar actions. If we determine in the future that our cash requirements exceed the amount of cashand cash equivalents we have on hand, we may seek to issue equity or equity linked securities or obtain debt financing. The issuance and sale ofadditional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligationsand could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or onterms acceptable to us, if at all.Our business is subject to seasonal and quarterly fluctuations, and if our sales fall below our forecasts, our overall financial condition andresults of operations could be adversely affected.Our revenues and operating results have fluctuated in the past from quarter to quarter, due to, among others, seasonal factors. Our revenues havebeen higher in the third quarter each year primarily as a result of ideal weather conditions for riding e-scooters and have been lower in the firstquarter each year primarily as a result of poor weather conditions. Accordingly, any shortfall in expected third-quarter revenues would adverselyaffect our annual operating results. Our advertising and promotion expenses tend to be event-driven. We typically conduct various advertising andpromotional events when we launch new products. As a result, the costs relating to such marketing and promotional events may increasesignificantly in the relevant quarter, which may cause our results of operations and financial performance to fluctuate from quarter to quarter.We note that, in general, scooter sales tend to decline over the winter season and we anticipate that our sales of currently available e-scooters andthe upcoming new products may have similar seasonality. However, our operating results could suffer if we do not generate revenues consistentwith our expectations for this seasonal demand because many of our procurement are based on anticipated levels of annual revenues and past years’pattern of reasonability. Accordingly, yearly or quarterly comparisons of our operating results may not be useful and our operating results in anyparticular period will not necessarily be indicative of the results to be expected for any future period. Table of Contents30An economic downturn or economic uncertainty may adversely affect consumer discretionary spending and demand for our productsand services.Our products and services may be considered discretionary items for some consumers. Factors affecting the level of consumer spending for suchdiscretionary items include general economic conditions, and other factors, such as consumer confidence in future economic conditions, fears ofrecession, the availability and cost of consumer credit, levels of unemployment and tax rates. As global economic uncertainty remains, trends inconsumer discretionary spending also remain unpredictable and subject to reductions. Unfavorable economic conditions may lead consumers todelay or reduce purchases of our products and services and consumer demand for our products and services may not grow as we expect. Oursensitivity to economic cycles and any related fluctuation in consumer demand for our products and services may have an adverse effect on ouroperating results and financial condition.Rising international political tension, including changes in U.S. and international trade policies, particularly with regard to China, mayadversely impact our business and operating results.The U.S. government has made statements and taken certain actions that may lead to changes to U.S. and international trade policies towardsChina. However, it remains unclear what additional actions, if any, will be taken by the U.S. or other governments with respect to internationaltrade agreements, the imposition of tariffs on goods imported into the U.S., tax policy related to international commerce or other trade matters. Anyunfavorable government policies on international trade, such as capital controls or tariffs, may affect the demand for our products and services,impact the competitive position of our products or prevent us from selling products in certain countries. Moreover, many of the recent policyupdates in the U.S., including the Entity List regime maintained and regularly updated by the U.S. Bureau of Industry and Security, may haveunforeseen implications for our business. If any new tariffs, legislation and/or regulations are implemented, or if existing trade agreements arerenegotiated or, in particular, if the U.S. government takes retaliatory trade actions due to the recent U.S.-China trade tension, such changes couldhave an adverse effect on our business, financial condition and results of operations.Additionally, the United States and various foreign governments have imposed controls, export license requirements and restrictions on the importor export of technologies and products (or voiced the intention to do so), especially related to semiconductor chips, AI and other high-tech areas,which may have a negative impact on our business, financial condition and results of operations. Moreover, political tensions between the UnitedStates and China have escalated due to various incidents relating to trade dispute, tensions in the Taiwan Strait, U.S. sanctions on certain Chinesegovernment officials and Chinese companies. In response, China has implemented, and may further implement, measures in response to thechanging trade policies, treaties, tariffs and sanctions and restrictions against Chinese companies initiated by the U.S. In addition, the Russia-Ukraine conflict, the Hamas-Israel conflict and the attacks on shipping in the Red Sea have heightened geopolitical tensions across the world. Theimpact of the Russia-Ukraine conflict on Ukraine food exports has contributed to increases in food prices and thus to inflation more generally.We may also face protectionist policies that could, among other things, hinder our ability to execute our business strategies and put us at acompetitive disadvantage relative to domestic companies. Rising political tensions could reduce levels of trades, investments, technologicalexchanges, and other economic activities between the two major economies, which would have a material adverse effect on global economicconditions and the stability of global financial markets. Any of these factors could have a material adverse effect on our business, prospects,financial condition, and results of operations.We have limited insurance coverage, which could expose us to significant costs.We maintain certain insurance policies to safeguard against various risks associated with our business and operations, including mainly propertyinsurance and product liability insurance for models in the international markets and public liability insurance for models in the China market.However, we cannot assure you that our insurance coverage is sufficient to prevent us from any loss or that we will be able to successfully claimour losses under our current insurance policy on a timely basis, or at all, which may adversely affect our financial condition and results ofoperations. Table of Contents31We have granted, and may continue to grant, options and other types of awards under our share incentive plan, which may result in increasedshare-based compensation expenses.In January 2016 and September 2018, our shareholders and board of directors approved the 2016 Global Share Incentive Plan and the 2018 ShareIncentive Plan, respectively, to attract and retain the best available personnel, provide additional incentives to employees, directors and consultants,and promote the success of our business. The maximum aggregate number of ordinary shares that may be issued under the 2016 Global ShareIncentive Plan, as amended in March 2018, or the Amended and Restated 2016 Plan, is 5,861,480 Class A ordinary shares. Under the 2018 ShareIncentive Plan, the maximum aggregate number of ordinary shares available for issuance is 6,733,703 Class A ordinary shares, subject to certainannual increases. As of December 31, 2023, options to purchase 1,330,130 Class A ordinary shares and nil restricted share units had been grantedand were outstanding under the Amended and Restated 2016 Plan, excluding options or restricted share units that were forfeited or canceled afterthe relevant grant dates. As of December 31, 2023, options to purchase 2,612,928 Class A ordinary shares and 2,003,074 restricted share units hadbeen granted and were outstanding under the 2018 Share Incentive Plan. In 2021, 2022 and 2023, we recorded RMB47.2 million, RMB58.2 millionand RMB47.7 million (US$6.7 million) in share-based compensation expenses, respectively.We believe the granting of share-based awards is of significant importance to our ability to attract and retain key personnel and employees, and wewill continue to grant share-based compensation to employees in the future. As a result, our expenses associated with share-based compensationmay increase, which may have an adverse effect on our results of operations.Competition for highly skilled personnel is often intense and we may incur significant costs or be unsuccessful in attracting, integrating, orretaining qualified personnel to fulfill our current or future needs.We have, from time to time, experienced, and we expect to continue to experience, difficulty in hiring and retaining highly skilled employees withappropriate qualifications. In addition, if any of our senior management or key personnel joins a competitor or engages in a competing business, wemay lose business, knowhow, trade secrets, business partners and key personnel. Furthermore, prospective candidates and existing employees oftenconsider the value of the equity awards they receive in connection with their employment. Thus, our ability to attract or retain highly skilledemployees may be adversely affected by declines in the perceived value of our equity or equity awards. Furthermore, there are no assurances thatthe number of shares reserved for issuance under our share incentive plans will be sufficient to grant equity awards adequate to recruit newemployees and to compensate existing employees.We are or may be subject to risks associated with strategic alliances or acquisitions.We have entered into and may in the future enter into joint research and development agreements, co-branding agreements and strategic allianceswith various third parties to further our business purpose from time to time. These alliances could subject us to a number of risks, including risksassociated with sharing proprietary information, non-performance by the third party and increased expenses in establishing new strategic alliances,any of which may materially and adversely affect our business. We have limited ability to monitor or control the actions of these third parties and,to the extent any of these strategic third parties suffers negative publicity or harm to their reputation from events relating to their business, we mayalso suffer negative publicity or harm to our reputation by virtue of our association with any such third party.In addition, although we have no current acquisition plans, if appropriate opportunities arise, we may acquire additional assets, products,technologies or businesses that are complementary to our existing business. In addition to possible shareholders’ approval, we may also have toobtain approvals and licenses from the government authorities for the acquisitions and to comply with any applicable laws and regulations ofmainland China, which could result in increased delay and costs, and may derail our business strategy if we fail to do so. Furthermore, past andfuture acquisitions and the subsequent integration of new assets and businesses into our own require significant attention from our management andcould result in a diversion of resources from our existing business, which in turn could have an adverse effect on our business operations. Acquiredassets or businesses may not generate the financial results we expect. Acquisitions could result in the use of substantial amounts of cash, potentiallydilutive issuances of equity securities, the occurrence of significant goodwill impairment charges, amortization expenses for other intangible assetsand exposure to potential unknown liabilities of the acquired business. Moreover, the costs of identifying and consummating acquisitions may besignificant. Table of Contents32Our business could be adversely affected by trade tariffs or other trade barriers.Our products are exported to a number of geographical markets, such as Europe, the U.S. and Southeast Asia, and we plan to further expand ouroverseas sales in the future. Our ability to sell our products to international markets may be affected by trade tariffs or other trade barriers.Moreover, a discord in international trade relations and the implementation of new tariff or trade barriers, particularly between the United Statesand China, but also as a result of the war in Ukraine and sanctions on Russia, could negatively affect our global sales. Starting from early 2018, theU.S. government imposed several rounds of tariffs on Chinese goods, the categories of which include our e-scooters and accessories. While the twoparties singed a phrase one agreement in January 2020, the tariffs on our products have yet been lifted. In addition, the European Union imposedtariffs on imports of e-bikes, which are defined as cycle with pedal assistance and an ancillary electric motor, originating in mainland China. Anyof the existing tariffs and trade barriers and any future ones could have a material adverse effect on our business, financial condition and results ofoperations.Our financial and operating performance may be adversely affected by epidemics or other public health crises.Our financial and operating performance may be materially and adversely affected by the outbreak of epidemics or other public health crises. Forexample, during the COVID-19 pandemic between the end of 2019 and the beginning of 2023, government-imposed measures such as travelrestrictions, extended holidays and delays of business resumption, interrupted normal operation of businesses and adversely affected and sloweddown economic development. Many aspects of our operations and our financial performance were negatively affected as a result. Any prolongedoccurrence or recurrence of these health epidemics or other adverse public health developments in China or any of the major markets in which weoperate may have a material adverse effect on our business and operations. Our business could also experience a slowdown or temporarysuspension in production in geographic locations impacted. To the extent any pandemic adversely affects our business and financial results, it mayalso have the effect of heightening many of the other risks described in this annual report.We are subject to changing laws and regulations regarding regulatory matters, corporate governance and public disclosure that have increasedboth our costs and the risk of non-compliance.We are subject to rules and regulations by various governing bodies, including, for example, the SEC, which is charged with the protection ofinvestors and the oversight of companies whose securities are publicly traded, and the various regulatory authorities in China and the CaymanIslands, and to new and evolving regulatory measures under applicable law. Our efforts to comply with new and changing laws and regulationshave resulted in and are likely to continue to result in, increased general and administrative expenses and a diversion of management time andattention from revenue-generating activities to compliance activities.We operate in the electric two-wheeled vehicles industry. We are subject to the laws of mainland China in addition to the laws of the foreigncountries in which we operate and to which we sell our products. Changing laws and regulations regarding regulatory matters, corporategovernance and public disclosure may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoingrevisions to our disclosure and governance practices. In addition, we may face operational issues that could have a material adverse effect on ourreputation, business and results of operations, if we fail to address certain factors, including but not limited to the following:●the need for increased resources to manage regulatory compliance across our international businesses;●compliance with privacy laws and data security laws and compliance costs across different legal systems;●heightened restrictions and barriers on the transfer of data between different jurisdictions; and●differing, complex and potentially adverse customs, import/export laws, tax rules and regulations or other trade barriers or restrictionsrelated compliance obligations and consequences of non-compliance, and any new developments in these areas.If any of our overseas operations, or our associates or agents, violate such laws and regulations, we could become subject to sanctions or otherpenalties, which could have a material and adverse effect on our business, financial condition, results of operations and prospects. Table of Contents33Our business is subject to complex and evolving Chinese and international laws and regulations regarding data privacy and cybersecurity.Failure to protect confidential information of our customers and network against security breaches could damage our reputation and brandand substantially harm our business and results of operations.Personally identifiable and other confidential information is increasingly subject to legislation and regulations in China and numerous foreignjurisdictions. The PRC governmental authorities have enacted a series of laws and regulations relating to the protection of personal informationand/or the supervision over data processing activities, under which certain information or data processors are required to comply with an array ofpersonal information and data protection requirements, including for example, to clearly indicate the purposes, methods and scope of anyinformation collection and usage, to obtain appropriate user consent and to establish user information protection systems with appropriate remedialmeasures. However, this regulatory framework for privacy issues in China and worldwide is rapidly evolving and is likely to remain uncertain forthe foreseeable future. For example, on June 10, 2021, the Standing Committee of the PRC National People’s Congress issued the Data SecurityLaw to regulate data processing activities and security supervision in mainland China, which came into effect on September 1, 2021. The DataSecurity Law provides a national data security review system, under which data processing activities that affect or may affect national security shallbe reviewed. Moreover, on August 20, 2021, the Standing Committee of the PRC National People’s Congress promulgated the PersonalInformation Protection Law, effective on November 1, 2021, which further detailed the general rules and principles on personal data processing andfurther increase the potential liability of personal data processor. Given that many of the laws and regulations of mainland China regarding dataprivacy and cybersecurity are constantly evolving, it is uncertain how they will be interpreted or enforced. For more information, see “Item 4.Information on the Company—B. Business Overview—Regulations.”Furthermore, the PRC government has taken steps to limit the method and manner that the internet companies may apply when using thealgorithms. For instance, the CAC, together with eight other government authorities, jointly issued the Guidelines on Strengthening theComprehensive Regulation of Algorithms for Internet Information Services on September 17, 2021, which provides that daily monitoring of datause, application scenarios and effects of algorithms shall be carried out by the regulators, and security assessments of algorithms shall be conductedby the regulators. The guidelines also provide that an algorithm filing system shall be established, and classified security management ofalgorithms shall be promoted. In addition, on December 31, 2021, the CAC, the Ministry of Industry and Information Technology, or the MIIT, theMinistry of Public Security and the Ministry of State Security promulgated the Administrative Provisions on Internet Information ServiceAlgorithm Recommendation, which came into effect on March 1, 2022. These provisions stipulate that algorithm recommendation serviceproviders shall inform users of their provision of algorithm recommendation services in a conspicuous manner, and publicize the basic principles,purpose intentions and main operating mechanisms of algorithm recommendation services in an appropriate manner. For more information, see“Item 4. Information on the Company—B. Business Overview—Regulations.” Table of Contents34In addition, on November 14, 2021, the CAC released the Regulations on the Network Data Security for public comments, which stipulate, amongothers, that a prior cybersecurity review is required for listing abroad of data processors which process over one million users’ personalinformation, and the listing of data processors in Hong Kong which affects or may affect national security. On December 28, 2021, the CAC andother twelve PRC regulatory authorities jointly revised and promulgated the Measures for Cybersecurity Review, or the Cybersecurity ReviewMeasures, which came into effect on February 15, 2022. Pursuant to the Cybersecurity Review Measures, besides the procurement of networkproducts and services by critical information infrastructure operators, any data processing activities by network platform operators that affects ormay affect national security shall be subject to the cybersecurity review as well. In accordance with the Cybersecurity Review Measures, operatorsmastering personal information of more than one million users must apply to the Cybersecurity Review Office for cybersecurity review when theyseek for listing in a foreign country. However, the Cybersecurity Review Measures and the Regulations on the Network Data Security remainunclear on whether the requirements will be applicable to companies that have been listed in the United States. We cannot predict the impact of theCybersecurity Review Measures and the Regulations on the Network Data Security, if any, at this stage, and we will closely monitor and assess anydevelopment in the rule-making process. Furthermore, on July 7, 2022, the CAC promulgated the Measures on Security Assessment of Cross-border Data Transfer, or the Data Export Measures, which became effective on September 1, 2022. The Data Export Measures require that any dataprocessor which processes or exports personal information exceeding certain volume threshold under such measures shall apply for securityassessment by the CAC before transferring any personal information abroad. The security assessment requirement also applies to any transfer ofimportant data outside of China. Additionally, on November 18, 2022, the CAC and the SAMR issued the Implementation Rules for PersonalInformation Protection Certification, which came into immediate effect. These rules provide important guidance on obtaining a personalinformation certification for the lawful cross-border transfer of personal information under the Personal Information Protection Law. The CAC alsopublished various regulations in 2023 that offer important guidance on relying on standard contracts for transferring personal information out of thePRC, as well as on the applicable filing requirements. Due to changes in the cross-border data transfer regulatory landscape, we have been requiredto continuously review our existing data protection compliance framework. This review encompasses conducting data mapping exercises, obtainingseparate consents from individuals, applying for security assessments with the CAC, and entering into standard contracts with our overseasaffiliates for the transfer of personal information outside of the PRC. The CAC has also issued the First Edition and the Second Edition ofGuidelines for Application for Security Assessment of Outbound Data Transfer successively on August 31, 2022 and March 22, 2024, respectively,illustrating the specific requirements for declaration of the cross-border data security assessment, such as methods, processes and materials, andoptimizes and simplifies the relevant materials that data processors need to submit. As of the date of this annual report, we have not been involvedin any investigations, security assessment or cybersecurity reviews by the CAC, and we had not received any inquiry, notice, warning, or sanctionin such respect. If a cybersecurity review for any of our activities is required, we will actively cooperate with the CAC to conduct suchcybersecurity review.Any failure, or perceived failure, by us, our employees or partners to maintain the security of our user data or to comply with applicable PRC orforeign privacy, data security and personal information protection laws, regulations, policies, contractual provisions, industry requirements andother requirements may result in civil or regulatory liability. The ensuing consequences may include governmental or data protection authorityenforcement actions and investigations, fines, penalties, enforcement orders requiring us to cease operating in a certain way, revoking our businesspermits or business licenses, litigation or adverse publicity, which may require us to expend significant resources in responding to and defendingallegations and claims. Furthermore, claims or allegations that we have failed to adequately protect our users’ data, or otherwise violated applicableprivacy and data security laws, regulations, policies, contractual provisions, industry standards or other requirements, may result in damage to ourreputation and a loss of confidence in us by our users or our partners, potentially causing us to lose users, other business partners and revenues,which could have a material adverse effect on our business, financial condition and results of operations. Table of Contents35As we gradually expand into international markets, we may be subject to laws and regulations of other countries regarding cybersecurity,information security, privacy and data protection. We strive to comply with local laws and regulations in markets where we have operations. Forexample, the GDPR of the European Union imposes obligations on companies regarding the handling of personal data and provides certainindividual privacy rights to persons whose data is stored. The GDPR requires companies to submit personal data breach notifications to designatedEuropean privacy regulator in each country they have business operations, and provides significant penalties for non-compliance with thenotification obligation as well as other requirements of the GDPR. For another instance, some countries are considering or have passed legislationimplementing data protection requirements or requiring local storage and processing of data or similar requirements, which, if adopted andimplemented, could increase the cost and complexity of delivering our services. In addition, wherever we operate, we could be subject to new lawsor regulations or the interpretation and application of existing consumer and data protection laws or regulations. These new laws, regulations andinterpretations are often uncertain and in flux and may be inconsistent with our practices. We cannot guarantee that we will be able to maintaincompliance at all times, especially in light of the fact that laws and regulations on cybersecurity and data protection are evolving. Our launch ofnew products that we may take may also subject us to additional laws, regulations, or other government scrutiny. Complying with these new oradditional laws, regulations and requirements could cause us to incur substantial costs or require us to change our business practices in a mannermaterially adverse to our business.Risks Related to Our Corporate StructureIf the PRC government finds that the agreements that establish the structure for operating some of our operations in mainland China do notcomply with the regulations of mainland China relating to the relevant industries, or if these regulations or the interpretation of existingregulations change or are interpreted differently in the future, we could be subject to severe penalties or be forced to relinquish our interests inthose operations.Foreign ownership of certain of our businesses including value-added telecommunication services is subject to restrictions under current PRC lawsand regulations. For example, foreign investors are not allowed to own more than 50% of the equity interests in a value-added telecommunicationservice provider (excluding e-commerce, domestic multi-party communications, data collection and transmission services and call centers).We are a Cayman Islands exempted company and our mainland China subsidiaries are considered foreign-invested enterprises. Accordingly, noneof these PRC subsidiaries is eligible to provide value-added telecommunication services or provide certain other restricted services related to ourbusinesses. As a result, we conduct or will conduct such business activities through the VIE and its subsidiaries in mainland China.We entered into a series of contractual arrangements with the VIE and its shareholders, which enable us to (i) conduct the business operations ofthe VIE, (ii) receive substantially all of the economic benefits of the VIE, and (iii) have an exclusive option to or designate any third party topurchase all or part of the equity interests and assets in the VIE to the extent permitted by the laws of mainland China. As a result of thesecontractual arrangements, we conduct the business operations and are the primary beneficiary of the VIE and hence consolidate its financial resultsand its subsidiaries into our consolidated financial statements under U.S. GAAP. See “Item 4. Information on the Company—C. OrganizationalStructure” for further details.Investors in our ADSs are not purchasing equity interest in the VIE in mainland China but instead are purchasing equity interest in a CaymanIslands holding company. If the PRC government deems that our contractual arrangements with the variable interest entity do not comply with theregulatory restrictions on foreign investment in the relevant industries in mainland China, or if these regulations or the interpretation of existingregulations change or are interpreted differently in the future, we could be subject to severe penalties or be forced to relinquish our interests inthose operations, and our ADSs may decline in value or become worthless, if we are unable to assert contractual control over the assets of the VIEand its subsidiaries which contributes to a majority of our revenues in 2023. Our holding company in the Cayman Islands, the VIE, and investors ofour company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractualarrangements with the variable interest entity and, consequently, significantly affect the financial performance of the VIE and our company as agroup. Table of Contents36In the opinion of our PRC legal counsel, (i) the ownership structures of the VIE in mainland China and our WFOE are not in violation of applicablelaws and regulations of mainland China currently in effect; and (ii) the contractual arrangements between our WFOE, the VIE and its shareholdersgoverned by the laws of mainland China are valid, binding and enforceable, and will not result in any violation of applicable laws and regulationsof mainland China currently in effect. However, our PRC legal counsel has also advised us that there are substantial uncertainties regarding theinterpretation and application of current and future laws, regulations and rules of mainland China. Accordingly, the PRC regulatory authorities maytake a view that is contrary to the opinion of our PRC legal counsel. It is uncertain whether any new laws or regulations of mainland China relatingto variable interest entity structures will be adopted or, if adopted, what they would provide. If we or the VIE are found to be in violation of anyexisting or future laws or regulations of mainland China, or fail to obtain or maintain any of the required permits or approvals, the PRC regulatoryauthorities would have broad discretion to take action in dealing with such violations or failures, including, but not limited to:●revoking the business license and/or operating licenses of such entities;●discontinuing or placing restrictions or onerous conditions on our operations;●imposing fines, confiscating the income from the VIE, or imposing other requirements with which we or the VIE may not be ableto comply;●requiring us to restructure our ownership structure or operations, including terminating the contractual arrangements with the VIE andderegistering the equity pledges of the VIE, which in turn would affect our ability to consolidate, derive economic interests from, orconduct the business operations of the VIE; or●restricting or prohibiting our ability to finance our business and operations in mainland China.The imposition of any of these penalties would result in a material and adverse effect on our ability to conduct our business. In addition, it isunclear what impact the PRC government actions would have on us and on our ability to consolidate the financial results of the VIE in ourconsolidated financial statements, if the PRC government authorities were to find our legal structure and contractual arrangements to be in violationof the laws and regulations of mainland China. If the imposition of any of these government actions causes us to lose our right to direct theactivities of the VIE or our right to receive the economic benefits and residual returns from the VIE and we are not able to restructure ourownership structure and operations in a satisfactory manner, we would no longer be able to consolidate the financial results of the VIE in ourconsolidated financial statements. Either of these results, or any other significant penalties that might be imposed on us in this event, would have amaterial adverse effect on our financial condition and results of operations.Uncertainties exist with respect to the interpretation and implementation of the newly enacted Foreign Investment Law of the PRC and how itmay impact the viability of our current corporate structure, corporate governance and business operations.On March 15, 2019, the National People’s Congress adopted the Foreign Investment Law of the PRC, which became effective on January 1, 2020and replaced the Wholly Foreign-Invested Enterprise Law of the PRC, the Sino-Foreign Cooperative Joint Venture Enterprise Law of the PRC andthe Sino-Foreign Equity Joint Venture Enterprise Law of the PRC, together with their implementation rules and ancillary regulations. On December31, 2019, the State Council published the Implementation Rules of the Foreign Investment Law, which took effect on January 1, 2020.The Foreign Investment Law embodies an expected regulatory trend in mainland China to rationalize its foreign investment regulatory regime inline with prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign and domesticinvestments. However, since it is relatively new, uncertainties still exist in relation to its interpretation and implementation. For example, theForeign Investment Law removes all references to the terms of “de facto control” or “contractual control” as defined in the draft published in 2015by the Ministry of Commerce, and adds a catch-all clause to the definition of “foreign investment” so that foreign investment, by its definition,includes “investments made by foreign investors in China through other means defined by other laws or administrative regulations or provisionspromulgated by the State Council” without further elaboration on the meaning of “other means.” The Implementation Rules of the ForeignInvestment Law also remain silent on contractual arrangements. It leaves leeway for the future legislations promulgated by the State Council toprovide for contractual arrangements as a form of foreign investment. It is therefore uncertain whether our corporate structure will be seen asviolating the foreign investment rules as we are currently leverage the contractual arrangement to operate certain businesses in which foreigninvestors are prohibited from or restricted to investing. Table of Contents37In addition, the Foreign Investment Law grants national treatment to foreign invested entities, except for those foreign invested entities that operatein industries deemed to be either “restricted” or “prohibited” in the “negative list.” The current Special Administrative Measures for Market Accessof Foreign Investment (Negative List) (2021 Edition) was issued by the National Development and Reform Commission, or the NDRC, and theMinistry of Commerce on December 27, 2021 and took effective on January 1, 2022. Furthermore, on December 19, 2020, the NDRC and theMinistry of Commerce jointly issued the Measures for Security Review of Foreign Investment, effective on January 18, 2021, which providesdetailed guidance regarding security review of foreign investment that has a potential impact on national security. However, there remain a numberof unclear issues under the Measures, including but not limited to its view towards contractual arrangements. As the Measures was only recentlyissued, there are very few interpretations, implementation guidance or precedents to follow in practice. If future legislations prescribed by the StateCouncil mandate further actions to be taken by companies with respect to existing contractual arrangement, we may face substantial uncertaintiesas to whether we can complete such actions in a timely manner, or at all. Failure to take timely and appropriate measures to comply with any ofthese or similar regulatory compliance requirements could materially and adversely affect our current corporate structure, corporate governance andbusiness operations.We rely on contractual arrangements with the VIE and its shareholders for a large portion of our business operations, which may not be aseffective as direct ownership.The VIE contributed a majority of our consolidated total revenues in 2021, 2022 and 2023. We have relied and expect to continue to rely oncontractual arrangements with the VIE and its shareholders to conduct our business. These contractual arrangements may not be as effective asdirect ownership in the VIE. For example, the VIE and its shareholders could breach their contractual arrangements with us by, among other things,failing to conduct their operations in an acceptable manner or taking other actions that are detrimental to our interests. The shareholders of the VIEhave pledged all of their equity interests in the VIE to our WFOE pursuant to the equity pledge agreement under the contractual arrangements. Anequity pledge agreement becomes effective between the parties upon execution. In February 2021, we completed the registration of the equitypledge under the second amended and restated equity pledge agreement with the local office of the State Administration of Market Regulation inaccordance with the PRC Property Rights Law.If we had direct ownership of the VIE, we would be able to exercise our rights as a shareholder to effect changes in the board of directors of theVIE, which in turn could implement changes, subject to any applicable fiduciary obligations, at the management and operational level. However,under the current contractual arrangements, we rely on the performance by the VIE and its shareholders of their obligations under the contracts toconduct the business operations of the VIE. However, the shareholders of the VIE may not act in the best interests of our company or may notperform their obligations under these contracts. Such risks exist throughout the period in which we intend to operate certain portions of ourbusiness through the contractual arrangements with the VIE. If any disputes relating to these contracts remains unresolved, we will have to enforceour rights under these contracts through the operations of law and arbitration, litigation and other legal proceedings in mainland China andtherefore will be subject to uncertainties in the PRC legal system. See “—Any failure by the VIE or its shareholders to perform their obligationsunder our contractual arrangements with them would have a material and adverse effect on our business.” Meanwhile, there are very fewprecedents and little formal guidance as to how contractual arrangements in the context of a VIE should be interpreted or enforced by the courts ofmainland China. Should legal actions become necessary, we cannot guarantee that the court will rule in favor of the enforceability of the VIEcontractual arrangements. In the event we are unable to enforce these contractual arrangements, or if we suffer significant delay or other obstaclesin the process of enforcing these contractual arrangements, we may not be able to conduct the business operations of the VIE, and our ability toconduct our business may be materially adversely affected. Therefore, our contractual arrangements with the VIE may not be as effective as directownership.We may lose the ability to use and enjoy assets held by the VIE and its subsidiaries that are important to our business if the VIE and itssubsidiaries declare bankruptcy or become subject to a dissolution or liquidation proceeding.The VIE and its subsidiaries hold assets that are important to our operations, and they contributed a majority of our consolidated total revenues in2021, 2022 and 2023. Under our contractual arrangements, the shareholders of the VIE may not voluntarily liquidate the VIE or approve it to sell,transfer, mortgage or dispose of its assets or legal or beneficial interests exceeding certain threshold in the business in any manner without our priorconsent. However, in the event that the shareholders breach this obligation and voluntarily liquidate the VIE, or the VIE declares bankruptcy, or allor part of its assets become subject to liens or rights of third-party creditors, we may be unable to continue some or all of our operations, whichwould materially and adversely affect our business, financial condition and results of operations. Furthermore, if the VIE or its subsidiaries undergoa voluntary or involuntary liquidation proceeding, their shareholders or unrelated third-party creditors may claim rights to some or all of its assets,hindering our ability to operate our business, which could materially and adversely affect our business, financial condition and results ofoperations. Table of Contents38Any failure by the VIE or its shareholders to perform their obligations under our contractual arrangements with them would have a materialand adverse effect on our business.We refer to the shareholders of the VIE as its nominee shareholders because although they remain the holders of equity interests on record in eachof the VIE, pursuant to the terms of the power of attorney, each of such shareholders has irrevocably authorized our company to exercise his, her orits rights as a shareholder of the VIE. However, if the VIE or its shareholders fail to perform their respective obligations under the contractualarrangements, we may have to incur substantial costs and expend additional resources to enforce such arrangements. We may also have to rely onlegal remedies under the laws of mainland China, including seeking specific performance or injunctive relief, and claiming damages, which maynot be enforceable under the laws of mainland China. For example, if the shareholders of the VIE refuse to transfer their equity interest in the VIEto us or our designee if we exercise the purchase option pursuant to these contractual arrangements, or if they otherwise act in bad faith toward us,then we may have to take legal actions to compel them to perform their contractual obligations.All of the agreements under our contractual arrangements are governed by the laws of mainland China and provide for the resolution of disputesthrough arbitration in China. Accordingly, these contracts would be interpreted in accordance with the laws of mainland China and any disputeswould be resolved in accordance with the legal procedures of mainland China. The legal system in the PRC is developing and rapidly evolving. Asa result, uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements. See “—Risks Related to DoingBusiness in China—Uncertainties in the interpretation and enforcement of the laws and regulations of mainland China could limit the legalprotections available to you and us.” Meanwhile, there are very few precedents and little formal guidance as to how contractual arrangements in thecontext of a VIE should be interpreted or enforced under the laws of mainland China. There remain significant uncertainties regarding the ultimateoutcome of such arbitration should legal action becomes necessary. In addition, under the laws of mainland China, rulings by arbitrators are final,parties cannot appeal the arbitration results in courts, and if the losing parties fail to carry out the arbitration awards within a prescribed time limit,the prevailing parties may only enforce the arbitration awards in the courts of mainland China through arbitration award recognition proceedings,which would require additional expenses and delay. In the event we are unable to enforce these contractual arrangements, or if we suffer significantdelays or other obstacles in the process of enforcing these contractual arrangements, we may not be able to conduct the business operations of theVIE, and our ability to conduct our business may be negatively affected.The shareholders of the VIE may have potential conflicts of interest with us, which may materially and adversely affect our business andfinancial condition.Currently, each of Token Yilin Hu, Yi’nan Li, Yuqin Zhang and Changlong Sheng holds 89.74%, 5.00%, 2.63% and 2.63% of the equity interest inthe VIE, respectively. The shareholders of the VIE may have potential conflicts of interest with us. These shareholders may breach, or cause theVIE to breach, or refuse to renew, the existing contractual arrangements we have with them and the VIE, which would have a material and adverseeffect on our ability to conduct the business operations of the VIE and receive economic benefits from them. For example, the shareholders may beable to cause our agreements with the VIE to be performed in a manner adverse to us by, among other things, failing to remit payments due underthe contractual arrangements to us on a timely basis. We cannot assure you that when conflicts of interest arise any or all of these shareholders willact in the best interests of our company or such conflicts will be resolved in our favor.Currently, we do not have any arrangements to address potential conflicts of interest between these shareholders and our company, except that wecould exercise our purchase option under the second amended and restated exclusive option agreements with these shareholders to request them totransfer all of their equity interests in the VIE to a mainland China entity or individual designated by us, to the extent permitted by the laws ofmainland China. The shareholders of the VIE have executed powers of attorney to appoint our company to vote on their behalf and exercise votingrights as shareholders of the VIE. If we cannot resolve any conflict of interest or dispute between us and the shareholders of the VIE, we wouldhave to rely on legal proceedings, which could result in disruption of our business and subject us to substantial uncertainty as to the outcome of anysuch legal proceedings. Table of Contents39The shareholders of the VIE may be involved in personal disputes with third parties or other incidents that may have an adverse effect on theirrespective equity interests in the VIE and the validity or enforceability of our contractual arrangements with its shareholders. For example, in theevent that any of the shareholders of the VIE divorces his or her spouse, the spouse may claim that the equity interest of the VIE held by suchshareholder is part of their community property and should be divided between such shareholder and his or her spouse. If such claim is supportedby the court, the relevant equity interest may be obtained by the shareholder’s spouse or another third party who is not subject to obligations underour contractual arrangements, which could affect our ability to conduct the business operations of the VIE. Similarly, if any of the equity interestsof the VIE is inherited by a third party with whom the current contractual arrangements are not binding, we could lose our ability to conduct thebusiness operations of the VIE or have to maintain such ability by incurring unpredictable costs, which could cause significant disruption to ourbusiness and operations and harm our financial condition and results of operations.Although under our current contractual arrangements, (i) the spouse of each of the shareholders of the VIE has executed a spousal consent letter,under which the spouse agrees that he or she will not raise any claims against the equity interest, and will take every action to ensure theperformance of the contractual arrangements, and (ii) it is expressly provided that the rights and obligations under the contractual agreements shallbe equally effective and binding on the heirs and successors of the parties thereto, and the VIE shall not assign or delegate its rights and obligationsunder the contractual agreements to third parties without our prior consent, we cannot assure you that these undertakings and arrangements will becomplied with or effectively enforced. In the case any of them is breached or becomes unenforceable and leads to legal proceedings, it coulddisrupt our business, distract our management’s attention and subject us to substantial uncertainties as to the outcome of any such legalproceedings.Contractual arrangements in relation to the VIE may be subject to scrutiny by the PRC tax authorities and they may determine that we or theVIE owes additional taxes, which could negatively affect our financial condition and the value of your investment.Under applicable laws and regulations of mainland China, arrangements and transactions among related parties may be subject to audit or challengeby the PRC tax authorities. We could face material and adverse tax consequences if the PRC tax authorities determine that the VIE contractualarrangements were not entered into on an arm’s length basis in such a way as to result in an impermissible reduction in taxes under applicable laws,rules and regulations of mainland China, and adjust the income of the VIE in the form of a transfer pricing adjustment. A transfer pricingadjustment could, among other things, result in a reduction of expense deductions recorded by the VIE for mainland China tax purposes, whichcould increase our tax expenses. In addition, the PRC tax authorities may impose late payment fees and other penalties on the VIE for the adjustedbut unpaid taxes according to the applicable regulations. Our financial position could be materially and adversely affected if the VIE’s tax liabilitiesincrease or if it is required to pay late payment fees and other penalties.If the chops of our mainland China subsidiaries and the VIE are not kept safely, are stolen or are used by unauthorized persons or forunauthorized purposes, the corporate governance of these entities could be severely and adversely compromised.In mainland China, a company chop or seal serves as the legal representation of the company towards third parties even when unaccompanied by asignature. Each legally registered company in mainland China is required to maintain a company chop, which must be registered with the localPublic Security Bureau. In addition to this mandatory company chop, companies may have several other chops which can be used for specificpurposes. The chops of our mainland China subsidiaries and the VIE are generally held securely by personnel designated or approved by us inaccordance with our internal control procedures. To the extent those chops are not kept safely, are stolen or are used by unauthorized persons or forunauthorized purposes, the corporate governance of these entities could be severely and adversely compromised and those corporate entities maybe bound to abide by the terms of any documents so chopped, even if they were chopped by an individual who lacked the requisite power andauthority to do so. In addition, if the chops are misused by unauthorized persons, we could experience disruption to our normal business operations.We may have to take corporate or legal action, which could involve significant time and resources to resolve while distracting management fromour operations. Table of Contents40Risks Related to Doing Business in ChinaChanges in China’s economic, political or social conditions or government policies could have a material and adverse effect on our businessand results of operations.Substantially all of our revenues are expected to be derived in mainland China in the near future and most of our operations, including all of ourmanufacturing, is conducted in mainland China. Accordingly, our results of operations, financial condition and prospects are influenced byeconomic, political and legal developments in China. China’s economy differs from the economies of most developed countries in many respects,including with respect to the level of development, growth rate, control of foreign exchange and allocation of resources. The PRC government hassignificant authority to exert influence on the ability of a China-based company, such as us, to conduct its business. Therefore, investors of ourcompany and our business face potential uncertainty from China.COVID-19 had a severe and negative impact on the Chinese and the global economy from 2020 through early 2023, and the global macroeconomicenvironment still faces numerous challenges. The Federal Reserve and other central banks outside of China have raised interest rates. Economicconditions in China are sensitive to global economic conditions, as well as changes in domestic economic and political policies and the expected orperceived overall economic growth rate in China. Although mainland China’s economy has grown significantly in the past decades, growth hasbeen uneven, both geographically and among various sectors of the economy. Some of the government measures aim to benefit the overall Chineseeconomy, but may unexpectedly have a negative effect on us. For example, our financial condition and results of operations may be affected bygovernment control over capital investments or changes in tax regulations. Some of the stimulus measures designed to boost the Chinese economymay unexpectedly cause higher inflation, which could affect our results of operations and financial condition. For example, certain operating costsand expenses, such as employee compensation and office operating expenses, may increase as a result of higher inflation. Additionally, because asubstantial portion of our assets consists of cash and cash equivalents, restricted cash and short-term investments, high inflation could significantlyreduce the value and purchasing power of these assets.The filing, approval or other administration requirements of the CSRC or other PRC government authorities may be required in connectionwith 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.The Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, adopted by six PRC regulatory agencies in 2006 andamended in 2009, or the M&A Rules, require an overseas special purpose vehicle formed for listing purposes through acquisitions of mainlandChina domestic companies and controlled by mainland China persons or entities to obtain the approval of the CSRC prior to the listing and tradingof such special purpose vehicle’s securities on an overseas stock exchange. The interpretation and application of the regulations remain unclear, andour offshore offerings may ultimately require approval of the CSRC. If the CSRC approval is required, it is uncertain whether we can or how longit will take us to obtain the approval and, even if we obtain such CSRC approval, the approval could be rescinded. Any failure to obtain or delay inobtaining the CSRC approval for any of our offshore offerings, or a rescission of such approval if obtained by us, would subject us to sanctionsimposed by the CSRC or other PRC regulatory authorities, which could include fines and penalties on our operations in mainland China,restrictions or limitations on our ability to pay dividends outside of mainland China, and other forms of sanctions that may materially and adverselyaffect our business, financial condition, and results of operations.On February 17, 2023, the CSRC promulgated the Overseas Listing Trial Measures, which became effective on March 31, 2023. The OverseasListing Trial Measures comprehensively improve and reform the existing regulatory regime for overseas offering and listing of mainland Chinadomestic companies’ securities and regulate both direct and indirect overseas offering and listing of mainland China domestic companies’securities by adopting a filing-based regulatory regime. Table of Contents41According to the Overseas Listing Trial Measures, (i) a mainland China domestic company that seeks to offer or list securities overseas, bothdirectly and indirectly, should fulfill the filing procedure and report certain information to the CSRC; if a mainland China domestic company failsto complete the filing procedure or conceals any material fact or falsifies any major content in its filing documents, such company may be subjectto administrative penalties, such as rectification orders, warnings and fines, and its controlling shareholders, actual controllers, the person directlyin charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines; (ii) if such company meetsboth of the following conditions, the overseas offering and listing shall be determined as an indirect overseas offering and listing by a mainlandChina domestic company: (a) any of the total assets, net assets, revenues or profits of the domestic operating entities of the company in the mostrecent fiscal year account for more than 50% of the corresponding figure in the company’s audited consolidated financial statements for the sameperiod; (b) its major operational activities are carried out in mainland China or its main places of business are located in mainland China, or thesenior managers in charge of operation and management of the company are mostly PRC citizens or have their usual place(s) of residence locatedin mainland China. The Overseas Listing Trial Measures require subsequent reports to be filed with the CSRC upon the occurrence of materialevents, such as change of control or voluntary or forced delisting of the companies which have completed overseas offerings and listings.On the same day, the CSRC also held a press conference for the release of the Overseas Listing Trial Measures and issued the Notice onAdministration for the Filing of Overseas Offering and Listing by Domestic Companies, which, among others, clarifies that (i) prior to the effectivedate of the Overseas Listing Trial Measures, mainland China domestic companies that have already completed overseas listing shall be regarded as“existing companies”, which are not required to fulfill filing procedure immediately but shall be required to complete the filing if such existingcompanies conduct refinancing in the future; and (ii) the CSRC will solicit opinions from the regulatory authorities and complete the filing of theoverseas listing of companies with contractual arrangements which duly meet the compliance requirements, and support the development andgrowth of these companies by enabling them to utilize two markets and two kinds of resources. However, since the Overseas Listing TrialMeasures was recently promulgated, their interpretation, application and enforcement remain unclear.Given the substantial uncertainties surrounding the latest CSRC filing requirements at this stage, we cannot assure you that we will be able tocomplete the filings and fully comply with the new rules on a timely basis, if at all.Relatedly, on December 27, 2021, the NDRC and the Ministry of Commerce jointly issued the Special Administrative Measures (Negative List) forForeign Investment Access (2021 Version), or the 2021 Negative List, which became effective on January 1, 2022. Pursuant to such SpecialAdministrative Measures, if a domestic company engaging in the prohibited business stipulated in the 2021 Negative List seeks an overseasoffering and listing, it shall obtain the approval from the competent government authorities. Besides, foreign investors of the company shall not beinvolved in the company’s operation and management, and their shareholding percentage shall be subject, mutatis mutandis, to the regulations onthe domestic securities investments by foreign investors. There remain uncertainties as to the interpretation and implementation of the 2021Negative List, and it is unclear as to whether and to what extent listed companies like us will be subject to these new requirements. If we arerequired to comply with these requirements and fail to do so on a timely basis, if at all, our business operation, financial conditions and businessprospect may be adversely and materially affected. Table of Contents42In addition, we cannot assure you that any new rules or regulations promulgated in the future will not impose additional requirements on us. If it isdetermined in the future that approval and filing from the CSRC or other regulatory authorities or other procedures, including the cybersecurityreview under the enacted version of the revised Measures for Cybersecurity Review and the Regulations on the Network Data Security, arerequired for our offshore offerings, it is uncertain whether we can or how long it will take us to obtain such approval or complete such filingprocedures and any such approval or filing could be rescinded or rejected. Any failure to obtain or delay in obtaining such approval or completingsuch filing procedures for our offshore offerings, or a rescission of any such approval or filing if obtained by us, would subject us to sanctions bythe CSRC or other PRC regulatory authorities for failure to seek CSRC approval or filing or other government authorization for our offshoreofferings. These regulatory authorities may impose fines and penalties on our operations in mainland China, limit our ability to pay dividendsoutside of mainland China, limit our operating privileges in mainland China, delay or restrict the repatriation of the proceeds from our offshoreofferings into mainland China or take other actions that could materially and adversely affect our business, financial condition, results ofoperations, and prospects, as well as the trading price of our listed securities. The CSRC or other PRC regulatory authorities also may take actionsrequiring us, or making it advisable for us, to halt our offshore offerings before settlement and delivery of the securities offered. Consequently, ifinvestors engage in market trading or other activities in anticipation of and prior to settlement and delivery, they do so at the risk that settlementand delivery may not occur. In addition, if the CSRC or other regulatory authorities later promulgate new rules or explanations requiring that weobtain their approvals or accomplish the required filing or other regulatory procedures for our prior offshore offerings, we may be unable to obtaina waiver of such approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties or negative publicityregarding such approval requirement could materially and adversely affect our business, prospects, financial condition, reputation, and the tradingprice of our listed securities.Uncertainties in the interpretation and enforcement of the laws and regulations of mainland China could limit the legal protections available toyou and us.The legal system of mainland China is a civil law system based on written statutes. Unlike the common law system, prior court decisions may becited for reference but have limited precedential value.Our mainland China subsidiaries are foreign-invested enterprises and are subject to laws and regulations applicable to foreign-invested enterprisesas well as various laws and regulations of mainland China generally applicable to companies incorporated in mainland China. However, since theselaws and regulations are developing and the legal system of mainland China continues to rapidly evolve, the interpretations of many laws,regulations and rules are not always uniform and enforcement of these laws, regulations and rules involves uncertainties.From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. However, since administrative andcourt authorities of mainland China have discretion in interpreting and implementing statutory and contractual terms, it may be difficult to evaluatethe outcome of such administrative and court proceedings. Furthermore, the legal system of mainland China is based in part on government policiesand internal rules, some of which are not published on a timely basis or at all, and which may have a retroactive effect. As a result, we may not beaware of our violation of any of these policies and rules until sometime after the violation. Such uncertainties, including uncertainty over the scopeand effect of our contractual, property (including intellectual property) and procedural rights, and any failure to respond to changes in theregulatory environment in mainland China could materially and adversely affect our business and impede our ability to continue our operations. Table of Contents43The PRC government’s significant oversight over our business operation could result in a material adverse change in our operations and thevalue of our ADSs.We conduct our business primarily in mainland China. Our operations in mainland China are governed by the laws and regulations of mainlandChina. The PRC government has significant oversight over the conduct of our business, and may intervene or influence our operations as thegovernment deems appropriate to advance regulatory and societal goals and policy positions, which could result in a material adverse change in ouroperations, and our ordinary shares and ADSs may decline in value or become worthless. The PRC government has recently published new policiesthat significantly affected certain industries and we cannot rule out the possibility that it will in the future release regulations or policies thatdirectly or indirectly affect our industry or require us to seek additional permission to continue our operations, which could result in a materialadverse change in our operation and/or the value of our ADSs. Also, the PRC government has recently promulgated certain regulations and rules toexert more oversight and control over offerings that are conducted overseas and foreign investment in mainland China-based issuers. Any suchaction could significantly limit or completely hinder our ability to offer or continue to offer securities to investors, and our ordinary shares andADSs may decline in value or become worthless. Therefore, investors of our company and our business face potential uncertainty from actionstaken by the PRC government affecting our business.We may be adversely affected by the complexity, uncertainties and changes in the regulation on internet-related businesses and companies inmainland China.We design, manufacture and sell high-performance electric motorcycles, mopeds, bicycles, as well as kick-scooters and e-bikes. Certain aspects ofour business operations may be deemed as providing value-added telecommunication services, which is subject to regulation by the PRCgovernment. For example, the PRC government imposes foreign ownership restriction and the licensing and permit requirements for companies inthe internet industry. See “Item 4. Information on the Company—B. Business Overview—Regulations—Regulations Relating to ForeignInvestment” and “Item 4. Information on the Company—B. Business Overview—Regulations—Regulations Relating to Value-AddedTelecommunication Services.” These laws and regulations are relatively new and evolving, and their interpretation and enforcement involvesignificant uncertainties. As a result, in certain circumstances it may be difficult to determine what actions or omissions may be deemed to be inviolation of applicable laws and regulations.In addition, our mobile app is also regulated by the Administrative Provisions on Mobile Internet Applications Information Services promulgatedby the CAC. According to these provisions, providers of mobile apps shall not create, copy, publish or distribute information and content prohibitedby laws and regulations. However, we cannot assure you that all the information and content displayed on, retrieved from or linked to our mobileapp comply with the requirements under these provisions at all times. If our mobile app were found to be violating these provisions, we may besubject to administrative penalties, including warning, service suspension or removal of our mobile app from the relevant mobile app store, whichmay materially and adversely affect our business and operating results.The interpretation and application of the existing laws, regulations and policies of mainland China and possible new laws, regulations or policies ofmainland China relating to the internet industry have created substantial uncertainties regarding the legality of existing and future foreigninvestments in, and the businesses and activities of, internet businesses in mainland China, including our business. We cannot assure you that wehave obtained all the permits or licenses required for conducting our business in mainland China or will be able to maintain or renew our existinglicenses or obtain new ones. Table of Contents44The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and theinability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections.Our auditor, the independent registered public accounting firm that issues the audit report included elsewhere in this annual report, as an auditor ofcompanies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant towhich the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. The auditor is located inmainland China, a jurisdiction where the PCAOB was historically unable to conduct inspections and investigations completely before 2022. As aresult, we and investors in the ADSs were deprived of the benefits of such PCAOB inspections. The inability of the PCAOB to conduct inspectionsof auditors in mainland China and Hong Kong in the past has made it more difficult to evaluate the effectiveness of our independent registeredpublic accounting firm’s audit procedures or quality control procedures as compared to auditors outside of mainland China and Hong Kong that aresubject to the PCAOB inspections. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination andremoved mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered publicaccounting firms. However, if the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accountingfirms in mainland China and Hong Kong, and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on ourfinancial statements filed with the SEC, we and investors in our ADSs would be deprived of the benefits of such PCAOB inspections again, whichcould cause investors and potential investors in the ADSs to lose confidence in the audit procedures and reported financial information and thequality of our financial statements.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 investigatecompletely auditors located in mainland China and Hong Kong. The delisting of the ADSs, or the threat of their being delisted, may materiallyand adversely affect the value of your investment.Pursuant to the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not beensubject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares or ADSs from being traded on a nationalsecurities 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 investigatecompletely registered public accounting firms headquartered in mainland China and Hong Kong and our auditor was subject to that determination.In May 2022, the SEC conclusively listed us as a Commission-Identified Issuer under the HFCAA following the filing of our annual report onForm 20-F for the fiscal year ended December 31, 2021. On December 15, 2022, the PCAOB removed mainland China and Hong Kong from thelist of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. For this reason, we were not identifiedas a Commission-Identified Issuer under the HFCAA after we filed our annual report on Form 20-F for the fiscal year ended December 31, 2022and do not expect to be so identified after we file this annual report on Form 20-F for the fiscal year ended December 31, 2023.Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, amongother jurisdictions. If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms inmainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financialstatements filed with the SEC, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F forthe relevant fiscal year. In accordance with the HFCAA, our securities would be prohibited from being traded on a national securities exchange orin the over-the-counter trading market in the United States if we are identified as a Commission-Identified Issuer for two consecutive years in thefuture. For U.S. single listing issuer: If our shares and ADSs are prohibited from trading in the United States, there is no certainty that we will beable to list on a non-U.S. exchange or that a market for our shares will develop outside of the United States. A prohibition of being able to trade inthe United States would substantially impair your ability to sell or purchase our ADSs when you wish to do so, and the risk and uncertaintyassociated with delisting would have a negative impact on the price of our ADSs. Also, such a prohibition would significantly affect our ability toraise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects. Table of Contents45We may rely on dividends and other distributions on equity paid by our mainland China subsidiaries to fund any cash and financingrequirements we may have, and any limitation on the ability of our mainland China subsidiaries to make payments to us could have a materialand adverse effect on our ability to conduct our business.Niu Technologies is a holding company, and may rely on dividends and other distributions on equity paid by our mainland China subsidiaries forour cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and serviceany debt we may incur. Current regulations of mainland China permit our mainland China subsidiaries to pay dividends to us only out of theiraccumulated after-tax profits upon satisfaction of the statutory conditions and procedures, if any, determined in accordance with Chineseaccounting standards and regulations. In addition, each of our mainland China subsidiaries is required to set aside at least 10% of its accumulatedprofits each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of its registered capital. For a detailed discussionof applicable regulations of mainland China governing distribution of dividends, see “Item 4. Information on the Company—B. Business Overview—Regulations—Regulations Relating to Dividend Distribution.” Additionally, if our mainland China subsidiaries incur debt on their own behalf inthe future, the instruments governing their debt may restrict their ability to pay dividends or make other distributions to us. Furthermore, the PRCtax authorities may require our WFOE to adjust its taxable income under the contractual arrangements it currently has in place with the variableinterest entity in a manner that would materially and adversely affect its ability to pay dividends and other distributions to us. See “—Risks Relatedto Our Corporate Structure—Contractual arrangements in relation to the VIE may be subject to scrutiny by the PRC tax authorities and they maydetermine that we or the VIE owes additional taxes, which could negatively affect our financial condition and the value of your investment.”Any limitation on the ability of our mainland China subsidiaries to pay dividends or make other distributions to us could materially and adverselylimit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conductour business. See “—If we are classified as a mainland China resident enterprise for mainland China income tax purposes, such classification couldresult in unfavorable tax consequences to us and our non-mainland China shareholders or ADS holders.”Mainland China’s regulation of loans to and direct investment in entities in mainland China by offshore holding companies and governmentalcontrol of currency conversion may delay or prevent us from using the proceeds of our offshore offerings to make loans to or make additionalcapital contributions to our mainland China subsidiaries, which could materially and adversely affect our liquidity and our ability to fund andexpand our business.Under the laws and regulations of mainland China, we are permitted to utilize the proceeds of any financing outside of mainland China to fund ourmainland China subsidiaries by making loans to or additional capital contributions to our mainland China subsidiaries, subject to applicablegovernment registration, statutory limitations on amount and approval requirements. The amount of capital contributions that we may make to theWFOE is RMB220.0 million, without obtaining approvals from SAFE or other government authorities. Additionally, the WFOE may increase itsregistered capital to receive additional capital contributions from us and currently there is no statutory limit to increasing its registered capital,subject to satisfaction of applicable government registration and filing requirements. Pursuant to the regulations of mainland China, we mayprovide loans to the WFOE up to the larger amount of (i) the balance between the registered total investment amount and registered capital of theWFOE, or (ii) twice the amount of the net assets of the WFOE calculated in accordance with PRC GAAP, and we may provide loans to the VIE upto twice the amount of the net assets of the VIE calculated in accordance with PRC GAAP, each subject to satisfaction of applicable governmentregistration or approval requirements. For any amount of loans that we may extend to the WFOE or the VIE, such loans must be registered with thelocal counterpart of SAFE. Medium- or long-term loans extended by our company to the VIE must also be approved by the NDRC. For moredetails, see “Item 4. Information on the Company—B. Business Overview—Regulations—Regulations Relating to Foreign Exchange—Regulations on Foreign Currency Exchange.” These laws and regulations of mainland China may significantly limit our ability to use Renminbiconverted from the net proceeds of any financing outside of mainland China to fund the establishment of new entities in mainland China by ourmainland China subsidiaries, to invest in or acquire any other mainland China companies through our mainland China subsidiaries, or to establishnew variable interest entities in mainland China. Moreover, we cannot assure you that we will be able to complete the necessary registrations orobtain the necessary government approvals on a timely basis, if at all, with respect to future loans to our mainland China subsidiaries or futurecapital contributions by us to our mainland China subsidiaries. If we fail to complete such registrations or obtain such approvals, our ability to usethe proceeds we received or expect to receive from our offshore offerings and to capitalize or otherwise fund our operations in mainland China maybe negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business. Table of Contents46On December 26, 2017, the NDRC issued the Management Rules for Overseas Investment by Enterprises, or the NDRC Order 11. On January 31,2018, the Catalog on Overseas Investment in Sensitive Industries (2018 Edition) was promulgated. “Overseas investment” as defined in the NDRCOrder 11 refers to the investment activities conducted by an enterprise located in the territory of mainland China either directly or through anoverseas enterprise under its control by making investment with assets and equities or providing financing or guarantee in order to obtain overseasownership, control, management rights and other related interests. Overseas investment by a Chinese individual through overseas enterprises underhis/her control is also subject to the NDRC Order 11. According to the NDRC Order 11, (i) direct overseas investment by Chinese enterprises orindirect overseas investment by Chinese enterprises or individuals in sensitive industries or sensitive countries and regions requires prior approvalby the NDRC; (ii) direct overseas investment by Chinese enterprises in non-sensitive industries and non-sensitive countries and regions requiresprior filing with the NDRC; and (iii) indirect overseas investment of over US$300 million by Chinese enterprises or individuals in non-sensitiveindustries and non-sensitive countries and regions requires reporting with the NDRC. Uncertainties remain with respect to the application of theNDRC Order 11. We are not sure if we were to use a portion of the proceeds raised from our financing activities to fund investments in andacquisitions of complementary business and assets outside of mainland China, such use of U.S. dollars funds held outside of mainland China wouldbe subject to the NDRC Order 11. There are very few interpretations, implementation guidance or precedents regarding NDRC Order 11 to followin practice. We will continue to monitor any new rules, interpretation and guidance promulgated by the NDRC and communicate with the NDRCand its local branches to seek their opinions, when necessary. If it turns out that the NDRC Order 11 applies to our use of proceeds from theoffering mentioned above and we fail to obtain the approval, complete the filing or report our overseas investment using the offering proceeds, asthe case may be, in a timely manner as provided under the NDRC Order 11, we may be forced to suspend or cease our investment, or be subject topenalties or other liabilities, which may materially and adversely affect our business, financial condition and prospects.Governmental control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.The PRC government imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currencyout of mainland China. Under the existing foreign exchange regulations of mainland China, payments of current account items, such as profitdistributions and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from the StateAdministration of Foreign Exchange, or SAFE, by complying with certain procedural requirements. However, approval from or registration withappropriate government authorities is required where Renminbi is to be converted into foreign currency and remitted out of mainland China to paycapital expenses such as the repayment of loans denominated in foreign currencies. See “Item 4. Information on the Company—B. BusinessOverview—Regulations—Regulations Relating to Foreign Exchange—Regulations on Foreign Currency Exchange.”The PRC government has tightened its foreign exchange policies again and stepped up scrutiny of major outbound capital movement. Morerestrictions and a substantial vetting process have been put in place by SAFE to regulate cross-border transactions falling under the capital account.The PRC government may also restrict access in the future to foreign currencies for current account transactions, at its discretion. We receivesubstantially all of our revenues in RMB. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfyour foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders, including holders of the ADSs.Regulations of mainland China relating to offshore investment activities by mainland China residents may limit our mainland Chinasubsidiaries’ ability to increase their registered capital or distribute profits to us or otherwise expose us or our mainland China residentbeneficial owners to liability and penalties under the laws of mainland China.SAFE requires mainland China residents or entities to register with SAFE or its local branch in connection with their establishment or control of anoffshore entity established for the purpose of overseas investment or financing. In addition, such mainland China residents or entities must updatetheir SAFE registrations when the offshore special purpose vehicle undergoes certain material events. According to the Notice on FurtherSimplifying and Improving Policies for the Foreign Exchange Administration of Direct Investment released on February 13, 2015 by SAFE, localbanks will examine and handle foreign exchange registration for overseas direct investment, including the initial foreign exchange registration andamendment registration, under SAFE Circular 37 from June 1, 2015. See “Item 4. Information on the Company—B. Business Overview—Regulations—Regulations Relating to Foreign Exchange—Regulations on Foreign Currency Exchange.” Table of Contents47If our shareholders who are mainland China residents or entities do not complete their registration with the local SAFE branches, our mainlandChina subsidiaries may be prohibited from distributing their profits and any proceeds from any reduction in capital, share transfer or liquidation tous, and we may be restricted from contributing additional capital to our mainland China subsidiaries. Moreover, failure to comply with SAFEregistration requirements could result in liability under the laws of mainland China for evasion of applicable foreign exchange restrictions. Mr.Yi’nan Li, Mr. Token Yilin Hu and Ms. Yuqin Zhang who directly or indirectly hold shares in our Cayman Islands holding company and who areknown to us as mainland China residents have completed the initial foreign exchange registrations and have updated their registrations required inconnection with our corporate restructuring.However, we may not be informed of the identities of all the mainland China residents or entities holding direct or indirect interests in ourcompany, nor can we compel our beneficial owners to comply with SAFE registration requirements. As a result, we cannot assure you that all ofour shareholders or beneficial owners who are mainland China residents or entities have complied with, or will in the future make or obtain anyapplicable registrations or approvals required by, SAFE regulations. Failure by such shareholders or beneficial owners to comply with SAFEregulations, or failure by us to amend the foreign exchange registrations of our mainland China subsidiaries, could subject us to fines or legalsanctions, restrict our overseas or cross-border investment activities, limit our mainland China subsidiaries’ ability to make distributions or paydividends to us or affect our ownership structure, which could adversely affect our business and prospects.Mainland China’s M&A Rules and certain other regulations of mainland China establish complex procedures for certain acquisitions ofmainland China companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in mainlandChina.A number of laws and regulations in mainland China have established procedures and requirements that could make merger and acquisitionactivities in mainland China by foreign investors more time consuming and complex. In addition to the Anti-monopoly Law itself, these includeM&A Rules adopted in 2006 and amended in 2009, and the Rules of the Ministry of Commerce on Implementation of Security Review System ofMergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the Security Review Rules, promulgated in 2011. These laws andregulations impose requirements in some instances that the Ministry of Commerce be notified in advance of any change-of-control transaction inwhich a foreign investor takes control of a mainland China domestic enterprise. In addition, the Anti-Monopoly Law requires that the Ministry ofCommerce be notified in advance of any concentration of undertaking if certain thresholds are triggered. Moreover, the Security Review Rulesspecify that mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions throughwhich foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review bythe Ministry of Commerce, and prohibit any attempt to bypass a security review, including by structuring the transaction through a proxy orcontractual control arrangement. In the future, we may grow our business by acquiring complementary businesses. Complying with theserequirements could be time consuming, and any required approval processes, including approval from the Ministry of Commerce, may delay orinhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share. Table of Contents48It may be difficult for overseas regulators to conduct investigation or collect evidence within mainland China.Shareholder claims or regulatory investigation that are common in the United States generally are difficult to pursue as a matter of law orpracticality in mainland China. For example, in mainland China, there are significant legal and other obstacles to providing information needed forregulatory investigations or litigation initiated outside of mainland China. Although the authorities in mainland China may establish a regulatorycooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision andadministration, such cooperation with the securities regulatory authorities in the Unities States may not be efficient in the absence of mutual andpractical cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, which became effective in March 2020, nooverseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of mainland China andwithout the consent by the Chinese securities regulatory authorities and the other competent governmental agencies, no entity or individual mayprovide documents or materials related to securities business overseas. In addition, the Data Security Law and the Personal Information ProtectionLaw provide that no entity or individual within the territory of mainland China shall provide any foreign judicial body and law enforcement bodywith any data or any personal information stored within the territory of mainland China without the approval of the competent PRC governmentauthority. While detailed interpretation of or implementation rules under these laws have yet to be promulgated, the inability for an overseassecurities regulator to directly conduct investigation or evidence collection activities within mainland China, and restrictions on the provision ofdocuments, materials, data and personal information by mainland China entities and individuals to an overseas securities regulator, foreign judicialbody or foreign law enforcement body may further increase difficulties faced by you in protecting your interests.Any failure to comply with the regulations of mainland China regarding the registration requirements for employee stock incentive plans maysubject the mainland China plan participants or us to fines and other legal or administrative sanctions.Under SAFE regulations, mainland China residents who participate in a stock incentive plan in an overseas publicly listed company are required toregister with SAFE or its local branches and complete certain other procedures. See “Item 4. Information on the Company—B. Business Overview—Regulations—Regulations Relating to Foreign Exchange—Regulations on Stock Incentive Plans.” We and our mainland China residentemployees who participate in our share incentive plans have been subject to these regulations when our company became publicly listed in theUnited States in 2018. If we or any of these mainland China resident employees fail to comply with these regulations, we or such employees maybe subject to fines and other legal or administrative sanctions. We also face regulatory uncertainties that could restrict our ability to adopt additionalincentive plans for our directors, executive officers and employees under the laws of mainland China.Failure to make adequate contributions to various employee benefit plans as required by the regulations of mainland China may subject us topenalties.Companies operating in mainland China are required to participate in various government-sponsored employee benefit plans, including certainsocial insurance, housing funds and other welfare-oriented payment obligations, and contribute to the plans in amounts equal to certain percentagesof salaries, including bonuses and allowances, of their employees up to a maximum amount specified by the local government from time to time atlocations where they operate our businesses. The requirement of employee benefit plans has not been implemented consistently by the localgovernments in mainland China given the different levels of economic development in different locations. We have previously received paymentnotices from the government authorities for inadequate contribution to employee benefit plans, and we have made the payments and penalty. Wemay be required to make up the contributions for these plans as well as to pay late fees and fines. If we are subject to late fees or fines in relation tothe underpaid employee benefits, our financial condition and results of operations may be adversely affected. Going forward, we will comply withthe regulations of mainland China and distribute the outstanding employee benefit payment accordingly.Enforcement of stricter labor laws and regulations of mainland China may adversely affect our business and our profitability.We have been subject to stricter regulatory requirements in terms of entering into labor contracts with our employees and paying various statutoryemployee benefits to designated government agencies for the benefit of our employees. Pursuant to the PRC Labor Contract Law and itsimplementation rules, employers are subject to stricter requirements in terms of signing labor contracts, minimum wages, paying remuneration,determining the term of employee’s probation and unilaterally terminating labor contracts. In the event that we decide to terminate the employmentwith some of our employees or otherwise change our employment or labor practices, the PRC Labor Contract Law and its implementation rulesmay limit our ability to effect those changes in a desirable or cost-effective manner, which could adversely affect our business and results ofoperations. Table of Contents49Companies registered and operating in mainland China are required under the Social Insurance Law and the Regulations on the Administration ofHousing Funds to apply for social insurance registration and housing fund deposit registration within 30 days of their establishment and to pay fortheir employees different social insurance including pension insurance, medical insurance, work-related injury insurance, unemployment insuranceand maternity insurance to the extent required by law. We could be subject to orders by the competent labor authorities for rectification and failureto comply with the orders may further subject us to administrative fines.As the interpretation and implementation of labor-related laws and regulations are still evolving, we cannot assure you that our employmentpractices do not and will not violate labor-related laws and regulations in mainland China, which may subject us to labor disputes or governmentinvestigations. We cannot assure you that we have complied or will be able to comply with all labor-related law and regulations including thoserelating to obligations to make social insurance payments and contribute to the housing provident funds. If we are deemed to have violated thelabor laws and regulations, we could be required to provide additional compensation to our employees and our business, financial condition andresults of operations will be adversely affected.Fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment.Our operations are subject to risks arising from fluctuations in exchange rates with reference to countries in which we operate and to which we sellour products. We sell our products to various countries, and therefore, our revenues have significant exposure to the relative movements ofcurrencies of those countries. Any significant appreciation or depreciation of Renminbi may materially and adversely affect our revenues, earningsand financial position, and the value of, and any dividends payable on, our ADSs in U.S. dollars. For example, to the extent that we need to convertU.S. dollars we receive into Renminbi to make capital contributions or pay our operating expenses, appreciation of Renminbi against the U.S.dollar would have an adverse effect on the RMB amount we would receive from the conversion. Conversely, a significant depreciation of Renminbiagainst the U.S. dollar may significantly reduce the U.S. dollar equivalent of our earnings, which in turn could adversely affect the price of ourADSs.The conversion of Renminbi into foreign currencies is based on rates set by the People’s Bank of China. The value of Renminbi against foreigncurrencies is affected by changes in China’s political and economic conditions and by China’s foreign exchange policies, among other things. Wecannot assure you that Renminbi will not appreciate or depreciate significantly in value against foreign currencies in the future.Very limited hedging options are available in mainland China to reduce our exposure to exchange rate fluctuations. To date, we have not enteredinto any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedgingtransactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge ourexposure or at all. In addition, our currency exchange losses may be magnified by the exchange control regulations of mainland China that restrictour ability to convert Renminbi into foreign currency. As a result, fluctuations in exchange rates may have a material adverse effect on yourinvestment.Discontinuation of any of the government subsidies or imposition of any additional taxes and surcharges could adversely affect our financialcondition and results of operations.Our mainland China subsidiaries have received various financial subsidies from PRC local government authorities. The financial subsidies resultfrom discretionary incentives and policies adopted by PRC local government authorities. Local governments may decide to change or discontinuesuch financial subsidies at any time. The discontinuation of such financial subsidies or imposition of any additional taxes could adversely affect ourfinancial condition and results of operations. Table of Contents50If we are classified as a mainland China resident enterprise for mainland China income tax purposes, such classification could result inunfavorable tax consequences to us and our non-mainland China shareholders or ADS holders.Under the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of mainland China with a “de factomanagement body” within mainland China is considered a mainland China resident enterprise. The implementation rules define the term “de factomanagement body” as the body that exercises full and substantial control over and overall management of the business, productions, personnel,accounts and properties of an enterprise. In 2009, the State Administration of Taxation issued a circular, known as Circular 82, which providescertain specific criteria for determining whether the “de facto management body” of a PRC-controlled enterprise incorporated offshore is located inmainland China. Although Circular 82 only applies to offshore enterprises controlled by mainland China enterprises or mainland China enterprisegroups, not those controlled by mainland China individuals or foreigners like us, the criteria set forth in the circular may reflect the StateAdministration of Taxation’s general position on how the “de facto management body” test should be applied in determining the tax resident statusof all offshore enterprises. According to Circular 82, an offshore incorporated enterprise controlled by a mainland China enterprise or a mainlandChina enterprise group will be regarded as a mainland China tax resident by virtue of having its “de facto management body” in mainland Chinaand will be subject to mainland China enterprise income tax on its global income only if all of the following conditions are met: (i) the primarylocation of the day-to-day operational management is in mainland China; (ii) decisions relating to the enterprise’s financial and human resourcematters are made or are subject to approval by organizations or personnel in mainland China; (iii) the enterprise’s primary assets, accounting booksand records, company seals, and board and shareholder resolutions, are located or maintained in mainland China; and (iv) at least 50% of votingboard members or senior executives habitually reside in mainland China.We believe that none of our entities incorporated outside of mainland China is a mainland China resident enterprise for mainland China taxpurposes. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain withrespect to the interpretation of the term “de facto management body.” If the PRC tax authorities determine that we are a mainland China residententerprise for enterprise income tax purposes, we will be subject to the enterprise income tax on our global income at the rate of 25% and we willbe required to comply with mainland China enterprise income tax reporting obligations. In addition, gains realized on the sale or other dispositionof the ADSs or our Class A ordinary shares may be subject to mainland China tax, at a rate of 10% in the case of non-mainland China enterprisesor 20% in the case of non-mainland China individuals (in each case, subject to the provisions of any applicable tax treaty), if such gains are deemedto be from mainland China sources. It is unclear whether non-mainland China shareholders of our company would be able to claim the benefits ofany tax treaties between their country of tax residence and mainland China in the event that we are treated as a mainland China resident enterprise.Any such tax may reduce the returns on your investment in the ADSs. Table of Contents51Any failure or perceived failure by us to comply with the anti-monopoly and anti-unfair competition laws and regulations may result ingovernmental investigations or enforcement actions, litigation, or claims or fines against us, and could have an adverse effect on our business,financial condition and results of operations.The PRC government has adopted a series of anti-monopoly and anti-unfair competition laws and regulations and has recently enhanced itsenforcement of such laws and regulations. The PRC Anti-monopoly Law (revised in 2022) and the implementing rules (i) require that where theconcentration of undertakings reaches the filing threshold stipulated by the State Council, a filing must be made with the anti-monopoly authoritybefore the parties implement the concentration, but even if the concentration of undertakings fails to meet the filing threshold, if there is anyevidence that the concentration of undertakings has or may have the effect of eliminating or restricting competition, the anti-monopoly authoritymay require the parties to file, (ii) prohibit a business operator with a dominant market position from abusing such position, such as by sellingcommodities at unfairly high prices or buying commodities at unfairly low prices, selling products at prices below cost without any justifiablecause, or refusing to trade with a trading party without any justifiable cause, and (iii) prohibit business operators from entering into monopolyagreements, which refer to agreements that eliminate or restrict competition with competing business operators or transaction counterparties, suchas by boycotting transactions, fixing or changing the price of commodities, limiting the output of commodities or fixing the price of commoditiesfor resale to third parties, unless the agreements satisfy certain exemptions under the PRC Anti monopoly Law. Furthermore, in February 2021, theAnti-monopoly Commission of the State Council promulgated the Anti-Monopoly Guidelines for the Internet Platform Economy Sector, whichprohibit certain monopolistic acts of internet platforms so as to protect market competition and safeguard the interests of users and undertakingsparticipating in the internet platform economy. These acts include prohibiting platforms with a dominant position from abusing their marketdominance such as discriminating against customers in terms of pricing and other transactional conditions using big data and analytics, coercingcounterparties into exclusivity arrangements, using technology to block competitors’ interfaces, favorable positioning in search results of goodsdisplays, using bundle services to sell services or products and compulsory collection of unnecessary user data. In addition, these guidelines alsoreinforce antitrust merger review for internet platform related transactions to safeguard market competition. Meanwhile, on March 10, 2023, theSAMR issued a series of provisions, which came into effect on April 15, 2023, to implement the Anti-Monopoly Law of the PRC, and furtherstrengthen the anti-monopoly legal system. As these provisions and guidelines were newly promulgated, it is still uncertain how they will impacton our business, financial condition, results of operations and prospects.According to the PRC Anti-unfair Competition Law, unfair competition, which refers to the production and operating activities where the operatordisrupts the market competition order and damages the legitimate rights and interests of other operators or consumers in violation of the provisionsof the PRC Anti-unfair Competition Law, shall be prohibited. Pursuant to the PRC Anti-unfair Competition Law, operators shall abide by theprinciple of voluntariness, equality, impartiality, integrity and adhere to laws and business ethics during market transactions. Operators in violationof the PRC Anti-unfair Competition Law may be subject to civil, administrative or criminal liabilities depending on the specific circumstances.Since its inception in 2018, the SAMR has continued to strengthen anti-monopoly enforcement. In December 2018, the SAMR issued the Noticeon Anti-monopoly Enforcement Authorization, which authorizes SAMR’s provincial branches to conduct anti-monopoly enforcement within theirrespective jurisdictions. In September 2020, the SAMR issued Anti-monopoly Compliance Guideline for Operators, which requires operators toestablish anti-monopoly compliance management systems to prevent anti-monopoly compliance risks. In particular, the PRC regulators have beenincreasingly focused on inspection and regulation on potential noncompliance with anti-unfair competition and anti-monopoly related lawsrecently. We have been conducting necessary internal inspection and rectifications in accordance with such guidance and are working on some ofthe rectification procedures, such as concentration notification for past deals. We cannot guarantee you that we will not be subject to more similaror even stricter rectification requests from the government authorities or that we will fully comply with all applicable rules and regulations at alltimes. As a result of the regulators’ focus on anti-monopoly and anti-unfair competition compliance and enhanced regulation of platformenterprises, our business practice and expansion strategy may be subject to heightened regulatory scrutiny. In order to comply with existing lawsand regulations and new laws and regulations that may be enacted in the future, we may need to devote significant resources and efforts, includingrestructuring affected businesses and adjusting investment activities, which may adversely affect our business operation, growth prospects andreputation. In addition, we cannot assure you that our efforts are sufficient to comply with all the applicable laws and regulations on anti-monopolyand anti-unfair competition and the authorities’ requirements in all respects. Any anti-monopoly or anti-unfair competition related lawsuit,regulatory investigations or administrative proceedings initiated against us could also result in our being subject to regulatory actions andconstraints on our investments and acquisitions, which could include forced termination of any agreements or transactions, required divestitures,limitations on certain pricing and business practices or significant fines. As a result, we may be subject to significant difficulties in operating ourcurrent business and pursuing our investment and acquisition strategy. Table of Contents52We may not be able to obtain certain benefits under the tax treaty on dividends paid by our mainland China subsidiaries to us through ourHong Kong subsidiary.Niu Technologies is a holding company incorporated under the laws of the Cayman Islands and as such rely on dividends and other distributions onequity from our mainland China subsidiaries to satisfy part of our liquidity requirements. Pursuant to the PRC Enterprise Income Tax Law, awithholding tax rate of 10% currently applies to dividends paid by a mainland China “resident enterprise” to a foreign enterprise investor, unlessany such foreign investor’s jurisdiction of incorporation has a tax treaty with mainland China that provides for preferential tax treatment. Pursuantto the Arrangement between the Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and TaxEvasion on Income, effective from December 8, 2006, such withholding tax rate may be lowered to 5% if a Hong Kong resident enterprise owns noless than 25% of a mainland China enterprise. According to the Announcement of the State Administration of Taxation on Issues concerning the“Beneficial Owner” in Tax Treaties, which became effective in April 2018, whether a resident enterprise is a “beneficial owner” that can apply fora low tax rate under tax treaties depends on an overall assessment of several factors, which may bring uncertainties to the applicability ofpreferential tax treatment under the tax treaties. Furthermore, the Administrative Measures for Non-Resident Taxpayers to Enjoy Treatments underTax Treaties, which became effective on January 1, 2020, require non-resident taxpayers (including non-resident enterprises and individuals) todetermine whether they are qualified to enjoy the preferential tax treatment under the tax treaties and file certain report and materials with the taxauthorities. Where a non-resident taxpayer self-assesses and concludes that it/he/she satisfies the criteria for claiming preferential tax treatment,it/he/she may enjoy treaty benefits at the time of tax declaration or at the time of withholding through the withholding agent, simultaneously gatherand retain the relevant materials for future inspection, and accept follow-up administration by the tax authorities. There are also other conditions forenjoying the reduced withholding tax rate according to other tax rules and regulations. See “Item 5. Operating and Financial Review and Prospects—Taxation.” In the future we intend to re-invest all earnings, if any, generated from our mainland China subsidiaries for the operation andexpansion of our business in mainland China. Should our tax policy change to allow for offshore distribution of our earnings, we would be subjectto a significant withholding tax. We cannot assure you that our determination regarding our qualification to enjoy the preferential tax treatment willnot be challenged by the tax authority or we will be able to complete the necessary filings with the tax authority and enjoy the preferentialwithholding tax rate of 5% under the arrangement with respect to dividends to be paid by our mainland China subsidiaries to our Hong Kongsubsidiary.We face uncertainty with respect to indirect transfers of equity interests in mainland China resident enterprises by their non-mainland Chinaholding companies.In February 2015, the State Administration of Taxation issued the Public Notice Regarding Certain Corporate Income Tax Matters on IndirectTransfer of Properties by Non-Resident Enterprises, or SAT Public Notice 7. SAT Public Notice 7 extends its tax jurisdiction to not only indirecttransfers but also transactions involving transfer of other taxable assets, through the offshore transfer of a foreign intermediate holding company. Inaddition, SAT Public Notice 7 provides certain criteria on how to assess reasonable commercial purposes and has introduced safe harbors forinternal group restructurings and the purchase and sale of equity through a public securities market. SAT Public Notice 7 also brings challenges toboth the foreign transferor and transferee (or other person who is obligated to pay for the transfer) of the taxable assets. Where a non-residententerprise conducts an “indirect transfer” by transferring the taxable assets indirectly by disposing of the equity interests of an overseas holdingcompany, the non-resident enterprise being the transferor, or the transferee, or the mainland China entity which directly owned the taxable assetsmay report to the tax authority such indirect transfer. Using a “substance over form” principle, the PRC tax authority may disregard the existence ofthe overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferringmainland China tax. As a result, gains derived from such indirect transfer may be subject to mainland China enterprise income tax, and thetransferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for thetransfer of equity interests in a mainland China resident enterprise. On October 17, 2017, the State Administration of Taxation issued theAnnouncement of the State Administration of Taxation on Issues Concerning the Withholding of Nonresident Enterprise Income Tax at Source, orSAT Bulletin 37, which came into effect on December 1, 2017, and was last amended on June 15, 2018. The SAT Bulletin 37 further clarifies thepractice and procedure of the withholding of nonresident enterprise income tax. Table of Contents53We face uncertainties on the reporting and consequences of future private equity financing transactions, share exchanges or other transactionsinvolving the transfer of shares in our company by investors that are non-mainland China resident enterprises. The PRC tax authorities may pursuesuch non resident enterprises with respect to a filing or the transferees with respect to withholding obligation, and request our mainland Chinasubsidiaries to assist in the filing. As a result, we and non-resident enterprises in such transactions may become at risk of being subject to filingobligations or being taxed under SAT Public Notice 7 and SAT Bulletin 37, and may be required to expend valuable resources to comply with themor to establish that we and our non-resident enterprises should not be taxed under these regulations, which may have a material adverse effect onour financial condition and results of operations.If the custodians or authorized users of controlling non-tangible assets of our company, including our corporate chops and seals, fail to fulfilltheir responsibilities, or misappropriate or misuse these assets, our business and operations could be materially and adversely affected.Under the laws of mainland China, legal documents for corporate transactions are executed using the chops or seal of the signing entity or with thesignature of a legal representative whose designation is registered and filed with the relevant branch of the Administration of Industry andCommerce.Although we usually utilize chops to enter into contracts, the designated legal representatives of each of our mainland China subsidiaries, the VIEand its subsidiaries have the apparent authority to enter into contracts on behalf of such entities without chops and bind such entities. All designatedlegal representatives of our mainland China subsidiaries, the VIE and its subsidiaries are members of our senior management team who havesigned employment agreements with us or our mainland China subsidiaries, the VIE and its subsidiaries under which they agree to abide by variousduties they owe to us. In order to maintain the physical security of our chops and chops of our mainland China entities, we generally store theseitems in secured locations accessible only by the authorized personnel in the legal or finance department of each of our subsidiaries, the VIE and itssubsidiaries. Although we monitor such authorized personnel, there is no assurance such procedures will prevent all instances of abuse ornegligence. Accordingly, if any of our authorized personnel misuse or misappropriate our corporate chops or seals, we could encounter difficultiesin maintaining control over the relevant entities and experience significant disruption to our operations. If a designated legal representative obtainscontrol of the chops in an effort to obtain control over any of our mainland China subsidiaries, the VIE or its subsidiaries, we or our mainlandChina subsidiaries, the VIE and its subsidiaries would need to pass a new shareholder or board resolution to designate a new legal representativeand we would need to take legal action to seek the return of the chops, apply for new chops with the authorities, or otherwise seek legal redress forthe violation of the representative’s fiduciary duties to us, which could involve significant time and resources and divert management attentionaway from our regular business. In addition, the affected entity may not be able to recover corporate assets that are sold or transferred out of ourcontrol in the event of such a misappropriation if a transferee relies on the apparent authority of the representative and acts in good faith.Our leased property interest may be defective and our right to lease the properties may be affected by such defects challenged, which couldcause significant disruption to our business.Under the laws of mainland China, all lease agreements are required to be registered with the local housing authorities. We presently lease fourpremises in China, and the landlords of these premises have not completed the registration of their ownership rights or the registration of our leaseswith the authorities. Failure to complete these required registrations may expose our landlords, lessors and us to potential monetary fines. If theseregistrations are not obtained in a timely manner or at all, we may be subject to monetary fines or may have to relocate our offices and incur theassociated losses.Risks Related to Our ADSsThe trading price of the ADSs is likely to be volatile, which could result in substantial losses to investors.The trading price of the ADSs is likely to be volatile and could fluctuate widely due to factors beyond our control. This may happen because ofbroad market and industry factors, including the performance and fluctuation of the market prices of other companies with business operationslocated mainly in China that have listed their securities in the United States. The securities of some of these companies, including internet-basedcompanies, have experienced significant volatility since their initial public offerings, including, in some cases, substantial price declines in theirtrading prices. The trading performances of other Chinese companies’ securities after their offerings may affect the attitudes of investors towardChinese companies listed in the United States in general and consequently may impact the trading performance of the ADSs, regardless of ouractual operating performance. Table of Contents54In addition to market and industry factors, the price and trading volume for the ADSs may be highly volatile for factors specific to our ownoperations, including the following:●variations in our revenues, earnings and cash flow;●announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors;●announcements of new offerings, solutions and expansions by us or our competitors;●changes in financial estimates by securities analysts;●detrimental adverse publicity about us, our services or our industry;●additions or departures of key personnel;●release of lockup or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; and●potential litigation or regulatory investigations.Any of these factors may result in large and sudden changes in the volume and price at which the ADSs will trade.In the past, shareholders of public companies have often brought securities class action suits against those companies following periods ofinstability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount of our management’sattention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm ourresults of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in thefuture. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverseeffect on our financial condition and results of operations.If securities or industry analysts do not publish research or publishes inaccurate or unfavorable research about our business, or if theyadversely change their recommendations regarding the ADSs, the market price for our ADSs and trading volume could decline.The trading market for the ADSs will be influenced by research or reports that industry or securities analysts publish about our business. If one ormore analysts who cover us downgrade the ADSs or publishes inaccurate or unfavorable research about our business, the market price for theADSs would likely decline. If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility inthe financial markets, which in turn could cause the market price or trading volume for the ADSs to fall.The sale or availability for sale of substantial amounts of the ADSs could adversely affect their market price.Sales of substantial amounts of the ADSs in the public market, or the perception that these sales could occur, could adversely affect the marketprice of the ADSs and could materially impair our ability to raise capital through equity offerings in the future. We cannot predict what effect, ifany, market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities for future sale willhave on the market price of the ADSs. As of February 29, 2024, we had 155,196,912 ordinary shares issued and outstanding, comprising of (i)138,654,892 Class A ordinary shares, and (ii) 16,542,020 Class B ordinary shares, among which 95,472,950 Class A ordinary shares are in theform of ADSs, which are freely transferable without restriction or additional registration under the Securities Act. The remaining Class A ordinaryshares outstanding and the Class B ordinary shares will be available for sale, subject to volume and other restrictions as applicable under Rules 144and 701 under the Securities Act. Certain holders of our ordinary shares may cause us to register under the Securities Act the sale of their shares,subject to the applicable lock-up period. Registration of these shares under the Securities Act would result in ADSs representing these sharesbecoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of the registration. Sales of theseregistered shares in the form of ADSs in the public market could cause the price of our ADSs to decline. Table of Contents55Our dual-class voting structure will limit your ability to influence corporate matters and could discourage others from pursuing any change ofcontrol transactions that holders of our Class A ordinary shares and the ADSs may view as beneficial.We have a dual-class ordinary share structure. Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. Holders ofClass A ordinary shares are entitled to one vote per share, while holders of Class B ordinary shares will be entitled to four votes per share. EachClass B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof, while Class A ordinary shares are notconvertible into Class B ordinary shares under any circumstances. Upon any direct or indirect sale, transfer, assignment or disposition of Class Bordinary shares by a holder thereof or the direct or indirect transfer or assignment of the voting power attached to such number of Class B ordinaryshares through voting proxy or otherwise to any person or entity that is not an affiliate of such holder, such Class B ordinary shares shall beautomatically and immediately converted into an equal number of Class A ordinary shares.All of the 6,615,000 ordinary shares held by ELLY Holdings Limited, an entity wholly owned by Dr. Yan Li, the chairman of our board of directorsand our chief executive officer, and the 9,927,020 ordinary shares held by Niu Holding Inc., an entity 82.7% owned by Mr. Token Yilin Hu, ourformer director and vice president, and 17.3% owned by Mr. Carl Chuankai Liu, are Class B ordinary shares. Messrs. Yan Li, Token Yilin Hu andCarl Chuankai Liu collectively beneficially own an aggregate of 16,542,020 Class B ordinary shares, which represented 32.3% of our total votingpower as of February 29, 2024. Therefore, Messrs. Yan Li, Token Yilin Hu and Carl Chuankai Liu have significant influence over matters requiringshareholders’ approval, including election of directors and significant corporate transactions, such as a merger or sale of our company or our assets.This concentration in voting power will limit your ability to influence corporate matters and could discourage others from pursuing any potentialmerger, takeover or other change of control transactions that holders of our Class A ordinary shares and the ADSs may view as beneficial.Because we do not expect to pay dividends in the foreseeable future, you must rely on a price appreciation of the ADSs for a return on yourinvestment.We currently intend to retain most, if not all, of our available funds and any future earnings to fund the development and growth of our business. Asa result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in the ADSs as asource for any future dividend income.Our board of directors has discretion as to whether to distribute dividends, subject to certain requirements of Cayman Islands law. In addition, ourshareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our directors. UnderCayman Islands law, a Cayman Islands company may pay a dividend out of either profit or share premium account provided that in nocircumstances may a dividend be paid if this would result in the company being unable to pay its debts as they fall due in the ordinary course ofbusiness. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will dependon our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from oursubsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return onyour investment in the ADSs will likely depend entirely upon any future price appreciation of our ADSs. There is no guarantee that the ADSs willappreciate in value or even maintain the price at which you purchased the ADSs. You may not realize a return on your investment in the ADSs, andyou may even lose your entire investment in the ADSs.There can be no assurance that we will not be classified as a passive foreign investment company, or PFIC, for U.S. federal income taxpurposes for any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. holders of the ADSs or our Class Aordinary shares.A non-U.S. corporation will be classified as a passive foreign investment company, or PFIC, for any taxable year if either (i) at least 75% of itsgross income for such year consists of certain types of “passive” income; or (ii) at least 50% of the value of its assets (generally determined on thebasis of a quarterly average) during such year is attributable to assets that produce passive income or are held for the production of passive income.Although the law in this regard is unclear, we intend to treat the VIE (and its subsidiaries) as being owned by us for United States federal incometax purposes, not only because we conduct the business operations of such entity but also because we are entitled to substantially all of itseconomic benefits, and, as a result, we consolidate its result of operations in our consolidated financial statements. Assuming that we are the ownerof the VIE (including its respective subsidiaries, if any) for United States federal income tax purposes, we do not believe we were a PFIC for thetaxable year ended December 31, 2023 and we do not presently expect to be a PFIC for the current taxable year or the foreseeable future. Table of Contents56While we do not expect to become a PFIC, because the value of our assets for purposes of the asset test may be determined by reference to themarket price of the ADSs, fluctuations in the market price of the ADSs may cause us to become a PFIC for the current or subsequent taxable years.In addition, the composition of our income and assets will also be affected by how, and how quickly, we use our liquid assets. If we determine notto deploy significant amounts of cash for active purposes or if it were determined that we do not own the stock of the VIE for United States federalincome tax purposes, our risk of being a PFIC may substantially increase. Because PFIC status is a factual determination made annually after thedose of each taxable year, there can be no assurance that we will not be a PFIC for the current taxable year or any future taxable year.If we are a PFIC in any taxable year during which a U.S. Holder (as defined in “Item 10. Additional Information—E. Taxation—United StatesFederal Income Tax Considerations”) holds the ADSs or our Class A ordinary shares, certain adverse U.S. federal income tax consequences couldapply to such U.S. Holder. See “Item 10. Additional Information—E. Taxation—Passive Foreign Investment Company Considerations.”Our sixth amended and restated memorandum and articles of association contain anti-takeover provisions that could have a material adverseeffect on the rights of holders of our Class A ordinary shares and ADSs.Our sixth amended and restated memorandum and articles of association contain certain provisions to limit the ability of others to acquire controlof our company or cause us to engage in change-of-control transactions, including a provision that grants authority to our board of directors toestablish and issue from time to time one or more series of preferred shares without action by our shareholders and to determine, with respect toany series of preferred shares, the terms and rights of that series, any or all of which may be greater than the rights associated with our Class Aordinary shares in the form of ADSs. These provisions could have the effect of depriving our shareholders of the opportunity to sell their shares at apremium over the prevailing market price by discouraging third parties from seeking to obtain control of our company in a tender offer or similartransactions.You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we areincorporated under Cayman Islands law.We are an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our sixth amended andrestated memorandum and articles of association, the Companies Act (As Revised) of the Cayman Islands and the common law of the CaymanIslands. The rights of shareholders to take action against our directors, actions by our minority shareholders and the fiduciary duties of our directorsto us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islandsis derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisionsof whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciaryduties of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in somejurisdictions in the United States. In particular, the Cayman Islands have a less developed body of securities laws than the United States. Inaddition, with respect to Cayman Islands companies, plaintiffs may face special obstacles, including but not limited to those relating to jurisdictionand standing, in attempting to assert derivative claims in state or federal courts of the United States.Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records (otherthan the memorandum and articles of association and any special resolutions passed by such companies, and the registers of mortgages and chargesof such companies) or to obtain copies of lists of shareholders of these companies. Our directors have discretion under our articles of association, todetermine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but our directors are not obligedto make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any factsnecessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.Certain corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companiesincorporated in other jurisdictions such as the United States. As a result of all of the above, our public shareholders may have more difficulty inprotecting their interests in the face of actions taken by our management, members of our board of directors or our controlling shareholders thanthey would as public shareholders of a company incorporated in the United States. Table of Contents57Certain judgments obtained against us and our directors and officers by our shareholders may not be enforceable.We are a Cayman Islands exempted company and all of our assets are located outside of the United States. Substantially all of our currentoperations are conducted in mainland China. As a result, it may be difficult or impossible for you to bring an action against us in the United Statesin the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful inbringing an action of this kind, the laws of the Cayman Islands and of mainland China may render you unable to enforce a judgment against ourassets.In addition, some of our directors and officers reside within China or are PRC nationals. As a result, it may also be difficult or impossible for you tobring an action against our directors and officers in the United States in the event that you believe that your rights have been infringed under theU.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and ofmainland China may render you unable to enforce a judgment against the assets of our directors and officers.The recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize andenforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and thecountry where the judgment is made or on principles of reciprocity between jurisdictions. China does not have any treaties or other forms of writtenarrangement with the United States that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to thePRC Civil Procedures Law, the PRC courts will not enforce a foreign judgment against us or our directors and officers if they decide that thejudgment violates the basic principles of PRC laws or national sovereignty, security or public interest. As a result, it is uncertain whether and onwhat basis a PRC court would enforce a judgment rendered by a court in the United States.You may experience dilution of your holdings due to inability to participate in rights offerings.We may, from time to time, distribute rights to our shareholders, including rights to acquire securities. Under the deposit agreement, the depositarywill not distribute rights to holders of ADSs unless the distribution and sale of rights and the securities to which these rights relate are either exemptfrom registration under the Securities Act with respect to all holders of ADSs or are registered under the provisions of the Securities Act. Thedepositary may, but is not required to, attempt to sell these undistributed rights to third parties, and may allow the rights to lapse. We may be unableto establish an exemption from registration under the Securities Act, and we are under no obligation to file a registration statement with respect tothese rights or underlying securities or to endeavor to have a registration statement declared effective. Accordingly, holders of ADSs may be unableto participate in our rights offerings and may experience dilution of their holdings as a result.You may be subject to limitations on transfer of your ADSs.Your ADSs are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when itdeems expedient in connection with the performance of its duties. The depositary may close its books from time to time for a number of reasons,including in connection with corporate events such as a rights offering, during which time the depositary needs to maintain an exact number ofADS holders on its books for a specified period. The depositary may also close its books in emergencies, and on weekends and public holidays.The depositary may refuse to deliver, transfer or register transfers of the ADSs generally when our share register or the books of the depositary areclosed, or at any time if we or the depositary thinks it is advisable to do so because of any requirement of law or of any government orgovernmental body, or under any provision of the deposit agreement, or for any other reason.We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisionsapplicable to United States domestic public companies.Because we are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in theUnited States that are applicable to U.S. domestic issuers, including:●the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC;●the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered underthe Exchange Act; Table of Contents58●the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability forinsiders who profit from trades made in a short period of time; and●the selective disclosure rules by issuers of material nonpublic information under Regulation FD.We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our resultson a quarterly basis through press releases, distributed pursuant to the rules and regulations of the SEC. Press releases relating to financial resultsand material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC isless extensive and less timely than that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the sameprotections or information that would be made available to you were you investing in a U.S. domestic issuer.As an exempted company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporategovernance matters that differ significantly from the Nasdaq listing standards; these practices may afford less protection to shareholders than theywould enjoy if we complied fully with such corporate governance listing standards.As a Cayman Islands exempted company listed on the Nasdaq Stock Market, we are subject to the Nasdaq listing standards. Rule 5620(a) requiresthat each company listing common stock or voting preferred stock, and their equivalents, must hold an annual meeting of shareholders no later thanone year after the end of the company’s fiscal year-end. However, the Nasdaq Stock Market Rules permit a foreign private issuer like us to followthe corporate governance practices of its home country. We have informed Nasdaq that we will follow home country practice, that is, the provisionsof our Sixth Amended and Restated Memorandum and Articles of Association, with respect to the annual meeting of shareholders, which providesthat our company may (but shall not be obliged to) in each calendar year hold a general meeting as our annual general meeting. Our shareholdersmay be afforded less protection than they would otherwise enjoy under the Nasdaq listing standards applicable to U.S. domestic issuers given ourreliance on the home country practice exception.The voting rights of holders of ADSs are limited by the terms of the deposit agreement, and you may not be able to exercise your right to directhow the Class A ordinary shares which are represented by your ADSs are voted.Holders of ADSs do not have the same rights as our registered shareholders. As a holder of the ADSs, you will not have any direct right to attendgeneral meetings of our shareholders or to cast any votes at such meetings. You will only be able to exercise the voting rights that are carried by theunderlying Class A ordinary shares represented by your ADSs indirectly in accordance with the provisions of the deposit agreement. Under thedeposit agreement, you may vote only by giving voting instructions to the depositary. Upon receipt of your voting instructions, the depositary willtry, as far as is practicable, to vote the underlying Class A ordinary shares represented by your ADSs in accordance with your instructions. You willnot be able to directly exercise your right to vote with respect to the underlying Class A ordinary shares unless you withdraw the shares and becomethe registered holder of such shares prior to the record date for the general meeting.Under our articles of association, the minimum notice period required to convene a general meeting is seven calendar days. When a generalmeeting is convened, you may not receive sufficient advance notice of the meeting to withdraw the underlying Class A ordinary shares representedby your ADSs and become the registered holder of such shares to allow you to attend the general meeting and to vote directly with respect to anyspecific matter or resolution to be considered and voted upon at the general meeting. In addition, under our articles of association, for the purposesof determining those shareholders who are entitled to attend and vote at any general meeting, our directors may close our register of membersand/or fix in advance a record date for such meeting, and such closure of our register of members or the setting of such a record date may preventyou from withdrawing the underlying Class A ordinary shares represented by your ADSs and becoming the registered holder of such shares prior tothe record date, so that you would not be able to attend the general meeting or to vote directly. If we ask for your instructions, the depositary willnotify you of the upcoming vote and will arrange to deliver voting materials to you. We have agreed to give the depositary at least 30 days’ priornotice of shareholder meetings. Nevertheless, we cannot assure you that you will receive the voting materials in time to ensure that you can instructthe depositary to vote the underlying Class A ordinary shares represented by your ADSs. In addition, the depositary and its agents are notresponsible for failing to carry out voting instructions or for their manner of carrying out your voting instructions. This means that you may not beable to exercise your right to direct how the underlying Class A ordinary shares represented by your ADSs are voted, and you may have no legalremedy if the underlying Class A ordinary shares represented by your ADSs are not voted as you requested. Table of Contents59We are entitled to amend the deposit agreement and to change the rights of ADS holders under the terms of such agreement, or to terminate thedeposit agreement, without the prior consent of the ADS holders.We are entitled to amend the deposit agreement and to change the rights of the ADS holders under the terms of such agreement, without the priorconsent of the ADS holders. We and the depositary may agree to amend the deposit agreement in any way we decide is necessary or advantageousto us. Amendments may reflect, among other things, operational changes in the ADS program, legal developments affecting ADSs or changes inthe terms of our business relationship with the depositary. In the event that the terms of an amendment impose or increase fees or charges (otherthan in connection with foreign exchange control regulations, and taxes and other governmental charges, delivery and other such expenses) ormaterially prejudice an existing substantial right of the ADS holders, ADS holders will only receive 30 days’ advance notice of the amendment,and no prior consent of the ADS holders is required under the deposit agreement. Furthermore, we may decide to terminate the ADS facility at anytime for any reason. For example, terminations may occur when we decide to list our shares on a non-U.S. securities exchange and determine not tocontinue to sponsor an ADS facility or when we become the subject of a takeover or a going-private transaction. If the ADS facility will terminate,ADS holders will receive at least 30 days’ prior notice, but no prior consent is required from them. Under the circumstances that we decide to makean amendment to the deposit agreement that is disadvantageous to ADS holders or terminate the deposit agreement, the ADS holders may chooseto sell their ADSs or surrender their ADSs and become direct holders of the underlying common shares, but will have no right to any compensationwhatsoever.ADS holders may not be entitled to a jury trial with respect to claims arising under the deposit agreement, which could result in less favorableoutcomes to the plaintiffs’ in any such action.The deposit agreement governing the ADSs representing our Class A ordinary shares provides that, the federal or state courts in the City of NewYork have non-exclusive jurisdiction to hear and determine claims arising under the deposit agreement and in that regard, to the fullest extentpermitted by law, ADS holders waive the right to a jury trial of any claim they may have against us or the depositary arising out of or relating toour Class A ordinary shares, the ADSs or the deposit agreement, including any claim under the U.S. federal securities laws.If we or the depositary opposed a jury trial demand based on the waiver, the court would determine whether the waiver was enforceable based onthe facts and circumstances of that case in accordance with the applicable state and federal law. To our knowledge, the enforceability of acontractual pre-dispute jury trial waiver in connection with claims arising under the federal securities laws has not been finally adjudicated by theUnited States Supreme Court. However, we believe that a contractual pre-dispute jury trial waiver provision is generally enforceable, includingunder the laws of the State of New York, which govern the deposit agreement. In determining whether to enforce a contractual pre-dispute jury trialwaiver provision, courts will generally consider whether a party knowingly, intelligently and voluntarily waived the right to a jury trial. We believethat this is the case with respect to the deposit agreement and the ADSs. It is advisable that you consult legal counsel regarding the jury waiverprovision before investing in the ADSs.If you or any other holders or beneficial owners of ADSs bring a claim against us or the depositary in connection with matters arising under thedeposit agreement or the ADSs, including claims under federal securities laws, you or such other holder or beneficial owner may not be entitled toa jury trial with respect to such claims, which may have the effect of limiting and discouraging lawsuits against us and / or the depositary. If alawsuit is brought against us and/or the depositary under the deposit agreement, it may be heard only by a judge or justice of the applicable trialcourt, which would be conducted according to different civil procedures and may result in different outcomes than a trial by jury would have had,including results that could be less favorable to the plaintiff(s) in any such action.Nevertheless, if this jury trial waiver provision is not enforced, to the extent a court action proceeds, it would proceed under the terms of thedeposit agreement with a jury trial. No condition, stipulation or provision of the deposit agreement or ADSs serves as a waiver by any holder orbeneficial owner of ADSs or by us or the depositary of compliance with any substantive provision of the U.S. federal securities laws and therules and regulations promulgated thereunder. Table of Contents60The depositary for the ADSs will give us a discretionary proxy to vote our Class A ordinary shares underlying your ADSs if you do not vote atshareholders’ meetings, except in limited circumstances, which could adversely affect your interests.Under the deposit agreement for the ADSs, if you do not vote, the depositary will give us a discretionary proxy to vote our Class A ordinary sharesunderlying your ADSs at shareholders’ meetings unless:●we have instructed the depositary that we do not wish a discretionary proxy to be given;●we have informed the depositary that there is substantial opposition as to a matter to be voted on at the meeting;●a matter to be voted on at the meeting may have a material adverse impact on shareholders; or●the voting at the meeting is to be made on a show of hands.The effect of this discretionary proxy is that if you do not vote at shareholders’ meetings, you cannot prevent our ordinary shares underlying yourADSs from being voted, except under the circumstances described above. This may make it more difficult for shareholders to influence themanagement of our company. Holders of our ordinary shares are not subject to this discretionary proxy.Item 4.Information on the CompanyA.History and Development of the CompanyWe commenced operations in September 2014 through Beijing Niudian, and launched our NQi-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 offshorelisting. Shortly following its incorporation, Niu Technologies established a wholly-owned subsidiary in Hong Kong, Niu TechnologiesGroup Limited.In May 2015, Niu Technologies Group Limited established a wholly-owned subsidiary in mainland China, Niudian Information.Due to the legal restrictions on foreign ownership in companies in mainland China that provide value-added telecommunications services inmainland China, we operate our NIU app, our website www.niu.com and other related business through Beijing Niudian, a mainland Chinacompany in which the equity interests are held by mainland China citizens. In May 2015, we began to conduct the business operations of BeijingNiudian and its subsidiaries through Niudian Information by entering into a series of contractual arrangements with Beijing Niudian and itsshareholders.We refer to Niudian Information as our WFOE, and to Beijing Niudian as the VIE in this annual report. Our contractual arrangements with the VIEand its shareholders allow us to (i) conduct the business operations of the VIE, (ii) receive substantially all of the economic benefits of the VIE, and(iii) have an exclusive option to purchase or designate any third party to purchase all or part of the equity interests in and assets of the VIE whenand to the extent permitted by the laws of mainland China.As a result of our direct ownership in our WFOE and the contractual arrangements with the VIE, we are regarded as the primary beneficiary of theVIE, and we treat the VIE as the consolidated variable interest entity under U.S. GAAP, which generally refers to an entity in which we do not haveany equity interests but whose financial results are consolidated into our consolidated financial statements in accordance with U.S. GAAP becausewe have a controlling financial interest in, and thus are the primary beneficiary of, that entity. We have consolidated the financial results of the VIEand its subsidiaries in our consolidated financial statements in accordance with U.S. GAAP.On October 19, 2018, the ADSs representing our Class A ordinary shares commenced trading on Nasdaq under the symbol “NIU.” We raised fromour initial public offering approximately US$55.2 million in net proceeds after deducting underwriting commissions and discounts and the offeringexpenses payable by us. Table of Contents61B.Business OverviewWe currently design, manufacture and sell high-performance electric motorcycles, mopeds, bicycles, as well as kick-scooters and e-bikes. We havea diversified product portfolio that caters to the various demands of our users and addresses different urban travel scenarios. Currently, we offer twomodel lineups, comprising a number of different vehicle types. These include (i) our electric motorcycle, moped and bicycle series, including theNQi, MQi, UQi, F series and others, and (ii) our micro-mobility series, including the kick-scooter series KQi and the e-bike series BQi. We haveadopted an omnichannel retail model, integrating the offline and online channels, to sell our products and provide services. We sold 709,802 units,including our e-motorcycles, e-scooters, kick-scooters and e-bikes, in 2023. The number of units sold in China market and international marketswere 600,994 and 108,808, respectively. We sell and service our products through our “city partner” system in China, which consisted of 288 citypartners with 2,856 franchised stores in 251 cities in China, and 56 distributors in 54 countries overseas as of December 31, 2023, as well as on ourown online store and third-party e-commerce platforms.Our award-winning products represent style, freedom and technology. Our brand “NIU” has inspired many followers and has enabled us to build aloyal user base. We offer the NIU app as an integral part of the user experience and will continue to develop new features within the app to enhanceuser loyalty. NIU fan clubs are established in 36 cities in China, where fans actively organize NIU scooter-related events. Capitalizing on ourpremium 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 products. We collect user feedback and product performance data to develop new productsor functionalities to satisfy the unmet demand. All of our products are designed to embody the themes of style, freedom and technology throughtheir unique design languages. We have built our smart e-scooters based on our advanced and innovative technologies, including smarttechnologies, powertrain and battery technologies and automotive inspired functionalities.To meet the diversified market demand, in 2021 we entered the category of micro-mobility through kick-scooter and e-bike products in theInternational markets. Our kick-scooters and e-bikes product portfolio are designed to cover a wide range of urban mobility needs from last-milecommuting to entertainment purposes. Since the launch of the first kick-scooter product, we have strategically rolled out micro-mobility productsto cover a wide range of market needs.We provide connectivity solutions and value-added services to our users. Our NIU app synchronizes with the smart e-scooters and communicateswith our cloud system. Through the app, our users receive real-time information relating to their smart e-scooters. We use the data collected toprovide smart maintenance and services, and guide the users on when and how to properly maintain our products to extend their service life andachieve better performance. We also analyze this data to help us improve our products and create new services. In addition, we collect and analyzeuser behavioral data from our NIU app and our website, from which we derive insights to further engage our customers and strengthen brandloyalty.Our ProductsWe have a diversified product portfolio that caters to the various demands of our users and addresses different urban travel scenarios. Currently, weoffer two model lineups, comprising a number of different vehicle types. These include (i) our electric motorcycle, moped and bicycle series,including the NQi, MQi, UQi, F series, and others and (ii) our micro-mobility series, including the kick-scooter series KQi and the e-bike seriesBQi.For our product offerings in China, we have mainly separated our products in the premium and mass-premium categories. We built our productportfolio around the classic NQi, MQi, UQi and newly introduced F series, and rolled out diversified products catering to different market needssuch as the high-performance RQi electric motorcycle and the high-end SQi electric bicycle.NQi SeriesOur NQi series smart e-scooters consist of the NQi, NQi-GT and NQi-GTS models. The NQi series is built to be high-performance, well balanced,and with a minimalistic aesthetic. Its design language is modem and minimalistic. The NQi series is equipped with advanced powertrain consistingof the removable lithium-ion battery pack with our proprietary battery management system, the BOSCH motor or NIU motor, and our proprietaryField Oriented Control, or the FOC, system that controls the electric motors. The NQi series utilizes a state-of-the-art lithium-ion battery pack thatachieves extended range with light weight. Table of Contents62MQi SeriesOur MQi series smart e-scooters consist of the MQiS, MQi2, MQi+, MQiL, MQi-GT and MQi-GT EVO models. The MQi series is a cool andfresh-looking smart e-scooter designed for young urban users. Most of the MQi series models are smaller, lighter and more agile when cruisingthrough urban traffic than that of the NQi series. The MQi series carries the NIU design language that puts a modem twist on the classic e-scooterdesign. The MQi series is designed to be ergonomic, bolstering natural and comfortable sitting posture and intuitive dashboard and switches layout.UQi SeriesOur UQi series smart e-scooters consists of the UQi, UQiM, UQi+, UQiS and UQi-GT models. The UQi series is smaller and lighter than the NQi-Series and MQi-Series and carries the same NIU design language. The UQi series is designed to be ultra-light and ultra-compact.F SeriesThe F-Falcon Series is a new popular series that quickly become a well-known style besides the classic halo light NMU series, with the F600,F400T, F400, F200, F100, and F0 products. The F series draws inspiration from fighter jets and seamlessly incorporates NIU’s essential smartfunctionalities.For our product offerings in overseas, we have two main categories: (i) electric motorcycles and mopeds, and (ii) electric micro-mobility products.While the electric motorcycle and moped category includes some key products from the China market, the micro-mobility product category mainlyfocuses on kick-scooters and e-bikes.RQi SeriesOur RQi series is a line of high-performance straddle motorcycles designed for city-oriented riding, offering sufficient speed to be safely ridden onmajor roads in urban areas. The RQi model is equipped with several features that enhance its performance, safety, and convenience, includingremovable batteries, front and rear recording cameras, a 5kW mid-mounted motor to provide acceleration, and a TFT dash containing a GPStracker for real-time location information. With its focus on urban riding and its advanced features, the RQi series stands out as a technologicallyadvanced option for riders who value riding experiences.SQi SeriesOur SQi series is positioned as our most high-end product series in the electric bicycle product category for China market, featuring innovativedesign and cutting-edge technologies in materials. The SQi has a futuristic straddle motorcycle-like appearance. With a clear-cut geometric bodyframe and large 17-inch wheels, it presents an unconventional design for electric bicycles while still meeting the China’s new national standards.The body frame of the SQi has been designed using a high performing aerospace magnesium alloy material to meet the weight requirements.KQi SeriesThe KQi Series offers a wide range of products in the electric kick-scooter category. It includes the KQi Air, a high-end innovatively designedscooter, the KQi3, a high-performance product, and the KQi2 and KQi1, which are entry-level options. This diverse lineup lays a strong foundationto cater to a broad spectrum of users’ need.BQi SeriesThe BQi e-bike series features a stylish and practical lightweight frame design, combined with pedal assist and throttle control, making them easyand comfortable for city commutes. The BQi e-bike was showcased during CES in 2022 and was well received by the audiences.Accessories and spare partsIn addition to our e-scooters, urban commuter electric motorcycles, and performance bicycle series, we also offer a comprehensive line of NIU-branded accessories and spare parts. Table of Contents63Scooter Accessories. Our scooter accessories include riding gears, such as raincoats, gloves, and knee pads and accessories to be installed on our e-scooters to expand functionalities, such as storage baskets and tail boxes, smart phone holders, backrests and locks.Lifestyle accessories. Our NIU POWER line of lifestyle accessories includes branding apparel, such as t-shirts, coats, jeans, hats, bags, andjewelry, and souvenirs such as notebook, badges, key chain and mugs. In November 2019, we promoted the new autumn collection of NIUPOWER lifestyle apparels including sweaters and hoodies.Performance Upgrades. Our NIU POWER Performance line of high-performance upgrade components include upgraded wheels, shock absorbers,and brake calipers, and carbon fiber body panels.Our NIU AppOur NIU app serves as an integrated platform and supplemental tool to our smart e-scooters. The app includes a suite of functions that primarilyfocus on the connection with our smart e-scooters as well as other services and value propositions. Depending on vehicle models and geographicalareas, the App includes:NIU DashboardThrough communications with the Cloud ECU, multiple sensors, positioning module and communication modules onboard each smart e-scooter,the NIU app presents various key information about the smart e-scooter on the dashboard, including:●scooter status, such as the location of the scooter and anti-theft alerts;●historical riding data such as past routes and riding statistics; and●key diagnostics, such as the real-time status of the battery and the battery health score.The dashboard features a card-based interface to present the most useful and relevant information to the users based on users’ preferences,which is both intuitive and has great potential for customization and expandability.NIU ServicesThrough the NIU app, users can access a variety of services.●Online repair request. Users can request repair services with one click, after which the app will intelligently recommend the nearestservice station for the services.●Smart check. The function checks common failures which may occur in various components. Users can directly seek solution through thefault tags.●Service station locator. Users can access comprehensive information about nearby service stations.●NIU Cover. Users can query and activate NIU Cover insurance services within the app.●Smart service. Users can check the status of the smart connection services and can renew the service.●Theft reporting. Users can report theft of the smart e-scooter and battery within the app.NIU StoreWe have established a built-in e-commerce platform in our NIU app, where our users can purchase our e-scooters and NIU-branded accessories.NIU SocialThe social tab is the forum for NIU users to post photos, chat, set up a gathering, and share fun in riding and daily life. Table of Contents64NIU PointsIt is a user loyalty program designed to enhance user engagement and activity. The NIU Points are earned through joining special events,purchasing specific accessories, publishing original content, interacting with other users, among others. NIU users can redeem the earned points forexclusive NIU badges, NIU accessories, and coupons.Our NIU BrandOur brand represents style, freedom and technology. We design and market our products purposefully to reinforce consumer perception of “NIU”as a premium smart e-scooter brand.We conduct various marketing and branding activities to establish NIU as a premium brand. For example, we launched the global “Green Riding”cycling campaign and “Search for Earth Guardians” initiative online and offline on the Earth Day. These initiatives rallied our users from all overthe world to participate in waste recycling, promote environmentally friendly travel, and encourage more people to join the green cyclingmovement, thereby contributing towards sustainable development and fulfilling our social responsibility as a leading provider of smart urbanmobility solutions. In 2023, we actively participated in global exhibitions and roadshows, including the AIMExpo in Las Vegas, IFA in Berlin,EICMA in Milan, and the electric exhibitions in various countries, which significantly boosted the visibility of our NIU brand. We alsocollaborated with a diverse range of brands and trendy groups, including Alipay, Gaode Maps, Pizza Hut, War Horse, 360, The North Face, andSneaker Con, to organize marketing activities aimed at promoting our brand. Additionally, we sponsored premier esports team, JD Gaming, toenhance our brand exposure and bolster brand recognition, particularly among the younger demographic. In August 2022, our SQi seriescollaborated with Razer, the world’s top gaming hardware brand, on a joint product event that received widespread recognition and praise in thegaming community and on social media, especially among the younger demographic. In October 2021, in order to celebrate our importantmilestone in becoming the first electric two-wheel brand in the world to have covered 10 billion kilometers of riding distance by its global users,we launched a large-scale communication campaign “Make Life Electric”, which gained popularity on Weibo, TikTok and WeChat, achieving over1.4 billion views.Capitalizing on our premium NIU brand, we have also launched various lifestyle accessories, such as apparel, which are well received bycustomers.NIU CommunityWe have cultivated a highly dedicated and growing base of NIU fans. Our users are proud owners of NIU smart e-scooters with high engagement.Based on the e-scooter activity data we collected, more than 75% of our users rode their e-scooters on a monthly basis in 2023. We endeavor tobuild an interactive and dynamic social community to further convey and brand image as a fashionable urban lifestyle. NIU clubs are one of thecore components of NIU community, and there were over 100 of NIU clubs as of December 31, 2023. Formed and run by the enthusiastic NIUfans, these NIU clubs organize various events, such as new product test drives, riding for good causes, and scooter parades. We support the NIUclubs with products, designs and announcement channels. To further expand the NIU community and increase brand loyalty, we have facilitated ourusers to create virtual NIU communities via social media, such as WeChat, to bring together our users from all walks of life. We have a dedicateduser interaction team, which closely monitors and actively participates in different interest groups such as photography group, accessories group,social responsibility group, etc. and interacts with users online.In these groups, our users share user-generated content, such as video clips or pictures. To boost the content contribution from our users, our citypartners through their distribution network reward them with discounts from local businesses such as restaurants. Owning a NIU scooter thus opensup opportunities for users to participate in more local interest groups and local businesses discounts, leading to a truly better urban life. Our virtualcommunity and NIU clubs create a beneficial network effect for the brand.Data Analytics—NIU Big DataWe have developed our user and scooter data analytics capabilities, which enable us to collect and analyze massive relevant data to deepen ourunderstanding of the smart e-scooter performance, user behavior and operational insights. Table of Contents65We have accumulated massive amount of data from multiple sources. We currently collect 462 types of data points covering 72 dimensions such ashumidity, lighting and temperature, from our Cloud ECU and up to 32 sensors installed on each smart e-scooter. As of December 31, 2023, ourNIU app had been connected with approximately 2,704,500 smart e-scooters, which had accumulated approximately 21.4 billion kilometers ofriding distance of data. We also collect data from our NIU app, company’s websites, e-commerce platforms, as well as through providing repair andmaintenance services.Our cloud system utilizes a robust, multilayer database structure that can handle over a million persistent connections concurrently. Our paralleldatabase servers to support quick multiple queries in a TB level database. Our cloud system monitors the servers and automatically regenerates anew virtual server if any server goes offline. The above features ensure that our smart e-scooters maintain constant, reliable, and responsiveconnections with our cloud. In addition, our cloud’s open API platform allows connection with third parties to support functions such as fleetmanagement and smart e-scooter sharing program.Our data analytics team leverages our proprietary big data platform and analytical tools, NIU Inspire to analyze the collected data to deepen ourunderstanding of user behavior and product performance and gain operational insights, enabling us to: (i) guide the upgrade of the existing modelsand development of new ones; (ii) fine tune the firmware in our existing scooters to improve performance, such as the self-adaptive state of chargealgorithms for better battery utilization or the FOC controller software for better electric motor efficiency; (iii) achieve more intelligent retail andservice shop planning; (iv) generate scooter diagnosis reports and provide smart maintenance suggestions; and (v) conduct accurate targetedmarketing.We collect user-related data after receiving users’ consent. Users in Europe have the option to choose whether or not to send the GPS related data tous due to different data privacy regulations in these regions.After-Sales ServicesWe offer comprehensive after-sale services including value-added services. Our warranty is complemented by value-added services such as NIUCare and NIU Cover, which can be conveniently ordered through NIU app, service hotline, or at our franchised stores. In addition, we providevarious value-added services through our NIU app, including DIY repairs and location of our service centers, and theft reporting. We believe allthese services together will create a satisfying user experience throughout the e-scooter life cycle. Through these services, we aim to makeownership “worry free” and allow our users to truly enjoy riding and owning our e-scooters.Warranty PolicyWe provide limited warranty to our users for terms varying from six months to three years, subject to certain conditions, such as normal use. Forcertain key components of e-scooters, we provide quality warranty varying from 12 months to 24 months. For lithium-ion battery packs, weprovide a 24-month or 20,000-kilometer warranty or a 36-month or 30,000-kilometer warranty, depending on the model. For other components ofthe e-scooters, we provide quality warranty varying from six months to three years depending on the parts. We are responsible for replacing orrepairing the faulty products during their respective warranty terms. The warranty on certain parts of our e-scooters is covered by our suppliers’back-to-back warranty and thus we are entitled to have the suppliers replace or repair the faulty parts.NIU CareOur e-scooters are primarily serviced through our franchised stores and our authorized service centers, which provide repair, maintenance andbodywork services.We launched our NIU Care program in August 2018 to provide regular after-sales maintenance service to our e-scooters. Our regular maintenanceservices include scooter exterior check, mechanical structure service, motor system check, electrification service, battery maintenance service, tirepressure check and cleaning services. Based on user’s driving behavior and mileage.NIU CoverIn November 2015, we launched NIU Cover to facilitate the sale of insurance coverage provided by third-party insurance companies relating toaccident injury, loss of scooters and third-party liability. Table of Contents66TechnologiesBehind our lineup of smart, efficient and high-performance smart e-scooters are the suite of advanced technologies we have developed or adopted,such as NIU Energy smart power technology, the Cloud ECU, electric motors, FOC, advanced braking systems, driver assistance and systemintegration, among others.NIU Energy Smart Power TechnologyOur NIU Energy smart power technology, currently in its seventh generation, combines reliable and proven cell components, innovative hardwaresystem design and an intelligent battery management system, or the BMS. We adapted the technology to create a portable, lightweight, safe andreliable battery pack that is suitable for e-scooters. We analyze the riding data from our smart e-scooters to locate and refine the critical point ofdischarge within the safe range of the battery, develop our proprietary energy efficiency matrix PACK, dynamically calibrate the intelligent BMSchips, optimize the charging dynamic balance algorithms, and integrate our EBS kinetic energy recovery system, motor, and power control unit.Hardware Component and DesignWe use the Lithium-ion battery cells as the building blocks of our battery pack. A matrix of battery cells is connected in parallel to produce a robustbattery pack.Our battery packs incorporate PACK technology, which is adopted by automakers globally. The PACK technology protects the battery cells fromimpact and regulates battery temperature, and use voltage, temperature, current, or PTC technology to protect each cell, thereby ensuring theintegrity of the battery pack.Our battery packs can be charged either standalone or when installed on the e-scooter, both of which can be through a home wall plug. They useproprietary charging connectors and ports for simultaneous safe charging and BMS data communications. We have also developed our proprietaryNIU Flash Charger that effectively doubles the charging speed of our battery pack as compared to regular chargers.BMSIn addition to robust hardware, our battery packs feature an intelligent battery management system, or BMS. The BMS monitors the voltage,current and temperature of the battery in real-time, and regulates power consumption.The core of our proprietary BMS is the self-adaptive SoC algorithms that optimizes the balance between performance and battery life and providesaccurate range predictions based on the data and analysis of the riding behavior of the users and the discharging characteristics of the battery cells.Cloud Electronic Control UnitAt the core of each NIU smart e-scooter lies the Cloud Electronic Control Unit, or the Cloud ECU. The Cloud ECU serves as both a control centerand communications center for the smart e-scooter. In particular, the Cloud ECU serves a wide range of functions including, among others, scootercontrol, motion monitoring, positioning, connectivity and data transmission from the smart e-scooter to our cloud server.Scooter Control. The Cloud ECU serves as the smart e-scooter’s master control center, coordinating the smart e-scooter’s complex systems. TheCloud ECU controls, among others, the smart e-scooter battery, electric motor, Field Oriented Control system, electronic lock and light systems.Motion Monitoring. The Cloud ECU monitors various physical aspects of our smart e-scooters with its built-in triaxial gyro sensor. The gyrosensor detects acceleration and changes in rotational motion or orientation. Thus, the Cloud ECU is able to monitor the posture and dynamics of thesmart e-scooter in real-time and accordingly adjust the motor’s power output, ensuring the smart e-scooter’s performance and efficiency.Positioning. The Cloud ECU currently supports two major global satellite geolocation systems: (1) the American Global Positioning System, orthe GPS, (2) the Chinese COMPASS, also known as the BeiDou Navigation Satellite System. Together, these systems constitute the technicalbackbone of our position-based anti-theft systems as well as functions such as riding map and smart e-scooter sharing, which are capable ofdetecting unauthorized movements of our smart e-scooters. Table of Contents67Connectivity and Data Transmission. The Cloud ECU facilitates the connectivity of our smart e-scooters, which are able to access the completespectrum of mobile network standards. Via these mobile networks, the Cloud ECU upload data about a smart e-scooter’s position and its conditionevery 3 to 15 seconds, depending on the smart e-scooter’s start up conditions. The transmittance of this data also serves as the foundation of ourAssisted Global Positioning System, or the AGPS, that, when coupled with our GPS systems, allows for precise geolocation of our smart e-scooters. In addition, our smart e-scooters are also equipped with dual-mode Bluetooth chips, which allow owners of our smart e-scooters to usetheir smartphones to directly communicate with our e-scooters. Owners can, among others, query the smart e-scooter’s status and change certainsettings such as adjusting the sensitivity level of the anti-theft alert.Intelligent Interaction. The Cloud ECU supports remote interaction with vehicles through IoT, as well as interaction between smartphones andvehicles via Bluetooth Low Energy (BLE) in the absence of a wireless network. Additionally, it supports NFC card swiping for powering on andoff, and is capable of learning user driving habits to calculate estimated mileage.OM Updates. Our smart e-scooters are the first in the industry with OTA update capability, which is normally only seen on high-end electric cars.The OTA update is supported by the Cloud ECU and rewriteable firmware of various electronic components. The OTA allows users to effortlesslyupdate the e-scooters to the most recent firmware updates, so the users can benefit from all future performance improvements and featureenhancements on a regular basis.In addition to constantly improving and upgrading our Cloud ECU, we have developed our own System-on-Chip module, which to our knowledgeis the first chip module specially designed and customized for smart urban mobility products. We have applied the C35 System-on-Chip module tothe latest V35 version of Cloud ECU to replace the current version of Cloud ECU since August 2019, which provides higher performance andbetter reliability with lower power consumption and more compact packaging. In addition, the customized chip module will make it more difficultfor competitors to replicate our Cloud ECU. In the meantime, we are adopting Long-Term Evolution Category 1 (LTE Cat-1) data connectiontechnology and applying to mass production since July 2021. Compared with Narrowband IoT (NB-IoT), LTE Cat-1 supports higher bandwidthneeds since it offers better performance and much lower latency than its counterpart.MotorsWe purchase motors from various suppliers and we have also designed our NIU motors, which are energy efficient and cost-efficient. We have beenconstantly increasing the conversion ratio and refining the calibration of the FOC of the motors.Field Oriented ControlUsing big data analytics, we have developed the proprietary FOC system that controls the electric motors. The FOC is the intelligence behind thepowertrains of our entire lineup of smart e-scooters, and helps our smart e-scooters strike the balance between performance and powerconsumption.The FOC controls the motor in real-time by recognizing riding conditions and continuously adjusting the torque of the motor for optimalperformance. The FOC taps into the performance of a vector controller, which is superior to the square-wave controllers common on the marketbecause a vector controller controls the power and torque output of the motor as opposed to simply adjusting the revolutions per minute, achievinga much smoother ride.Braking SystemOur smart e-scooters are equipped with hydraulic disc brakes made from special alloys. The brake discs are slotted to extend the life of the system.The hardware of the brakes is complemented by the Electronic Braking System, or the EBS, which provides for intelligent braking and recyclingkinetic energy. Certain of our models also employ the combined braking system, or CBS, which intelligently splits braking force between the frontand rear discs to shorten the braking distance at higher speeds.Driver AssistanceWe have developed various driver assistance technologies to enhance the rider experience of our smart e-scooters such as automatic headlight,automatic return indicators, cruise control and smart self-diagnosis systems. Table of Contents68We continue to look for ways to enhance the user experience. We have developed adaptive responses to road conditions, active safety systems, andapplied them to our latest version of Cloud ECU. We are currently working on the development of, among others, active safety systems, self-balancing systems and L2 autonomous driving systems. These advanced systems are developed in tandem with the new product series.System IntegrationThe NIU systems draw from a diverse range of industries and technologies. For example, we use gyroscope, satellite navigation and mobilecommunication chipsets that originate from the mobile phone industry; temperature sensors, humidity sensors and communication protocols thatoriginate from the industrial control systems; and cloud and big data technologies that originate from internet industry. These diverse technologiesand components operate under diverse conditions, such as different working electrical currents and temperatures. We have developed a system thatuses a single master control with multi-channel protocols to ensure that all components in the vehicle can be upgraded to the latest version.Design and EngineeringWe have significant in-house design and engineering capabilities, which cover all areas of scooter engineering from concept to completion.User-Centric PhilosophyWe adopt a user-centric approach in our product design and development. All of our products are designed based on the quantitative data andqualitative feedback we collect from the smart e-scooters and users. We have developed an instant user feedback loop based on our continuousconnection with smart e-scooters and proactive interaction with users and achieved an agile product development process. We collect and analyzelarge amounts of product performance data and user behavioral data generated by the smart e-scooters running on the road and collected from ourNIU app and website. We also conduct comprehensive surveys and collect feedback and comments from online virtual communities to understandthe drawbacks of existing scooters and aim to develop new products and functionalities to satisfy the user demand. Utilizing the insights gainedfrom the data and feedback collected, we have developed various new products and functionalities, such as cruise control and automatic headlight.We also utilize the data and feedback to provide updates to our firmware regularly over-the-air (OTA) to fine-tune the performance of our smart e-scooters and improve overall user experience.Our research and development team comprise motorcycle enthusiasts with years of motor biking experience. Their enthusiasm, experience andexpertise, together with our user-centric product development philosophy, have allowed us to design and deliver high-performance smart e-scootersand made us the pioneer in urban mobility solutions we are today.Platform-based Engineering SystemWe have developed a platform-based engineering system, which is based on the same in-scooter control and data connection systems. Accordingly,we can develop different product lines with the same voltage requirement. As a result, our existing production lines can be easily adapted to newproducts. For example, our MQi and UQi series, which are all based on the 48V platform, adopt the same battery pack solution, batterymanagement system, and FOC, BOSCH motor and EBS. By doing so, we can shorten our design timeline, accelerate time-to-market and lowermanufacturing costs.Industrial DesignIndustrial design plays a crucial role at NIU. Utilizing the power of design and design thinking, the team is able to identify critical pain points fromusers and then to provide the best solutions to daily urban commute. For example, we chose lithium-ion battery over lead-acid battery becauselithium-ion battery is not only more ecofriendly, but also safer, lighter and more compact so that the users can easily bring the batteries home forcharging. Table of Contents69Our well-designed product lines speak a distinctive and consistent family design language. Our industrial design philosophy combines minimalistaesthetics with thoughtful functionality. Under that philosophy, we desire to create an exceptional riding experience while maintaining a smart andsimple design. For example, the iconic “Halo” headlamp, equipped on all of our smart e-scooters integrates a daytime running light with our LEDhead lamps, providing an ultra-wide arc of light for improved vision and safety at night. Another example is the MQi Series—a cool and fresh-looking smart e-scooter designed for young urban users. Slim, modem, chic and intuitive are the core design attributes of MQi Series from insideout. We believe a good design should bring people joyful experience. Therefore, the team has done intensive testing and mock-ups for ergonomicsstudy, as a result of which the MQi Series features a comfortable and ergonomic seating posture as well as intuitive and easy-to-use control layout.The hidden shock absorber and the high strength aluminum alloy swing arm not only speak the same minimalistic design language, but also ensureexcellent riding experience as well as safety and comfort.NIU Innovation LabOur NIU Innovation Lab hosts our research and development teams of 162 members, which include, among others, our user experience designteam, smart electronic research team, powertrain design team and industrial design team.The Lab focuses on industrial design, structural design, smart electronics research, power electronics research, user data analysis, businessintelligence system development and user experience research. The Lab and our research and development team played a crucial role in thecreation of the 582 patents we held as of December 31, 2023. We also entered into a definitive Development Collaboration Agreement inMarch 2019 with one of the world’s leading automobile manufacturers regarding joint development of Micro-mobility solutions, which was carriedout by the Lab.Global R&D and Manufacturing BaseOur new global R&D and manufacturing base commenced operation in December 2019. Located in Changzhou, China, the new facility hosts,among others, our proprietary R&D laboratories for our BMS intelligent battery management system, FOC magnetic field-oriented control system,EBS electronic brake system, Cloud ECU intelligent central controller and NIU Inspire big data analysis system, as well as a quality laboratory forcomprehensive and standardized testing of the raw materials and vehicles.Manufacturing and FulfillmentWe design, manufacture and sell high-performance electric motorcycles, mopeds, bicycles, as well as kick-scooters and e-bikes. We view themanufacturers and suppliers we work with as key partners through our product development process and leverages their industry expertise toensure that each product that we produce meets our strict quality standards.Production facilityWe keep the majority of the assembly of our electric bicycles,electric motorcycles and electric kick-scooters in our own production facility, whilecooperating with a motorcycle manufacturer with required qualifications to manufacture the certain electric motorcycles models. We operate twomanufacturing facilities in Changzhou, China. Our global R&D and manufacturing base includes two phases of construction. Phase I facilitycommenced operation in December 2019, and covers around 50,000 square meters. Phase I layout includes four semi-automatic assembly lines, ahighly efficient double-decker logistics facility, a products showroom, and a dedicated quality control laboratory. The designed production capacityunder Phase I is 700,000 units per annum, which increased our total production capacity to over 1,000,000 units per annum. Phase II facility coversaround 61,000 square meters and started production from September 2021, which increased our total production capacity to over 2,000,000 unitsper annum.Supply Chain ManagementWe purchase key components from our suppliers, such as batteries, motors, tires, battery chargers and controllers. We strategically select oursuppliers to avoid over-concentration, control our cost and maintain a good relationship with our suppliers. Table of Contents70To avoid over-concentration of supply and manage costs and product quality, we generally engage more than two suppliers for each of our keycomponents. For example, we source motors from other suppliers in addition to BOSCH, and source battery cells from multiple suppliers. Weselect our suppliers based on a variety of criteria, including, among others, production capacity, technological sophistication, quality assurance,professional certification, manpower adequacy, financial position and environmental compliance. In addition, we review the performance of oursuppliers quarterly, and make necessary adjustments to our supply chain, including termination of under-performing suppliers. We have been ableto maintain good and long-lasting relationships with our suppliers.We also have strong bargaining power on procuring raw materials, which enables us to effectively defend ourselves against price increases andfluctuations. We diversify our source of each type of raw material from at least two suppliers. Typically, we enter into a supply frameworkagreement with each of our raw material suppliers, under which our procurement price is generally set as the predefined standard cost of thesupplier plus a specified mark-up, subject to quarterly or semi-annual renegotiation.We have been able to effectively manage our inventory level. We formulate holistic plans for our production, warehousing and logistics, bytracking a variety of factors, including, among others, historical sales data, sales forecasts and customization requests. With smooth turnoverbetween production and logistics, we are able to maintain an optimal inventory level, to fulfill our orders and avoid over-stock at the same time.Our inventory turnover days were 26, 50 and 73 for 2021, 2022 and 2023, respectively. Inventory turnover days for a given period are equal toaverage of the balances of inventories, at the beginning and the end of the period divided by cost of revenues during the period and multiplied bythe number of days during the period.Quality ControlWe believe that the quality of our products is crucial to our growth. We place great emphasis on quality control, set up dedicated team andimplemented stringent monitoring and quality control systems to manage our operations.Our quality control system starts from procurement. Before entering our production flow, the raw materials must be certified for quality. We alsoperform quality reexaminations and unannounced inspections on raw materials in the mass production flow. We review the performance of oursuppliers based on the defective percentage of their supplies, and adjust the amount of procurement from them accordingly. We typically enter intoa quality control agreement with each of our suppliers, under which we may seek remedies against our suppliers, such as damages and rectification,in the event the supplies fall below the quality standard or exceed minimum defective percentage.Our quality control system covers each stage of our production process. When we establish or adapt an assembly line for a new product or model,we trial-run the assembly line to produce a sample for quality examination. The assembly line can start mass production only if the producedsample is of adequate quality. When the in-progress product moves from one section to another along the assembly line, it must be checked forquality by the responsible assembly specialists in both sections. After completion of assembly, our quality control personnel will perform overallquality inspection and road-test on the products in accordance with relevant protocols. A product may be shipped out of manufacturing facility onlyafter it passes all quality control examinations and is properly documented as such. We also track the acceptance status of our products when theyreach our distributors or customers. By logging and breaking down the pass rates along our products in the production process, we are able toidentify our quality control weak spots, and improve our operation accordingly.Our new global R&D and manufacturing base includes a dedicated quality control laboratory equipped with full-automatic and semi-automaticinstruments for components testing, and proprietary inspection systems for battery cell quality testing.We have not experienced any massive product recall, massive refunds or other quality control outbreak since we started to sell e-scooters.FulfilmentLeveraging our excellent production and big data capabilities, we are able to achieve fast turnaround time fulfilling orders placements. We ship ourproducts generally 7 to 15 days following placement of order and receipt of payment from our city partners in China. For overseas distributors, itgenerally takes 30 to 60 days following the receipt of down payment. Orders from niu.com or other e-commerce platforms are faster to fulfill,usually within two days. Table of Contents71Through proactive planning, we are able to estimate the distribution of orders in a certain period of time and improve the predictability of our orderfulfillment. For example, our franchised stores must timely submit their revolving order plans for the period of the following two weeks andfollowing three months. We incorporate such order plans, in addition to other information, into our holistic planning of production, warehousingand logistics, which in turn helps us achieve fast turnaround to fulfill order placements. Similarly, in a one-year time span, we take intoconsideration of the capacity constraint of the factories and frontload the productions ahead of the peak sales season.We have different shipping methods for our finished products depending on the type of the distribution channel: (i) for our offline domesticdistribution channels, our city partners and franchised stores are responsible for logistics from the moment products are rolled out of the factory;(ii) for local distributors in international markets, we ship our products mainly under FOB or DDP terms; and (iii) for online shopping platformssuch as our official website and third-party platforms such as JD.com and Tmall, we ship our products through third-party delivery services.Omnichannel Retail ModelWe have established a distinct omnichannel retail model network to sell our products and provide service to our customers. As of December 31,2023, we sold our products through 2,856 franchised stores in 251 cities in China and 56 distributors in 54 countries overseas, as well as on ourown online store and third-party leading e-commerce platforms. We also leverage our omnichannel retail network to deliver peripheral servicessuch as maintenance and repair, and to collect data for business insights.Offline Distribution NetworkCity partners and franchised storesIn China, our offline retail channels consist of city partners and franchised stores. Our “city partner” system plays an important role in our offlinesales strategy. City partners are our exclusive distributors who either open and operate franchised stores or sign up franchised stores. Leveragingour data analytics and their local knowledge, the city partners select store location and manage the franchised stores. The city partner system allowsus to optimize store location selection, manage stores efficiently, and maintain our inventory at a low level.To become our city partner and run our franchised stores, a potential business partner must meet certain qualifications and possess the prerequisitecapabilities specified in the standard franchise agreement, including, among others, adequate and relevant experience, minimum working capitaland sound knowledge of local business environment. The stores also have to meet certain requirements that we formulate and adjust from time totime, such as being in a location reasonably accessible and convenient for our targeted users, having adequate square footage, having at least twoyears of lease term if under leasehold, and having a layout and decorative style that conform to the architectural specifications.Our city partners and franchised stores are an extension of our brand. Our franchised stores adopt a consistent design and layout and provideconsistent shopping experience. We enter into a standard distribution agreement with each of our city partners. Each city partner may only offersuch products and services, in the specified region and manner, as provided under its respective distribution agreement. The city partners also haveto comply with our internal policies regarding performance review, branding and confidentiality. To ensure orderly allocation of customer resourcesbetween the city partners, we maintain a zoning segregation system, under which all the city partners must sell at or above the guidance retail pricewe set, and may not cross-sell to other regions allocated to other city partners. The city partners purchase the products from us, and are responsiblefor the logistics, warehousing, and distribution to franchised stores. We do not charge any initial fees or continuing fees to our city partners orfranchised stores.We closely monitor the sales performance, service level and activities within the franchised stores through the store level management system thatwas implemented in early 2018. We will continue to upgrade such system to collect more store operation data such as consumer traffic flow andtraffic flow sources, test drive frequencies and sales conversion rate. We also use data collected by other means to improve the performance of ourstores. This information helps us adjust store-specific retailing and marketing strategies, thereby increasing per store sales. Table of Contents72In addition to offering smart e-scooters, our stores also serve as our service stations to provide after-sales services such as inspection, maintenanceand repair services. Under our standard franchise agreement with the city partners and franchised stores, if a customer requests a franchised store torepair one of our products within the term of the warranty, we will reimburse the franchised store for all reasonable labor cost incurred from therepair and also provide them with the necessary spare parts. By offering after-sales services, we aim to establish one-stop solution experience forour customers, continue to increase traffic flow to our stores and enhance user loyalty.The majority of our city partners make full payments upfront for their orders, which helps us improve cash flow management.Overseas DistributionWe export our products to distributors in over 50 countries overseas, with Europe being our largest export market. We manufacture and customizeour products based on the requirements of our international customers and we ensure our exported products are in compliance with the standards ofthe local markets.In international markets, we establish our sales network by engaging with local distributors, retail partners, and by setting up local entities. Apotential business partner must meet certain qualifications and possess certain prerequisite capabilities, including, among others, preexistingbusiness presence in motorcycles or consumer electronics and established comprehensive sales and service network to be eligible as our localdistributor. In addition, our local distributors must share our vision in the promising future of smart and eco-friendly transportation products, andembrace our innovative marketing models.Typically, we enter into a distribution agreement with each of our local distributors, under which the local distributor will commit to a minimumannual purchase amount from us, for a period of one to three years. Our shipping arrangements with local distributors mainly under FOB or DDPterms.We position our products as fashionable, premium urban mobility tools in international markets. Our distributors sell our products primarily in thefollowing three types of stores in international markets:●branded flagship stores, which are located in the core business areas in major cities, have a space of over 100 square meters, and carry oursmart e-scooters exclusively.●shop-in-shop stores, which are located in downtowns in major cities, where the entire store has a space of over 100 square meters, andhave a designated section for our smart e-scooters with a space of over 30 square meters.●other point of sales, which are licensed to carry our smart e-scooters on a non-exclusive basis.In our micro-mobility product category, we have established offline sales channels by engaging with our retail partners. Through these retailpartners, we were able to place our products in over 1,000 physical locations in the US and Europe as of the end of 2023. We aim to invest more inlocal branding and marketing, strengthen connections with our customers, and enhance our adaptability to local market changes.Online Distribution NetworkWe sell smart e-scooters and accessories online through third-party e-commerce platforms and on our own online store.We have adopted the online to offline model, seamlessly integrating the online and offline networks to provide a seamless, consistent experiencefor our customers. These online platforms act as conduits for influencing customers and directing sales to physical stores. Our customers canconveniently place orders online and pick up their scooters at the franchised stores.We entered into standard cooperation agreements with third-party e-commerce platforms, pursuant to which the e-commerce platforms provide ussales and price settlement services, and charge us commission fees and technical support annual fees. We are responsible for the logistics, customerservices and after-sale services for the products sold on these platforms. Table of Contents73MarketingWe focus on promoting awareness of our brand generally and in particular as a lifestyle brand with high-quality smart e-scooters globally. Ourbrand and our e-scooters are marketed to retail customers through digital and experiential activities as well as through more traditional promotionaland advertising activities. We aim to engage in cost-effective marketing activities by taking advantage of social media and to build an online andoffline ecosystem of users that will promote awareness of our brand. To a lesser extent, we engage out-of-home advertising, such as throughbillboard advertising in cities and advertising on buses. Our marketing efforts include the following:Profile-based online marketingLeveraging our sophisticated data analytics capabilities, we are able to gain a deep understanding of our target customer profiles, such asdemographics and interests. With this knowledge, we precisely direct our marketing efforts through targeted online channels to efficiently reachnew customers with matching profiles or existing customers for repeat purchases. We conduct online marketing through channels such as searchportals, social media, online video platforms, and e-commerce platforms. We also leverage the key major media popular with our target groups toregularly publish news and updates about our company, such as our product launch events. We conduct joint marketing activities with other brands.We also utilize our official bulletin board system (BBS), the NIU app and our social media accounts to distribute original content to, and interactwith, our followers and existing users. Through the right channels, we deliver the right key messages and original contents to achieve effectivemarketing.Location-based offline marketingWe conduct offline marketing and advertising through LCD billboard ads, elevators ads, bus ads, product roadshows, subway stations, exhibitionsin music festivals, among others. To achieve higher efficiency on offline marketing, we leverage riding data collected from our smart e-scooters.For example, in each city, we have a heat map showing anonymously where NIU users ride and park our e-scooters, a good indicator of locationsof where potential users concentrate. The heat map allows us to select the optimal offline ads locations (such as LCD billboard, or bus routes orresidential buildings) to reach our targeted consumer groups, or organize product roadshows in the most relevant venue.Viral marketingLeveraging our excellent product quality, fashionable brand image and strong customer loyalty, we are able to utilize viral marketing strategies toestablish NIU as a premium brand. For example, in 2023, we actively participated in global exhibitions and roadshows, including the AIMExpo inLas Vegas, IFA in Berlin, EICMA in Milan, and the electric exhibitions in various countries, which significantly boosted the visibility of our NIUbrand. Additionally, we collaborated with a diverse range of brands and trendy groups, including Alipay, Gaode Maps, Pizza Hut, War Horse, 360,The North Face, and Sneaker Con, to organize marketing activities aimed at promoting our brand. In August 2022, our SQi series collaborated withRazer, the world’s top gaming hardware brand, on a joint product event that received widespread recognition and praise in the gaming communityand on social media, especially among the younger demographic. In October 2021, in order to celebrate our important milestone in becoming thefirst electric two-wheel brand in the world to have covered 10 billion kilometers of riding distance by its global users, we launched a large-scalecommunication campaign “Make Life Electric”, which gained popularity on Weibo, TikTok and WeChat, achieving over 1.4 billion views.Event-driven marketingIn addition to our day-to-day marketing operation, we organize event-driven marketing activities, such as new product launches, company keymilestone media events and monthly offline marketing events.New product launches are typically our largest events of the year. Starting in 2015, we have organized product launch events every year, joined bya large group of live audience including our users and partners, with extensive media coverage. In November 2021, we unveiled an electric scooter,the MQi-GT EVO, along with two kick scooters, the KQi2 and KQi3 Max, and an e-bike, BQi, at the 2021 EICMA show. Throughout 2022, weintroduced a range of new products, including the SQi, UQi+. In 2023, we launched the MQiL and the new F series, among others. Table of Contents74We actively participate in exhibitions and roadshows, collaborating with leading lifestyle brands such as the North Face Mountain Festival, SneakerCon, G-Fusion Game Fest, and Designer Toy Expo. These events provide us with valuable opportunities to showcase our products and enhance ourbrand presence. We also maintain a strong online presence through strategic communication and marketing campaigns, primarily on short videoplatforms like Xiaohongshu and Douyin.In 2023, we embarked on impactful cross-brand collaborations, such as our partnership with the globally recognized IP Kumamon and the launchof the NIU x Kumamon scooters. Additionally, we sponsored a premier esports team, JD Gaming.In addition, we sponsor and participate in non-profit social activities such as marathons, through which we exemplify green and lifestyle, and it hasbeen positively received by runners and spectators nationwide.Overseas marketingWe invest in overseas marketing with a view to raise our brand awareness in the international markets. We adopted a dynamic marketing strategythat combines traditional public relations, tactical digital marketing, and strategic retail and event marketing.Our active participation in in global exhibitions and roadshows, including the AIMExpo in Las Vegas, IFA in Berlin, EICMA in Milan, and theElectric Expo in various countries, has significantly elevated the NIU brand’s visibility.We have engaged leading consumer technology public relations firms to assist us in building trust, awareness and thought leadership in the e-mobility space.CompetitionWe operate in the lithium-ion battery-powered electric two-wheeled vehicles market, which is a segment of the electric two-wheeled vehiclesmarket. The segment is growing rapidly, and we believe we maintain competitive advantages in a number of areas, including brand, product designand quality, smart features, omnichannel retail model, customer satisfaction, and a loyal customer base.See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry—We may face intense competition in the electrictwo-wheeled vehicles industry.”Intellectual PropertyOur success depends, at least in part, on our ability to protect our core technology and intellectual property. We rely on a combination of patents,patent applications, trade secrets, including know-how, copyright laws, trademarks, intellectual property licenses and other contractual rights toestablish and protect our proprietary rights in our technology. In addition, we enter into confidentiality and non-disclosure agreements with ouremployees and business partners. The agreements we entered into with our employees also provide that all software, inventions, developments,works of authorship and trade secrets created by them during the course of their employment are our property.Our intellectual property rights are critical to our business. As of December 31, 2023, we owned 582 patents, 936 registered trademarks and 27copyrights relating to various aspects of our operations and two registered domain names, including www.niu.com. Of the 936 registeredtrademarks, 155 are registered in mainland China and 781 in other countries and regions. As of the same date, we had 316 applications for patentsand trademarks pending in mainland China, Europe and other jurisdictions.RegulationsThis section sets forth a summary of the most significant laws, regulations and rules that affect our business activities in mainland China and ourshareholders’ rights to receive dividends and other distributions from us. Table of Contents75Regulations on Production of Electric BicyclesOn July 9, 2005, the State Council of the PRC promulgated the Regulation of the PRC on the Administration of Production License for IndustrialProducts, or the Production License Regulations, which was last amended on July 20, 2023 to take effective on the same date. On April 21, 2014,the General Administration of Quality Supervision, Inspection and Quarantine, or the AQSIQ, issued the Measures for the Implementation of theRegulations of the PRC Administration of Production Licenses for Industrial Products, or the Measures, which was revised by the SAMR onSeptember 29, 2022. The latest version took effect on November 1, 2022. According to the Production License Regulations and the Measures, anyenterprise that has not obtained a production license for a product listed in the Announcement of the Product Catalog Implementing the ProductionLicensing System, or the Production Catalog, which was issued by the General Administration of Quality Supervision, Inspection and Quarantine(abolished), or the AQSIQ on November 20, 2012, must not produce the relevant product. An enterprise must file an application to the provincialadministration of quality and technology supervision for the license of producing the products listed in the Production Catalog. Otherwise, theauthorities can impose fines and other administrative sanctions, and serious violations may result in criminal liabilities. According to theProduction Catalog, most of our products are classified as electric bicycles, which are industrial products that fall within the scope of ProductionLicense Regulations and Measures. Thus, we have obtained the appropriate production license thereof. On June 24, 2017, the State Council issuedthe Decision on Adjusting the Catalog for the Administration of Production Permits for Industrial Products and on Trying out the Simplification ofApproval Procedures, or the Decision. Pursuant to the Decision, the production license for electric bicycle was canceled and was changed toimplement mandatory product certification management. However, on October 11, 2017, AQSIQ announced that the production of the electricbicycles is still under the production licensing system. According to this announcement, the production license regulatory regime is implementedpursuant to the new electric bicycle technical standard, which is the Safety and Technical Specification for Electric Bicycle (GB 17761-2018), orthe Electric Bicycle Standard, promulgated by the SAMR and the National Standardization Management Committee on May 15, 2018 and effectiveon April 15, 2019. The Electric Bicycle Standard replaced the General Technical Requirements for Electric Bicycles (GB 17761-1999), or the OldStandard, which were issued by the Quality and Technology Supervision Bureau on May 28, 1999 and became effective from October 1, 1999. See“Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry—Our products are subject to safety standards and failureto satisfy such mandated standards would have a material adverse effect on our business and operating results.” Furthermore, on April 21, 2023, theMIIT issued certain recommended industrial standards on the production and design standards of electric bicycles and spare parts, including theTechnical Specifications for Handlebar of Bicycles (QB/T 1715-2023), the Specifications and Dimensions of Lithium-ion Battery for ElectricBicycles (QB/T 4428-2023), the General Technical Specifications for Electric Bicycles (QB/T 5869-2023), and the General TechnicalSpecifications for Electric Bicycles’ Electronic Control Units (QB/T 5870-2023), all of which came into effect on November 1, 2023, forenterprises’ reference.Regulations on Qualification of Production of Electric MotorcyclesPursuant to the Administration Measures for Access of Motorcycle Manufacturing, or the Motorcycle Manufacturing Measures, issued onNovember 30, 2002 and the Implementing Rules of the Administration Measures for Access of Motorcycle Manufacturing, or the MotorcycleManufacturing Rules, issued on December 31, 2002, enterprises must pass the production access examination and obtain the MotorcycleProduction Access Certificate before manufacturing motorcycles in mainland China, and if an enterprise conducts a motorcycle manufacturingconsignment, both the consignee and the consignor are required to obtain the Motorcycle Production Access Certificate. Pursuant to the GeneralSpecifications for Electric Motorcycles and Electric Mopeds, or the General Specifications, which was issued on June 25, 2009 and effective onJanuary 1, 2010, the General Specifications applies to electric motorcycles and electric mopeds. On January 14, 2010, the MIIT, issued the Circularon Matters Related to Electric Motorcycle Production Enterprises and Product Access Management, or the Circular, which imposes productionrestrictions on enterprises who currently produce or intend to produce electric motorcycles. Such enterprises must satisfy the MIIT’s accessrequirements and be on the list of the Announcement on Vehicle Manufacturers and Products before continuing or commencing production. OnNovember 27, 2018, the MIIT promulgated the Administration Measures for Access of the Road Motor Vehicle Manufacturing Enterprises andProducts, which became effective on June 1, 2019 and replaced the Motorcycle Manufacturing Measures and the Motorcycle Manufacturing Rules.According to the Administration Measures for Access of the Road Motor Vehicle Manufacturing Enterprises and Products, the authorities willcontinue to implement a classified access administration of enterprises engaged in the manufacturing of road motor vehicles and road motor vehicleproducts, and road motor vehicle design enterprises are encouraged to cooperate with or consign to licensed road motor vehicle manufacturingenterprises in manufacturing process. We entered into a manufacturing cooperation agreement with a motorcycle manufacturer with requiredqualifications to manufacture certain models classified as electric motorcycles. Besides, Jiangsu Xiaoniu has been listed in the Road Motor VehicleManufacturers and Products List (batch 327) issued by MIIT on January 13, 2020 as an enterprise permitted to manufacture motorcycles and wehave obtained the World Manufacturer Identifier (WMI) and Vehicle Identification Number (VIN). See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry—Our products are subject to safety standards and failure to satisfy such mandated standards wouldhave a material adverse effect on our business and operating results.” Table of Contents76Regulations on Registration of Electric BicyclesPursuant to the Road Traffic Safety Law of the PRC (Revised in 2021), a non-motorized vehicle which ought to be lawfully registered shall bedeemed street-illegal until it has been registered with the local traffic administrative department. In addition, the categories of such non-motorizedvehicles shall be determined by provincial governments in light of their respective actual local situation and shall consist of technical standards interms of overall weight, braking performance, overall size and reflectors, which all non-motorized vehicles should abide by. We have obtained theproduction license for electric bicycles according to applicable regulations. We will adjust the technical standards of our e-scooters to be sold atlocal markets until the technical standards meet local requirements and our e-scooter is listed on the local catalog which indicates the e-scooters onit are permitted to be lawfully registered.Pursuant to the Circular on Strengthening the Management of Electric Bicycles, jointly promulgated by the State Administration for Industry andCommerce, the AQSIQ, the Ministry of Public Security and the MIIT on March 18, 2011, any non-compliant vehicle may not be registered as anon-motorized vehicle, which in turn means it shall be deemed street-illegal.Therefore, some PRC local governments issued restrictive provisions on electric bicycles. Some local governments (such as Beijing, Shanghai,Anhui province, Jiangsu province, Guangxi province, Zhejiang province and Gansu province) implemented a catalog management system requiring(i) restricting and prohibiting sales and/or use of electric two-wheeled vehicles that do not meet the required standards; and/or (ii) end users toregister electric two-wheeled vehicles. For example, on October 20, 2013, the Shanghai Municipal People’s Congress promulgated the Measuresfor the Management of Non-motorized Vehicles in Shanghai, which stipulates that any non-motorized vehicle that is sold in Shanghai must beregistered with relevant department. Most of our products have obtained sales approval in Beijing, Shanghai, Anhui province, Jiangsu province,Guangxi province, Zhejiang province, Gansu province and other major provinces and cities. In addition, we will cooperate with local governmentsthat require us to obtain approval of sales. On the other hand, several local municipal governments (such as Xiamen, Shenzhen and Dongguan)have promulgated rules and regulations prohibiting the riding of electric bicycles/electric scooters in specific districts, and also restricting the use ofregistered electric two-wheeled vehicles. Due to the limited number of such districts, which are not our major source of revenue, the regulations ofprohibiting and restricting do not have substantial effect on our revenue.Regulations on Registration of MotorcyclesPursuant to the Provisions on the Registration of Motor Vehicles of the PRC promulgated on May 27, 2008, amended on December 17, 2021 andcame into effect on May 1, 2022, the owner of a motor vehicle, including motorcycles, shall apply for registration of such motor vehicle afterobtaining the certificate of qualified motor vehicle safety technical inspection from a local motor vehicle safety technical inspection institution. OnOctober 18, 2014, the Circular of the Ministry of Industry and Information Technology and the Ministry of Public Security on Strengthening theProduction and Registration Management of Minibuses and Motorcycles was issued, which reiterates that motorcycles must be registered, and inorder to simplify the motorcycle registration procedures in rural areas, motorcycles may gradually be sold with license, and motorcycle salesenterprises may be entrusted to register motorcycles before motorcycles are sold.In recent years, in order to control the number of motor vehicles on the road, certain local governments have issued restrictions on the issuance ofvehicle license plates, but these restrictions generally do not apply to the issuance of license plates for new energy vehicles, which makes it easierfor purchasers of new energy vehicles to obtain automobile license plates. For example, pursuant to the Implementation Measures on EncouragingPurchase and Use of New Energy Vehicles in Shanghai, local authorities will issue new automobile license plates to qualified purchasers of newenergy vehicles without requiring such qualified purchasers to go through certain license-plate bidding processes and to pay license-plate purchasefees. Table of Contents77Regulations on Production Safety,Pursuant to the Production Safety Law of the PRC, or the Production Safety Law, which took effect on November 1, 2002 and was amended onAugust 31, 2014, the entities that are engaged in production and business operation activities must implement national industrial standards whichguarantee the production safety and comply with production safety requirements provided by the laws, administrative regulations and national orindustrial standards. An entity must take effective measures for safety production, maintain safety facilities, examine the safety productionprocedures, educate and train employees and take any other measures to ensure the safety of its employees and the public. An entity or its relevantpersons-in-charge which has failed to perform such safety production liabilities will be required to make amends within a time limit or faceadministrative penalties. If it fails to amend within the prescribed time limit, the production and business operation entity may be ordered tosuspend business for rectification, and serious violations may result in criminal liabilities. Our production behaviors are compliant with theProduction Safety Law so far.Regulations on Product QualityThe Product Quality Law of the PRC, or the Product Quality Law, was adopted on February 22, 1993 and amended on July 8, 2000, August 27,2009 and December 29, 2018. The Product Quality Law applies to anyone who manufactures or sells any product within the territory of mainlandChina. It is prohibited from producing or selling counterfeit products in any form, including counterfeit brands, or providing false informationabout the product manufacturers. Violation of national or industrial standards may result in civil liability and administrative penalties such ascompensation, fines, suspension of business and confiscation of illegal income, and serious violations may result in criminal liabilities. We are incompliance with any of provisions of the Product Quality Law.Under the Application Scope of the First Batch of Products Implementing Mandatory Product Certification Catalogue effective on July 1, 2002,motorcycles and bicycles with gasoline and other engines were within the product catalogue that must apply the compulsory product certification.The Administrative Regulations for Compulsory Product Certification was promulgated on July 3, 2009, amended on September 29, 2022, andtook effect on November 1, 2022, pursuant to which that several specified products must not be delivered, sold, imported or used in other businessactivities until they complete the compulsory product certification and be labeled with certification mark. According to the Announcement on theTransition Period Arrangement for the Management of Mandatory Product Certification of Motorcycle Crew Helmets, Electric Blankets andMotorcycle Products, promulgated by the AQSIQ and the Certification and Accreditation Administration of the PRC on October 11, 2017,motorcycle and bicycle productions must still be under a license administration. On March 14, 2019, the Opinions of the SAMR, the MIIT and theMinistry of Public Security on Intensifying Supervision of the Execution of National Standards for Electric Bicycles, or the Opinions, waspromulgated. The Opinions provides that the market supervision department shall strengthen the management of China Compulsory Certificationfor electric bicycles, strengthen inspections of certification agencies and manufacture enterprises, and shall only allow vehicles that meet theElectric Bicycle Standard and obtained China Compulsory Certification flowing into the market. We have obtained China Compulsory Certificationfor all of our current for-sale products, and will try to obtain China Compulsory Certification for our future products. See “Item 3. Key Information— D. Risk Factors—Risks Related to Our Business and Industry—Our products are subject to safety standards and failure to satisfy such mandatedstandards would have a material adverse effect on our business and operating results.”Pursuant to the Civil Code of the PRC, promulgated by the National People’s Congress on May 28, 2020 and effective on January 1, 2021, in theevent of damages caused to other party due to product defect, the infringed party may seek compensation from the manufacturer of the products orfrom the seller of the products and shall have the right to request the manufacturer and the seller to bear tortious liability such as cessation ofinfringement, removal of obstruction, elimination of danger, etc.Regulations Relating to Product RecallThe SAMR issued the Interim Provisions on the Administration of Recall of Consumer Goods on November 21, 2019, which took effect onJanuary 1, 2020. Our products, accordingly, as one kind of customer goods, are subject to the requirements set out thereunder. Pursuant to theInterim Provisions on the Administration of Recall of Consumer Goods, if a manufacturer is aware of any potential defect in its products, or receivesuch notice from the government authorities, it must investigate in a timely manner and report the results of such investigation to the authorities.Where any defect is found during the investigation, the manufacturer must immediately cease to manufacture, sell, or import the relevant productsand recall such products. We have not received any such notice from authorities, or initiated, voluntarily or involuntarily, any product recalls inaccordance with such provisions. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry—We may becompelled to undertake product recalls or take other actions, which could adversely affect our brand image and results of operations.” Table of Contents78Regulations Relating to Foreign TradePursuant to the Foreign Trade Law of the PRC, promulgated on May 12, 1994 and amended on April 6, 2004, November 7, 2016, and December30, 2022, and the Measures for the Record Filing and Registration of Foreign Trade Business Operators promulgated by the Ministry of Commerceon June 25, 2004, effective on July 1, 2004, and amended on August 18, 2016, November 30, 2019 and May 10, 2021, foreign trade operatorsengaged in the import and export of goods or the import and export of technology must register with the Ministry of Commerce or its authorizedinstitution. In addition, if an entity imports or exports goods as consignee or consignor, it shall file with customs according to the Provisions of thePeople’s Republic of China on the Administration of Recordation of Customs Declaration Entities, promulgated on November 19, 2021 and cameinto effect on January 1, 2022. We have made filings with authorities pursuant to the applicable provisions.Regulations Relating to Foreign InvestmentPursuant to the Special Administrative Measures for Market Access of Foreign Investment (Negative List) (2021 Edition), or the 2021 NegativeList, jointly issued by the NDRC and the Ministry of Commerce on December 27, 2021 and enforced on January 1, 2022, the foreign investmentrelated to design, manufacture and sale of electricity bicycles does not fall within the category of industries in which foreign investment isrestricted or prohibited. The 2021 Negative List enumerates the restricted industries and the prohibited industries in relation to foreign investment,and the industries which do not fall within the 2021 Negative List, shall be administered under the principle of equal treatment to domestic andforeign investment. On March 15, 2019, the Foreign Investment Law of PRC was issued by the National People’s Congress and took effect onJanuary 1, 2020, which also provides that the industries in which foreign investment is not restricted and prohibited shall be administered under theprinciple of equal treatment to domestic investment. On December 26, 2019, the State Council published the Implementation Rules of the ForeignInvestment Law, which took effect on January 1, 2020. Furthermore, on December 19, 2020, the NDRC and the Ministry of Commerce jointlyissued the Measures for Security Review of Foreign Investment, effective on January 18, 2021, which provides detailed guidance regardingsecurity review of foreign investment that has a potential impact on national security. On July 25, 2023, the State Council issued the Opinions onFurther Optimizing the Foreign Investment Environment and Increasing Efforts to Attract Foreign Investment, which provides certain policysupports aimed at vigorously attracting and utilizing foreign investment.Foreign investment in telecommunications companies in mainland China is governed by the Provisions on Administration of Foreign-InvestedTelecommunications Enterprises, or the Foreign-Invested Telecommunications Enterprises Provisions, which were promulgated by the StateCouncil on December 11, 2001, and amended on September 10, 2008 and February 6, 2016. The Foreign-Invested Telecommunications EnterprisesProvisions prohibits a foreign investor from holding over 50% of the total equity interest in any value-added telecommunications service businessin mainland China. On March 29, 2022, the State Council published the Decision of the State Council to Amend and Repeal Certain AdministrativeRegulations, among which the Foreign-Invested Telecommunications Enterprises Provisions is further amended. The latest version removes certainrequirements for foreign-invested telecommunications enterprises and came into effect on May 1, 2022. We operate our website www.niu.com andour NIU app through Beijing Niudian and sell our e-scooters and peripheral products on the website.Regulations Relating to Overseas InvestmentOn December 26, 2017, the NDRC issued the Management Rules for Overseas Investment by Enterprises, or the NDRC Order 11. As defined inthe NDRC Order 11, “overseas investment” refers to the investment activities conducted by an enterprise located in the territory of mainland China,either directly or through an offshore enterprise under its control, by making investment with assets and equities or providing financing or aguarantee in order to acquire overseas ownership, control, management rights and other related interests. Furthermore, overseas investment by aChinese individual through overseas enterprises under his/her control is also subject to the NDRC Order 11. According to the NDRC Order 11, (i)direct overseas investment by Chinese enterprises or indirect overseas investment by Chinese enterprises or individuals in sensitive industries orsensitive countries and regions requires prior approval by the NDRC; (ii) direct overseas investment by Chinese enterprises in non-sensitiveindustries and non-sensitive countries and regions requires prior filing with the NDRC; and (iii) indirect overseas investment of over US$300million by Chinese enterprises or individuals in non-sensitive industries and non-sensitive countries and regions requires reporting with the NDRC.Uncertainties remain with respect to the application of the NDRC Order 11. We are not sure if we were to use a portion of the proceeds raised fromour financing activities to fund investments in and acquisitions of complementary business and assets outside of mainland China, such use of U.S.dollars funds held outside of mainland China would be subject to the NDRC Order 11. There are very few interpretations, implementation guidanceor precedents to follow in practice. We will continue to monitor any new rules, interpretation and guidance promulgated by the NDRC andcommunicate with the NDRC and its local branches to seek their opinions, when necessary. Table of Contents79Regulations Relating to Foreign DebtOn January 8, 2003, the NDRC, Ministry of Finance and SAFE promulgated the Interim Provisions on the Management of Foreign Debts, whichwas amended on July 26, 2022 and became effective on September 1, 2022, pursuant to which the summation of the accumulated medium-term andlong-term debts borrowed by foreign-invested entities and the balance of short-term debts shall not exceed the surplus between the total investmentin projects approved by the verifying departments and the registered capital, or the Surplus Limit. Within the range of the Surplus Limit foreign-invested entities may borrow foreign loans at their own will. If the loans exceed the Surplus Limit, the total investment in projects shall bereexamined by the original examination and approval departments. In addition, on January 11, 2017, People’s Bank of China promulgated theNotice of the People’s Bank of China on Full-coverage Macro-prudent Management of Cross-border Financing, or PBOC Circular 9, which setsout an upper limit for mainland China entities, including foreign-invested entities and domestic-invested entities, regarding their foreign debts, orthe Financing Limit. Pursuant to PBOC Circular 9, the Financing Limit for entities shall be calculated based on the following formula: theFinancing Limit = net assets * cross-border financing leverage ratio * macro-prudent regulation parameter. As to net assets, entities shall take thenet assets value stated in their respective latest audited financial statement in calculation; the cross-border financing leverage ratio for enterprises istwo (2); the macro-prudent regulation parameter is one (1). PBOC Circular 9 does not supersede the Interim Provisions on the Management ofForeign Debts. PBOC Circular 9 stipulates a one-year transitional period, or Transitional Period, from its promulgation date for foreign-investedentities, during which they could choose the calculation method of foreign debt upper limit based on either (i) the Surplus Limit, or (ii) theFinancing Limit. After the Transition Period, the method applicable to foreign-invested entities shall be determined by the People’s Bank of Chinaand SAFE separately. On March 11, 2020, the People’s Bank of China and SAFE issued the Notice of Adjusting the Macro-prudent RegulationParameter for Full-covered Cross-border Financing, which adjusted the macro-prudent regulation parameter as set forth in the Circular 9 from 1 to1.25. However, although the Transitional Period ended on January 10, 2018, as of December 31, 2023, the People’s Bank of China or SAFE has notissued any new regulations regarding the application calculation method of foreign debt upper limit for foreign-invested entities. As to domestic-invested entities, they are only subject to the Financing Limit from the date of promulgation of PBOC Circular 9 regardless of the TransitionalPeriod. On January 5, 2023, the NDRC issued the Administrative Measures for the Examination and Registration of Medium and Long-termForeign Debts of Enterprises, which took effect on February 10, 2023, setting out regulatory standards and procedures for enterprises when issuingforeign debts that over one year.Regulations Relating to Internet Information Security and Privacy ProtectionInternet information in mainland China is heavily regulated and restricted as a national security issue. The SCNPC enacted the Decisions onMaintaining Internet Security in December 2000, as further amended in August 2009, which impose criminal liabilities on persons or entities that:(i) gain improper entry into a computer or system of strategic importance; (ii) disseminate politically disruptive information; (iii) leak state secrets;(iv) spread false commercial information; or (v) infringe intellectual property rights. The Ministry of Public Security has promulgated measuresthat prohibit the use of the internet in ways that would result in the leakage of state secrets or dissemination of socially destabilizing content. If aninternet information service provider violates these measures, the Ministry of Public Security and the local security bureaus may revoke itsoperating license and shut down its websites.Under the Several Provisions on Regulating the Market Order of Internet Information Services issued by the MIIT in December 2011, an internetinformation service provider may not collect any user’s personal information or provide any such information to third parties without that user’sconsent. It must also expressly inform that user of the method, content and purpose of the collection and processing of such user’s personalinformation and may only collect such information as necessary for the provision of its services. In addition, pursuant to the Decision onStrengthening the Protection of Online Information issued by the SCNPC in December 2012 and the Order for the Protection ofTelecommunication and Internet User’s Personal Information issued by the MIIT in July 2013, any collection and use of a user’s personalinformation must be subject to the consent of the user, abide by the principles of legality, rationality and necessity and be within the specifiedpurposes, methods and scopes. Table of Contents80In November 2016, the SCNPC promulgated the Network Security Law of the PRC, or the Network Security Law, which took effect on June 1,2017. Pursuant to the Network Security Law, a network operator, including, without limitation, internet information service providers, must taketechnical measures and other necessary measures in accordance with the provisions of applicable laws and regulations as well as the compulsoryrequirements of the national and industrial standards to safeguard the safe and stable operation of networks, effectively respond to network securityincidents, prevent illegal and criminal activities and maintain the integrity, confidentiality and availability of network data. Any violation of theprovisions and requirements under the Network Security Law may subject an internet service provider to warnings, fines, confiscation of illegalgains, revocation of licenses, cancelation of filings, closedown of websites or even criminal liabilities. On December 28, 2021, the CAC, togetherwith other twelve government authorities, jointly released the Cybersecurity Review Measures, which came into effect on February 15, 2022. TheMeasures require operators of critical information infrastructure to go through cybersecurity review when purchasing any network products andservices with a potential impact on national security. On March 17, 2023, the SAMR and the National Standardization Administration Committeeannounced the issuance of the National Standards of the People’s Republic of China (No. 1 of 2023), which contains 12 sets of national standardson cybersecurity under the National Technical Security Standardization Committee of China, or TC260, including the Information SecurityTechnology - Basic Requirements for Competence of Cybersecurity Workforce (GB/T 42446-2023).On April 26, 2023, the amended Counterespionage Law of the People’s Republic of China was promulgated which came into effect on July 1,2023, establishing a close connection between data security and national security. It provides, among others, that engaging in the unauthorizedprovision of data or conducting cyberattacks against specific authorities is categorized as acts falling within the scope of espionage, and unlawfullyacquiring or possessing documents, data, materials, or items that qualify as state secrets is strictly forbidden.On May 29, 2023, the Secretariat of the National Information Security Standardization Technical Committee published the Practice Guidelines forCybersecurity Standards - Implementation Guidelines for Cyber Data Security Risk Assessment, implementing the requirements of the DataSecurity Law on data security risk assessment, which outlines the approach, workflow and key components of the data security risk assessment,including data security management, data processing activities, data security technology, and personal information protection. On December 8,2023, the CAC promulgated the Administrative Measures for the Reporting of Cybersecurity Incidents (for public comments), which imposedobligations on network platform operators to report to the in-charge cyberspace administration when an incident that might endanger networksecurity occurred.In November 2019, the Secretariat of the CAC, the General Office of the MIIT, the General Office of the Ministry of Public Security and theSAMR jointly promulgated the Circular on Issuing the Methods for Identifying Unlawful Collection and Use of Personal Information ofApplications, which defines actions that may be regarded as violating the Network Security Law and other personal information protection relatedregulations, including, among other things, failure to publicize the rules for collection and use of personal information, failure to expressly state thepurpose, manner and scope of collecting and using personal information, collection and use of personal information without consent of users,provision of personal information to others without consent, and failure to provide the function of deleting or correcting personal information asrequired by law. Furthermore, on August 20, 2021, the SCNPC promulgated the Personal Information Protection Law, which came into effect onNovember 1, 2021. The Personal Information Protection Law integrates the scattered rules with respect to personal information rights and privacyprotection and aims at protecting the personal information rights and interests, regulating the processing of personal information and promoting thereasonable use of personal information. Personal information, as defined in the Personal Information Protection Law, refers to information relatedto identified or identifiable natural persons and recorded by electronic or other means, but excluding the anonymized information. The PersonalInformation Protection Law provides the circumstances under which a personal information processor could process personal information, whichinclude but not limited to, where the consent of the individual concerned is obtained and where it is necessary for the conclusion or performance ofa contract to which the individual is a contractual party. It also stipulates certain specific rules with respect to the obligations of a personalinformation processor, such as to inform the purpose and method of processing to the individuals, and the obligation of the third party who hasaccess to the personal information by way of co-processing or delegation.The Data Security Law of the People’s Republic of China, or the Data Security Law, was passed on June 10, 2021 and came into effect onSeptember 1, 2021. The Data Security Law requires the data processor to establish and improve a whole-process data security management system,organize data security education and training, and take corresponding technical measures and other necessary measures to safeguard data security.In conducting data processing activities by using the internet or any other information network, the data processor shall perform the above datasecurity protection obligations on the basis of the hierarchical cybersecurity protection system. Any violation of the provisions and requirementsunder the Data Security Law may subject a data processor to rectifications, warnings, fines, suspension of the related business, revocation oflicenses or even criminal liabilities. Table of Contents81In addition, on November 14, 2021, the CAC released the Regulations on the Network Data Security for public comments, which stipulates, amongothers, that a prior cybersecurity review is required for listing abroad of data processors which process over one million users’ personalinformation, and the listing of data processors in Hong Kong which affects or may affect national security. On December 28, 2021, the CAC andother twelve PRC regulatory authorities jointly revised and promulgated the Measures for Cybersecurity Review, or the Cybersecurity ReviewMeasures, which came into effect on February 15, 2022. Pursuant to the Cybersecurity Review Measures, besides the procurement of networkproducts and services by critical information infrastructure operators, any data processing activities by network platform operators that affects ormay affect national security shall be subject to the cybersecurity review as well. In accordance with the Cybersecurity Review Measures, operatorsmastering personal information of more than one million users must apply to the Cybersecurity Review Office for cybersecurity review when theyseek for listing in a foreign country. However, the Cybersecurity Review Measures and the Regulations on the Network Data Security remainunclear on whether the requirements will be applicable to companies that have been listed in the United States.Furthermore, the Data Export Measures were released by the CAC on July 7, 2022 and came into effect on September 1, 2022. The Data ExportMeasures require that any data processor which processes or exports personal information exceeding certain volume threshold under such measuresshall apply for security assessment by the CAC before transferring any personal information abroad. The security assessment requirement alsoapplies to any transfer of important data outside of China.In December 2022, the MIIT released the Administrative Measures for Data Security in the Field of Industry and Information Technology (for TrialImplementation), which came into effect on January 1, 2023. The Administrative Measures for Data Security in the Field of Industry andInformation Technology (for Trial Implementation) requires the data processor in the field of industry and information technology to review dataon a periodical basis, identify important data and core data in accordance with the relevant standards and specifications, and form its specificcatalogue.On February 22, 2023, the CAC issued the Measures for the Standard Contract for the Outbound Transfer of Personal Information, or the StandardContract Measures, which took effect on June 1, 2023. The Standard Contract Measures apply to the provision of personal information to overseasrecipients through standard contract and set out detailed criteria relating to the formality and terms of such contracts. The Standard ContractMeasures also requires the personal information processor to file such contract with the authorities within 10 business days after the contract iseffective. To regulate the application of the outboard transfer of personal information through standard contact, the CAC has promulgated the FirstEdition and the Second Edition of Guidelines for the Recordation of the Standard Contracts for the Outbound Transfer of Personal Information onMay 30, 2023 and March 22, 2024.On March 16, 2023, the TC260 released the draft national standards entitled Information Security Technology - Certification Requirements forCross-border Transmission of Personal Information, for public comments, which sets out the basic principles and requirements for the protection ofthe rights and interests of personal information subjects in the cross-border transmission of personal information, and outlines the standards for thethird-party certification of companies engaged in the cross-border transfer.On August 3, 2023, the CAC has issued the Measures for the Administration of Personal Information Protection Compliance Audits (for PublicComments), which stipulates that companies that process personal information of subjects in China shall undergo regular compliance audits. OnAugust 8, 2023, the CAC released the Provisions on Security Management of the Application of Face Recognition Technology (for TrialImplementation), for public comments, which aimed at enhancing the oversight and responsible use of face recognition technology and stipulates,among others, that that face recognition technology can only be used when there is a specific purpose and sufficient necessity, and strict protectionmeasures must be implemented.On February 24, 2023, the CSRC released the Provisions on Strengthening the Confidentiality and Archives Administration Related to theOverseas Securities Offering and Listing by Domestic Enterprises, which took effect on March 31, 2023. These provisions require, among others,that mainland China domestic enterprises that seek to offer and list securities in overseas markets, either directly or indirectly, complete approvaland filing procedures with the competent authorities, if such enterprises or their overseas listing entities provide or publicly disclose documents ormaterials involving state secrets and work secrets of PRC government authorities to certain securities companies, securities service institutions,overseas regulatory agencies and other entities and individuals. These provisions further stipulate that providing or publicly disclosing documentsand materials which may adversely affect national security or public interests shall be subject to applicable procedures. We may be required tocomplete approval or filing procedures under these provisions or expend additional resources to comply with the provisions if we are found to fallwithin any of the foregoing circumstances. Table of Contents82On September 28, 2023, the CAC released the Notice on Seeking Public Comments on the Provisions on Regulating and Promoting Cross-borderData Flow (Exposure Draft) of the PRC, which specifies the circumstances under which it is not required to apply for a security assessment for datato be provided abroad, to conclude a standard contract for personal information to be provided abroad, or to pass the certification for personalinformation protection. On March 22, 2024, the CAC formally issued the Regulations on Promoting and Regulating the Cross-border Data Flow,which clarifies the obligations of data processors with cross-border transfer of personal information, such as notification, obtaining individualconsent, and conducting personal information protection impact assessments in accordance with laws and administrative regulations, and also setsout several exemptions, including cross-border data transfer (i) for concluding or performing a contract to which an individual is a party, (ii) for thecross-border HR management purpose according to the applicable internal labor rules and a collective contract entered into with the employees,(iii) to safeguard an individual’s life, health or property in the event of an emergency, and (iv) if the handler is not classified as a criticalinformation infrastructure operator, involving less than 100,000 people’s non-sensitive personal information from January 1 of the current year.Regulations Relating to Value-Added Telecommunication ServicesPursuant to the Telecommunications Regulations of the PRC, or the Telecommunications Regulations, promulgated by the State Council onSeptember 25, 2000 and amended on July 29, 2014 and February 6, 2016, telecommunication service providers must obtain an operating licenseprior to the commencement operations. The Telecommunications Regulations categorize telecommunication services into basic telecommunicationservices and value-added telecommunication services. According to the Catalog of Telecommunications Business, attached to theTelecommunications Regulations, information services provided via fixed network, mobile network and internet fall within value-addedtelecommunication services.In July 2017, the MIIT promulgated the Administrative Measures on Telecommunications Business Operating Licenses. Under these regulations, acommercial operator of value-added telecommunication services must first obtain a license for value-added telecommunications business, knownas ICP License, from the MIIT or its provincial level counterparts. The VIE, Beijing Niudian, the main operating entity which sells our products tothird-parties, has obtained an ICP License for information service business.Regulations Relating to Mobile Internet Applications Information ServicesIn addition to the Telecommunications Regulations and other regulations above, mobile app information service providers are especially regulatedby the Administrative Provisions on Mobile Internet Applications Information Services, or the App Provisions, which were promulgated by theCAC on June 28, 2016 and amended in 2022. The latest version became effective on August 1, 2022.Under the App Provisions, mobile app information service providers are required to obtain the qualifications prescribed by laws and regulations,take responsibility for the supervision and administration of mobile app information as required by laws and regulations and implement theinformation security management responsibilities.On July 21, 2023, the MIIT issued the Notice of Carrying out the Filing of Mobile Internet Applications, which proposes the requirements thatholders of Apps engaged in internet information services within the PRC must fulfill the filing formalities in accordance with the relevantregulations and such holders shall not engage in the App internet information service without completion of such filing.We have implemented the necessary programs in our mobile app, including programs for data collection notification and for preventing databreach, damage and loss, to make sure the collection, protection and preservation of user information are in compliance with the App Provisions inall material aspects. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry—We retain certain personalinformation about our users and may be subject to various privacy and consumer protection laws.”Regulations Relating to Intellectual Property RightsMainland China has adopted comprehensive legislation governing intellectual property rights, including copyrights, patents, trademarks anddomain names. Table of Contents83Regulations on CopyrightPursuant to the Copyright Law of the PRC revised by the Standing Committee of the National People’s Congress on November 11, 2020 and cameinto effect on June 1, 2021, copyrights include personal rights such as the right of publication and that of attribution as well as property rights suchas the right of production and that of distribution. Reproducing, distributing, performing, projecting, broadcasting or compiling a work orcommunicating the same to the public via an information network without permission from the owner of the copyright therein, unless otherwiseprovided in the Copyright Law of the PRC, constitutes an infringement of copyright. The infringer shall, among others, according to thecircumstances of the case, undertake to cease the infringement, take remedial action, offer an apology and pay damages. We have registered ourcopyright on 27 sets of software codes regarding our BMS and other control or management systems.Regulations on PatentThe Patent Law of the PRC promulgated by the Standing Committee of the National People’s Congress on October 17, 2020 and effective on June1, 2021, the Detailed Rules for the Implementation of the Patent Law of the PRC (revised in 2023) promulgated by the State Council provide forpatentable inventions, utility models and designs, which must meet three conditions: novelty, inventiveness and practical applicability. The StateIntellectual Property Office under the State Council is responsible for examining and approving patent applications. The duration of a patent rightis respectively 10 years for utility model, 15 years for design, and 20 years for invention, all of which shall commence from the date of application.Regulations on TrademarkPursuant to the Trademark Law of the PRC promulgated by the Standing Committee of the National People’s Congress on August 23, 1982 andamended on February 22, 1993, October 27, 2001, August 30, 2013 and April 23, 2019, and the Regulation on the Implementation of theTrademark Law of the PRC (revised in 2014) promulgated by the State Council on August 3, 2002 and amended on April 29, 2014, the right to theexclusive use of a registered trademark is limited to trademarks which have been approved for registration and to goods for which the use of suchtrademark has been approved. The period of validity of a registered trademark is ten years, counted from the day that the registration is approved.According to this law, using a trademark that is identical to or similar to a registered trademark in connection with the same or similar goodswithout the authorization of the owner of the registered trademark constitutes an infringement of the exclusive right to use a registered trademark.The infringer shall, in accordance with the regulations, undertake to cease the infringement, remedial action, or pay damages. We have submittedseveral trademark invalidation applications against certain third-party infringers, which are still under administrative or legal proceedings. See“Item 3. Key Information— D. Risk Factors—Risks Related to Our Business and Industry—We may need to defend ourselves against patent,trademark or other intellectual property rights infringement claims, which may be time-consuming and would cause us to incur substantial costs.”Regulations on Domain NameInternet domain name registration and related matters are primarily regulated by the Measures on Administration of Internet Domain Namespromulgated by the MIIT on August 24, 2017 and effective on November 1, 2017, and the Implementing Rules of China ccTLD Registrationissued by China Internet Network Information Center on June 18, 2019. Domain name registrations are handled through domain name serviceagencies established under the applicable regulations, and the applicants become domain name holders upon successful registration.Regulations Relating to EmploymentPursuant to the Labor Law of the PRC, the Labor Contract Law of the PRC, or the Labor Contract Law, and the Implementing Regulations of thePRC Labor Contract Law, labor relationships between employers and employees must be executed in written form. Wages may not be lower thanthe local minimum wage. Employers must establish a system for labor safety and sanitation, strictly abide by state standards and provide relevanteducation to their employees. Employees are also required to be able to work in safe and sanitary conditions. Table of Contents84According to the Social Insurance Law of the PRC, promulgated by the SCNPC and effective from July 1, 2011 and amended on December 29,2018, the Regulation of Insurance for Work-Related Injury, the Provisional Measures on Insurance for Maternity of Employees, the Regulation ofUnemployment Insurance, and the Interim Regulation on the Collection and Payment of Social Insurance Premiums, an employer is required tocontribute social insurance for its employees in mainland China, including basic pension insurance, basic medical insurance, unemploymentinsurance, maternity insurance and injury insurance. Under the Regulations on the Administration of Housing Funds, promulgated by the StateCouncil on April 3, 1999 and amended on March 24, 2002 and March 24, 2019, an employer is required to make contributions to a housing fundfor its employees. See “Item 3. Key Information—D. Risk Factors —Risks Related to Doing Business in China—Enforcement of stricter laborlaws and regulations of mainland China may adversely affect our business and our profitability.”Regulations Relating to Foreign ExchangeRegulations on Foreign Currency ExchangeSAFE promulgated the Circular on Issues Relating to the Administration of Foreign Exchange of Offshore Investment and Financing throughSpecial Purpose Vehicles and Round-Tripping Investment by mainland China Resident, or SAFE Circular 37, on July 4, 2014, which replaced theformer circular commonly known as “SAFE Circular 75.” SAFE Circular 37 requires mainland China residents to register with local branches ofSAFE in connection with their direct establishment or indirect control of an offshore entity, for the purpose of offshore investment and financing,with such mainland China residents’ legally owned assets or equity interests in domestic enterprises or offshore assets or interests, referred to inSAFE Circular 37 as a “special purpose vehicle.” SAFE Circular 37 further requires amendment to the registration in the event of any significantchanges with respect to the special purpose vehicle, such as increase or decrease of capital contributed by mainland China residents, share transferor exchange, merger, division or other material event. In the event that a mainland China shareholder holding interests in a special purpose vehiclefails to fulfill the required SAFE registration, the mainland China subsidiaries of that special purpose vehicle may be prohibited from making profitdistributions to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and the special purpose vehicle maybe restricted in its ability to contribute additional capital into its mainland China subsidiaries. Furthermore, failure to comply with the variousSAFE registration requirements described above could result in liability under the laws of mainland China for evasion of foreign exchangecontrols.Regulations on Stock Incentive PlansIn February 2012, SAFE promulgated the Circular on Foreign Exchange Administration of PRC Residents Participating in Share Incentive Plans ofOffshore Listed Companies, or the Stock Option Rules, replacing the previous rules issued by SAFE in March 2007. Under the Stock Option Rulesand other rules and regulations, mainland China residents who participate in a stock incentive plan in an overseas publicly-listed company arerequired to register with SAFE or its local branches and complete certain other procedures. Participants of a stock incentive plan who are mainlandChina residents must retain a qualified mainland China agent, which could be a mainland China subsidiary of the overseas publicly-listed companyor another qualified institution selected by the mainland China subsidiary, to conduct SAFE registration and other procedures with respect to thestock incentive plan on behalf of its participants. The participants must also retain an overseas entrusted institution to handle matters in connectionwith their exercise of stock options, the purchase and sale of corresponding stocks or interests and fund transfers. In addition, the mainland Chinaagent is required to amend SAFE registration with respect to the stock incentive plan if there is any material change to the stock incentive plan, themainland China agent or the overseas entrusted institution or other material changes. The mainland China agents must, on behalf of the mainlandChina residents who have the right to exercise the employee share options, apply to SAFE or its local branches for an annual quota for the paymentof foreign currencies in connection with the mainland China residents’ exercise of the employee share options. The foreign exchange proceedsreceived by mainland China residents from the sale of shares under the stock incentive plans granted and dividends distributed by overseas listedcompanies must be remitted into the bank accounts in mainland China opened by mainland China agents before distribution to such mainlandChina residents. In addition, the Circular of the State Administration of Foreign Exchange on Issues concerning Foreign Exchange Administrationover the Overseas Investment and Financing and Round-trip Investment by Domestic Residents via Special Purpose Vehicles promulgated on July4, 2014 provides that mainland China residents who participate in a share incentive plan of an overseas unlisted special purpose company mustregister with SAFE or its local branches before exercising such rights. Table of Contents85Regulations Relating to Dividend DistributionThe principal regulations governing distribution of dividends of foreign-invested enterprises include the PRC Company Law, the ForeignInvestment Law and the Implementation Rules of the Foreign Investment Law. Under these laws and regulations, foreign-invested enterprises inmainland China may pay dividends only out of their accumulated after-tax profits, if any, determined in accordance with PRC accounting standardsand regulations. In addition, foreign-invested enterprises in mainland China are required to allocate 10% of their respective after-tax profits as thestatutory common reserve when it distributes its after-tax profit for the current fiscal year, if any, to fund certain reserve funds until these reserveshave reached 50% of the registered capital of the enterprises.Regulations Relating to TaxationRegulations on Enterprise Income TaxUnder the Enterprise Income Tax Law of the PRC, which was promulgated on March 16, 2007, amended on February 24, 2017 and December 29,2018, and its implementing rules, enterprises are classified as resident enterprises and non-resident enterprises. Mainland China resident enterprisestypically pay enterprise income tax at the rate of 25%, while non-mainland China resident enterprises without any branches in mainland China payan enterprise income tax in connection with their income from mainland China at the tax rate of 10%. An enterprise established outside ofmainland China but with its “de facto management body” located within mainland China is considered a “resident enterprise,” which means that itis treated in a manner similar to a mainland China domestic enterprise for enterprise income tax purposes. The implementing rules of the EnterpriseIncome Tax Law define “de facto management body” as a managing body that in practice exercises “substantial and overall management andcontrol over the production and operations, personnel, accounting and properties” of the enterprise.The Enterprise Income Tax Law and the implementation rules provide that an income tax rate of 10% will normally be applicable to dividendspayable to investors that are “non-resident enterprises,” and gains derived by such investors, which (i) do not have an establishment or place ofbusiness in mainland China or (ii) have an establishment or place of business in mainland China, but the relevant income is not effectivelyconnected with the establishment or place of business to the extent that such dividends and gains are derived from sources within mainland China.Such income tax on the dividends may be reduced pursuant to a tax treaty between mainland China and other jurisdictions. Pursuant to theArrangement between the Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and TaxEvasion on Income, and other applicable laws of mainland China, if a Hong Kong resident enterprise is determined by the competent PRC taxauthority to have satisfied the conditions and requirements under such arrangement and other applicable laws, the 10% withholding tax on thedividends the Hong Kong resident enterprise receives from a mainland China resident enterprise may be reduced to 5% upon receiving approvalfrom in-charge tax authority. However, based on the Circular on Certain Issues with Respect to the Enforcement of Dividend Provisions in TaxTreaties issued on February 20, 2009 by the State Administration of Taxation, if the PRC tax authorities determine, in their discretion, that acompany benefits from such reduced income tax rate due to a structure or arrangement that is primarily tax-driven, such PRC tax authorities mayadjust the preferential tax treatment. According to Announcement of the State Administration of Taxation on Issues Concerning the Recognition ofBeneficial Owners in Entrusted Investments, effective on June 1, 2014, non-residents may be recognized as “beneficial owners” and enjoy thetreaty benefits for the income derived from mainland China from certain investments. According to the Announcement of the State Administrationof Taxation on Issues concerning the “Beneficial Owner” in Tax Treaties, which became effective in April 2018, a resident enterprise is determinedas a “beneficial owner” that can apply for a low tax rate under tax treaties based on an overall assessment of several factors. Furthermore, theAdministrative Measures for Non-Resident Taxpayers to Enjoy Treatments under Tax Treaties, which became effective on January 1, 2020,requires non resident enterprises to determine whether they are qualified to enjoy the preferential tax treatment under the tax treaties and file certainreport and materials with the tax authorities. We may be classified as mainland China resident tax payers. See “Item 3. Key Information— D. RiskFactors—Risks Related to Doing Business in China—If we are classified as a mainland China resident enterprise for mainland China income taxpurposes, such classification could result in unfavorable tax consequences to us and our non-mainland China shareholders or ADS holders.” Table of Contents86Regulations on Value-Added TaxPursuant to the Provisional Regulation of the PRC on Value-Added Tax issued by the State Council, effective on January 1, 1994, which wasamended on November 10, 2008, February 6, 2016 and on November 19, 2017, or the Provisional Regulation, and its Implementing Rules, allentities and individuals that are engaged in the sale of goods, the provision of processing, repairs and installation services and the importation ofgoods in mainland China are required to pay a valued-added tax, or VAT. According to the Provisional Regulation, gross proceeds from sales andimportation of goods and provision of services are generally subject to a VAT rate of 17% with exceptions for certain categories of goods that aretaxed at a VAT rate of 11%. On April 4, 2018, the Circular of the Ministry of Finance and the State Administration of Taxation on Adjusting Value-Added Tax Rates was promulgated, which provides that effective from the date of May 1, 2018, gross proceeds from sales and importation ofgoods and provision of services are generally subject to a VAT rate of 16%, with exceptions for certain categories of goods that are taxed at a VATrate of 10%. On March 20, 2019, the Announcement on Relevant Policies for Deepening Value-Added Tax Reform was jointly promulgated theMinistry of Finance, the State Administration of Taxation and the General Administration of Customs, which further provides that effective fromApril 1, 2019, the VAT rate of gross proceeds from sales and importation of goods and provision of services shall be adjusted from 16% to 13%,with the VAT rate of certain categories of goods shall be adjusted from 10% to 9%. In addition, under the Provisional Regulation, the input VAT forthe purchase of fixed assets is deductible from the output VAT, except for goods or services that are used in non-VAT taxable items, VAT exempteditems and welfare activities, or for personal consumption. On September 3, 2023 the Ministry of Finance and the State Administration of Taxationpromulgated the Circular of Additional Value-Added Tax Credit Policy for Advanced Manufacturing Enterprises, which provides that an advancedmanufacturing enterprise may credit the amount of input tax creditable in the current period, plus 5% of that amount, against the amount of taxpayable. Table of Contents87C.Organizational StructureThe following diagram illustrates our corporate structure, including our principal subsidiaries, the VIE and its principal subsidiaries, as of the dateof this annual report:(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 BeijingNiudian, respectively. All of the shareholders of Beijing Niudian are beneficial owners of the shares of our company.Contractual Arrangements with the VIEThe following is a summary of the currently effective contractual arrangements relating to Beijing Niudian. Table of Contents88Agreements that allow us to conduct the business operations of the VIEPowers of Attorney. Each of the shareholders of Beijing Niudian has executed a power of attorney to irrevocably authorize our company to act ashis or her attorney-in-fact to exercise all of his or her rights as a shareholder of Beijing Niudian, including, but not limited to, the right to conveneand attend shareholders’ meetings, vote on any resolution that requires a shareholder vote, such as the appointment and removal of directors,supervisors and officers, as well as the sale, transfer and disposal of all or part of the equity interests owned by such shareholder. The powers ofattorney will remain effective, as long as the shareholders of Beijing Niudian remain as registered shareholders of Beijing Niudian, unlessotherwise instructed by our company.Second Amended and Restated Equity Pledge Agreement. Pursuant to the second amended and restated equity pledge agreement, dated February27, 2020, among our WFOE, Beijing Niudian and each of the shareholders of Beijing Niudian, the shareholders of Beijing Niudian have pledgedthe 100% equity interests in Beijing Niudian to our WFOE to guarantee performance by the shareholders of their obligations under the secondamended and restated exclusive option agreement and powers of attorney, as well as the performance by Beijing Niudian of its obligations underthe amended and restated exclusive business cooperation agreement and the second amended and restated exclusive option agreement. In the eventof a breach by Beijing Niudian or any of its shareholders of contractual obligations under the second amended and restated equity pledgeagreement, our WFOE, as pledgee, will have the right to dispose of the pledged equity interests in Beijing Niudian and will have priority inreceiving the proceeds from such disposal. The shareholders of Beijing Niudian also undertake that, without the prior written consent of ourWFOE, they will not dispose of, create or allow any encumbrance on the pledged equity interests. Beijing Niudian undertakes that, without theprior written consent of our WFOE, it will not assist or allow any encumbrance to be created on the pledged equity interests. In February 2021, wecompleted the registration of the equity pledge under the second amended and restated equity pledge agreement with the local office of the StateAdministration of Market Regulation in accordance with the PRC Property Rights Law.Spousal Consent Letters. The spouses of the shareholders of Beijing Niudian have each signed a spousal consent letter agreeing that the equityinterests in Beijing Niudian held by and registered under the name of the respective shareholders will be disposed of pursuant to the VIEAgreements. These spouses agreed not to assert any rights over the equity interest in Beijing Niudian held by their spouses.Agreements that allow us to receive economic benefits from the VIEAmended and Restated Exclusive Business Cooperation Agreements. Pursuant to the amended and restated exclusive business cooperationagreement, dated July 20, 2018, between our WFOE and Beijing Niudian, our WFOE has the exclusive right to provide Beijing Niudian withoperational supports as well as consulting and technical services required by Beijing Niudian’s business. Without our WFOE’s prior writtenconsent, Beijing Niudian may not accept any services subject to this agreement from any third party. Beijing Niudian agrees to pay our WFOE amonthly 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 relevantmonth, which should be paid within seven business days upon receipt of invoice from our WFOE. Our WFOE has the exclusive ownership of allthe intellectual property rights created as a result of the performance of the amended and restated exclusive business cooperation agreement to theextent permitted by applicable laws of mainland China. To guarantee Beijing Niudian’s performance of its obligations thereunder, the shareholdersof Beijing Niudian shall pledge all of their equity interests in Beijing Niudian to our WFOE pursuant to the second amended and restated equitypledge agreement. The amended and restated exclusive business cooperation agreement will remain effective for a term equal to Beijing Niudian’soperating period, unless otherwise terminated by our WFOE in writing or in accordance with applicable laws of mainland China.In June 2018, our WFOE and Jiangsu Xiaoniu entered into the amended and restated exclusive business cooperation agreement, which containsterms substantially similar to the amended and restated exclusive business cooperation agreement between our WFOE and Beijing Niudiandescribed above. Table of Contents89Agreements that provide us with the option to purchase the equity interests in and assets of the VIESecond Amended and Restated Exclusive Option Agreements. Pursuant to the second amended and restated exclusive option agreement, datedFebruary 27, 2020, among our company, our WFOE, Beijing Niudian and each of the shareholders of Beijing Niudian has irrevocably granted ourcompany an exclusive option to purchase all or part of his or her equity interests in Beijing Niudian. Our company or our designated person mayexercise such options at the price of RMB100 or the lowest price permitted under applicable laws of mainland China. The shareholders of BeijingNiudian undertake that, without our company’s prior written consent, they will not, among other things, (i) create any pledge or encumbrance ontheir equity interests in Beijing Niudian, (ii) transfer or otherwise dispose of their equity interests in Beijing Niudian, (iii) change Beijing Niudian’sregistered capital, (iv) amend Beijing Niudian’s articles of association, (v) dispose of Beijing Niudian’s material assets or enter into any materialcontract with a value of over RMB100,000 (except in the ordinary course of business), or (vi) merge Beijing Niudian with any other entity. Inaddition, Beijing Niudian undertakes that, without our company’s prior written consent, it will not, among other things, create any pledge orencumbrance on any of its assets, or transfer or otherwise dispose of its material assets (except in the ordinary course of business). The secondamended and restated exclusive option agreement will remain effective until all equity interests in and all the assets of Beijing Niudian have beentransferred to our company or our designated person.In the opinion of DaHui Lawyers, our PRC legal counsel:●the ownership structures of the VIE in mainland China and our WFOE, are not in violation of applicable laws and regulations of mainlandChina currently in effect; and●the contractual arrangements between our company, our WFOE, the VIE and its shareholders governed by the laws of mainland China arevalid, binding and enforceable, and will not result in any violation of applicable laws and regulations of mainland China currently ineffect.However, our PRC legal counsel has also advised us that there are substantial uncertainties regarding the interpretation and application of currentand future laws, regulations and rules of mainland China. Accordingly, the PRC regulatory authorities may take a view that is contrary to theopinion of our PRC legal counsel. It is uncertain whether any new laws or regulations of mainland China relating to variable interest entitystructures will be adopted or if adopted, what they would provide. If we or any of the VIE are found to be in violation of any existing or future lawsor regulations of mainland China, or fail to obtain or maintain any of the required permits or approvals, the PRC regulatory authorities would havebroad discretion to take action in dealing with such violations or failures. We have been further advised by our PRC legal counsel that if the PRCgovernment finds that the agreements in connection with the VIE structure do not comply with the laws of mainland China, we could be subject tosevere penalties, including being prohibited from continuing operations. See “Item 3. Key Information—D. Risk Factors—Risks Related to OurCorporate Structure—If the PRC government funds that the agreements that establish the structure for operating some of our operations inmainland China do not comply with the regulations of mainland China relating to the relevant industries, or if these regulations or the interpretationof existing regulations change or are interpreted differently in the future, we could be subject to severe penalties or be forced to relinquish ourinterests in those operations” and “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Uncertainties in theinterpretation and enforcement of the laws and regulations of mainland China could limit the legal protections available to you and us.”D.Property, Plants and EquipmentOur headquarters is located in Beijing, China, where we lease and occupy our office space with an aggregate floor area of approximately 2,300square meters. Our Niu Innovation Lab is located in Shanghai, China, where we lease and occupy our office space with an aggregate floor area ofapproximately 500 square meters. Our manufacturing facility and after sales services facilities are in Changzhou, China, where we have bothowned and leased facilities with a combined building area of approximately 123,500 square meters. In May 2020, we made prepayment ofRMB39.4 million in addition to prepayment of RMB2.0 million in 2019 to acquire land use rights of a piece of land with total area of 61,148square meters. In January 2021, we obtained the land use rights certificate. We built a new manufacturing facility on this piece of land to expandthe production capacity in order to meet the expected increasing demand of our e-scooters. Construction of the new facility was completed inAugust 2021 and we have commenced production from September 2021. Table of Contents90The following table sets forth the location, approximate size and primary use of facilities that we own or we lease, as of December 31, 2023:Our Own Facility Approximate Size (Building) inLocationSquare MetersPrimary UseChangzhou 111,467 Manufacturing and Maintenance Facility Approximate Size (Building) inLocationSquare MetersPrimary UseLease Expiration DateBeijing 2,330 Office December 31, 2024Shanghai 534 Office October 31, 2025Changzhou 12,000Manufacturing FacilityDecember 31, 2024Item 4A.Unresolved Staff CommentsNone.Item 5.Operating and Financial Review and ProspectsThe following discussion of our financial condition and results of operations is based upon, and should be read in conjunction with, our auditedconsolidated financial statements and the related notes included in this annual report on Form 20-F. This report contains forward-lookingstatements. See “Forward-Looking Information.” In evaluating our business, you should carefully consider the information provided under thecaption “Item 3. Key Information— D. Risk Factors” in this annual report on Form 20-F. We caution you that our businesses and financialperformance are subject to substantial risks and uncertainties.A.Operating ResultsOverviewWe currently design, manufacture and sell high-performance electric motorcycles, mopeds, bicycles, as well as kick-scooters and e-bikes. We havea diversified product portfolio that caters to the various demands of our users and addresses different urban travel scenarios. We have adopted anomnichannel retail model, integrating offline and online channels, to sell our products and provide services. We sold 709,802 units, including600,994 units sold in the China market and 108,808 units sold in international markets. We sell and service our products through our “city partner”system in China, which consisted of 288 city partners with 2,856 franchised stores in 251 cities in China, and 56 distributors in 54 countriesoverseas as of December 31, 2023, as well as on our own online store and third-party e-commerce platforms. We also offer the NIU app as anintegral part of the user experience.We currently generate a majority of our revenues from sales of e-scooters to our distributors offline or to individual consumers online. We alsogenerate revenues by selling accessories and spare parts and providing mobile app and other services.Key Factors Affecting Our Results of OperationsOur results of operations and financial condition are affected by the general factors driving China’s electric two-wheeled vehicles industry,including, among others, China’s overall economic growth, the increase in per capita disposable income, the expansion of urbanization, the growthin consumer spending and consumption upgrades, the competitive environment, and governmental policies and initiatives towards electric two-wheeled vehicles, as well as the general factors affecting the electric two-wheeled vehicles industry in international markets. Unfavorable changesin any of these general industry conditions could negatively affect demand for our products and materially and adversely affect our results ofoperations. Table of Contents91Our results of operations and financial condition in 2023 was affected by the lingering effects of lithium battery price hikes started in 2022. Wewere also affected by the downturn in macroeconomic conditions characterized by cautious spending behaviors in our target markets post COVID-19 and increased market competition in China and international markets.While our business is influenced by these general factors, our results of operations are more directly affected by company specific factors,including the following major factors:●our ability to increase e-scooter sales volume;●our ability to develop and sell more accessories and spare parts and services;●our ability to manage our supply chain and manufacturing;●our ability to enhance our operational efficiency; and●our ability to expand into international markets.Our ability to increase e-scooter sales volumeOur results of operations depend significantly on our ability to increase sales volume of our e-scooters. Revenues generated from e-scootersrepresented 87.8%, 90.1% and 88.9% of our net revenues in 2021, 2022 and 2023, respectively. The number of e-scooters sold decreased by 19.9%from 1,037,914 in 2021 to 831,593 in 2022 and further decreased to 709,802 in 2023. We experienced external challenges from the lingeringeffects of lithium battery price hikes in 2022, as well as the consumption downgrade in our addressable markets. Despite the headwinds, we havebeen committed to the strategy of focusing on premium and mass-premium products in 2023, by expanding our product line and growing ourclassic series. Although we still face uncertainties and pressures, we expect that our domestic sales will return to the growth track in 2024 with thelaunches of our new products. The following table shows the number of e-scooters we sold in the years presented:For the Year ended December 31,202120222023 Units % Units % Units %F Series 175,230 16.9 79,747 9.6 209,554 29.5G Series 430,057 41.4 233,737 28.1 134,671 19.0KQi Series 15,413 1.5 102,466 12.3 100,508 14.2MQi Series 106,914 10.3 41,906 5.0 98,726 13.9UQi Series 180,491 17.4 208,360 25.1 80,248 11.3NQi Series(1) 100,111 9.7 55,161 6.7 40,099 5.6Others(2) 29,698 2.9 110,216 13.3 45,996 6.5Total 1,037,914 100.0 831,593 100.0 709,802 100.0Notes:(1)Number of e-scooters sold including SQi and RQi series.(2)Others include B series, C series, BQi series, Niu Aero Sports Bicycles and power-assist e-bike EUB-01 launched in previous years.Our ability to increase e-scooters sales volume depends on our ability to innovate in design and technology and offer e-scooter products that meetour users’ demand. We have a diversified product portfolio that caters to the various demands of our users and addresses different urban travelscenarios. Currently, we offer two model lineups, comprising a number of different vehicle types. These include (i) our electric motorcycle, mopedand bicycle series, including the NQi, MQi, UQi, F series and others, and (ii) our micro-mobility series, including the kick-scooter series KQi andthe e-bike series BQi. We will continue to expand our product offerings by growing the classic series and introducing new models, aiming to coverthe full spectrum of the urban mobility solutions. Moreover, our ability to increase the sales volume also depends on our ability to continuallyenhance our brand to attract users and purchases, as well as our ability to successfully execute our omnichannel retail model and expand our salesnetwork both domestically and globally. Table of Contents92Our ability to develop and sell more accessories and spare parts and servicesOur results of operations are affected by our ability to develop and sell more accessories and spare parts, which generally have higher grossmargins. Revenues generated from selling accessories and spare parts represented 10.7%, 7.6% and 7.5% of our net revenues in 2021, 2022 and2023, respectively. Our results of operations are also affected by our ability to sell more services. We generate revenue from the NIU app byproviding subscription-based mobile app services. Users will need to subscribe for the mobile app service by paying a fee after an initial period ofone or two years. Revenues generated from providing services 1.5%, 2.3% and 3.6% of our revenues in 2021, 2022 and 2023, respectively. We willcontinue to further enhance the connectivity and other smart functionalities of our e-scooters and the NIU app and improve the user experience.This not only provides us with additional revenue streams but also improves our gross margin.Our ability to manage our supply chain and manufacturingMaterial and manufacturing costs of our e-scooters have historically accounted for a majority of our cost of revenues. Our future profitability issignificantly dependent on our ability to control those costs as a percentage of our revenues, which in turn depends on our ability to effectivelymanage our supply chain and manufacturing process. Raw materials and components used in the production of our e-scooters are sourced fromdomestic suppliers as well as international suppliers, and their prices are dependent on various factors in addition to supply and demand. Wegenerally engage multiple suppliers for the key components to minimize the dependency on any single supplier. We will continue to collaboratewith our suppliers to manage the cost, capacity and quality of the raw materials and components. As our business grows in scale, we have obtainedmore bargaining power and hence more favorable terms from suppliers, including pricing terms. Our gross margin remained stable at 21.9%,21.1% and 21.5% in 2021, 2022 and 2023, respectively, despite some temporary setbacks due to general economic conditions, our ability to controlcost of products sold also depends on our successful adoption of automatic and intelligent manufacturing equipment and procedures, and effectiveutilization of our platform-based engineering system, through which designs of new models may be easily adaptable to our existing productionlines.Our ability to enhance our operational efficiencyOur ability to achieve profitability is dependent on our ability to improve our operational efficiency and reduce the total operating expenses as apercentage of our revenues. Excluding share-based compensation expense, selling and marketing expenses have historically represented the largestportion of our total operating expenses. Advertising and promotion expenses, consisting primarily of online and offline advertisements, are event-driven, and tend to be higher when we launch new products. Our selling and marketing expenses as a percentage of our revenues were 9.0%, 13.9%and 18.7% in 2021, 2022 and 2023, respectively. The increase of our selling and marketing expenses as a percentage of our revenues in 2023 wasmainly due to our expansion in the international markets, especially kick-scooters.Our ability to lower our selling and marketing expenses as a percentage of revenues depends on our ability to manage our branding and promotionefforts, and improve selling and marketing efficiency. We have adopted an omnichannel retail model, integrating offline and online channels, to sellour products and provide services. Our offline channels consisted of 288 city partners with 2,856 franchised stores in 251 cities in China and 56distributors in 54 countries overseas as of December 31, 2023. These distributors promote our brand and market our products and services at theirown cost. We aim to invest more in local branding and marketing, strengthen connections with our customers, and enhance our adaptability to localmarket changes. Through our distributor networks, we will continue to expand and leverage our sales network to enhance our brand and improvesales efficiency. In addition, as our business grows, we expect to achieve greater operating leverage, increase the productivity of our personnel, andobtain more favorable terms from our suppliers.Our ability to expand to international marketsAs of December 31, 2023, we sold our smart e-scooters through 56 distributors in 54 countries overseas. In 2021, 2022 and 2023, 14.7%, 18.5%and 15.2% of our revenues were derived from sales in international markets, respectively. We believe that our well-recognized NIU brand, togetherwith our innovative design and continual expansion of product offerings, position us favorably to capture the enormous growth potential in theglobal market, and we will enter into selected international markets that offer identified growth opportunities and favorable government policies. InEurope, the U.S. and Southeast Asia, we will continue to expand our distribution network, launch new products suitable for local markets, partnerwith global leading companies to co-brand premium smart e-scooter models, and are exploring additional business opportunities to drive thegrowth beyond retail. We will pursue differentiated strategies for different overseas markets. We believe that our expansion into selectedinternational markets will not only drive our revenue growth but also enhance our brand awareness. Table of Contents93Key Components of Results of OperationsRevenuesWe generate revenues from sales of e-scooters, sales of accessories and spare parts, and provision of mobile app and other services. The followingtable sets forth the break-down of our revenues, in amounts and as percentages of revenues for the years presented:For the Year Ended December 31,202120222023 RMB % RMB % RMB US$ %(in thousands, except percentage data)Revenues:E-scooter sales 3,252,989 87.8 2,853,895 90.1 2,358,659 332,210 88.9Accessories and spare parts sales 397,088 10.7 242,297 7.6 197,634 27,836 7.5Service revenues 54,460 1.5 72,405 2.3 95,465 13,446 3.6Total 3,704,537 100.0 3,168,597 100.0 2,651,758 373,492 100.0We recognize revenues upon the satisfaction of our performance obligation (upon transfer of control of promised goods or services to customers) inan amount that reflects the consideration to which we expect to be entitled to in exchange for those goods or services, excluding amounts collectedon behalf of third parties (for example, value added taxes), sales volume rebates provided to qualified distributors based on the volume sold to suchdistributors in a certain period and sales return estimated based on historical experiences.E-scooter sales. We generate a large majority of our revenues from sales of e-scooters to our distributors offline or directly to individualconsumers online.We have adopted an omnichannel retail model, integrating the offline and online channels, to sell our e-scooters. In China, we have a “city partner”system, and sell e-scooters to the city partners. City partners are our distributors, who either open and operate franchised stores or sign upfranchised stores, and the franchised stores sell our products and provide services to individual consumers. In international markets, we sell todistributors. We generate revenues by selling e-scooters to our city partners in China and overseas distributors at a discount to the retail price. Inaddition, we incentivize them by providing sales volume rebate. We also sell directly to individual consumers through third-party e-commerceplatforms, as well as on our own online store. We treat distributors offline and individual consumers online as our customers.Accessories and spare parts sales. We sell proprietary accessories and spare parts to be installed on or used with our e-scooters, such as rearstorage boxes and front baskets. We also offer NIU-branded accessories and general merchandise, such as decorative car plates, key chains,bicycles and apparel.Service revenues. Our service revenues primarily relate to our services associated with NIU app, NIU Cover and R&D services to strategic partner.●NIU app. We generate revenues from the NIU app by providing subscription-based mobile app services. The subscription fee for theinitial one to two years is included in the retail price of our smart e-scooters, and after the initial period, users will need to pay a fee torenew the subscription.●NIU Cover. We facilitate the sale of insurance policies for our e-scooters to individual customers, which are provided by third-partyinsurance companies.●R&D services. We collaborate with a strategic partner for a joint R&D project and we earn revenues from the R&D services we provided.Cost of revenuesCost of products sold represents a majority of our cost of revenues, and the other components of cost of revenues include logistics costs, write-downs of inventory and warranty costs. Table of Contents94Cost of products sold mainly consists of the cost for purchasing raw materials and components, the labor cost and other costs for manufacturing e-scooters. We purchase raw materials and main components, such as batteries, motors, tires, battery chargers and controllers, from suppliers andassemble e-scooters in our own production facility.Gross marginOur gross margin is mainly affected by the retail price, product mix change, sales volume rebate and the cost of revenue per e-scooter. Thefollowing table shows our gross profit and gross margin for each of the years presented:For the Year Ended December 31,202120222023(in thousands, except for percentage data) RMB RMB RMB US$Gross profit 812,779 669,681 570,747 80,388Gross margin21.9%21.1%21.5%21.5%Operating expensesOur operating expenses consist of selling and marketing expenses, research and development expenses, and general and administrative expenses.The following table sets forth the break-down of our total operating expenses, in amounts and as percentages of total operating expenses for each ofthe years presented:For the Year Ended December 31,202120222023 RMB % RMB % RMB US$ %(in thousands except for percentage data)Operating expenses:Selling and marketing expenses 332,008 54.5 440,409 56.8 495,735 69,823 55.6Research and development expenses 135,218 22.2 176,478 22.8 150,986 21,266 16.9General and administrative expenses 141,799 23.3 158,461 20.4 244,518 34,439 27.5Total 609,025 100.0 775,348 100.0 891,239 125,528 100.0Selling and marketing expenses. Our selling and marketing expenses primarily consist of advertising and promotion expenses, payroll and relatedexpenses for personnel engaged in selling and marketing activities.The advertising and promotion expenses, consisting primarily of online and offline advertisements. We plan to continue to expand our new e-scooter product portfolio and sales network and retail channels, and engage in more selling and marketing activities to enhance our brandawareness and attract more purchases from new and existing customers in different geographic markets.Research and development expenses. Our research and development expenses mainly consist of payroll and related costs for employees involved inresearching and developing new products and technologies, design and development expenses, primarily including validation and testing fees, andexpenses associated with the use by these functions of our facilities and equipment, such as depreciation and rental expenses. We plan to continueour innovation in design and technology and further expand our product portfolio.General and administrative expenses. Our general and administrative expenses mainly consist of allowance for doubtful accounts, payroll andrelated costs for employees engaging in general corporate functions, professional fees, foreign currency exchange gains (losses) and other generalcorporate expenses, as well as expenses associated with the use by these functions of facilities and equipment, such as depreciation and rentalexpenses.TaxationCayman IslandsThe Cayman Islands currently levies no taxes on corporations based upon profits, income, capital gains or appreciation. There are no other taxeslikely to be material to us levied by the government of the Cayman Islands except for stamp duties which may be applicable on instrumentsexecuted in, or brought within the jurisdiction of the Cayman Islands. In addition, the Cayman Islands does not impose withholding tax onpayments of dividends. Table of Contents95Hong KongThe first HK$2 million of profits earned by our subsidiary incorporated in Hong Kong, Niu Technologies Group Limited, is taxed at 8.25%,representing a half the current tax rate, while the remaining profits continue to be taxed at the current tax rate of 16.5%. Niu Technologies GroupLimited is exempted from the Hong Kong income tax on its foreign-derived income. In addition, payments of dividends from Niu TechnologiesGroup Limited to our company are not subject to any withholding tax in Hong Kong. No provision for Hong Kong profits tax was made as we hadno estimated assessable profit that was subject to Hong Kong profits tax during 2021, 2022 or 2023.Mainland ChinaOur mainland China subsidiaries, the VIE, and VIE’s subsidiaries are subject to the PRC Enterprise Income Tax Law and are generally subject to astatutory income tax rate of 25%. Under the PRC Corporate Income Tax Law, preferential tax treatments will be granted to entities which conductbusinesses in certain encouraged sectors and to entities otherwise classified as High and New Technology Enterprises (HNTE). Jiangsu Xiaoniuand Beijing Niudian were qualified as HNTEs and enjoy a preferential income tax rate of 15% for the fiscal years from 2021 to 2023 and 2022 to2024, respectively. An entity could re-apply for the HNTE certificate when the prior certificate expires. The foregoing preferential income taxrates, however, are subject to periodic review and renewal by PRC authorities.The Enterprise Income Tax Law also imposes a withholding income tax of 10% on dividends distributed by a foreign investment enterprise to itsimmediate holding company outside of mainland China, if such immediate holding company is considered as a non-resident enterprise without anyestablishment or place within mainland China or if the received dividends have no connection with the establishment or place of such immediateholding company within mainland China, unless such immediate holding company’s jurisdiction of incorporation has a tax treaty with mainlandChina that provides for a different withholding arrangement. The Cayman Islands, where Niu Technologies is incorporated, does not have such taxtreaty with mainland China. According to the Arrangement between the Mainland China and the Hong Kong Special Administrative Region for theAvoidance of Double Taxation and Tax Evasion on Income, dividends paid by a foreign investment enterprise in mainland China to its immediateholding company in Hong Kong will be subject to withholding tax at a rate of no more than 5%, if the immediate holding company owns at least25% of the equity interest of the foreign investment enterprise and satisfies all other requirements under the tax arrangement and receives approvalfrom the tax authority. We did not record any dividend withholding tax, as our mainland China entities have no retained earnings in the periodspresented. See “Item 3. Key Information— D. Risk Factors—Risks Related to Doing Business in China—We may not be able to obtain certainbenefits under the tax treaty on dividends paid by our mainland China subsidiaries to us through our Hong Kong subsidiary.”The Enterprise Income Tax Law also provides that an enterprise established under the laws of a foreign country or region but whose “de factomanagement body” is located in mainland China be treated as a resident enterprise for mainland China tax purposes and consequently be subject tothe mainland China income tax at the rate of 25% for its global income. The implementing rules of the Enterprise Income Tax Law define thelocation of the “de facto management body” as “the place where the exercising, in substance, of the overall management and control of theproduction and business operation, personnel, accounting, property, etc., of a non-mainland China company is located.” Based on a review ofsurrounding facts and circumstances, we do not believe that it is likely that our operations outside of mainland China should be considered aresident enterprise for mainland China tax purposes. If our holding company in the Cayman Islands or any of our subsidiaries outside of mainlandChina were deemed to be a “resident enterprise” under the PRC Enterprise Income Tax Law, it would be subject to enterprise income tax on itsworldwide income at a rate of 25%. See “Item 3. Key Information— D. Risk Factors—Risks Related to Doing Business in China—If we areclassified as a mainland China resident enterprise for mainland China income tax purposes, such classification could result in unfavorable taxconsequences to us and our non-mainland China shareholders or ADS holders.” Table of Contents96Results of OperationsThe following table sets forth a summary of our consolidated results of operations for the years presented, both in absolute amount and as apercentage of our net revenues for the years presented. Year-to-year comparisons of historical results of operations should not be relied upon asindicative of future performance.For the Year Ended December 31,202120222023 RMB % RMB % RMB US$ %(in thousands except for percentage data)Revenues 3,704,537 100.0 3,168,597 100.0 2,651,758 373,492 100.0Cost of revenues(1) (2,891,758) (78.1) (2,498,916) (78.9) (2,081,011) (293,104) (78.5)Gross profit 812,779 21.9 669,681 21.1 570,747 80,388 21.5Operating expenses Selling and marketing expenses (332,008) (9.0) (440,409) (13.9) (495,735) (69,823) (18.7)Research and development expenses (135,218) (3.7) (176,478) (5.6) (150,986) (21,266) (5.7)General and administrative expenses (141,799) (3.8) (158,461) (5.0) (244,518) (34,439) (9.2)Total operating expenses(1) (609,025) (16.4) (775,348) (24.5) (891,239) (125,528) (33.6)Government grants 48,727 1.3 16,385 0.5 2,969 418 0.1Operating income (loss) 252,481 6.8 (89,282) (2.8) (317,523) (44,722) (12.0)Interest expenses (6,168) (0.2) (5,716) (0.2) (1,424) (201) (0.1)Interest income 5,376 0.1 12,860 0.4 35,492 4,999 1.3Investment income 21,168 0.6 10,918 0.3 1,426 201 0.1Income (loss) before income taxes 272,857 7.4 (71,220) (2.2) (282,029) (39,723) (10.6)Income tax (expense) benefit (47,037) (1.3) 21,757 0.7 10,193 1,436 0.4Net income (loss) 225,820 6.1 (49,463) (1.6) (271,836) (38,287) (10.3)(1)Share-based compensation expenses are allocated in cost of revenues and operating expenses items as follows:For the Year Ended December 31,202120222023 RMB RMB RMB US$(in thousands)Cost of revenues 847 1,225 1,238 174Selling and marketing expenses 13,293 15,433 9,992 1,407Research and development expenses 17,061 22,362 21,654 3,050General and administrative expenses 16,017 19,199 14,775 2,082Total 47,218 58,219 47,659 6,713Year Ended December 31, 2023 Compared to Year Ended December 31, 2022RevenuesOur revenues decreased by 16.3% from RMB3,168.6 million in 2022 to RMB2,651.8 million (US$373.5 million) in 2023, which was primarily dueto a decrease in e-scooter sales volume.The revenues from e-scooter sales decreased by 17.4% from RMB2,853.9 million in 2022 to RMB2,358.7 million (US$332.2 million) in 2023,which was mainly due to a decrease in the sales volume of e-scooters by 14.6% from 831,593 in 2022 to 709,802 in 2023. The decrease in the salesvolume of e-scooters was mainly due to the relatively slow pace of macro-economic recovery post COVID-19 and increased market competition inChina and international markets. Table of Contents97The revenues per e-scooter decreased from RMB3,810.3 in 2022 to RMB3,735.9 (US$526.2) in 2023, mainly due to the decreased sales volume ofe-motorcycles and e-mopeds in international markets, which generally have a higher average selling price. The respective impact from the changein sales volume of e-scooters and revenues per e-scooter on our revenues in 2023, as compared to 2022, was RMB464.0 million (calculated byassuming the revenues per e-scooter in 2023 was the same as that in 2022) and RMB61.8 million (calculated by assuming the sales volume of e-scooters in 2023 was the same as that in 2022).The revenues from accessory and spare parts sales decreased from RMB242.3 million in 2022 to RMB197.6 million (US$27.8 million) in 2023,mainly due to the reduction in battery pack sales from overseas shared mobility operators, and the decrease in the sales volume of e-motorcyclesand e-mopeds in international markets, which usually correlates with purchases of accessories and spare parts. The service revenues increased fromRMB72.4 million in 2022 to RMB95.5 million (US$13.4 million) in 2023, mainly attributable to the growth of our user base.Cost of revenuesOur cost of revenues decreased by 16.7% from RMB2,498.9 million in 2022 to RMB2,081.0 million (US$293.1 million) in 2023. The decreasewas primarily attributable to a decrease in cost of products from RMB2,376.8 million in 2022 to RMB1,992.5 million (US$280.6 million) in 2023,which was generally in line with the decrease in e-scooter sales volume.The cost per e-scooter, defined as cost of revenues divided by the number of e-scooters sold in a specified period, decreased from RMB3,005.0 in2022 to RMB2,931.8 (US$412.9) in 2023, which was primarily due to lower freight cost for overseas sales.Gross profitWe generated a gross profit of RMB570.7 million (US$80.4 million) in 2023, as compared to a gross profit of RMB669.7 million in 2022. Ourgross margin increased from 21.1% in 2022 to 21.5% in 2023, which was mainly due to lower raw material cost and change in product mix as aresult of the launch of various new products.Selling and marketing expensesOur selling and marketing expenses increased by 12.6% from RMB440.4 million in 2022 to RMB495.7 million (US$69.8 million) in 2023. Theincrease was primarily due to an increase of RMB64.7 million in rental expenses, and an increase of RMB18.2 million in after-sales services,partially offset by a decrease of RMB14.0 million in advertising and promotion expenses, a decrease of RMB11.0 million in staff cost, and adecrease of RMB5.4 million in share-based compensation. The increase in rental and after-sales expenses was primarily driven by overseasbusiness expansion. The decrease in advertising and promotion expenses was primarily due to reduced marketing and promotional activitiesconducted in China in 2023. The decrease in staff cost was primarily due to a decreased in the number of our sales staff. Our sales and marketingexpenses as a percentage of our revenues increased from 13.9% in 2022 to 18.7% in 2023.Research and development expensesOur research and development expenses decreased by 14.4% from RMB176.5 million in 2022 to RMB151.0 million (US$21.3 million) in 2023.The decrease was mainly attributable to a decrease of RMB16.8 million in staff cost and share-based compensation, and a decrease of RMB5.1million in system development expenses. The decrease in staff cost was mainly due to a reduction in the number of research and developmentpersonnel. The decrease of system development expenses primarily resulting from our cost-effective measures. Our research and developmentexpenses as a percentage of our revenues slightly increased from 5.6% in 2022 to 5.7% in 2023. Table of Contents98General and administrative expensesOur general and administrative expenses increased by 54.3% from RMB158.5 million in 2022 to RMB244.5 million (US$34.4 million) in 2023.The increase was primarily due to an increase of RMB114.4 million in allowance for doubtful accounts, partially offset by a decrease of RMB19.3million in professional fees and office and miscellaneous expenses, and a decrease of RMB15.3 million in staff cost and share-based compensation.The decrease in staff cost was mainly the result of a reduction in the number of employees with general corporate functions. The decrease in officeand miscellaneous expenses was mainly due to enjoying the preferential VAT policy for the Advanced Manufacturing Enterprises. Our general andadministrative expenses as a percentage of our revenues increased from 5.0% in 2022 to 9.2% in 2023. Excluding allowance for doubtful accounts,our general and administrative expenses as a percentage of our revenues was 4.0% in 2023, as compared to 4.2% in 2022.Government grantsOur government grants decreased from RMB16.4 million in 2022 to RMB3.0 million (US$0.4 million) in 2023. The government grants mainlyconsisted of subsidies or tax refunds from local government or industrial parks where our offices are located and there were no significantcommitment, contingencies or provision for recapture conditions for the government grants received.Net lossAs a result of the foregoing, we were in a net loss of RMB271.8 million (US$38.3 million) in 2023, compared to a net loss of RMB49.5 million in2022.Year Ended December 31, 2022 Compared to Year Ended December 31, 2021RevenuesOur revenues decreased by 14.5% from RMB3,704.5 million in 2021 to RMB3,168.6 million in 2022, which was primarily due to a decrease in e-scooter sales volume.The revenues from e-scooter sales decreased by 12.3% from RMB3,253.0 million in 2021 to RMB2,853.9 million in 2022, which was mainly dueto a decrease in the sales volume of e-scooters by 19.9% from 1,037,914 in 2021 to 831,593 in 2022. The decrease in the sales volume of e-scooterswas driven by the increase in raw materials and the impact of the COVID-19, which resulted in a decrease in sales in the domestic market.The revenues per e-scooter increased from RMB3,569.2 in 2021 to RMB3,810.3 in 2022, mainly due to better premium product mix and priceincrease. The respective impact from the change in sales volume of e-scooters and revenues per e-scooter on our revenues in 2022, as compared to2021, was RMB736.4 million (calculated by assuming the revenues per e-scooter in 2022 was the same as that in 2021) and RMB250.2 million(calculated by assuming the sales volume of e-scooters in 2022 was the same as that in 2021).The revenues from accessory and spare parts sales decreased from RMB397.1 million in 2021 to RMB242.3 million in 2022, mainly due to thebattery pack sales reduction from overseas shared mobility operators, and the decrease in the sales volume of e-scooters in China, with whichpurchases of accessories and spare parts usually correlate. The service revenues increased from RMB54.5 million in 2021 to RMB72.4 million in2022, mainly attributable to the continued growth of our user base.Cost of revenuesOur cost of revenues decreased by 13.6% from RMB2,891.8 million in 2021 to RMB2,498.9 million in 2022. The decrease was primarilyattributable to a decrease in cost of products from RMB2,826.6 million in 2021 to RMB2,376.8 million in 2022, which was primarily due to adecrease in e-scooter sales volume.The cost per e-scooter, defined as cost of revenues divided by the number of e-scooters sold in a specified period, increased from RMB2,786.1 in2021 to RMB3005.0 in 2022, which was primarily due to higher raw material costs and product mix change. Table of Contents99Gross profitWe generated a gross profit of RMB669.7 million in 2022, as compared to a gross profit of RMB812.8 million in 2021. Our gross margin slightlydecreased from 21.9% in 2021 to 21.1% in 2022, which was mainly due to higher raw material cost and change in product mix as a result of thelaunch of various new products.Selling and marketing expensesOur selling and marketing expenses increased by 32.7% from RMB332.0 million in 2021 to RMB440.4 million in 2022. The increase wasprimarily due to an increase of RMB31.4 million in advertising and promotion expenses, an increase of RMB41.8 million in depreciation andamortization, an increase of RMB10.2 million in staff cost, an increase of RMB2.1 million in share-based compensation, an increase of RMB6.3million in rental expenses and an increase of RMB14.7 million in other selling expenses. The increase in advertising and promotion expenses wasmainly due to increased advertising and marketing activities especially in international markets. The increase in depreciation and amortization wasdue to higher depreciation of furniture and decoration expenditures of the franchised stores as a result of the increased number of stores in China.The increase in staff cost and share-based compensation was due to an increase in the number of sales staff and additional share incentive grants.The increase in rental expenses and other selling expenses was due to the growth of kick-scooters sales in international markets. Excludingadvertising and promotion expenses, our selling and marketing expenses as a percentage of our revenues was 7.8% in 2022, as compared to 4.6% in2021.Research and development expensesOur research and development expenses increased by 30.5% from RMB135.2 million in 2021 to RMB176.5 million in 2022. The increase wasmainly attributable to an increase of RMB22.4 million in staff cost, an increase of RMB5.3 million in share-based compensation, and an increase ofRMB21.0 million in design and testing expenses. The increase in staff cost and share-based compensation was mainly due to an increase in thenumber of staff and additional share incentive grants. The increase of design and testing expenses was due to the research and development of newproducts, especially in micro-mobility sector. Our research and development expenses as a percentage of our revenues increased from 3.7% in 2021to 5.6% in 2022.General and administrative expensesOur general and administrative expenses increased by 11.8% from RMB141.8 million in 2021 to RMB158.5 million in 2022. The increase wasprimarily due to an increase of RMB14.7 million in staff cost, an increase of RMB3.2 million in share-based compensation, an increase ofRMB23.8 million in allowance for doubtful accounts and a decrease of RMB24.6 million in foreign currency exchange gain. The increase in staffcost and share-based compensation was mainly due to an increase in the number of staff and additional share incentive grants. The increase inallowance for doubtful accounts was mainly due to overseas accounts receivable. The decrease in foreign currency exchange gain was mainlybecause of the appreciation of US dollar. Our general and administrative expenses as a percentage of our revenues increased from 3.8% in 2021 to5.0% in 2022.Government grantsOur government grants decreased from RMB48.7 million in 2021 to RMB16.4 million in 2022. These government grants mainly consisted ofincentives from local government authorities and were for the purpose of giving immediate financial support from local government authoritieswith no future related costs or obligations.Net lossAs a result of the foregoing, we generated a net loss of RMB49.5 million in 2022, compared to a net income of RMB225.8 million in 2021.B.Liquidity and Capital ResourcesCash flows and working capitalWe had net cash provided by operating activities of RMB334.2 million and RMB93.7 million (US$13.2 million) in 2021 and 2023, respectively,and net cash used in operating activities of RMB121.9 million in 2022. Table of Contents100Our primary sources of liquidity have been cash provided by operating activities and financing activities. As of December 31, 2023, we hadRMB980.2 million (US$138.1 million) in cash, cash equivalents and restricted cash, of which approximately 34.2% were held in Renminbi and theremainder was mainly held in U.S. dollars.After considering all facts available to us as of the date of this annual report, we believe our cash and cash equivalents, restricted cash and termdeposits will be sufficient to meet our current and anticipated needs for general corporate purposes for at least the next 12 months. We may,however, need additional cash resources in the future if we experience changes in business conditions or other developments. We may also needadditional cash resources in the future if we find and wish to pursue opportunities for investment, acquisition, capital expenditure or similar actions.If we determine that our cash requirements exceed the amount of cash and cash equivalents we have on hand, we may seek to issue equity or equitylinked securities or obtain debt financing. The issuance and sale of additional equity would result in further dilution to our shareholders. Theincurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations.We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.We have the following short-term bank borrowings:●In June 2021, we entered into a two-year secured loan facility agreement with a commercial bank in the PRC, pursuant to which we wereentitled to borrow a secured bank loan of up to RMB160,000,000. In June 2021, we drew down RMB160,000,000 under this facilityagreement bearing interest of 3.5% per annum, and repaid RMB40,000,000 and RMB120,000,000 in September and December 2021,respectively. In December 2021, June 2022 and December 2022, we drew down RMB160,000,000 each under this facility agreement forthree times, bearing interest of 3.2%, 3.0% and 3.0%, respectively, and fully repaid in June 2022, December 2022 and January 2023,respectively, and the cash collateral in this bank was released accordingly. As of December 31, 2023, the total outstanding balance ofthese borrowings was nil, and the cash collateral in the form of a US dollar deposit held with the bank was nil.●In March 2023, we entered into a twelve-month secured loan facility agreement with a commercial bank in the PRC, pursuant to whichwe are entitled to borrow a secured bank loan of up to RMB160,000,000. In June and August 2023, we drew down RMB41,380,805 andRMB58,619,195, respectively, under this facility agreement bearing interest of 3.2% per annum. As of December 31, 2023, the totaloutstanding borrowings were RMB100,000,000 and we provided cash collateral in the form of a US dollar deposit equivalent toRMB107,521,732 held with the bank.●In April 2022, we entered into a twelve-month revolving loan facility agreement with a commercial bank in the PRC, and was entitled toextend the maturity date to April 2024. Pursuant to this agreement, we are entitled to borrow a short-term bank borrowing and notespayable of up to RMB300,000,000. As of December 31, 2023, notes payable represents non-interest-bearing bank acceptance notes weissued to suppliers that are due within twelve months.Although we consolidate the results of the VIE, we only have access to the assets or earnings of the VIE through our contractual arrangements withthe VIE and its shareholders. See “Item 4. Information on the Company—C. Organizational Structure” For restrictions and limitations on liquidityand capital resources as a result of our corporate structure, see “—Holding Company Structure.”A substantial majority of our revenues have been, and we expect they are likely to continue to be, in the form of Renminbi. Under existing foreignexchange regulations of mainland China, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior SAFE approval as long as certain routine proceduralrequirements are fulfilled. Therefore, our mainland China subsidiaries are allowed to pay dividends in foreign currencies to us without prior SAFEapproval by following certain routine procedural requirements. However, current regulations of mainland China permit our mainland Chinasubsidiaries to pay dividends to us only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards andregulations. Our mainland China subsidiaries are required to set aside at least 10% of its after-tax profits after making up previous years’accumulated losses each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of its registered capital. Thesereserves are not distributable as cash dividends. Historically, our mainland China subsidiaries have not paid dividends to us. Furthermore, capitalaccount transactions, which include foreign direct investment and loans, must be approved by and/or registered with SAFE, its local branches andcertain local banks. Table of Contents101The following table sets forth the movements of our cash flows for the years presented: For the Year Ended December 31, 202120222023 RMB RMB RMB US$(in thousands)Selected Consolidated Cash Flow Data: Net cash provided by (used in) operating activities 334,175 (121,856) 93,735 13,202Net cash (used in) provided by investing activities (295,059) 397,892 216,310 30,467Net cash provided by (used in) financing activities 6,246 (17,797) (59,346) (8,359)Effect of foreign currency exchange rate changes on cash, cash equivalents andrestricted cash (8,490) 30,043 8,914 1,255Net increase in cash, cash equivalents and restricted cash 36,872 288,282 259,613 36,565Cash, cash equivalents and restricted cash at the beginning of the year 395,473 432,345 720,627 101,499Cash, cash equivalents and restricted cash at the end of the year 432,345 720,627 980,240 138,064Operating activitiesNet cash provided by operating activities in 2023 was RMB93.7 million (US$13.2 million), as compared to net loss of RMB271.8 million(US$38.3 million). The difference between net cash provided by operating activities and net loss was attributable to adjustments for certain non-cash expenses and net changes in working capital. Adjustments for non-cash expenses consisted principally of depreciation and amortizationexpenses of RMB148.1 million (US$20.9 million), allowance for doubtful accounts of RMB139.4 million (US$19.6 million) and share-basedcompensation expenses of RMB47.7 million (US$6.7 million). Changes in working capital accounts that affected operating cash flow consistedprimarily of (i) a decrease of RMB65.4 million (US$9.2 million) in accounts receivable and (ii) a decrease of RMB33.3 million (US$4.7 million) inaccounts payable and notes payable. The decrease in accounts receivable was primarily due to enhanced efficiency of cash management.Net cash used in operating activities in 2022 was RMB121.9 million, as compared to net loss of RMB49.5 million. The difference between net cashused in operating activities and net loss was attributable to adjustments for certain non-cash expenses and net changes in working capital.Adjustments for non-cash expenses consisted principally of depreciation and amortization expenses of RMB142.7 million and share-basedcompensation expenses of RMB58.2 million. Changes in working capital accounts that affected operating cash flow consisted primarily of (i) aRMB156.1 million increase in inventories and (ii) a RMB125.9 million increase in prepayments and other current assets. The increase ininventories and prepayments and other current assets was primarily due to the growth of our business and operation.Net cash provided by operating activities in 2021 was RMB334.2 million, as compared to net income of RMB225.8 million. The differencebetween net cash provided by operating activities and net loss was attributable to adjustments for certain non-cash expenses and net changes inworking capital. Adjustments for non-cash expenses consisted principally of depreciation and amortization expenses of RMB95.5 million andshare-based compensation expenses of RMB47.2 million. Changes in working capital accounts that affected operating cash flow consistedprimarily of (i) a RMB286.7 million increase in accounts payable and notes payable, (ii) a RMB168.5 million increase in accounts receivable and(iii) a RMB131.2 million increase in inventories. The increase in accounts payable and notes payable, accounts receivable and inventories wasprimarily due to the growth of our business and operation.Investing activitiesNet cash provided by investing activities in 2023 was RMB216.3 million (US$30.5 million), consisting primarily of cash received from sale ofshort-term investments and withdrawal from term deposits, partially offset by cash paid for purchases of term deposits, short-term investments, andproperty, plant and equipment.Net cash provided by investing activities in 2022 was RMB397.9 million, consisting primarily of cash received from sale of short-term investmentsand withdrawal from term deposits, partially offset by cash paid for purchases of term deposits, short-term investments, and property, plant andequipment.Net cash used in investing activities in 2021 was RMB295.1 million, consisting primarily of cash paid for purchases of term deposits, short-terminvestments, and property, plant and equipment, partially offset by cash received from sale of short-term investments and withdrawal from termdeposits. Table of Contents102Financing activitiesNet cash used in financing activities in 2023 was RMB59.3 million (US$8.4 million), consisting primarily of repayments for short-term bankborrowings, partially offset by the proceeds from short-term bank borrowings and exercise of employee stock option.Net cash used in financing activities in 2022 was RMB17.8 million, consisting primarily of repayments for short-term bank borrowings, partiallyoffset by the proceeds from short-term bank borrowings and exercise of employee stock option.Net cash provided by financing activities in 2021 was RMB6.2 million, consisting primarily of proceeds from short-term bank borrowings andexercise of employee stock option, partially offset by repayments for short-term bank borrowings.Material cash requirementsOur material cash requirements as of December 31, 2023 and any subsequent interim period primarily include our capital expenditures, operatinglease obligations and purchase obligations.We made capital expenditures of RMB285.7 million, RMB135.3 million and RMB78.9 million (US$11.1 million) in 2021, 2022 and 2023,respectively. Our capital expenditures for 2021, 2022 and 2023 represented cash paid for purchase of property, plant and equipment. We willcontinue to make such capital expenditures to support the expected growth of our business.We intend to fund our existing and future material cash requirements primarily with anticipated cash flows from operations, our existing cashbalance and other financing alternatives.We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have notentered into any off-balance sheet derivative instruments. Furthermore, we do not have any retained or contingent interest in assets transferred to anunconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in anyunconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research anddevelopment services with us.We did not have any significant capital and other commitments, long-term obligations or guarantees as of December 31, 2023.Holding Company StructureOur company, Niu Technologies, is a holding company with no material operations of its own. We conduct operations in mainland China primarilythrough our subsidiaries and the VIE in mainland China. As a result, although other means are available for us to obtain financing at the holdingcompany level, Niu Technologies’ ability to pay dividends depends upon dividends paid by our mainland China subsidiaries and license andservice fees paid by the VIE in mainland China.If any of our existing or newly formed mainland China subsidiaries incur debt on their own behalf in the future, the instruments governing theirdebt may restrict their ability to pay dividends to Niu Technologies. In addition, our WFOE is permitted to pay dividends to us only out of itsretained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Under the laws of mainland China, each ofour WFOE and the VIE is required to set aside at least 10% of its after-tax profits each year, if any, to fund certain statutory reserve funds untilsuch reserve funds reach 50% of its registered capital. In addition, our WFOE may allocate a portion of its after-tax profits based on PRCaccounting standards to enterprise expansion funds and staff bonus and welfare funds at its discretion, and the VIE may allocate a portion of theirafter-tax profits based on PRC accounting standards to a discretionary surplus fund at its discretion. The statutory reserve funds and thediscretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of mainland China issubject to examination by the banks designated by SAFE. Our WFOE has not paid dividends and will not be able to pay dividends until it generatesaccumulated profits and meets the requirements for statutory reserve funds.C.Research and DevelopmentSee “Item 4. Information On the Company—B. Business Overview— NIU Innovation Lab” and “—Intellectual Property.” Table of Contents103D.Trend InformationOther than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events sinceJanuary 1, 2024 that are reasonably likely to have a material and adverse effect on our revenues, income, profitability, liquidity or capital resources,or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial conditions.E.Critical Accounting Policies and EstimatesWe prepare our financial statements in conformity with U.S. GAAP, which requires us to make judgments, estimates and assumptions that affectthe amounts reported in our consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highlyuncertain at the time the accounting estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period to period, oruse of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition orresults of operations. There are other items within our financial statements that require estimation but are not deemed critical, as defined above.Changes in estimates used in these and other items could have a material impact on our consolidated financial statements. For a detailed discussionof our significant accounting policies and related judgments, please see Note 2, “Summary of Significant Accounting Policies” of the notes to ourconsolidated financial statements included elsewhere in this annual report. You should read the following descriptions of critical accountingestimates in conjunction with our consolidated financial statements and other disclosures included in this annual report.Income taxesOur current income taxes are provided on the basis of net income (loss) for financial reporting purposes, and adjusted for income and expenseitems which are not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions. Ourdeferred income taxes are provided using the asset and liability method. A valuation allowance is provided to reduce the amount of deferredincome tax assets if based on the weight of available evidence, it is more likely than not that some portion, or all, of the deferred income tax assetswill not be realized.We estimate the need for any valuation allowance by applying significant judgment and considering all available evidence including past resultsand future projections. We reassess our estimates periodically and record a partial or full valuation allowance release if needed.Recent Accounting PronouncementsWe discuss recently adopted and issued accounting standards in Note 2, “Summary of Significant Accounting Policies—Recent AccountingPronouncements” to our consolidated financial statements included elsewhere in this annual report.Item 6.Directors, Senior Management and EmployeesA.Directors and Senior ManagementThe following table sets forth information regarding our directors and executive officers as of the date of this annual report.Directors and Executive Officers Age Position/TitleYan Li 45 Chairman of the Board of Directors and Chief Executive OfficerFion Wenjuan Zhou 40 Director and Chief Financial OfficerChangqing Ye 53 Independent DirectorMei-Wei Cheng 74 Independent DirectorJulian Juul Wolhardt 50 Independent DirectorJohn Jinshu Zhang 64 Independent Director Table of Contents104Dr. Yan Li has served as the chairman of our board of directors since March 2018, our chief executive officer since December 2017 and our chiefoperating officer since January 2016. Prior to joining our company in 2016, Dr. Li was a principal at KKR Capstone Limited from 2009 to 2015and he oversaw KKR Capstone Limited’s portfolio operation in China, including Qingdao Haier Group, a home appliance manufacturer listed onthe Shanghai Stock Exchange, China Modern Diary, a milk producer listed on the Hong Kong Stock Exchange, China Cord Blood Corporation, aprovider of cord blood banking services in China listed on the New York Stock Exchange and United Envirotech, an environmental engineeringand consulting solutions provider listed on the Singapore Stock Exchange. Dr. Li was awarded the Operational Excellence Award by Private EquityInternational in 2012. Prior to KKR Capstone Limited, Dr. Li worked for McKinsey & Company from 2008 to 2009, where he advised variouscompanies in high-tech, industrial goods and retail sectors. Prior to McKinsey, Dr. Li worked as a senior research engineer at Qualcomm Inc. inSan Diego, CA from 2006 to 2008, focusing on the development of 3G and 4G communications technology. Dr. Li holds three patents on 3Gcommunications. Dr. Li received a bachelor’s degree from the University of California at Berkeley in 2001 and a Ph.D. from Stanford University in2005, both in electronics and electrical engineering.Ms. Fion Wenjuan Zhou has served as our director since December 2023 and our chief financial officer since November 2021. She is responsiblefor overseeing investor relations, strategic investment, finance, legal, internal controls and ESG compliance of our company. Prior to joining us,Ms. Zhou served as the chief financial officer of Sogou Inc. (NYSE: SOGO) from July 2020 to October 2021. Between 2015 and 2019, Ms. Zhouserved as a finance director of Alibaba Group (NYSE: BABA) and as chief financial officer of Yidian Zixun, a leading mobile news aggregator inChina. Prior to that, Ms. Zhou also held senior finance roles at Viadeo S.A. and Concord Medical Services Holdings Limited (NYSE: CCM). Ms.Zhou started her career as an auditor at PricewaterhouseCoopers Zhong Tian in 2006. Ms. Zhou received a bachelor’s degree in FinancialManagement from the University of International Business and Economics in 2006 and an Executive MBA from HEC Paris in 2016. Ms. Zhou is amember of the American Institute of Certified Public Accountants and a Chartered Global Management Accountant.Mr. Changqing Ye has served as our director since October 2018. He currently also serves as an independent director of Baozun Inc., a companylisted on Nasdaq, Ascentage Pharma Group International, a company listed on the Hong Kong Stock Exchange, Jinxin Fertility Group Limited, acompany listed on the Hong Kong Stock Exchange, Hygeia Healthcare Holdings Limited, a company listed on the Hong Kong Stock Exchange,VNET Group Inc., a company listed on Nasdaq, and NWTN Inc., a company listed on Nasdaq. From October 2018 to September 2022, he servedas an independent director of Luzhou Bank, a company listed on the Hong Kong Stock Exchange. From February 2011 to December 2015, Mr. Yeserved as an investment committee member and then group chief financial officer and managing director of CITIC PE Group. Prior to that, Mr. Yeworked at PricewaterhouseCoopers’ China and UK offices from July 1992 to January 2011. Mr. Ye received his bachelor’s degree in journalismfrom Huazhong University of Science and Technology in China in 1992 and an MBA from Warwick University in 1999. Mr. Ye is a certified publicaccountant in China.Mr. Mei-Wei Cheng has served as our director since October 2018. Mr. Cheng serves as a director of LEAR Corporation, and served as non-executive chairman of the board of directors of HCP Packaging and INTERPLEX Holdings, both portfolio companies of Baring Private EquityAsia. Mr. Cheng served as a member of the audit committee and finance committee of the board of directors of Seagate Technology, a companylisted on Nasdaq, from 2013 to 2018. From 2010 to 2014, Mr. Cheng served as board member and audit committee member of Diebold Nixdorf, acompany listed on NYSE. From February 2015 to January 2017, Mr. Cheng served as the chairman of the board of directors of Pactera TechnologyInternational Ltd., a portfolio company of Blackstone Group. From July 2010 to April 2014, Mr. Cheng was the chief executive officer of SiemensNortheast Asia and president and chief executive officer of Siemens China. Prior to joining Siemens, Mr. Cheng served as the chairman and chiefexecutive officer of Ford Motor (China) Ltd. And as a corporate vice president of Ford Motor Company from 1998 to 2008 and as the executivechairman at Ford Motor Company (China) Ltd. And as a group vice president of Ford Motor Company from 2009 to 2010. Prior to joining Ford,Mr. Cheng held several executive positions at General Electric Corporation and AT&T. Mr. Cheng received a bachelor’s degree in industrialengineering/operations research from Cornell University in 1972 and an MBA from Rutgers University in 1999.Mr. Julian Juul Wolhardt has served as our director since October 2018. Mr. Wolhardt is currently chief executive officer of DCP Advisors Limited.From August 2006 to December 2016, Mr. Wolhardt was a partner focused on Greater China at KKR Asia Limited. Prior to joining KKR AsiaLimited, Mr. Wolhardt served as executive director at Morgan Stanley Private Equity Asia from 1998 to 2006. Mr. Wolhardt was an analyst atLazard Freres & Co from 1996 to 1997 and worked at Coopers & Lybrand from 1995 to 1996. Mr. Wolhardt received his bachelor’s degree inaccounting from the University of Illinois (Urbana-Champaign) in 1995. Mr. Wolhardt is a certified public accountant and certified managementaccountant in the U.S. Table of Contents105Mr. John Jinshu Zhang has served as our director since October 2018. Mr. Zhang is currently general counsel of Blue California. From October2000 to May 2021, Mr. Zhang was a partner at Dentons LLP, Edwards Wildman LLP, Reed Smith LLP, and Greenberg Traurig, LLP successively.Mr. Zhang worked as an associate of Jones Day LLP and Graham & James, LLP from November 1993 to November 1999. Mr. Zhang received hisbachelor’s degree in literature from Peking University in 1982, master’s degree in Asian studies from University of Hawaii at Manoa in 1989,master’s degree in intellectual history from University of California, Los Angeles in 1990 and Juris doctor degree from University of California,Berkeley in 1993.B.CompensationIn 2023, we paid an aggregate of approximately RMB3.54 million (US$0.50 million) in cash to our executive officers, and approximatelyRMB1.06 million (US$0.15 million) in cash to our non-executive directors. We have not set aside or accrued any amount to provide pension,retirement or other similar benefits to our directors and executive officers.Share Incentive PlansIn January 2016, our shareholders and board of directors approved the 2016 Global Share Incentive Plan to attract and retain the best availablepersonnel, provide additional incentives to employees, directors and consultants, and promote the success of our business. In March 2018, weamended the 2016 Global Share Incentive Plan, or the Amended and Restated 2016 Plan, so that the maximum aggregate number of ordinaryshares that may be issued under the Amended and Restated 2016 Plan is 5,861,480 ordinary shares. As of December 31, 2023, options to purchase1,330,130 ordinary shares and nil restricted share units had been granted and were outstanding under the Amended and Restated 2016 Plan,excluding options or restricted share units that were forfeited or canceled after the relevant grant dates.In September 2018, our shareholders and board of directors approved the 2018 Share Incentive Plan to promote the success and enhance the valueof our company, which became effective immediately prior to the completion of our initial public offering. Under the 2018 Share Incentive Plan, orthe 2018 Plan, the maximum aggregate number of ordinary shares available for issuance is initially 6,733,703 ordinary shares, which shall beincreased by a number equal to 1.5% of the total number of our issued and outstanding ordinary shares on the last day of each of the immediatelypreceding fiscal year during the term of the 2018 Plan commencing with the fiscal year ended December 31, 2019, if determined and approved bythe board of directors for the relevant fiscal year. Our board of directors has approved annual increases of 2,285,407, 2,305,212, and 2,313,923ordinary shares for the years ended December 31, 2021, 2022 and 2023, representing 1.5% of total issued and outstanding shares as of December31, 2020, 2021 and 2022, respectively, pursuant to the 2018 Plan. As of December 31, 2023, options to purchase 2,612,928 ordinary shares and2,003,074 restricted share units had been granted and were outstanding under the 2018 Plan, excluding options or restricted share units that wereforfeited or canceled after the relevant grant dates. The following paragraphs describe the principal terms of the Amended and Restated 2016 Planand the 2018 Plan:Type of Awards. The Amended and Restated 2016 plan permits the awards of options, restricted share units, restricted shares, share appreciationrights, dividend equivalents and share payments. The 2018 plan permits the awards of options, restricted shares, restricted share units or other typesof awards approved by the board of directors or a committee of one or more members of the board of directors.Plan Administration. Our board of directors or a committee appointed by the board of directors will administer the plan. The committee or theboard of directors, as applicable, will determine the participants to receive awards, the type and number of awards to be granted to each participant,and the terms and conditions of each grant.Award Agreement. Awards granted under the plan are evidenced by an award agreement that sets forth the terms, conditions and limitations foreach award, which may include the term of the award, the provisions applicable in the event that the grantee’s employment or service terminates,and our authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind the award.Eligibility. We may grant awards to our employees, consultants and directors.Vesting Schedule. In general, the plan administrator determines the vesting schedule, which is specified in the relevant award agreement.Exercise of Options. The plan administrator determines the exercise price for each award, which is stated in the relevant award agreement. Optionsthat are vested and exercisable will terminate if they are not exercised prior to the time as the plan administrator determines at the time of grant.However, the maximum exercisable term is ten years from the date of grant. Table of Contents106Transfer Restrictions. Awards may not be transferred in any manner by the participant other than in accordance with the exceptions provided in theplan or the relevant award agreement or otherwise determined by the plan administrator, such as transfers by will or the laws of descent anddistribution.Termination and Amendment of the Plan. Unless terminated earlier, the plan has a term of ten years. Our board of directors has the authority toterminate, amend, suspend or modify the plan in accordance with our articles of association. However, without the prior written consent of theparticipant, no such action may adversely affect in any material way any award previously granted pursuant to the plan.The following table summarizes, as of December 31, 2023, the options granted and outstanding under the Amended and Restated 2016 Plan and the2018 Plan to our directors and executive officers and our other employees, excluding options that were forfeited or canceled after the relevantgrant dates. Ordinary Shares Exercise UnderlyingPriceDate ofNameOptions(US$/Share)Date of GrantExpirationYan Li * 3.425 August 1, 2019 July 31, 2029Other employees 3,013,058 0.2 and 3.425 February 1, 2018~August 1, 2019 January 31, 2028~ July 31,2029* Less than 1% of our total ordinary shares outstanding as of December 31, 2023.The following table summarizes, as of December 31, 2023, the restricted share units granted and outstanding under the Amended and Restated2016 Plan and the 2018 Plan to our directors and executive officers and our other employees, excluding restricted share units that were forfeited orcanceled after the relevant grant dates. Ordinary Shares UnderlyingRestricted ShareDate ofNameUnitsDate of GrantExpirationFion Wenjuan Zhou*March 15, 2022March 14, 2032Changqing Ye*October 19, 2022October 18, 2032Mei-Wei Cheng * October 19, 2022 October 18, 2032Julian Juul Wolhardt*October 19, 2022October 18, 2032John Jinshu Zhang * October 19, 2022 October 18, 2032Other employees 1,669,074 February 1, 2019 ~ October 1, 2023 January 31, 2029 ~ September 30, 2033* Less than 1% of our total ordinary shares outstanding as of December 31, 2023.C.Board PracticesBoard of DirectorsOur board of directors consists of six directors. A director is not required to hold any shares in our company by way of qualification. A directorwho is in any way, whether directly or indirectly, interested in a contract or transaction or proposed contract or transaction with our company isrequired to declare the nature of his interest at a meeting of our directors. Subject to the Nasdaq Global Market rules and disqualification by thechairman of the relevant board meeting, a director may vote in respect of any contract or transaction or proposed contract or transactionnotwithstanding that he may be interested therein, and if he does so his vote shall be counted and he shall be counted in the quorum at any meetingof our directors at which any such contract or transaction or proposed contract or transaction is considered. Our directors may exercise all thepowers of our company to raise or borrow money and to mortgage or charge its undertaking, property and assets (present and future) and uncalledcapital or any part thereof, to issue debentures, debenture stock, bonds and other securities, whether outright or as collateral security for any debt,liability or obligation of our company or of any third party. None of our non-executive directors has a service contract with us that provides forbenefits upon termination of service. Table of Contents107Committees of the Board of DirectorsWe have established three committees under the board of directors: an audit committee, a compensation committee and a nominating and corporategovernance committee. We have adopted a charter for each of the three committees. Each committee’s members and functions are described below.Audit Committee. Our audit committee consists of Mr. Changqing Ye, Mr. John Jinshu Zhang and Mr. Mei-Wei Cheng. Mr. Changqing Ye is thechairman of our audit committee. We have determined that Mr. Changqing Ye, Mr. John Jinshu Zhang and Mr. Mei-Wei Cheng satisfy the“independence” requirements of Rule 5605 of the Nasdaq Stock Market Rules and Rule 10A-3 under the Exchange Act. We have determined thatMr. Changqing Ye qualifies as an “audit committee financial expert.” The audit committee oversees our accounting and financial reportingprocesses and the audits of the financial statements of our company. The audit committee is responsible for, among other things:●appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by theindependent auditors;●reviewing with the independent auditors any audit problems or difficulties and management’s response;●discussing the annual audited financial statements with management and the independent auditors;●reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitorand control major financial risk exposures;●reviewing and approving all proposed related party transactions;●meeting separately and periodically with management and the independent auditors; and●monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of ourprocedures to ensure proper compliance.Compensation Committee. Our compensation committee consists of Mr. John Jinshu Zhang and Mr. Julian Juul Wolhardt. Mr. John Jinshu Zhangis the chairman of our compensation committee. We have determined that Mr. John Jinshu Zhang and Mr. Julian Juul Wolhardt satisfy the“independence” requirements of Rule 5605 of the Nasdaq Stock Market Rules. The compensation committee assists the board in reviewing andapproving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executiveofficer may not be present at any committee meeting during which his compensation is deliberated. The compensation committee is responsible for,among other things:●reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and otherexecutive officers;●reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors;●reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and●selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’sindependence from management.Nominating and Corporate Governance Committee. Our nominating and corporate governance committee consists of Mr. John Jinshu Zhang, Mr.Changqing Ye and Mr. Mei-Wei Cheng. Mr. John Jinshu Zhang is the chairperson of our nominating and corporate governance committee. We havedetermined that Mr. John Jinshu Zhang, Mr. Changqing Ye and Mr. Mei-Wei Cheng satisfy the “independence” requirements of Rule 5605 of theNasdaq Stock Market Rules. The nominating and corporate governance committee assists the board of directors in selecting individuals qualified tobecome our directors and in determining the composition of the board and its committees. The nominating and corporate governance committeewill be responsible for, among other things:●selecting and recommending to the board nominees for election by the shareholders or appointment by the board; Table of Contents108●reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge,skills, experience and diversity;●making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of theboard; and●advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as ourcompliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance andon any remedial action to be taken.Duties of DirectorsUnder Cayman Islands law, our directors owe fiduciary duties to our company, including a duty of loyalty, a duty to act honestly and a duty to actin what they consider in good faith to be in our best interests. Our directors must also exercise their powers only for a proper purpose. Our directorsalso have a duty to exercise skills they actually possess and such care and diligence that a reasonably prudent person would exercise in comparablecircumstances. It was previously considered that a director need not exhibit in the performance of his duties a greater degree of skill than mayreasonably be expected from a person of his knowledge and experience. However, English and Commonwealth Courts have moved toward anobjective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands. In fulfilling theirduty of care to us, our directors must ensure compliance with our sixth amended and restated memorandum and articles of association, as amendedand restated from time to time, and the class rights vested thereunder in the holders of the shares. In certain limited exceptional circumstances, ashareholder may have the right to seek damages in our name if a duty owed by our directors is breached.Our board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs. The functions and powersof our board of directors include, among others:●convening shareholders’ annual and extraordinary general meetings and reporting its work to shareholders at such meetings;●declaring dividends and distributions;●appointing officers and determining the term of office of the officers;●exercising the borrowing powers of our company and mortgaging the property of our company; and●approving the transfer of shares in our company, including the registration of such shares in our share register.Terms of Directors and OfficersOur directors may be appointed by an ordinary resolution of our shareholders. Alternatively, our board of directors may, by the affirmative vote of asimple majority of the directors present and voting at a board meeting appoint any person as a director to fill a casual vacancy on our board or as anaddition to the existing board. Our directors may be appointed on terms that the Director shall automatically retire from office (unless he has soonervacated office) at the next or a subsequent annual general meeting or upon any specified event or after any specified period in a written agreementbetween our company and the Director, if any; but no such term shall be implied in the absence of express provision and our Directors hold officeuntil such time as they are removed from office by an ordinary resolution of our shareholders (or where they have sooner vacated office). Inaddition, a director will cease to be a director if he (i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) dies or isfound to be or becomes of unsound mind; (iii) resigns his office by notice in writing; (iv) without special leave of absence from our board, is absentfrom meetings of our board for three consecutive meetings and our board resolves that his office be vacated; or (v) is removed from office pursuantto any other provision of our articles of association.Our officers are appointed by and serve at the discretion of the board of directors, and may be removed by our board of directors. Table of Contents109Employment Agreements and Indemnification AgreementsWe have entered into employment agreements with each of our executive officers. Under these agreements, each of our executive officers isemployed for a specified time period. We may terminate employment for cause, at any time, for certain acts of the executive officer, such ascontinued failure to satisfactorily perform, willful misconduct or gross negligence in the performance of agreed duties, conviction or entry of aguilty or nolo contendere plea of any felony or any misdemeanor involving moral turpitude, or dishonest act that results in material to our detrimentor material of the employment agreement. We may also terminate an executive officer’s employment without cause upon 60-day advance writtennotice. In such case of termination by us, we will provide severance payments to the executive officer as may be agreed between the executiveofficer and us. The executive officer may resign at any time with a 60-day advance written notice.Each executive officer has agreed to hold, both during and after the termination or expiry of his or her employment agreement, in strict confidenceand not to use, except as required in the performance of his or her duties in connection with the employment or pursuant to applicable law, any ofour confidential information or trade secrets, any confidential information or trade secrets of our clients or prospective clients, or the confidential orproprietary information of any third party received by us and for which we have confidential obligations. The executive officers have also agreed todisclose in confidence to us all inventions, designs and trade secrets which they conceive, develop or reduce to practice during the executiveofficer’s employment with us and to assign all right, title and interest in them to us, and assist us in obtaining and enforcing patents, copyrights andother legal rights for these inventions, designs and trade secrets.In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his or heremployment and typically for one year following the last date of employment. Specifically, each executive officer has agreed not to (i) solicit fromany customer doing business with us during the effective term of the employment agreement business of the same or of a similar nature to ourbusiness; (ii) solicit from any of our known potential customer business of the same or of a similar nature to that which has been the subject of ourknown written or oral bid, offer or proposal, or of substantial preparation with a view to making such a bid, proposal or offer; (iii) solicit theemployment or services of, or hire or engage, any person who is known to be employed or engaged by us; or (iv) otherwise interfere with ourbusiness or accounts, including, but not limited to, with respect to any relationship or agreement between any vendor or supplier and us.We have also entered into indemnification agreements with each of our directors and executive officers. Under these agreements, we agree toindemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made byreason of their being a director or officer of our company.Board Diversity MatrixBoard Diversity Matrix (As of February 29, 2024)Country of Principal Executive Offices PRCForeign Private Issuer YesDisclosure Prohibited Under Home Country Law NoTotal Number of Directors 6 Did NotNon- DiscloseFemaleMaleBinaryGenderPart I: Gender Identity Directors15N/AN/APart II: Demographic Background Underrepresented Individual in Home Country Jurisdiction 0LGBTQ+ 0Did Not Disclose Demographic Background 0 Table of Contents110D.EmployeesAs of December 31, 2023, we had 550 full-time employees. We had a total of 702 employees as of December 31, 2021 and 641 employees as ofDecember 31, 2022. The following table sets forth the numbers of our employees categorized by function as of December 31, 2023. % of TotalFunction Number EmployeesSales and marketing 220 40.0Research and Development 162 29.5Supply chain management and general administration 168 30.5Total number of employees 550 100.0A substantial majority of the personnel in our manufacturing facility, mainly the personnel working on the assembly and production lines, areoutsourced from third parties, and are not our employees.Our success depends on our ability to attract, retain and motivate qualified employees that share our values and vision. We offer employeescompetitive salaries, which are potentially adjusted twice a year based on the employee’s performance. We believe that we maintain a goodworking relationship with our employees.Under the regulations of mainland China, we are required to participate in and make contributions to housing funds and various employee socialsecurity plans that are organized by applicable local municipal and provincial governments, including pension, medical, work-related injury andunemployment benefit plans. See “Item 3. Key Information— D. Risks Related to Doing Business in China—Failure to make adequatecontributions to various employee benefit plans as required by the regulations of mainland China may subject us to penalties.”E.Share OwnershipExcept as specifically noted, the following table sets forth information with respect to the beneficial ownership of our ordinary shares as ofFebruary 29, 2024 by:●each of our directors and executive officers; and●each of our principal shareholders who beneficially own more than 5% of our total outstanding shares on an as-converted basis.The calculations in the table below are based on 155,196,912 ordinary shares, consisting of 138,654,892 Class A ordinary shares and 16,542,020Class B ordinary shares, as of February 29, 2024. Table of Contents111Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially ownedby a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, includingthrough the exercise of any option, warrant or other right or the conversion of any other security. These shares, however, are not included in thecomputation of the percentage ownership of any other person.Ordinary Shares Beneficially Owned % of % ofClass AClass Btotalaggregateordinaryordinaryordinaryvotingsharessharessharespower***Directors and Executive Officers**: Yan Li(1) 830,000 6,615,000 4.8 13.3Fion Wenjuan Zhou * — * *Changqing Ye — — — —Mei-Wei Cheng * — * *Julian Juul Wolhardt * — * *John Jinshu Zhang * — * *All Directors and Executive Officers as a Group 984,600 6,615,000 4.9 13.4Principal Shareholders: Glory Achievement Fund Limited(2) 49,321,935 — 31.8 24.1Niu Holding Inc.(3) — 9,927,020 6.4 19.4* Less than 1% of our total ordinary shares outstanding as of February 29, 2024.** The business address of Yan Li, and Fion Wenjuan Zhou is No.1 Building, No. 195 Huilongguan East Road, Changping District, Beijing 102208, People’s Republic of China. Thebusiness address of Mr. Changqing Ye is Flat B, 36/F, Harbour Green, 8 Sham Mong Road, Tai Kok Tsui, Kowloon, Hong Kong. The business address of Mr. Mei-Wei Cheng is1202 Building 10, Green Court, 777 Biyun Road, Pudong, Shanghai, 201206, People’s Republic of China. The business address of Mr. Julian Juul Wolhardt is 21F, York House,The Landmark, 15 Queen’s Road Central, Hong Kong. The business address of Mr. John Jinshu Zhang is 749 Via del Monte, Palos Verdes Estates, California 90274, the UnitedStates of America.*** For each person or group included in this column, percentage of total voting power represents voting power based on both Class A and Class B ordinary shares held by such personor group with respect to all outstanding shares of our Class A and Class B ordinary shares as a single class. Each holder of our Class A ordinary shares is entitled to one vote pershare. Each holder of our Class B ordinary shares is entitled to four votes per share. Our Class B ordinary shares are convertible at any time by the holder into Class A ordinaryshares on a one-for-one basis.(1).Represents (i) 210,000 Class A ordinary shares held in the form of ADSs held by Dr. Yan Li in the brokerage account of the administrator of our employee stock option program,(ii) 620,000 Class A Ordinary Shares issuable to Dr. Yan Li upon exercise of share options within 60 days of February 29, 2024, and (iii) 6,615,000 Class B ordinary shares heldby ELLY Holdings Limited, a BVI business company. ELLY Holdings Limited is wholly owned by Dr. Yan Li. The registered address of ELLY Holdings Limited is VistraCorporate Services Centre, Wickhams Cay II, Road Town, Tortola, British Virgin Islands VG1110.(2).Represents 49,321,935 Class A ordinary shares held by Glory Achievement Fund Limited, a Cayman Islands company. Glory Achievement Fund Limited is wholly owned byBull Group Limited, a Cayman Islands company. Bull Group Limited is wholly owned by BULL TRUST, which has Mr. Yi’nan Li as the beneficiary and is administered by anindependent trustee and initially by three individual protectors unrelated to Mr. Li. Any decision making with respect to the voting or disposal of the shares held by GloryAchievement Fund Limited in the Issuer or other dealings in the Issuer’s securities is subject to approval by the protectors. Mr. Yi’nan Li will be able to replace the protectors withpersons appointed by himself in August 2028 or when the trust beneficially owns, through Glory Achievement Fund Limited or otherwise, no more than 10% of the outstandingshares of the Issuer on an as-converted basis. The registered address of Glory Achievement Fund Limited is P.O. Box 2075, George Town, Grand Cayman KY1-1105, CaymanIslands. The following information is based on the Schedule 13D filed by Glory Achievement Fund Limited, among others, on December 7, 2023. The above information is basedon the Schedule 13G jointly filed by (i) Glory Achievement Fund Limited, (ii) Bull Group Limited and (iii) BULL TRUST on December 7, 2023, and assumes that GloryAchievement Fund Limited’s shareholding has not change since December 7, 2023.(3).Represents 9,927,020 Class B ordinary shares held by Niu Holding Inc., a BVI business company, which is 82.7% owned by LUCK GENIE HOLDINGS LIMITED, a BVIbusiness company, and 17.3% owned by WEALTH ERUPT HOLDINGS LIMITED, a BVI business company. LUCK GENIE HOLDINGS LIMITED is wholly owned by LegendChamp Investment Limited, a BVI business company. Legend Champ Investment Limited is wholly owned by Token Who Cares Trust. The settlor and beneficiary of Token WhoCares Trust is Mr. Token Yilin Hu, our former director and vice president. WEALTH ERUPT HOLDINGS LIMITED is beneficially owned by Mr. Carl Chuankai Liu. Theregistered address of Niu Holding Inc. is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, British Virgin Islands VG1110. The above information is basedon the Schedule 13G/A jointly filed by (i) Niu Holding Inc., (ii) LUCK GENIE HOLDINGS LIMITED, (iii) Legend Champ Investment Limited, (iv) Token Who Cares Trust and(v) Token Yilin Hu on February 9, 2023, and assumes that Niu Holding Inc.’s shareholding has not changed since December 31, 2022. Table of Contents112To our knowledge, as of February 29, 2024, a total of 101,545,280 Class A ordinary shares were held by three record holders in the United States,representing approximately 65.4% of our total outstanding shares on an as-converted basis. One of these record holders is Citibank, N.A., thedepositary of our ADS program. None of our outstanding Class B ordinary shares were held by record holders in the United States as of February29, 2024. The number of beneficial owners of our ADSs in the United States is likely to be much larger than the number of record holders of ourordinary shares in the United States. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of ourcompany.Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares are entitled to onevote per share, while holders of Class B ordinary shares are entitled to four votes per share. Holders of Class A and Class B ordinary shares votetogether as one class on all matters subject to a shareholders’ vote. Each Class B ordinary share is convertible into one Class A ordinary share atany time by the holder thereof, while Class A ordinary shares are not convertible into Class B ordinary shares under any circumstance. See “Item10.B. Additional Information—Memorandum and Articles of Association” for a more detailed description of our Class A ordinary shares and ClassB ordinary shares.F.Disclosure of Registrant’s Action to Recover Erroneously Awarded CompensationNot applicable.Item 7.Major Shareholders and Related Party TransactionsA.Major ShareholdersPlease refer to “Item 6. Directors, Senior Management and Employees— E. Share Ownership.”B.Related Party TransactionsContractual Arrangements with the VIE and Its ShareholdersSee “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements with the VIE.”Employment Agreements and Indemnification AgreementsSee “Item 6. Directors, Senior Management and Employees—B. Compensation.”Share Options and Restricted Shares GrantsPlease refer to “Item 6. Directors, Senior Management and Employees— B. Compensation.”C.Interests of Experts and CounselNot applicable.Item 8. Financial InformationA.Consolidated Statements and Other Financial InformationWe have appended consolidated financial statements filed as part of this annual report.Legal ProceedingsWe are currently not a party to any material legal or administrative proceedings. We may from time to time be subject to various legal oradministrative claims and proceedings arising in the ordinary course of business. Litigation or any other legal or administrative proceeding,regardless of the outcome, is likely to result in substantial cost and diversion of our resources, including our management’s time and attention. Table of Contents113Dividend PolicyOur board of directors has discretion on whether to distribute dividends, subject to certain requirements of Cayman Islands law. In addition, ourshareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our board of directors. Ineither case, all dividends are subject to certain restrictions under Cayman Islands law, namely that our company may only pay dividends out ofprofits or share premium, and always that in no circumstances may a dividend be paid if this would result in our company being unable to pay itsdebts as they fall due in the ordinary course of business. Even if we decide to pay dividends, the form, frequency and amount will depend upon ourfuture operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the boardof directors may deem relevant.We do not have any present plan to pay any cash dividends on our ordinary shares in the foreseeable future. We currently intend to retain most, ifnot all, of our available funds and any future earnings to operate and expand our business.Our company is a holding company incorporated in the Cayman Islands. We may rely on dividends from our subsidiaries in mainland China for ourcash requirements, including any payment of dividends to our shareholders. Regulations of mainland China may restrict the ability of our mainlandChina subsidiaries to pay dividends to us. See “Item 4. Information on the Company—B. Business Overview—Regulations—Regulations Relatingto Dividend Distribution.”If we pay any dividends on our ordinary shares, we will pay those dividends which are payable in respect of the Class A ordinary shares underlyingthe ADSs to the depositary, as the registered holder of such Class A ordinary shares, and the depositary then will pay such amounts to the ADSholders in proportion to the Class A ordinary shares underlying the ADSs held by such ADS holders, subject to the terms of the deposit agreement,including the fees and expenses payable thereunder. Cash dividends on our ordinary shares, if any, will be paid in U.S. dollars.B.Significant ChangesExcept as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our audited consolidatedfinancial statements included in this annual report.Item 9.The Offer and ListingA.Offering and Listing DetailsOur ADSs, each representing two Class A ordinary shares, have been listed on The Nasdaq Global Market since October 19, 2018 under thesymbol “NIU.”B.Plan of DistributionNot applicable.C.MarketsThe ADSs have been listed on the Nasdaq Global Market since October 19, 2018 under the symbol “NIU.”D.Selling ShareholdersNot applicable.E.DilutionNot applicable.F.Expenses of the IssueNot applicable. Table of Contents114Item 10. Additional InformationA.Share CapitalNot applicable.B.Memorandum and Articles of AssociationThe following are summaries of material provisions of our currently effective sixth amended and restated memorandum and articles of association,as well as the Companies Act (As Revised) insofar as they relate to the material terms of our ordinary shares. The information set forth in Exhibits2.5 and 2.6 to this annual report on Form 20-F is incorporated herein by reference.Registered Office and ObjectsOur registered office in the Cayman Islands is located at the offices of Maples Corporate Services Limited at PO Box 309, Ugland House, GrandCayman, KY1-1104, Cayman Islands. The objects for which our company is established are unrestricted and we have the full power and authorityto carry out any object not prohibited by the laws of the Cayman Islands.Board of DirectorsSee “Item 6. Directors, Senior Management and Employees— C. Board Practices—Board of Directors.”Ordinary SharesOrdinary Shares. Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. Holders of our Class A ordinary sharesand Class B ordinary shares will have the same rights except for voting and conversion rights. Each Class A ordinary share shall entitle the holderthereof to one vote on all matters subject to vote at our general meetings, and each Class B ordinary share shall entitle the holder thereof to fourvotes on all matters subject to vote at our general meetings. Our ordinary shares are issued in registered form and are issued when registered in ourregister of members. We may not issue shares to bearer. Our shareholders who are non-residents of the Cayman Islands may freely hold and votetheir shares.Conversion. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary sharesare not convertible into Class B ordinary shares under any circumstances. Any number of Class B ordinary shares held by a holder thereof will beautomatically and immediately converted into an equal number of Class A ordinary shares upon the occurrence of (i) any direct or indirect sale,transfer, assignment or disposition of such number of Class B ordinary shares by the holder thereof or the direct or indirect transfer or assignmentof the voting power attached to such number of Class B ordinary shares through voting proxy or otherwise to any person that is not an affiliate ofsuch holder or (ii) the direct or indirect sale, transfer, assignment or disposition of a majority of the issued and outstanding voting securities of, orthe direct or indirect transfer or assignment of the voting power attached to such voting securities through voting proxy or otherwise, or the director indirect sale, transfer, assignment or disposition of all or substantially all of the assets of, a holder of Class B ordinary shares that is an entity toany person that is not an affiliate of such holder.Dividends. Our directors may from time to time declare dividends (including interim dividends) and other distributions on our shares in issue andauthorize payment of the same out of the funds of our company lawfully available therefor. In addition, our shareholders may declare dividends byordinary resolution, but no dividend shall exceed the amount recommended by our directors. Our memorandum and articles of association providethat dividends may be declared and paid out of the funds of our company lawfully available therefor. Under the laws of the Cayman Islands, ourcompany may pay a dividend out of either profits or share premium account; provided that in no circumstances may a dividend be paid if thiswould result in our company being unable to pay its debts as they fall due in the ordinary course of business.Voting Rights. Holders of our Class A ordinary shares and our Class B ordinary shares shall, at all times, vote together as one class on all matterssubmitted to a vote by our shareholders at any general meeting of our company. Each Class A ordinary share shall be entitled to one vote, and eachClass B ordinary share shall be entitled to four votes, on all matters subject to a vote at general meetings of our company. Voting at any meeting ofshareholders is by show of hands unless a poll (before or on the declaration of the result of the show of hands) is demanded. A poll may bedemanded by the chairman of such meeting or any one shareholder holding not less than 10% of the votes attaching to the shares present in personor by proxy. Table of Contents115An ordinary resolution to be passed at a meeting by the shareholders requires the affirmative vote of a simple majority of the votes attaching to theordinary shares cast at a meeting, while a special resolution requires the affirmative vote of no less than two-thirds of the votes cast attaching to theissued and outstanding ordinary shares at a meeting. A special resolution will be required for important matters such as a change of name ormaking changes to our memorandum and articles of association. Our shareholders may, among other things, divide or combine their shares byordinary resolution.General Meetings of Shareholders. As a Cayman Islands exempted company, we are not obliged by the Companies Act to call shareholders’annual general meetings. Our memorandum and articles of association provide that we may (but are not obliged to) in each year hold a generalmeeting as our annual general meeting in which case we shall specify the meeting as such in the notices calling it, and the annual general meetingshall be held at such time and place as may be determined by our directors.Shareholders’ general meetings may be convened by the chairman of our board of directors or by our directors (acting by a resolution of ourboard). Advance notice of at least seven calendar days is required for the convening of our annual general shareholders’ meeting (if any) and anyother general meeting of our shareholders. A quorum required for any general meeting of shareholders consists of, at the time when the meetingproceeds to business, one or more of our shareholders holding shares which carry in aggregate (or representing by proxy) not less than one-third ofall votes attaching to all of our shares in issue and entitled to vote at such general meeting.The Companies Act provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with anyright to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. Ourmemorandum and articles of association provide that upon the requisition of any one or more of our shareholders holding shares which carry inaggregate not less than one-third of all votes attaching to all issued and outstanding shares of our company entitled to vote at general meetings, ourboard will convene an extraordinary general meeting and put the resolutions so requisitioned to a vote at such meeting. However, our memorandumand articles of association do not provide our shareholders with any right to put any proposals before annual general meetings or extraordinarygeneral meetings not called by such shareholders.Transfer of Ordinary Shares. Subject to the restrictions set out below, any of our shareholders may transfer all or any of his or her ordinary sharesby an instrument of transfer in the usual or common form or any other form approved by our board of directors.Our board of directors may, in its absolute discretion, decline to register any transfer of any ordinary share which is not fully paid up or on whichwe have a lien. Our board of directors may also decline to register any transfer of any ordinary share unless:●the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such otherevidence as our board of directors may reasonably require to show the right of the transferor to make the transfer;●the instrument of transfer is in respect of only one class of ordinary shares;●the instrument of transfer is properly stamped, if required;●in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does not exceedfour; and●a fee of such maximum sum as the Nasdaq Global Market may determine to be payable or such lesser sum as our directors may from timeto time require is paid to us in respect thereof.If our directors refuse to register a transfer they shall, within three months after the date on which the instrument of transfer was lodged, send toeach of the transferor and the transferee notice of such refusal.The registration of transfers may, on ten calendar days’ notice being given by advertisement in such one or more newspapers, by electronic meansor by any other means in accordance with the rules of the Nasdaq Global Market be suspended and the register closed at such times and for suchperiods as our board of directors may from time to time determine; provided, however, that the registration of transfers shall not be suspended northe register closed for more than 30 days in any year as our board may determine. Table of Contents116Liquidation. On the winding up of our company, if the assets available for distribution amongst our shareholders shall be more than sufficient torepay the whole of the share capital at the commencement of the winding up, the surplus shall be distributed amongst our shareholders inproportion to the par value of the shares held by them at the commencement of the winding up, subject to a deduction from those shares in respectof which there are monies due, of all monies payable to our company for unpaid calls or otherwise. If our assets available for distribution areinsufficient to repay all of the paid-up capital, such the assets will be distributed so that, as nearly as may be, the losses are home by ourshareholders in proportion to the par value of the shares held by them.Calls on Shares and Forfeiture of Shares. Our board of directors may from time to time make calls upon shareholders for any amounts unpaid ontheir shares in a notice served to such shareholders at least 14 days prior to the specified time and place of payment. The shares that have beencalled upon and remain unpaid are subject to forfeiture.Redemption, Repurchase and Surrender of Shares. We may issue shares on terms that such shares are subject to redemption, at our option or at theoption of the holders of these shares, on such terms and in such manner as may be determined, before the issue of such shares, by our board ofdirectors or by our shareholders by special resolution. Our company may also repurchase any of our shares on such terms and in such manner ashave been approved by our board of directors or by an ordinary resolution of our shareholders. Under the Companies Act, the redemption orrepurchase of any share may be paid out of our company’s profits or out of the proceeds of a new issue of shares made for the purpose of suchredemption or repurchase, or out of capital (including share premium account and capital redemption reserve) if our company can, immediatelyfollowing such payment, pay its debts as they fall due in the ordinary course of business. In addition, under the Companies Act no such share maybe redeemed or repurchased (a) unless it is fully paid up, (b) if such redemption or repurchase would result in there being no shares outstanding or(c) if the company has commenced liquidation. In addition, our company may accept the surrender of any fully paid share for no consideration.Variations of Rights of Shares. Whenever the capital of our company is divided into different classes the rights attached to any such class may,subject to any rights or restrictions for the time being attached to any class, only be materially adversely varied with the consent in writing of theholders of all of the issued shares of that class or with the sanction of an ordinary resolution passed at a separate meeting of the holders of theshares of that class. The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, subject to anyrights or restrictions for the time being attached to the shares of that class, be deemed to be materially adversely varied by the creation, allotment orissue of further shares ranking pari passu with or subsequent to them or the redemption or purchase of any shares of any class by our company. Therights of the holders of shares shall not be deemed to be materially adversely varied by the creation or issue of shares with preferred or other rightsincluding, without limitation, the creation of shares with enhanced or weighted voting rights.Issuance of Additional Shares. Our memorandum of association authorizes our board of directors to issue additional ordinary shares from time totime as our board of directors shall determine, to the extent of available authorized but unissued shares.Our memorandum of association also authorizes our board of directors to establish from time to time one or more series of preference shares and todetermine, with respect to any series of preference shares, the terms and rights of that series, including:●the designation of the series;●the number of shares of the series;●the dividend rights, dividend rates, conversion rights, voting rights; and●the rights and terms of redemption and liquidation preferences.Our board of directors may issue preference shares without action by our shareholders to the extent authorized but unissued. Issuance of theseshares may dilute the voting power of holders of ordinary shares.Inspection of Books and Records. Holders of our ordinary shares will have no general right under Cayman Islands law to inspect or obtain copies ofour list of shareholders or our corporate records (save for our memorandum and articles of association, our register of mortgages and charges andspecial resolutions of our shareholders). However, we intend to provide our shareholders with our annual audited financial statements. Table of Contents117Anti-Takeover Provisions. Some provisions of our memorandum and articles of association may discourage, delay or prevent a change of controlof our company or management that shareholders may consider favorable, including provisions that:●authorize our board of directors to issue preference shares in one or more series and to designate the price, rights, preferences, privilegesand restrictions of such preference shares without any further vote or action by our shareholders; and●limit the ability of shareholders to requisition and convene general meetings of shareholders.However, under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our memorandum and articles ofassociation for a proper purpose and for what they believe in good faith to be in the best interests of our company.Exempted Company. We are an exempted company with limited liability under the Companies Act. The Companies Act distinguishes betweenordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outsideof the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the same asfor an ordinary company except that an exempted company:●does not have to file an annual return of its shareholders with the Registrar of Companies;●is not required to open its register of members for inspection;●does not have to hold an annual general meeting;●may issue shares with no par value;●may obtain an undertaking against the imposition of any future taxation (such undertakings are given for up to 30 years);●may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;●may register as a limited duration company; and●may register as a segregated portfolio company.“Limited liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on the shares of the company(except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose orother circumstances in which a court may be prepared to pierce or lift the corporate veil).Differences in Corporate LawThe Companies Act (As Revised) is derived, to a large extent, from the older Companies Acts of England but does not follow recent UnitedKingdom statutory enactments, and accordingly there are significant differences between the Companies Act (As Revised) and the currentCompanies Act of England.In addition, the Companies Act (As Revised) differs from laws applicable to United States corporations and their shareholders. Set forth below is asummary of certain significant differences between the provisions of the Companies Act (As Revised) applicable to us and the laws applicable toUnited States corporations and companies incorporated in the State of Delaware.Mergers and Similar ArrangementsThe Companies Act (As Revised) permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companiesand non-Cayman Islands companies. For these purposes, (1) “merger” means the merging of two or more constituent companies and the vesting oftheir undertaking, property and liabilities in one of such companies as the surviving company and (2) a “consolidation” means the combination oftwo or more constituent companies into a consolidated company and the vesting of the undertaking, property and liabilities of such companies inthe consolidated company. Table of Contents118In order to effect such a merger or consolidation, the directors of each constituent company must approve a written plan of merger or consolidation,which must then be authorized by (1) a special resolution of the shareholders of each constituent company, and (2) such other authorization, if any,as may be specified in such constituent company’s articles of association. The written plan of merger or consolidation must be filed with theRegistrar of Companies together with a declaration as to the solvency of the consolidated or surviving company, a list of the assets and liabilities ofeach constituent company and an undertaking that a copy of the certificate of merger or consolidation will be given to the members and creditors ofeach constituent company and that notification of the merger or consolidation will be published in the Cayman Islands Gazette. Dissentingshareholders have the right to be paid the fair value of their shares (which, if not agreed between the parties, will be determined by the CaymanIslands court) if they follow the required procedures, subject to certain exceptions. Court approval is not required for a merger or consolidationwhich is effected in compliance with these statutory procedures.A merger between a Cayman parent company and its Cayman subsidiary or subsidiaries does not require authorization by a resolution ofshareholders of that Cayman subsidiary if a copy of the plan of merger is given to every member of that Cayman subsidiary to be merged unlessthat member agrees otherwise. For this purpose a company is a “parent” of a subsidiary if it holds issued shares that together represent at least 90%of the votes at a general meeting of the subsidiary.The consent of each holder of a fixed or floating security interest over a constituent company is required unless this requirement is waived by acourt in the Cayman Islands.Save in certain limited circumstances, a shareholder of a Cayman constituent company who dissents from the merger or consolidation is entitled topayment of the fair value of his shares (which, if not agreed between the parties, will be determined by the Cayman Islands court) upon dissentingto the merger or consolidation, provide the dissenting shareholder complies strictly with the procedures set out in the Companies Act. The exerciseof dissenter rights will preclude the exercise by the dissenting shareholder of any other rights to which he or she might otherwise be entitled byvirtue of holding shares, save for the right to seek relief on the grounds that the merger or consolidation is void or unlawful.Separate from the statutory provisions relating to mergers and consolidations, the Companies Act (As Revised) also contains statutory provisionsthat facilitate the reconstruction and amalgamation of companies by way of schemes of arrangement, provided that the arrangement is approved by(a) 75% in value of the shareholders or class of shareholders, as the case may be, or (b) a majority in number representing 75% in value of thecreditors or each class of creditors, as the case may be, with whom the arrangement is to be made, that are, in each case, present and voting either inperson or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must besanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that thetransaction ought not to be approved, the Grand Court can be expected to approve the arrangement if it determines that:●the statutory provisions as to the required majority vote have been met;●the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercionof the minority to promote interests adverse to those of the class;●the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest;and●the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act.The Companies Act (As Revised) also contains a statutory power of compulsory acquisition which may facilitate the “squeeze out” of dissentientminority shareholder upon a tender offer. When a tender offer is made and accepted by holders of 90% of the shares affected within four months,the offeror may, within a two-month period commencing on the expiration of such four-month period, require the holders of the remaining shares totransfer such shares to the offeror on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikelyto succeed in the case of an offer which has been so approved unless there is evidence of fraud, bad faith or collusion.If an arrangement and reconstruction by way of scheme of arrangement is thus approved, the dissenting shareholder would have no rightscomparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rightsto receive payment in cash for the judicially determined value of the shares. Table of Contents119Shareholders’ SuitsIn principle, we will normally be the proper plaintiff to sue for a wrong done to us as a company, and as a general rule a derivative action may notbe brought by a minority shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority in theCayman Islands, the Cayman Islands court can be expected to follow and apply the common law principles (namely the rule in Foss v. Harbottleand the exceptions thereto) so that a non-controlling shareholder may be permitted to commence a class action against or derivative actions in thename of our company to challenge actions where:●an act which is ultra vires or illegal and is therefore incapable of ratification by the shareholders;●the act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple majority vote that has notbeen obtained; and●an act which constitute a fraud against the minority where the wrongdoer are themselves in control of the company.Indemnification of Directors and Executive Officers and Limitation of LiabilityCayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification ofofficers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as toprovide indemnification against civil fraud or the consequences of committing a crime.Our memorandum and articles of association permit indemnification of officers and directors for losses, damages, costs and expenses incurred intheir capacities as such unless such losses or damages arise from dishonesty or fraud of such directors or officers. This standard of conduct isgenerally the same as permitted under the Delaware General Corporation Law for a Delaware corporation.In addition, we have entered into indemnification agreements with our directors and executive officers that provide such persons with additionalindemnification beyond that provided in our memorandum and articles of association.Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us underthe foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in theSecurities Act and is therefore unenforceable.Directors’ Fiduciary DutiesUnder Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has twocomponents: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarilyprudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to shareholders, allmaterial information reasonably available regarding a significant transaction.The duty of loyalty requires that a director acts in a manner he or she reasonably believes to be in the best interests of the corporation. He or shemust not use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interestof the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not sharedby the shareholders generally.In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action takenwas in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties.Should such evidence be presented concerning a transaction by a director, the director must prove the procedural fairness of the transaction and thatthe transaction was of fair value to the corporation.As a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company andtherefore it is considered that he or she owes the following duties to the company:●a duty to act in good faith in the best interests of the company,●a duty not to make a personal profit based on his or her position as director (unless the company permits him or her to do so), Table of Contents120●a duty not to put himself or herself in a position where the interests of the company conflict with his or her personal interest or his or herduty to a third party, and●a duty to exercise powers for the purpose for which such powers were intended.A director of a Cayman Islands company owes to the company a duty of care, diligence and skill. It was previously considered that a director neednot exhibit in the performance of his or her duties a greater degree of skill than may reasonably be expected from a person of his or her knowledgeand experience. However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill and careand these authorities are likely to be followed in the Cayman Islands.Shareholder Action by Written ConsentUnder the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written consent by amendment to itscertificate of incorporation. Cayman Islands law and our currently effective memorandum and articles of association provide that our shareholdersmay approve corporate matters by way of a unanimous written resolution signed by or on behalf of all shareholders who would have been entitledto vote on such matter at a general meeting without a meeting being held.Shareholder ProposalsUnder the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, providedit complies with the notice provisions in the governing documents. A special meeting may be called by the board of directors or any other personauthorized to do so in the governing documents, but shareholders may be precluded from calling special meetings.The Companies Act (As Revised) does not provide shareholders with an express right to put forth any proposal before a general meeting of theshareholders. However, the Companies Act (As Revised) may provide shareholders with limited rights to requisition a general meeting but suchrights must be stipulated in the articles of association of the company.Any one or more shareholders holding not less than one-tenth of the voting rights on a one vote per share basis, in the share capital of the companyat the date of deposit of the requisition shall at all times have the right, by written requisition to the board of directors or the secretary of thecompany, to require an extraordinary general meeting to be called by the board of directors for the transaction of any business specified in suchrequisition.Cumulative VotingUnder the Delaware General Corporation Law, cumulative voting for election of directors is not permitted unless the corporation’s certificate ofincorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board ofdirectors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases theshareholder’s voting power with respect to electing such director.There are no prohibitions relating to cumulative voting under the laws of the Cayman Islands, but our memorandum and articles of association donot provide for cumulative voting. As a result, our shareholders are not afforded any less protections or rights on this issue than shareholders of aDelaware corporation.Removal of DirectorsUnder the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for cause with the approvalof a majority of the issued and outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under ourmemorandum and articles of association, directors may be removed with or without cause, by an ordinary resolution of our shareholders at anytime before the expiration of his term of office notwithstanding anything in our memorandum and articles of association or in any agreementbetween our company and such director (but without prejudice to any claim for damages under any such agreement). Table of Contents121Transactions with Interested ShareholdersThe Delaware General Corporation Law contains a business combination statute applicable to Delaware public corporations whereby, unless thecorporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation, it is prohibited fromengaging in certain business combinations with an “interested shareholder” for three years following the date that such person becomes aninterested shareholder. An interested shareholder generally is a person or a group who or which owns or owned 15% or more of the target’soutstanding voting shares within the past three years.This statute has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would notbe treated equally. The statute does not apply if, prior to the date on which such shareholder becomes an interested shareholder, the board ofdirectors approves either the business combination or the transaction which resulted in the person becoming an interested shareholder. Thisencourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the target’s board ofdirectors.Cayman Islands law has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware businesscombination statute. However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders, itdoes provide that such transactions must be entered into bona fide in the best interests of the company and for a proper purpose and not with theeffect of constituting a fraud on the minority shareholders.RestructuringA company may present a petition to the Grand Court of the Cayman Islands for the appointment of a restructuring officer on the grounds that thecompany:(a)is or is likely to become unable to pay its debts; and(b)intends to present a compromise or arrangement to its creditors (or classes thereof) either pursuant to the Companies Act, the law of aforeign country or by way of a consensual restructuring.The Grand Court may, among other things, make an order appointing a restructuring officer upon hearing of such petition, with such powers and tocarry out such functions as the court may order. At any time (i) after the presentation of a petition for the appointment of a restructuring officer butbefore an order for the appointment of a restructuring officer has been made, and (ii) when an order for the appointment of a restructuring officer ismade, until such order has been discharged, no suit, action or other proceedings (other than criminal proceedings) shall be proceeded with orcommenced against the company, no resolution to wind up the company shall be passed, and no winding up petition may be presented against thecompany, except with the leave of the court. However, notwithstanding the presentation of a petition for the appointment of a restructuring officeror the appointment of a restructuring officer, a creditor who has security over the whole or part of the assets of the company is entitled to enforcethe security without the leave of the court and without reference to the restructuring officer appointed.Dissolution; Winding UpUnder the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved byshareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it beapproved by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware corporation to include in its certificate ofincorporation a supermajority voting requirement in connection with dissolutions initiated by the board.Under Cayman Islands law, a company may be wound up by either an order of the courts of the Cayman Islands or by a special resolution of itsmembers or, if the company is unable to pay its debts as they fall due, by an ordinary resolution of its members. The court has authority to orderwinding up in a number of specified circumstances including where it is, in the opinion of the court, just and equitable to do so. Table of Contents122Variation of Rights of SharesUnder the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of theoutstanding shares of such class, unless the certificate of incorporation provides otherwise. Under Cayman Islands law and our memorandum andarticles of association, if our share capital is divided into more than one class of shares, we may vary the rights attached to any class with thesanction of a special resolution passed by a majority of not less than three-fourths of the votes cast at a separate meeting of the holders of the sharesof that class.Amendment of Governing DocumentsUnder the Delaware General Corporation Law, a corporation’s governing documents may be amended with the approval of a majority of theoutstanding shares entitled to vote, unless the certificate of incorporation provides otherwise.Under Cayman Islands law, our memorandum and articles of association may only be amended with a special resolution of our shareholders.Rights of Non-resident or Foreign ShareholdersThere are no limitations imposed by our memorandum and articles of association on the rights of non-resident or foreign shareholders to hold orexercise voting rights on our shares.In addition, there are no provisions in our memorandum and articles of association governing the ownership threshold above which shareholderownership must be disclosed.Inspection of Books and RecordsUnder the Delaware General Corporation Law, any shareholder of a corporation may for any proper purpose inspect or make copies of thecorporation’s stock ledger, list of shareholders and other books and records.Shareholders of Cayman Islands exempted companies like us have no general right under Cayman Islands law to inspect corporate records (otherthan the memorandum and articles of association, the register of mortgages and charges and any special resolutions passed by our shareholders) orobtain copies of the list of shareholders of these companies. Under Cayman Islands law, the names of our current directors can be obtained from asearch conducted at the Registrar of Companies. However, we intend to provide our shareholders with annual reports containing audited financialstatements.C.Material ContractsWe have not entered into any material contracts other than in the ordinary course of business and other than those described in “Item 4. Informationon the Company,” “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions,” or elsewhere in this annual reporton Form 20-F.D.Exchange ControlsSee “Item 4. Information on the Company—B. Business Overview—Regulations—Regulations Relating to Foreign Exchange.”E.TaxationThe following summary of the material Cayman Islands, mainland China and U.S. federal income tax consequences of an investment in the ADSsor ordinary shares is based upon laws and relevant interpretations thereof in effect as of the date of this registration statement, all of which aresubject to change. This summary does not deal with all possible tax consequences relating to an investment in the ADSs or ordinary shares, such asthe tax consequences under U.S. state and local tax laws or under the tax laws of jurisdictions other than the Cayman Islands, mainland China andthe United States. Table of Contents123Cayman Islands TaxationThe Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is notaxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to holders of our ADSs or ordinary shareslevied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or, after execution,brought within the jurisdiction of the Cayman Islands. The Cayman Islands is not party to any double tax treaties that are applicable to anypayments made to or by our company. There are no exchange control regulations or currency restrictions in the Cayman Islands.Payments of dividends and capital in respect of our ordinary shares and ADSs will not be subject to taxation in the Cayman Islands and nowithholding will be required on the payment of a dividend or capital to any holder of our ordinary shares or the ADSs, nor will gains derived fromthe disposal of our ordinary shares or the ADSs be subject to Cayman Islands income or corporation tax.Mainland China TaxationUnder the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of mainland China with a “de factomanagement body” within mainland China is considered a resident enterprise and will be subject to the enterprise income tax at the rate of 25% onits global income. The implementation rules define the term “de facto management body” as the body that exercises full and substantial controlover and overall management of the business, production, personnel, accounts and properties of an enterprise. In April 2009, the StateAdministration of Taxation issued a circular, known as Circular 82, which provides certain specific criteria for determining whether the “de factomanagement body” of a mainland China-controlled enterprise that is incorporated offshore is located in mainland China. Although this circularonly applies to offshore enterprises controlled by mainland China enterprises or mainland China enterprise groups, not those controlled bymainland China individuals or foreigners, the criteria set forth in the circular may reflect the State Administration of Taxation’s general position onhow the “de facto management body” test should be applied in determining the tax resident status of all offshore enterprises. According to Circular82, an offshore incorporated enterprise controlled by a mainland China enterprise or a mainland China enterprise group will be regarded as amainland China tax resident by virtue of having its “de facto management body” in mainland China only if all of the following conditions are met:(i) the primary location of the day-to-day operational management is in mainland China; (ii) decisions relating to the enterprise’s financial andhuman resource matters are made or are subject to approval by organizations or personnel in mainland China; (iii) the enterprise’s primary assets,accounting books and records, company seals and board and shareholder resolutions are located or maintained in mainland China; and (iv) at least50% of voting board members or senior executives habitually reside in mainland China.We believe that Niu Technologies is not a mainland China resident enterprise for mainland China tax purposes. Niu Technologies is not controlledby a mainland China enterprise or mainland China enterprise group and we do not believe that Niu Technologies meets all of the conditions above.Niu Technologies is a company incorporated outside of mainland China. As a holding company, its key assets are its ownership interests in itssubsidiaries, and its key assets are located, and its records (including the resolutions of its board of directors and the resolutions of its shareholders)are maintained, outside of mainland China. For the same reasons, we believe our other entities outside of mainland China are not mainland Chinaresident enterprises either. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertaintiesremain with respect to the interpretation of the term “de facto management body.” There can be no assurance that the PRC government willultimately take a view that is consistent with us.If the PRC tax authorities determine that Niu Technologies is a mainland China resident enterprise for enterprise income tax purposes, we may berequired to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises, including the holders ofthe ADSs. In addition, non-resident enterprise shareholders (including the ADS holders) may be subject to a 10% mainland China tax on gainsrealized on the sale or other disposition of ADSs or ordinary shares, if such income is treated as sourced from within mainland China. It is unclearwhether our non-mainland China individual shareholders (including the ADS holders) would be subject to any mainland China tax on dividends orgains obtained by such non-mainland China individual shareholders in the event we are determined to be a mainland China resident enterprise. Ifany mainland China tax were to apply to such dividends or gains, it would generally apply at a rate of 20% unless a reduced rate is available underan applicable tax treaty. It is also unclear whether non-mainland China shareholders of Niu Technologies would be able to claim the benefits of anytax treaties between their country of tax residence and mainland China in the event that Niu Technologies is treated as a mainland China residententerprise. Table of Contents124Provided that our Cayman Islands holding company, Niu Technologies, is not deemed to be a mainland China resident enterprise, holders of theADSs and ordinary shares who are not mainland China residents will not be subject to mainland China income tax on dividends distributed by us orgains realized from the sale or other disposition of our shares or ADSs. However, under SAT Public Notice 7 and SAT Bulletin 37, where a non-resident enterprise conducts an “indirect transfer” by transferring taxable assets, including, in particular, equity interests in a mainland Chinaresident enterprise, indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise, being the transferor,or the transferee or the mainland China entity which directly owned such taxable assets may report to the tax authority such indirect transfer. Usinga “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonablecommercial purpose and was established for the purpose of reducing, avoiding or deferring mainland China tax. As a result, gains derived fromsuch indirect transfer may be subject to mainland China enterprise income tax, and the transferee or other person who is obligated to pay for thetransfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a mainland China residententerprise. We and our non-mainland China resident investors may be at risk of being required to file a return and being taxed under SAT PublicNotice 7 and SAT Bulletin 37, and we may be required to expend valuable resources to comply with SAT Public Notice 7 and SAT Bulletin 37, orto establish that we should not be taxed under these circulars. See “Item 3. Key Information— D. Risk Factors—Risks Related to Doing Businessin China—We face uncertainty with respect to indirect transfers of equity interests in mainland China resident enterprises by their non-mainlandChina holding companies.”United States Federal Income Tax ConsiderationsThe following discussion is a summary of U.S. federal income tax considerations generally applicable to the ownership and disposition of theADSs or ordinary shares by a U.S. Holder (as defined below) that holds the ADSs or ordinary shares as “capital assets”(generally, property held forinvestment) under the U.S. Internal Revenue Code of 1986, as amended, or the Code. This discussion is based upon existing U.S. federal tax law,which is subject to differing interpretations or change, possibly with retroactive effect. There can be no assurance that the IRS or a court will nottake a contrary position. This discussion, moreover, does not address the U.S. federal estate, gift, Medicare and minimum tax considerations, or anystate, local and non-U.S. tax considerations, relating to the ownership or disposition of the ADSs or ordinary shares. The following summary doesnot address all aspects of U.S. federal income taxation that may be important to particular investors in light of their individual circumstances or topersons in special tax situations such as:●banks and other financial institutions;●insurance companies;●pension plans;●cooperatives;●regulated investment companies;●real estate investment trusts;●broker-dealers;●traders that elect to use a mark-to-market method of accounting;●certain former U.S. citizens or long-term residents;●tax-exempt entities (including private foundations);●holders who acquire their ADSs or ordinary shares pursuant to any employee share option or otherwise as compensation;●investors that will hold their ADSs or ordinary shares as part of a straddle, hedge, conversion, constructive sale or other integratedtransaction for U.S. federal income tax purposes;●investors that have a functional currency other than the U.S. dollar;●persons that actually or constructively own 10% or more of our stock (by vote or value); or Table of Contents125●partnerships or other entities taxable as partnerships for U.S. federal income tax purposes, or persons holding the ADSs or ordinary sharesthrough such entities.all of whom may be subject to tax rules that differ significantly from those discussed below.Each U.S. Holder is urged to consult its tax advisor regarding the application of U.S. federal taxation to its particular circumstances, and the state,local, non-U.S. and other tax considerations of the ownership and disposition of the ADSs or ordinary shares.GeneralFor purposes of this discussion, a “U.S. Holder” is a beneficial owner of the ADSs or ordinary shares that is, for U.S. federal income tax purposes:●an individual who is a citizen or resident of the United States;●a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created in or organized under the law of theUnited States or any state thereof or the District of Columbia;●an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or●a trust (A) the administration of which is subject to the primary supervision of a U.S. court and which has one or more U.S. persons whohave the authority to control all substantial decisions of the trust or (B) that has otherwise validly elected to be treated as a U.S. personunder the Code.If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of the ADSs or ordinary shares,the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership.Partnerships holding the ADSs or ordinary shares and their partners are urged to consult their tax advisors regarding an investment in the ADSs orordinary shares.For U.S. federal income tax purposes, a U.S. Holder of ADSs will generally be treated as the beneficial owner of the underlying shares representedby the ADSs. The remainder of this discussion assumes that a U.S. Holder of the ADSs will be treated in this manner. Accordingly, deposits orwithdrawals of ordinary shares for ADSs will generally not be subject to U.S. federal income tax.Passive Foreign Investment Company ConsiderationsA non-U.S. corporation, such as our company, will be classified as a PFIC, for U.S. federal income tax purposes for any taxable year, if either (i)75% or more of its gross income for such year consists of certain types of “passive” income or (ii) 50% or more of the value of its assets (generallydetermined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passiveincome. For this purpose, cash and assets readily convertible into cash are categorized as a passive asset and the company’s goodwill and otherunbooked intangibles are taken into account. Passive income generally includes, among other things, dividends, interest, rents, royalties and gainsfrom the disposition of passive assets. We will be treated as owning a proportionate share of the assets and earning a proportionate share of theincome of any other corporation in which we own, directly or indirectly, 25% or more (by value) of the stock.Although the law in this regard is not entirely clear, we treat the VIE and its subsidiaries as being owned by us for U.S. federal income tax purposesbecause we conduct the business operations of the VIE and are entitled to substantially all of the economic benefits associated with it. As a result,we consolidate its result of operations in our consolidated U.S. GAAP financial statements. If it were determined, however, that we are not theowner of the VIE for U.S. federal income tax purposes, we may be treated as a PFIC for the current taxable year and any subsequent taxable year. Table of Contents126Assuming that we are the owner of the VIE and its subsidiaries for U.S. federal income tax purposes, and based upon our current and projectedincome and assets, we do not believe we were a PFIC for the taxable year ended December 31, 2023 and we do not presently expect to be a PFICfor the current taxable year or the foreseeable future. While we do not expect to be or become a PFIC, no assurance can be given in this regardbecause the determination of whether we are or will become a PFIC for any taxable year is a fact-intensive determination made annually that willdepend, in part, upon the composition of our income and assets. Fluctuations in the market price of the ADSs may cause us to be or become a PFICfor the current or future taxable years because the value of our assets for purposes of the asset test, including the value of our goodwill andunhooked intangibles, may be determined by reference to the market price of the ADSs from time to time (which may be volatile). In estimatingthe value of our goodwill and other unhooked intangibles, we have taken into account our current market capitalization. If our market capitalizationsubsequently declines, we may be or become classified as a PFIC for the current taxable year or future taxable years. Furthermore, the compositionof our income and assets may also be affected by how, and how quickly, we use our liquid assets. Under circumstances where our revenue fromactivities that produce passive income significantly increases relative to our revenue from activities that produce non-passive income, or where wedetermine not to deploy significant amounts of cash for active purposes, our risk of becoming classified as a PFIC may substantially increase.If we are a PFIC for any year during which a U.S. Holder holds the ADSs or ordinary shares, we will generally continue to be treated as a PFIC forall succeeding years during which such U.S. Holder holds the ADSs or ordinary shares.The discussion below under “—Dividends” and “—Sale or Other Disposition” is written on the basis that we will not be or become classified as aPFIC for U.S. federal income tax purposes. The U.S. federal income tax rules that apply generally if we are treated as a PFIC are discussed belowunder “—Passive Foreign Investment Company Rules.”DividendsAny cash distributions paid on the ADSs or ordinary shares (including the amount of any mainland China tax withheld) out of our current oraccumulated earnings and profits, as determined under U.S. federal income tax principles, will generally be includible in the gross income of a U.S.Holder as dividend income on the day actually or constructively received by the U.S. Holder, in the case of ordinary shares, or by the depositary, inthe case of ADSs. Because we do not intend to determine our earnings and profits on the basis of U.S. federal income tax principles, anydistribution we pay will generally be treated as a “dividend” for U.S. federal income tax purposes. Dividends received on the ADSs or ordinaryshares will not be eligible for the dividends-received deduction allowed to corporations in respect of dividends received from U.S. corporations.Individuals and other non-corporate U.S. Holders will be subject to tax at the lower capital gain tax rate applicable to “qualified dividend income”;provided that certain conditions are satisfied, including that (i) the ADSs or ordinary shares on which the dividends are paid are readily tradable onan established securities market in the United States, or, in the event that we are deemed to be a mainland China resident enterprise under themainland China tax law, we are eligible for the benefit of the United States-mainland China income tax treaty, (ii) we are neither a PFIC nor treatedas such with respect to a U.S. Holder (as discussed below) for the taxable year in which the dividend is paid and the preceding taxable year, and(iii) certain holding period requirements are met. Our ADSs are considered to be readily tradable on the Nasdaq Global Market, which is anestablished securities market in the United States. There can be no assurance that the ADSs will continue to be considered readily tradable on anestablished securities market in later years. Because the ordinary shares will not be listed on a U.S. exchange, we do not believe that dividendsreceived with respect to ordinary shares that are not represented by ADSs will be treated as qualified dividends. U.S. Holders are urged to consulttheir tax advisors regarding the availability of the lower rate for dividends paid with respect to the ADSs or ordinary shares.In the event that we are deemed to be a mainland China resident enterprise under the PRC Enterprise Income Tax Law (see “—Mainland ChinaTaxation”), we may be eligible for the benefits of the United States-mainland China income tax treaty. If we are eligible for such benefits,dividends we pay on our ordinary shares, regardless of whether such shares are represented by the ADSs, and regardless of whether the ADSs arereadily tradable on an established securities market in the United States, would be eligible for the reduced rates of taxation described in thepreceding paragraph. Table of Contents127For U.S. foreign tax credit purposes, dividends paid on the ADSs or ordinary shares will generally be treated as income from foreign sources andwill generally constitute passive category income. In the event that we are deemed to be a mainland China resident enterprise under the PRCEnterprise Income Tax Law, a U.S. Holder may be subject to mainland China withholding taxes on dividends paid on the ADSs or ordinary shares(see “—Mainland China Taxation”). Depending on the U.S. Holder’s particular facts and circumstances and subject to a number of complexconditions and limitations, mainland China withholding taxes on dividends that are non-refundable under the United States-mainland China incometax treaty may be treated as foreign taxes eligible for credit against a U.S. Holder’s U.S. federal income tax liability. A U.S. Holder who does notelect to claim a foreign tax credit for foreign tax withheld may instead claim a deduction for U.S. federal income tax purposes, in respect of suchwithholding, but only for a year in which such holder elects to do so for all creditable foreign income taxes. The rules governing the foreign taxcredit are complex and U.S. Holders are urged to consult their tax advisors regarding the availability of the foreign tax credit under their particularcircumstances.Sale or Other DispositionA U.S. Holder will generally recognize gain or loss upon the sale or other disposition of ADSs or ordinary shares in an amount equal to thedifference between the amount realized upon the disposition and the holder’s adjusted tax basis in such ADSs or ordinary shares. The gain or losswill generally be capital gain or loss. Any capital gain or loss will be long term if the ADSs or ordinary shares have been held for more than oneyear. The deductibility of a capital loss may be subject to limitations. Any such gain or loss that the U.S. Holder recognizes will generally betreated as U.S. source income or loss for foreign tax credit limitation purposes, which will generally limit the availability of foreign tax credits.However, in the event we are deemed to be a mainland China resident enterprise under the PRC Enterprise Income Tax Law, we may be eligible forthe benefits of the United States-mainland China income tax treaty. In such event, if mainland China tax were to be imposed on any gain from thedisposition of the ADSs or ordinary shares, a U.S. Holder that is eligible for the benefits of the treaty may elect to treat such gain as mainlandChina source income. Pursuant to Treasury Regulations, however, if a U.S. Holder is not eligible for the benefits of the United States-mainlandChina income tax treaty or does not elect to apply the treaty, then such holder may not be able to claim a foreign tax credit arising from anymainland China tax imposed on the disposition of the ADSs or ordinary shares. Each U.S. Holder is advised to consult its tax advisor regarding thetax consequences if a foreign tax is imposed on a disposition of the ADSs or ordinary shares, including the availability of the foreign tax credit ordeduction under its particular circumstances, their eligibility for benefits under the treaty and the potential impact of the Treasury Regulations.Passive Foreign Investment Company RulesIf we are classified as a PFIC for any taxable year during which a U.S. Holder holds the ADSs or ordinary shares, and unless the U.S. Holdermakes a mark-to-market election (as described below), the U.S. Holder will generally be subject to special tax rules on (i) any excess distributionthat we make to the U.S. Holder (which generally means any distribution paid during a taxable year to a U.S. Holder that is greater than125 percent of the average annual distributions paid in the three preceding taxable years or, if shorter, the U.S. Holder’s holding period for theADSs or ordinary shares), and (ii) any gain realized on the sale or other disposition including, under certain circumstances, a pledge, of ADSs orordinary shares. Under the PFIC rules:●the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the ADSs or ordinary shares;●the amount allocated to the current taxable year and any taxable years in the U.S. Holder’s holding period prior to the first taxable year inwhich we are classified as a PFIC (each, a “pre-PFIC year”) will be taxable as ordinary income; and●the amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect forindividuals or corporations, as appropriate, for that year, increased by an additional tax equal to the interest on the resulting tax deemeddeferred with respect to each such taxable year.If we are a PFIC for any taxable year during which a U.S. Holder holds the ADSs or ordinary shares, and any of our subsidiaries, the VIE or any ofthe subsidiaries of the VIE entity is also a PFIC, such U.S. Holder would be treated as owning a proportionate amount (by value) of the shares ofthe lower-tier PFIC for purposes of the application of these rules. U.S. Holders are urged to consult their tax advisors regarding the application ofthe PFIC rules to any of our subsidiaries, the VIE or any of the subsidiaries of the VIE. Table of Contents128As an alternative to the foregoing rules, a U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market electionwith respect to such stock. If a U.S. Holder makes this election with respect to the ADSs, the holder will generally (i) include as ordinary incomefor each taxable year that we are a PFIC the excess, if any, of the fair market value of ADSs held at the end of the taxable year over the adjusted taxbasis of such ADSs and (ii) deduct as an ordinary loss the excess, if any, of the adjusted tax basis of the ADSs over the fair market value of suchADSs held at the end of the taxable year, but such deduction will only be allowed to the extent of the amount previously included in income as aresult of the mark-to-market election. The U.S. Holder’s adjusted tax basis in the ADSs would be adjusted to reflect any income or loss resultingfrom the mark-to-market election. If a U.S. Holder makes a mark-to-market election in respect of the ADSs and we cease to be classified as a PFIC,the holder will not be required to take into account the gain or loss described above during any period that we are not classified as a PFIC. If aU.S. Holder makes a mark-to-market election, any gain such U.S. Holder recognizes upon the sale or other disposition of the ADSs in a year whenwe are a PFIC will be treated as ordinary income and any loss will be treated as ordinary loss, but such loss will only be treated as ordinary loss tothe extent of the net amount previously included in income as a result of the mark-to-market election.The mark-to-market election is available only for “marketable stock,” which is stock that is traded in other than de minimis quantities on at least15 days during each calendar quarter (“regularly traded”) on a qualified exchange or other market, as defined in applicable United States Treasuryregulations. Our ADSs are listed on the Nasdaq Global Market, which is an established securities market in the United States. Consequently, if ourADSs continue to be listed on the Nasdaq Global Market and are regularly traded, we expect that the mark-to-market election would be available toa U.S. Holder that holds our ADSs were we to be or become a PFIC. Our ADSs are expected to qualify as being regularly traded, but no assurancemay be given in this regard.Because a mark-to-market election cannot technically be made for any lower-tier PFICs that we may own, a U.S. Holder may continue to besubject to the PFIC rules with respect to such U.S. Holder’s indirect interest in any investments held by us that are treated as an equity interest in aPFIC for U.S. federal income tax purposes.We do not intend to provide information necessary for U.S. Holders to make qualified electing fund elections which, if available, would result intax treatment different from (and generally less adverse than) the general tax treatment for PFICs described above.If a U.S. Holder owns the ADSs or ordinary shares during any taxable year that we are a PFIC, the holder must generally file an annual IRSForm 8621. You should consult your tax advisor regarding the U.S. federal income tax consequences of owning and disposing of the ADSs orordinary shares if we are or become a PFIC.F.Dividends and Paying AgentsNot applicable.G.Statement by ExpertsNot applicable.H.Documents on DisplayWe are subject to periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private issuers, and arerequired to file reports and other information with the SEC. Specifically, we are required to file annually an annual report on Form 20-F within fourmonths after the end of each fiscal year, which is December 31. All information we file with the SEC can be obtained over the internet at the SEC’swebsite at www.sec.gov. As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and contentof quarterly reports and proxy statements, and officers, directors and principal shareholders are exempt from the reporting and short-swing profitrecovery provisions contained in Section 16 of the Exchange Act.We will furnish the Citibank, N.A., the depositary of the ADSs, with our annual reports, which will include a review of operations and annualaudited consolidated financial statements prepared in conformity with U.S. GAAP, and all notices of shareholders’ meetings and other reports andcommunications that are made generally available to our shareholders. The depositary will make such notices, reports and communicationsavailable to holders of ADSs and, upon our request, will mail to all record holders of ADSs the information contained in any notice of ashareholders’ meeting received by the depositary from us.In accordance with Nasdaq Stock Market Rule 5250(d), we will post this annual report on Form 20-F on our website at http://ir.niu.com. Inaddition, we will provide hardcopies of our annual report free of charge to shareholders and ADS holders upon request. Table of Contents129I.Subsidiary InformationNot applicable.J.Annual Report to Security HoldersNot applicable.Item 11.Quantitative and Qualitative Disclosures about Market RiskInterest Rate RiskOur exposure to interest rate risk primarily relates to the interest expenses on our short-term bank borrowings. Our short-term bank borrowingbears interests at fixed rates. We have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in market interestrates. However, our future interest expenses may exceed expectations due to changes in market interest rates. If we were to renew these short-termbank borrowings, we might be subject to interest rate risk.Foreign Exchange RiskA substantial majority of all of our revenues and expenses are denominated in Renminbi. We do not believe that we currently have any significantdirect foreign exchange risk and have not used any derivative financial instruments to hedge exposure to such risk. Although our exposure toforeign exchange risks should be limited in general, the value of your investment in the ADSs will be affected by the exchange rate between U.S.dollar and Renminbi because the value of our business is effectively denominated in Renminbi, while the ADSs will be traded in U.S. dollars. Inaddition, as our business and operation expand in European and other overseas markets, we are exposed to increased foreign exchange risks forU.S. dollar and other currencies.The conversion of Renminbi into other currencies, including U.S. dollars, is based on rates set by the People’s Bank of China. The Renminbi hasfluctuated against other currencies, at times significantly and unpredictably. The value of Renminbi against other currencies is affected by changesin China’s political and economic conditions and by China’s foreign exchange policies, among other things. It is difficult to predict how marketforces or government policies may impact the exchange rate between Renminbi and other currencies in the future.Any significant depreciation of the Renminbi may materially and adversely affect our revenues, earnings and financial position as reported in U.S.dollars. To the extent that we need to convert U.S. dollars into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollarwould have an adverse effect on the Renminbi amount we receive from the conversion. Conversely, if we decide to convert Renminbi into U.S.dollars for the purpose of making payments for dividends on our shares or ADSs or for other business purposes, appreciation of the U.S. dollaragainst the Renminbi would have a negative effect on the U.S. dollar amount available to us.Item 12.Description of Securities Other than Equity SecuritiesA.Debt SecuritiesNot applicable.B.Warrants and RightsNot applicable.C.Other SecuritiesNot applicable. Table of Contents130D.American Depositary SharesFees and Charges Our ADS holders May Have to PayAn ADS holder will be required to pay the following fees under the terms of the deposit agreement:Service Fees· Issuance of ADSs (e.g., an issuance of ADS upon a deposit of Class Aordinary shares, upon a change in the ADS(s)-to Class A ordinaryshare(s) ratio, or for any other reason), excluding ADS issuances as aresult of distributions of Class A ordinary shares Up to US$0.05 per ADS issued· Cancellation of ADSs (e.g., a cancellation of ADSs for delivery ofdeposited property, upon a change in the ADS(s)-to Class A ordinaryshare(s) ratio, or for any other reason) Up to US$0.05 per ADS cancelled· Distribution of cash dividends or other cash distributions (e.g., upon asale of rights and other entitlements) Up to US$0.05 per ADS held· Distribution of ADSs pursuant to (i) stock dividends or other freestock distributions, or (ii) exercise of rights to purchase additionalADSs Up to US$0.05 per ADS held· Distribution of securities other than ADSs or rights to purchaseadditional ADSs (e.g., upon a spin-off) Up to U.S$0.05 per ADS held· ADS Services Up to US$0.05 per ADS held on the applicable recorddate(s) established by the depositary bankAn ADS holder will also be responsible to pay certain charges such as:●taxes (including applicable interest and penalties) and other governmental charges;●the registration fees as may from time to time be in effect for the registration of Class A ordinary shares on the share register andapplicable to transfers of Class A ordinary shares to or from the name of the custodian, the depositary bank or any nominees upon themaking of deposits and withdrawals, respectively;●certain cable, telex and facsimile transmission and delivery expenses;●the expenses and charges incurred by the depositary bank in the conversion of foreign currency;●the fees and expenses incurred by the depositary bank in connection with compliance with exchange control regulations and otherregulatory requirements applicable to Class A ordinary shares, ADSs and ADRs; and●the fees and expenses incurred by the depositary bank, the custodian, or any nominee in connection with the servicing or delivery ofdeposited property. Table of Contents131ADS fees and charges for (i) the issuance of ADSs, and (ii) the cancellation of Ads are charged to the person for whom the ADSs are issued (in thecase of ADS issuances) and to the person for whom ADSs are cancelled (in the case of ADS cancellations). In the case of ADSs issued by thedepositary bank into DTC, the ADS issuance and cancellation fees and charges may be deducted from distributions made through DTC, and maybe charged to the DTC participant(s) receiving the ADSs being issued or the DTC participant(s) holding the ADSs being cancelled, as the case maybe, on behalf of the beneficial owner(s) and will be charged by the DTC participant(s) to the account of the applicable beneficial owner(s) inaccordance with the procedures and practices of the DTC participants as in effect at the time. ADS fees and charges in respect of distributions andthe ADS service fee are charged to the holders as of the applicable ADS record date. In the case of distributions of cash, the amount of theapplicable ADS fees and charges is deducted from the funds being distributed. In the case of (i) distributions other than cash and (ii) the ADSservice fee, holders as of the ADS record date will be invoiced for the amount of the ADS fees and charges and such ADS fees and charges may bededucted from distributions made to holders of ADSs. For ADSs held through DTC, the ADS fees and charges for distributions other than cash andthe ADS service fee may be deducted from distributions made through DTC, and may be charged to the DTC participants in accordance with theprocedures and practices prescribed by DTC and the DTC participants in turn charge the amount of such ADS fees and charges to the beneficialowners for whom they hold ADSs.In the event of refusal to pay the depositary bank fees, the depositary bank may, under the terms of the deposit agreement, refuse the requestedservice until payment is received or may set off the amount of the depositary bank fees from any distribution to be made to the ADS holder. Certaindepositary fees and charges (such as the ADS services fee) may become payable shortly after the closing of the ADS offering. Note that the feesand charges an ADS holder may be required to pay may vary over time and may be changed by us and by the depositary bank. An ADS holder willreceive prior notice of such changes.Fees and Other Payments Made by the Depositary to UsThe depositary bank may reimburse us for certain expenses incurred by us in respect of the ADR program, by making available a portion of theADS fees charged in respect of the ADR program or otherwise, upon such terms and conditions as we and the depositary bank agree from time totime. In 2023, we received approximately US$0.8 million as reimbursement from the depositary. Table of Contents132PART IIItem 13.Defaults, Dividend Arrearages and DelinquenciesNone.Item 14.Material Modifications to the Rights of Security Holders and Use of ProceedsSee “Item 10. Additional Information—B. Memorandum and Articles of Association—Ordinary Shares” for a description of the rights of securitiesholders, which remain unchanged.Item 15.Controls and ProceduresA.Evaluation of Disclosure Controls and ProceduresOur management, with the participation of our chief executive officer and chief financial officer, has performed an evaluation of the effectivenessof our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report,as required by Rule 13a-15(b) under the Exchange Act.Based upon that evaluation, our management has concluded that, as of December 31, 2023, our disclosure controls and procedures were effective inensuring that the information required to be disclosed by us in the reports that we file and furnish under the Exchange Act was recorded, processed,summarized and reported, within the time periods specified in the SEC’s rules and forms, and that the information required to be disclosed by us inthe reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executiveofficer and chief financial officer, to allow timely decisions regarding required disclosure.B.Management’s Annual Report on Internal Control over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financialreporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that(1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets,(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance withgenerally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of ourmanagement and directors, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use ordisposition of our assets that could have a material effect on the financial statements. As required by Section 404 of the Sarbanes-Oxley Act andrelated rules as promulgated by the SEC, our management assessed the effectiveness of our internal control over financial reporting as of December31, 2023 using criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of theTreadway Commission.Based on this assessment, our management, with the participation of our chief executive officer and chief financial officer, concluded that ourinternal control over financial reporting was effective as of December 31, 2023.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness of our internal control over financial reporting to future periods are subject to the risks that controls may becomeinadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.C.Attestation Report of the Registered Public Accounting FirmOur independent registered public accounting firm, KPMG Huazhen LLP, has audited the effectiveness of our company’s internal control overfinancial reporting as of December 31, 2023. Table of Contents133Report of Independent Registered Public Accounting FirmTo the Shareholders and Board of Directors Niu Technologies:Opinion on Internal Control Over Financial ReportingWe have audited Niu Technologies and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2023, based oncriteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the TreadwayCommission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations ofthe Treadway Commission.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), theconsolidated balance sheets of the Company as of December 31, 2022 and 2023, the related consolidated statements of comprehensive income(loss), changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the relatednotes (collectively, the consolidated financial statements), and our report dated April 24, 2024 expressed an unqualified opinion on thoseconsolidated financial statements.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of theeffectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control overFinancial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. Weare a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with theU.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internalcontrol over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a materialweakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit alsoincluded performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basisfor our opinion.Definition and Limitations of Internal Control Over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Acompany’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, inreasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of thecompany; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of thecompany’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or thatthe degree of compliance with the policies or procedures may deteriorate./s/ KPMG Huazhen LLPBeijing, ChinaApril 24, 2024 Table of Contents134D.Changes in Internal Control over Financial ReportingThere were no changes in our internal controls over financial reporting that occurred during the period covered by this annual report on Form 20-Fthat have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.Item 16. [Reserved]Item 16A. Audit Committee Financial ExpertOur board of directors has determined that Mr. Changqing Ye, an independent director (under the standards set forth in Nasdaq Stock MarketRule 5605 and Rule 10A-3 under the Exchange Act) and chairman of our audit committee, is an audit committee financial expert.Item 16B. Code of EthicsOur board of directors adopted a code of business conduct and ethics that applies to our directors, officers, employees and advisors inSeptember 2018. We have posted a copy of our code of business conduct and ethics on our website at ir.niu.com.Item 16C. Principal Accountant Fees and ServicesThe following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by KPMGHuazhen LLP, our principal external auditors, for the periods indicated. 2022 2023Audit fees(1) US$ 1,267,526 US$ 1,279,300Tax fees(2) US$ 83,498 Nil(1)“Audit fees” in 2023 represent the aggregate fees billed or payable for professional services rendered by our principal auditors for the audit ofthe 2023 consolidated financial statements and internal control over financial reporting as of December 31, 2023 and assistance with andreview of documents filed with the SEC.(2)“Tax fees” mean the aggregate fees billed for services rendered by independent registered public accounting firm for tax compliance servicesand tax advisory services.The policy of our audit committee or our board of directors is to pre-approve all audit and non-audit services provided by KPMG Huazhen LLP,including as described above.Item 16D. Exemptions from the Listing Standards for Audit CommitteesNot applicable.Item 16E. Purchases of Equity Securities by the Issuer and Affiliated PurchasersNone.Item 16F. Change in Registrant’s Certifying AccountantNot applicable. Table of Contents135Item 16G. Corporate GovernanceAs a Cayman Islands exempted company listed on Nasdaq, we are subject to the Nasdaq Stock Market Rules corporate governance listingstandards. However, Nasdaq rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certaincorporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companiesincorporated in other jurisdictions such as the United States. Nasdaq Rule 5620(a) requires that each company listing common stock or votingpreferred stock, and their equivalents, must hold an annual meeting of shareholders no later than one year after the end of the company’s fiscalyear-end. We followed home country practice and did not hold an annual meeting of shareholders in 2023. If we continue to rely on this and otherexemptions available to foreign private issuers in the future, our shareholders may be afforded less protection than they otherwise would under theNasdaq corporate governance listing standards applicable to U.S. domestic issuers. See “Item 3. Key Information—D. Risk Factors—Risks Relatedto Our ADSs—We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certainprovisions applicable to United States domestic public companies.”Item 16H. Mine Safety DisclosureNot applicable.Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent InspectionsNot applicable.Item 16J. Insider Trading PoliciesNot applicable.Item 16K. CybersecurityWe have implemented comprehensive procedures to ensure effectiveness in cybersecurity management, strategy and governance and reportingcybersecurity risks.We have developed a comprehensive cybersecurity threat defense system to address both internal and external threats. This system encompassesvarious levels, including network, host and application security and incorporates systematic security capabilities for threat defense, monitoring,analysis, response, deception and countermeasures. We strive to manage cybersecurity risks and protect sensitive information through variousmethods, including technical safeguards, procedural requirements, an intensive monitoring program on our corporate network, continuous testingof our security posture both internally and with outside vendors, a robust incident response program, a review of the effectiveness of our securitysystem with reference to applicable security standards by qualified third parties and regular cybersecurity awareness training for employees. Ourcybersecurity department is actively engaged in continuous monitoring of our applications, platforms and infrastructure to ensure promptidentification and response to potential issues, including emerging cybersecurity threats.As of the date of this annual report, we have not experienced any material cybersecurity incidents or identified any material cybersecurity threatsthat have affected or are reasonably likely to materially affect us, our business strategy, results of operations or financial condition.GovernanceOur board of directors is responsible for overseeing our company’s cybersecurity risk management and be informed on risks from cybersecuritythreats. Our board of directors shall review, approve and maintain oversight of the disclosure (i) on Form 6-K for material cybersecurity incidents(if any) and (ii) related to cybersecurity matters in the periodic reports (including annual report on Form 20-F) of our company. Table of Contents136At the management level, our cybersecurity committee is responsible for overseeing the process of assessing, identifying and managing materialrisks from cybersecurity threats to our company and monitoring the prevention, detection, mitigation and remediation of material cybersecurityincident. Our cybersecurity officer, who serves as the management representative of our cybersecurity committee, reports to our board of directorson (i) a quarterly basis on updates to the status of any material cybersecurity incidents or material risks from cybersecurity threats to our company,and the disclosure issues, if any, and (ii) on disclosure concerning cybersecurity matters in our annual report on Form 20-F. Our cybersecurityofficer has extensive experience in enterprise compliance and risk management and has been responsible for our company’s data security issuessince 2018. He is familiar with our company’s operational and data processing models and possesses thorough knowledge of information securityand data compliance regulations in various countries and regions, including mainland China, the European Union, and the United States.If a cybersecurity incident occurs, our cybersecurity committee will promptly organize relevant personnel for internal assessment and, dependingon the situation, seek the opinions of external experts and legal advisors. If it is determined that the incident could potentially be a materialcybersecurity event, our data management committee will promptly report the investigation and assessment results to our corporate governance andnominating committee and our corporate governance and nominating committee will decide on the relevant response measures and whether anydisclosure is necessary. If such disclosure is determined to be necessary, our cybersecurity committee shall promptly prepare disclosure material forreview and approval by our corporate governance and nominating committee before it is disseminated to the public. Table of Contents137PART IIIItem 17. Financial StatementsWe have elected to provide financial statements pursuant to Item 18.Item 18. Financial StatementsThe consolidated financial statements of Niu Technologies, its subsidiaries and the variable interest entity are included at the end of this annualreport.Item 19.ExhibitsExhibit Number Description of Document 1.1 Sixth Amended and Restated Memorandum and Articles of Association of the Registrant, effective October 23, 2018(incorporated by reference to Exhibit 3.2 of the Registrant’s registration statement on Form F-1 (file no. 333-227497), filedwith the Securities and Exchange Commission on September 24, 2018) 2.1 Registrant’s Specimen American Depositary Receipt (incorporated by reference to Exhibit 4.3 of the Registrant’s registrationstatement on Form F-1 (file no. 333-227497), filed with the Securities and Exchange Commission on September 24, 2018) 2.2 Registrant’s Specimen Certificate for Ordinary Shares (incorporated by reference to Exhibit 4.2 of the Registrant’s registrationstatement on Form F-1 (file no. 333-227497), as amended, filed with the Securities and Exchange Commission on October 9,2018) 2.3 Deposit Agreement dated October 18, 2018 among the Registrant, the depositary and holder of the American DepositaryReceipts (incorporated by reference to Exhibit 4.3 of the Registrant’s registration statement on Form S-8 (file no. 333229190),as amended, filed with the Securities and Exchange Commission on January 11, 2019) 2.4 Fourth Amended and Restated Shareholders Agreement between the Registrant and other parties thereto dated August 22,2018(incorporated by reference to Exhibit 4.4 of the Registrant’s registration statement on Form F-1 (file no. 333-227497),filed with the Securities and Exchange Commission on September 24, 2018) 2.5 Description of American Depositary Shares of the Registrant (incorporated by reference to Exhibit 2.5 to the annual report onForm 20-F (file no. 001 - 38696) filed by the Registrant with the Securities and Exchange Commission on April 24, 2020) 2.6 Description of Ordinary Shares of the Registrant (incorporated by reference to Exhibit 2.6 to the annual report on Form 20-F(file no. 001 - 38696) filed by the Registrant with the Securities and Exchange Commission on April 24, 2020) 4.1 Amended and Restated 2016 Global Share Incentive Plan of the Registrant (incorporated by reference to Exhibit 10.1 of theRegistrant’s Registration Statement on Form F-1 (file no. 333-227497) filed with the Securities and Exchange Commission onSeptember 24, 2018) 4.2 2018 Share Incentive Plan of the Registrant (incorporated by reference to Exhibit 10.2 of the Registrant’s RegistrationStatement on Form F-1 (file no. 333-227497) filed with the Securities and Exchange Commission on September 24, 2018) 4.3 Form of Employment Agreement between the Registrant and its executive officers (incorporated by reference to Exhibit 10.4of the Registrant’s registration statement on Form F-1 (file no. 333-227497), filed with the Securities and ExchangeCommission on September 24, 2018) Table of Contents138 4.4 Form of Indemnification Agreement between the Registrant and its directors and executive officers (incorporated by referenceto Exhibit 10.3 of the Registrant’s registration statement on Form F-1 (file no. 333-227497), filed with the Securities andExchange Commission on September 24, 2018) 4.5 English translation of the Powers of Attorney among the Registrant’s WFOE, Beijing Niudian and shareholders of BeijingNiudian (incorporated by reference to Exhibit 4.5 of the Registrant’s Annual Report on Form 20-F (file no. 001 - 38696) filedwith the Securities and Exchange Commission on April 24, 2020) 4.6 English translation of the Second Amended and Restated Equity Pledge Agreement among the Registrant’s WFOE, BeijingNiudian and shareholders of Beijing Niudian dated February 27, 2020 (incorporated by reference to Exhibit 4.6 of theRegistrant’s Annual Report on Form 20-F (file no. 001 - 38696) filed with the Securities and Exchange Commission on April24, 2020) 4.7 English translation of the Amended and Restated Exclusive Business Cooperation Agreement among the Registrant’s WFOE,Beijing Niudian and shareholders of Beijing Niudian dated July 20, 2018 (incorporated by reference to Exhibit 10.7 of theRegistrant’s registration statement on Form F-1 (file no. 333-227497), filed with the Securities and Exchange Commission onSeptember 24, 2018)4.8 English translation of the Second Amended and Restated Exclusive Option Agreement among the Registrant’s WFOE, BeijingNiudian and shareholders of Beijing Niudian dated February 27, 2020 (incorporated by reference to Exhibit 4.8 of theRegistrant’s Annual Report on Form 20-F (file no. 001 - 38696) filed with the Securities and Exchange Commission on April24, 2020) 4.9 Motor Purchase and Sales Contract between Bosch (Ning) E-scooter Motor Co., Ltd. and Jiangsu Xiaoniu Electric TechnologyCo., Ltd. dated March 21, 2017 (incorporated by reference to Exhibit 10.12 of the Registrant’s Registration Statement onForm F-1 (file no. 333227497) filed with the Securities and Exchange Commission on September 24, 2018) 4.10 Manufacturing Cooperation Agreement Between Jiangsu Xiaoniu Diandong Technology Co., Ltd. and Changzhou ShanqiMotorcycle Co., Ltd. dated December 1, 2018 (incorporated by reference to Exhibit 4.13 of the Registrant’s Annual Report onForm 20-F (file no. 001-38696) filed with the Securities and Exchange Commission on April 25, 2019) 4.11 Development Collaboration Agreement Between the Registrant and Volkswagen Aktiengesellschaft dated March 15, 2019(incorporated by reference to Exhibit 4.14 of the Registrant’s Annual Report on Form 20-F (file no. 001-38696) filed with theSecurities and Exchange Commission on April 25, 2019) 8.1* List of Principal Subsidiaries, the Variable Interest Entity and the Subsidiaries of the Variable Interest Entity 11.1 Code of Business Conduct and Ethics (incorporated by reference to Exhibit 99.1 of the Registrant’s Registration Statement onForm F-1 (file no. 333-227497) filed with the Securities and Exchange Commission on September 24, 2018) 12.1* Certification by Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 12.2* Certification by Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 13.1** Certification by Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 13.2** Certification by Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 15.1* Consent of KPMG Huazhen LLP Table of Contents13915.2* Consent of DaHui Lawyers 97*Clawback Policy101.INS* XBRL Instance Document 101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document101.SCH* XBRL Taxonomy Extension Schema Document 101.DEF* XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* XBRL Taxonomy Extension Labels Linkbase Document 101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document104*Cover Page Interactive Data File (embedded within the Inline XBRL document)* Filed herewith** Furnished herewith Table of Contents140SIGNATURESThe registrant hereby certifies that it meets all of the requirements for filing its annual report on Form 20-F and that it has duly caused andauthorized the undersigned to sign this annual report on its behalf.Niu TechnologiesBy:/s/ Yan LiName: Yan LiTitle: Chairman of the Board of Directors and ChiefExecutive OfficerDate: April 24, 2024 Table of ContentsF-1NIU TECHNOLOGIESINDEX TO THE CONSOLIDATED FINANCIAL STATEMENTSCONTENTSPAGE(S)REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID 1186)F-2 – F-3CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2022 AND 2023F-4 – F-5CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) FOR THE YEARS ENDED DECEMBER 31,2021, 2022 AND 2023F-6CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE YEARS ENDED DECEMBER31, 2021, 2022 AND 2023F-7CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023F-8NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSF-9 – F-40 Table of ContentsF-2Report of Independent Registered Public Accounting FirmTo the Shareholders and Board of DirectorsNiu Technologies:Opinion on the Consolidated Financial StatementsWe have audited the accompanying consolidated balance sheets of Niu Technologies and subsidiaries (the Company) as of December 31, 2022 and2023, the related consolidated statements of comprehensive income (loss), changes in shareholders’ equity, and cash flows for each of the years inthe three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements). In our opinion, theconsolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2023,and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with U.S.generally accepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), theCompany’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – IntegratedFramework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated April 24, 2024expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.Basis for OpinionThese consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on theseconsolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to beindependent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of theSecurities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Ouraudits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error orfraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amountsand disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significantestimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our auditsprovide a reasonable basis for our opinion.Critical Audit MatterThe critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that wascommunicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to theconsolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a criticalaudit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating thecritical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Table of ContentsF-3Revenue recognition for electric scooter sales to offline distributorsAs discussed in Note 2(q) and 19 to the consolidated financial statements, the Company recorded RMB2,358,658,368 of revenues related toelectric scooter sales for the year ended December 31, 2023, a portion of which related to electric scooter sales to its domestic offline distributors inthe People’s Republic of China (“PRC”) and overseas offline distributors. The transfer of control of the products is satisfied at a point in time,which occurs when the products are accepted by the domestic offline distributors, overseas offline distributors or individual customers. When theCompany sells its products to its domestic offline distributors for domestic sales in the PRC, acceptance of the products by the domestic offlinedistributors is evidenced by goods receipt notes signed by the domestic offline distributors, which is generally at the Company’s warehouse. Whenthe Company sells its products to overseas offline distributors for oversea sales, acceptance of the products by the overseas offline distributors isevidenced by shipping documents dependent upon the terms of the underlying contract.We identified the evaluation of timing of revenue recognition for electric scooter sales to domestic offline distributors and overseas offlinedistributors as a critical audit matter. Significant audit effort was required in evaluation the proper timing of revenue recognition for electric scootersales to domestic offline distributors and overseas offline distributors.The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the natureand extent of procedures to be performed over the evaluation of timing of revenue recognition for electric scooter sales to domestic offlinedistributors and overseas offline distributors. We evaluated the design and tested the operating effectiveness of certain internal controls related totiming of revenue recognition for electric scooter sales to domestic offline distributors and overseas offline distributors. This included controls overthe Company’s review of goods receipt notes and underlying contracts related to electric scooter sales to domestic offline distributors, shippingdocuments and underlying contracts related to electric scooter sales to overseas offline distributors, and the accurate timing of recording revenues.For a selection of electric scooter sales contracts with domestic offline distributors and overseas offline distributors, we read the contracts andevaluated the Company’s assessment of the contract terms impacting the timing of revenue recognition. For a sample of electric scooter sales todomestic offline distributors, we evaluated the proper timing of revenue recognized by inspecting (1) the underlying contracts, (2) purchase orders,and (3) goods receipt notes signed by the domestic offline distributors. For a sample of electric scooter sales to overseas offline distributors, weevaluated the proper timing of revenue recognized by inspecting (1) the underlying contracts, (2) purchase orders, and (3) shipping documents forthe overseas offline distributors. In addition, we evaluated the sufficiency of audit evidence obtained by assessing the results of proceduresperformed./s/ KPMG Huazhen LLPWe have served as the Company’s auditor since 2018.Beijing, ChinaApril 24, 2024 Table of ContentsF-4NIU TECHNOLOGIESCONSOLIDATED BALANCE SHEETS As of December 31, Note20222023 US$ RMBRMB (Note 2(d))ASSETS Current assets Cash and cash equivalents2(f)534,286,849 872,573,460 122,899,401Term deposits—current2(g)208,589,77097,555,56513,740,414Restricted cash2(h)186,340,321 107,666,733 15,164,542Short-term investments3160,406,301 — —Accounts receivable, net4299,742,923 94,956,170 13,374,297Inventories5417,009,148 392,790,141 55,323,334Prepayments and other current assets6205,695,717 195,072,129 27,475,335Total current assets2,012,071,029 1,760,614,198 247,977,323Non-current assets Term deposits—non-current2(g)20,000,000——Property, plant and equipment, net7397,356,795 323,112,366 45,509,425Intangible assets, net81,857,320 1,306,401 184,003Operating lease right-of-use assets2086,597,12176,821,28510,820,052Deferred income tax assets17(b)6,132,49920,747,0212,922,157Other non-current assets912,683,090 6,730,378 947,954Total non-current assets524,626,825 428,717,451 60,383,591Total assets2,536,697,854 2,189,331,649 308,360,914LIABILITIES Current liabilities Short-term bank borrowings10160,000,000 100,000,000 14,084,705Notes payable (including notes payable of VIE without recourse to the Company wereRMB316,832,113 and RMB167,282,688 as of December 31, 2022 and 2023, respectively)11316,832,113 167,282,688 23,561,274Accounts payable (including accounts payable of VIE without recourse to the Company ofRMB459,406,790 and RMB575,235,413 as of December 31, 2022 and 2023, respectively)459,466,937 575,724,288 81,089,070Income taxes payable (including income taxes payable of VIE without recourse to the Company ofRMB1,501,992 and RMB1,195,114 as of December 31, 2022 and 2023, respectively)1,898,0651,357,913191,258Advances from customers (including advances from customers of VIE without recourse to theCompany of RMB23,522,149 and RMB16,399,926 as of December 31, 2022 and 2023, respectively)2(r)24,931,897 19,304,488 2,718,980Deferred revenue—current (including deferred revenue-current of VIE without recourse to theCompany of RMB37,539,733 and RMB41,755,097 as of December 31, 2022 and 2023, respectively)2(r)37,539,733 41,755,097 5,881,082Accrued expenses and other current liabilities (including accrued expenses and other current liabilitiesof VIE without recourse to the Company of RMB175,352,229 and RMB151,286,008 as of December31, 2022 and 2023, respectively)12192,092,943 165,511,396 23,311,795Total current liabilities1,192,761,688 1,070,935,870 150,838,164The accompanying notes are an integral part of these consolidated financial statements. Table of ContentsF-5 As of December 31, Note 2022 2023Non-current liabilities Deferred revenue—non-current (including deferred revenue non-current of VIE without recourse to theCompany of RMB11,429,500 and RMB13,168,111 as of December 31, 2022 and 2023, respectively) 2(r)11,429,50013,168,1111,854,690Deferred income tax liabilities (including deferred income tax liabilities of VIE without recourse to theCompany of RMB1,398,279 and RMB2,362,494 as of December 31, 2022 and 2023, respectively)17(b)1,398,2792,362,494332,750Operating lease liabilities—non-current (including operating lease liabilities of VIE without recourse tothe Company were RMB7,569,128 and RMB280,421 as of December 31, 2022 and 2023,respectively)207,569,128280,42139,496Other non-current liabilities (including other non-current liabilities of VIE without recourse to theCompany of RMB13,441,382 and RMB8,968,519 as of December 31, 2022 and 2023, respectively)1313,441,3828,968,5191,263,189Total non-current liabilities 33,838,28924,779,5453,490,125 Total liabilities 1,226,599,9771,095,715,415154,328,289Commitments and contingencies21SHAREHOLDERS’ EQUITY: Class A Ordinary Shares (US$0.0001 par value, 4,900,000,000 shares authorized as of December 31,2022 and 2023; 137,719,542 and 138,575,010 shares issued and outstanding as of December 31, 2022and 2023)1489,42890,03112,681Class B Ordinary Shares (US$0.0001 par value, 50,000,000 shares authorized as of December 31, 2022and 2023; 16,542,020 shares issued and outstanding as of December 31, 2022 and 2023)1410,31610,3161,453Additional paid-in capital 1,915,825,6411,964,138,365276,643,103Accumulated other comprehensive loss (16,536,686)(9,495,674)(1,337,438)Accumulated deficit (589,290,822)(861,126,804)(121,287,174)Total shareholders’ equity 1,310,097,8771,093,616,234154,032,625Total liabilities and shareholders’ equity 2,536,697,8542,189,331,649308,360,914The accompanying notes are an integral part of these consolidated financial statements. Table of ContentsF-6NIU TECHNOLOGIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) For the Year Ended December 31, Note 202120222023 US$RMB RMB RMB(Note 2(d))Revenues19 3,704,537,4193,168,597,3342,651,757,646373,492,253Cost of revenues (2,891,758,188)(2,498,916,443)(2,081,010,633)(293,104,217)Gross profit 812,779,231669,680,891570,747,01380,388,036Operating expenses: Selling and marketing expenses (332,007,462)(440,408,982)(495,734,694)(69,822,771)Research and development expenses (135,218,399)(176,478,130)(150,985,739)(21,265,897)General and administrative expenses (including allowance for doubtfulaccounts of RMB1,272,454, RMB25,044,327 and RMB139,445,017 forthe years ended December 31, 2021, 2022 and 2023, respectively) (141,798,910)(158,460,764)(244,518,817)(34,439,755)Total operating expenses(609,024,771)(775,347,876)(891,239,250)(125,528,423)Government grants48,726,81816,385,0382,968,735418,138Operating income (loss) 252,481,278(89,281,947)(317,523,502)(44,722,249)Interest expenses (6,167,805)(5,715,878)(1,423,924)(200,556)Interest income 5,375,96912,860,21635,492,1904,998,970Investment income 21,167,57510,917,7361,426,370200,900Income (loss) before income taxes 272,857,017(71,219,873)(282,028,866)(39,722,935)Income tax (expense) benefit17(a) (47,036,608)21,756,94410,192,8841,435,638Net income (loss) 225,820,409(49,462,929)(271,835,982)(38,287,297)Other comprehensive income (loss) Foreign currency translation adjustment, net of nil income taxes (9,657,187)37,342,7247,386,3681,040,348Unrealized gain on available for sale securities, net income taxes ofRMB5,809,288, RMB1,184,686 and RMB3,080 for the year 2021,2022 and 2023, respectively 17,427,8656,460,89617,4542,458Less: reclassification adjustment for gain on available for sale securitiesrealized in net income, net income taxes of RMB5,291,894,RMB1,698,460 and RMB64,025 for the year 2021, 2022 and 2023,respectively (15,875,681)(9,219,276)(362,810)(51,100)Comprehensive income (loss) 217,715,406(14,878,585)(264,794,970)(37,295,591)Net income (loss) per ordinary share —Basic18 1.47(0.32)(1.73)(0.24)—Diluted181.41(0.32)(1.73)(0.24)Weighted average number of ordinary shares and ordinary sharesequivalents outstanding used in computing net income (loss) perordinary share —Basic18153,672,358155,176,922156,816,105156,816,105—Diluted18 160,460,976155,176,922156,816,105156,816,105The accompanying notes are an integral part of these consolidated financial statements. Table of ContentsF-7NIU TECHNOLOGIESCONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY Accumulated Additional other Total paid-in comprehensiveAccumulated shareholders’Ordinary sharescapital lossdeficitequity Shares RMB RMB RMB RMB RMBBalance as of January 1, 2021152,360,45298,5021,801,940,071(43,016,027)(765,648,302)993,374,244Net income — — — —225,820,409 225,820,409Foreign currency translation adjustment, net of nil income taxes — — — (9,657,187)— (9,657,187)Unrealized holding gains on available-for- sale security, net ofRMB5,809,288 income taxes — — — 17,427,865— 17,427,865Reclassification adjustment for gains on available-for-sale securitiesrealized in net income, net of RMB5,291,894 income taxes — — — (15,875,681)— (15,875,681)Share-based compensation (Note 15)——47,218,156——47,218,156Exercise of share-based awards1,320,3788526,245,532——6,246,384Balance as of December 31, 2021153,680,83099,3541,855,403,759(51,121,030)(539,827,893)1,264,554,190Net loss————(49,462,929)(49,462,929)Foreign currency translation adjustment, net of nil income taxes———37,342,724—37,342,724Unrealized holding gains on available-for- sale security, net ofRMB1,184,686 income taxes———6,460,896—6,460,896Reclassification adjustment for gains on available-for-sale securitiesrealized in net income, net of RMB1,698,460 income taxes———(9,219,276)—(9,219,276)Share-based compensation (Note 15)——58,219,186——58,219,186Exercise of share-based awards580,7323902,202,696——2,203,086Balance as of December 31, 2022 154,261,562 99,744 1,915,825,641(16,536,686)(589,290,822) 1,310,097,877Net loss————(271,835,982)(271,835,982)Foreign currency translation adjustment, net of nil income taxes———7,386,368—7,386,368Unrealized holding gains on available-for- sale security, net ofRMB3,080 income taxes———17,454—17,454Reclassification adjustment for gains on available-for-sale securitiesrealized in net income, net of RMB64,025 income taxes———(362,810)—(362,810)Share-based compensation (Note 15)——47,659,304——47,659,304Exercise of share-based awards855,468603653,420——654,023Balance as of December 31, 2023 155,117,030 100,347 1,964,138,365(9,495,674)(861,126,804) 1,093,616,234Balance as of December 31, 2023 — US$ (Note 2(d)) — 14,134 276,643,103 (1,337,438) (121,287,174) 154,032,625The accompanying notes are an integral part of these consolidated financial statements. Table of ContentsF-8NIU TECHNOLOGIESCONSOLIDATED STATEMENTS OF CASH FLOWS For the Year Ended December 31, 2021 2022 2023 US$ RMB RMB RMB (Note 2(d))Operating activities: Net income (loss) 225,820,409(49,462,929)(271,835,982) (38,287,297)Adjustments to reconcile net income (loss) to net cash provided by operating activities Allowance for doubtful accounts (Note 4) 1,272,45425,044,327139,445,01719,640,420Share-based compensation (Note 15) 47,218,15658,219,18647,659,304 6,712,673Depreciation and amortization (Note 7 and 8) 95,473,048142,711,409148,064,759 20,854,485Reduction in the carrying amount of right-of-use assets10,730,2138,525,5478,303,3441,169,502Investment income (21,167,575)(10,917,736)(1,426,370) (200,900)Unrealized foreign exchange loss (gain) 1,882,626(7,508,084)(4,557,547) (641,917)Deferred income tax expense (benefit)4,321,601(6,079,533)(10,952,309)(1,542,600)Loss on disposal of property, plant and equipment 235,581478,45722,077 3,109Write-down of inventories (Note 5)3,679,6698,991,79321,681,6523,053,797Changes in operating assets and liabilities: Accounts receivable (168,520,346)(56,145,868)65,371,286 9,207,353Inventories (131,185,130)(156,107,463)2,627,537 370,081Prepayments and other current assets (24,763,588)(125,888,562)(5,062,337) (713,015)Other non-current assets1,520,050(1,834,238)6,269,554883,048Accounts payable and notes payable 286,726,60293,747,996(33,303,059) (4,690,638)Advances from customers (22,764,635)7,545,887(5,657,752) (796,878)Deferred revenue 18,119,3405,517,8015,953,975 838,600Other non-current liabilities (4,374,815)(9,365,449)(1,280,068) (180,294)Income tax receivable—(13,349,602)13,340,1521,878,921Income taxes payable3,046,431(15,703,460)(540,152)(76,079)Accrued expenses and other current liabilities 15,256,165(13,056,147)(21,922,192) (3,087,676)Operating lease liabilities(8,351,554)(7,219,675)(8,465,797)(1,192,383)Net cash provided by (used in) operating activities 334,174,702(121,856,343)93,735,092 13,202,312Investing activities: Cash paid for purchase of property, plant and equipment (285,745,233)(135,349,387)(78,934,562) (11,117,701)Purchase of term deposits(357,162,950)(635,470,550)(379,419,347)(53,440,096)Cash received from redemption of term deposits353,295,700551,794,100513,238,24772,288,095Cash paid for purchase of short-term investments (6,032,000,000)(2,593,000,000)(420,000,000) (59,155,763)Cash received from sale of short-term investments 6,027,167,5753,213,917,736581,426,370 81,892,191Prepayment for an investment—(4,000,000)——Others(614,066)———Net cash (used in) provided by investing activities (295,058,974)397,891,899216,310,708 30,466,726Financing activities: Cash received from exercise of employee stock options6,246,3842,203,086654,02392,117Proceeds from short-term bank borrowings340,000,000340,000,000100,000,00014,084,705Repayment for short-term bank borrowings(340,000,000)(360,000,000)(160,000,000)(22,535,528)Net cash provided by (used in) financing activities 6,246,384(17,796,914)(59,345,977) (8,358,706)Effect of foreign currency exchange rate changes on cash, cash equivalents and restricted cash (8,490,370)30,043,5728,913,200 1,255,398Net increase in cash, cash equivalents and restricted cash 36,871,742288,282,214259,613,023 36,565,730Cash, cash equivalents and restricted cash at the beginning of the year 395,473,214432,344,956720,627,170 101,498,214Cash, cash equivalents and restricted cash at the end of the year 432,344,956720,627,170980,240,193 138,063,944Supplemental information Interest paid 6,346,1895,711,0561,616,253227,645Income tax paid 39,668,57613,374,9091,066,182150,169Construction payable11,279,4647,522,48013,441,9231,893,255Prepayment for a service in previous year to purchase of an investment—3,000,000——The accompanying notes are an integral part of these consolidated financial statements. Table of ContentsF-9NIU TECHNOLOGIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS1. DESCRIPTION OF ORGANIZATION AND PRINCIPAL ACTIVITIESOrganization and principal activitiesNiu Technologies (“the Company”), through its wholly-owned subsidiaries, consolidated variable interest entity (“VIE”) and VIE’ssubsidiaries (collectively referred to as “the Group”), is principally engaged in designing, manufacturing and selling of electric scooters and itsaccessories and spare parts under the brand name of “NIU”. The Group’s principal operations and geographic markets are primarily in the People’sRepublic of China (“PRC”).The accompanying consolidated financial statements include the financial statements of the Company, its wholly-owned subsidiaries,consolidated VIE and VIE’s subsidiaries.The VIE arrangementsThe Group operates its online business in the PRC through Beijing Niudian Technologies Co., Ltd. (“Beijing Niudian”, or the “VIE”), alimited liability company established under the laws of the PRC on September 18, 2014. Beijing Niudian holds the necessary PRC operatinglicenses for the online business. The equity interests of Beijing Niudian are legally held by individuals who act as nominee equity holders of theVIE on behalf of Beijing Niudian Information Technology Co., Ltd. (“Niudian Information”), the Company’s wholly-owned subsidiary. A series ofcontractual agreements, including Powers of Attorney, Exclusive Business Cooperation Agreement, Equity Pledge Agreement, Exclusive OptionAgreement and Spousal Consent Letters (collectively, the “VIE Agreements”), were entered among the Company, Niudian Information, BeijingNiudian and its nominee equity holders on May 27, 2015 and were subsequently amended to include registration of the Equity Pledge Agreementwith the relevant registration authority on June 11, 2018, amended when an equity holder transferred certain equity interests to another equityholder on July 20, 2018.The contractual agreements were further amended when two equity holders transferred certain equity interests to another equity holder onMarch 10, 2020.Pursuant to the VIE Agreements, the Company is able to exercise effective control over, bears the risks of, enjoys substantially all of theeconomic benefits of the VIE, and has an exclusive option to purchase all or part of the equity interests in the VIE when and to the extent permittedby PRC law at the lowest price possible. The Company’s management concluded that Beijing Niudian is a VIE and the Company is its primarybeneficiary. As such, the consolidated financial statements of the VIE are included in the consolidated financial statements of the Company.The principal terms of the VIE Agreements are further described below.1) Powers of AttorneyThe Company and each of the equity holders of Beijing Niudian entered into Powers of Attorney. Pursuant to the Powers of Attorney, theequity holders of Beijing Niudian irrevocably appointed the Company as their attorney-in-fact to exercise all equity holder rights, including, but notlimited to, convening and attending in the equity holders’ meeting, appointing or removing directors, executive officers and senior management,disposing of all or part of the equity holder’s interests in Beijing Niudian, casting equity holder’s vote on matters requiring equity holders’ approvaland doing all other acts in the capacity of equity holder as permitted by Beijing Niudian’s Memorandum and Articles of Association. In addition,the Company has a right to assign its rights and benefits under the Powers of Attorney to any other parties without an advance notice to the equityholders of Beijing Niudian. The Powers of Attorney shall continue in force and be irrevocable as long as the equity holders of Beijing Niudianremain as the equity holders of Beijing Niudian. Table of ContentsF-102) Exclusive Business Cooperation AgreementNiudian Information and Beijing Niudian entered into an Exclusive Business Cooperation Agreement, whereby Niudian Information isappointed as the exclusive service provider for the provision of business support, technology and consulting services to Beijing Niudian. Unless awritten consent is given by Niudian Information, Beijing Niudian is not allowed to engage a third party to provide such services, while NiudianInformation is able to designate another party to render such services to Beijing Niudian. Beijing Niudian shall pay Niudian Information ona monthly basis a service fee, which shall equal to 100% of the monthly net profits of Beijing Niudian, and Niudian Information has the solediscretion to adjust the basis of calculation of the service fee amount according to service provided to Beijing Niudian. Niudian Information ownsthe exclusive intellectual property rights, whether created by Niudian Information or Beijing Niudian, as a result of the performance of theExclusive Business Cooperation Agreement unless terminated in writing by Niudian Information. The Exclusive Business Cooperation Agreementwill be in effect until September 17, 2044 which represents the end of operation term of Beijing Niudian.3) Equity Pledge AgreementAn Equity Pledge Agreement was entered into by and among Niudian Information, Beijing Niudian and equity holders of Beijing Niudian. Toguarantee payment from Beijing Niudian, including but not limited to the service fee pursuant to the Exclusive Business Cooperation Agreement,and the performance of Beijing Niudian and the nominee equity holders’ obligations under the contractual arrangements including the ExclusiveBusiness Cooperation Agreement, Exclusive Option Agreement and Powers of Attorney, the equity holders of Beijing Niudian pledged theirrespective equity in Niudian Information under the Equity Pledge Agreement to Niudian Information as collateral. In the event Beijing Niudianfails to pay Niudian Information its service fee, Niudian Information will have the right to sell the pledged equity and apply the proceeds receivedto pay any outstanding service fees due by Beijing Niudian to Niudian Information. The equity holders of Beijing Niudian agree that, during theterm of the Equity Pledge Agreement, they will not dispose of the pledged equity or create or allow any encumbrance on the pledged equity, andthey also agree that Niudian Information’s rights relating to the equity pledges shall not be prejudiced by any legal actions of the equity holders ofBeijing Niudian, their successors or their designees. The equity pledges have been registered with the relevant registration authority and becameeffective and enforceable since registration. The Equity Pledge Agreement may only be terminated upon the fulfillment of all contractualobligations under the Exclusive Business Cooperation Agreement, Exclusive Option Agreement and Powers of Attorney. During the term of theEquity Pledge Agreement, Niudian Information is entitled to receive dividends attributable to the pledged Beijing Niudian equity.4) Exclusive Option AgreementEach of the equity holders of Beijing Niudian entered into an Exclusive Option Agreement with the Company, Niudian Information, andBeijing Niudian, pursuant to which the equity holders of Beijing Niudian granted the Company, and Niudian Information or other person upon thedesignation by the Company, an irrevocable and exclusive option to purchase, at its discretion and to the extent permitted under the PRC law, all orpart of the equity holders’ interests in Beijing Niudian at RMB100 or the lowest price that the PRC law permits at the time unless a valuation of theequity is required by the PRC law. The equity holders of Beijing Niudian commit that without the prior written consent of the Company, the equityholders of Beijing Niudian will not, among other things, (i) create any pledge or encumbrance on their equity interests in Beijing Niudian,(ii) transfer or otherwise dispose of their equity interests in Beijing Niudian, (iii) change Beijing Niudian’s registered capital, (iv) amend BeijingNiudian’s articles of association, (v) dispose of Beijing Niudian’s material assets or enter into any material contract with a value of overRMB100,000 (except in the ordinary course of business), or (vi) merge Beijing Niudian with any other entity. In addition, Beijing Niudianundertakes that, without the Company’s prior written consent, it will not, among other things, create any pledge or encumbrance on any of itsassets, or transfer or otherwise dispose of its material assets (except in the ordinary course of business). Beijing Niudian and its equity holders shallappoint those individuals recommended by the Company as directors of Beijing Niudian. Beijing Niudian shall provide operating and financialinformation to the Company at the request of the Company and ensure the continuance of the business. The Exclusive Option Agreement willremain effective until all equity interests in Beijing Niudian held by its equity holders are transferred or assigned to the Company or its designee.Beijing Niudian and its equity holders shall not have any right to terminate the Exclusive Option Agreement.5) Spousal Consent LettersThe spouses of each of nominee equity holders signed Spousal Consent Letters to consent that the equity interests in Beijing Niudian held byand registered in the name of the respective nominee equity holders will be disposed of pursuant to the VIE Agreements. These spouses agreed notto assert any rights over the equity interest in Beijing Niudian held by their spouses. In addition, in the event that the spouses obtain any equityinterests in Beijing Niudian held by their spouses for any reason, they agreed to be bound by the VIE Agreements. Table of ContentsF-11Risks in relation to the VIE structureBased on the opinion of the Company’s PRC legal counsel, the management believes the VIE Agreements have resulted in the Companyhaving the power to direct activities that most significantly impact the VIE, including appointing key management, setting up operating policies,exerting financial controls and transferring profit or assets out of the VIE at its discretion. The Company considers that it has the right to receive allthe benefits and assets of the VIE. As the VIE was established as a limited liability company under the PRC law, its creditors do not have recourseto the general credit of the Company for the liabilities of the VIE, and the Company does not have the obligation to assume the liabilities ofthe VIE.The Company has determined that the VIE Agreements are in compliance with PRC laws and are legally enforceable. However, uncertaintiesin the PRC legal system could limit the Company’s ability to enforce the VIE Agreements; and if the equity holders of the VIE were to reduce theirinterest in the Company, their interests may diverge from that of the Company and that may potentially increase the risk that they would seek to actcontrary to the contractual terms.The Company’s ability to control the VIE also depends on the rights provided to the Company under the Powers of Attorney to vote on allmatters requiring equity holders’ approval in the respective VIE. As noted above, the Company believes these Powers of Attorney are legallyenforceable but yet they may not be as effective as direct equity ownership. In addition, if the corporate structure of the Group or the contractualarrangements between the Company, Niudian Information, the VIE and its respective equity holders were found to be in violation of any existingPRC laws and regulations, the relevant PRC regulatory authorities could:●revoke the business license and/or operating licenses of such entities;●discontinue or place restrictions or onerous conditions on the Group’s operations;●impose fines, confiscate the income from the VIE, or impose other requirements with which the Group may not be able to comply;●require the Group to restructure its ownership structure or operations, including terminating the contractual arrangements with the VIEand deregistering the equity pledges of the VIE, which in turn would affect the Company’s ability to consolidate, derive economicinterests from, or exert effective control over the VIE; or●restrict or prohibit our use of the proceeds of this offering to finance our business and operations in China.The imposition of any of the above restrictions or actions may result in a material and adverse effect on the Group’s ability to conduct itsbusiness. In addition, if the imposition of any of these restrictions causes the Company to lose the right to direct the activities of the VIE or theright to receive its economic benefits, the Company would no longer be able to consolidate the VIE. The Company’s management believes that thelikelihood to lose the Company’s current ownership structure or the contractual arrangements with the VIE is remote based on the current facts andcircumstances.There is no VIE in which the Company has a variable interest but is not the primary beneficiary. Currently there is no contractual arrangementthat could require the Company to provide additional financial support to the VIE. Table of ContentsF-12The following consolidated assets and liabilities information of the Group’s VIE as of December 31, 2022 and 2023, and consolidatedrevenues, net income (loss) and cash flow information for the years ended December 31, 2022, 2022 and 2023, have been included in theaccompanying consolidated financial statements. All intercompany transactions and balances with the Company and its wholly-owned subsidiarieshave been eliminated upon consolidation. As of December 31, 2022 2023 RMBRMBCash 493,570,803620,484,535Term deposits-current—20,000,000Restricted cash6,229,605145,000Short-term investments 160,406,301—Accounts receivable, net 298,732,23991,975,054Inventories 411,954,893386,966,973Prepayments and other current assets 187,576,865177,957,171Amounts due from inter-companies24,251,01844,220,970Total current assets 1,582,721,7241,341,749,703Term deposits-non-current20,000,000—Property, plant and equipment, net 394,621,585321,213,398Intangible assets, net 1,317,7851,102,870Operating lease right-of-use assets86,597,12176,821,285Deferred income tax assets6,132,49920,747,021Other non-current assets 5,677,4146,720,608Total assets 2,097,068,1281,768,354,885Short-term bank borrowings 160,000,000100,000,000Notes payable316,832,113167,282,688Accounts payable 459,406,790575,235,413Amounts due to inter-companies 476,120,909467,282,009Income taxes payable1,501,9921,195,114Advances from customers 23,522,14916,399,926Deferred revenue—current 37,539,73341,755,097Accrued expenses and other current liabilities 175,352,229151,286,008Total current liabilities 1,650,275,9151,520,436,255Deferred revenue-non-current11,429,50013,168,111Deferred income tax liabilities 1,398,2792,362,494Operating lease liabilities7,569,128280,421Other non-current liabilities 13,441,3828,968,519Total liabilities 1,684,114,2041,545,215,800 Table of ContentsF-13 For the Year Ended December 31, 2021 2022 2023 RMBRMB RMBRevenues 3,768,134,4343,187,989,945 2,645,570,002Net income (loss) 213,848,471(9,347,980) (236,441,380)Net cash provided by (used in) operating activities 354,675,219(74,417,318) 93,727,586Net cash (used in) provided by investing activities (329,808,349)455,930,283 82,502,334Net cash used in financing activities —(20,000,000) (60,000,000)Effect of foreign currency exchange rate changes on cash and restricted cash (422,991)7,993,970 4,599,207Net increase in cash and restricted cash 24,443,879369,506,935 120,829,127Cash and restricted cash at the beginning of the year 105,849,594130,293,473 499,800,408Cash and restricted cash at the end of the year 130,293,473499,800,408 620,629,535The unrecognized revenue-producing assets that are held by the VIE primarily consist of ICP License, Production License for NationalIndustrial Products, trademarks, patents, know-how and customer relationships. None of the assets of the VIE can be used only to settle obligationsof the VIE. None of the assets of the VIE and its subsidiaries has been pledged or collateralized, except for the restricted cash as of December 31,2022. The creditors of the VIE and its subsidiaries do not have recourse to the general credit of the Company or its consolidated subsidiaries,except for the restricted cash of the Company which was pledged as collateral for the short -term bank borrowings.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(a) Basis of presentationThe accompanying consolidated financial statements of the Group have been prepared in accordance with accounting principles generallyaccepted in the United States of America (“U.S. GAAP”).(b) Principles of consolidationThe consolidated financial statements of the Group have been prepared in accordance with U.S. GAAP. The consolidated financial statementsinclude the financial statements of the Company, its subsidiaries, the VIE for which the Company or its subsidiary is the primary beneficiary, andthe VIE’s subsidiaries.Subsidiaries are those entities in which the Company, directly or indirectly, controls more than one half of the voting power or has the power togovern the financial and operating policies, to appoint or remove the majority of the members of the board of directors, or to cast a majority ofvotes at the meeting of directors. A VIE is an entity in which the Company, or its subsidiary, through contractual arrangements, exercises effectivecontrol over the activities that most impact the economic performance, bears the risks of, and enjoys the rewards normally associated withownership of the entity, and therefore the Company or its subsidiary is the primary beneficiary of the entity.All intercompany transactions and balances among the Company, its subsidiaries, the VIE and the VIE’s subsidiaries have been eliminatedupon consolidation.(c) Use of estimatesThe preparation of the consolidated financial statements in accordance with U.S. GAAP requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities at the balance sheet date,and the reported revenues and expenses during the reported period in the consolidated financial statements and accompanying notes. Significantaccounting estimates include, but not limited to, depreciable lives of property, plant and equipment and intangible assets, the realization of deferredincome tax assets, future warranty expenses, current expected credit loss and discount rate for operating leases. Changes in facts and circumstancesmay result in revising estimates. Actual results could differ from those estimates, and as such, differences may be material to the consolidatedfinancial statements. Table of ContentsF-14(d) Convenience translationTranslations of balances in the consolidated financial statements from RMB into US$ as of and for the year ended December 31, 2023 aresolely for the convenience of the readers and were calculated at the rate of US$1.00=RMB7.0999, representing the noon buying rate in the City ofNew York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York on December 29, 2023. Norepresentation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on December 29,2023, or at any other rate. The US$ convenience translation is not required under U.S. GAAP and all US$convenience translation amounts in theaccompanying consolidated financial statements are unaudited.(e) Commitments and contingenciesIn the normal course of business, the Group is subject to loss contingencies, such as legal proceedings and claims arising out of its business,that cover a wide range of matters, including, among others, government investigations, shareholder lawsuits, and non-income tax matters. Anaccrual for a loss contingency is recognized when it is probable that a liability has been incurred and the amount of loss can be reasonablyestimated. If a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the natureof the contingent liability, together with an estimate of the range of possible loss if determinable and material, is disclosed.(f) Cash and cash equivalentsCash consists of cash on hand and cash at bank. Cash equivalents represent term deposits with original maturities of three months or less,which are readily convertible to known amounts of cash. Cash and cash equivalents are deposited in financial institutions at the followinglocations: As of December 31, 2022 2023 RMB RMBFinancial institutions in the mainland of the PRC—Denominated in EUR 5,986,59518,233,516—Denominated in RMB 278,917,866334,796,621—Denominated in GPB244,790504,471—Denominated in USD 220,296,524499,117,291Total cash and cash equivalents balances held at mainland PRC financial institutions 505,445,775852,651,899Financial institutions in the United States —Denominated in USD 10,087,973691,290Total cash balances held at United States financial institutions 10,087,973691,290Financial institutions in the Hong Kong S.A.R.—Denominated in HKD78,20679,213—Denominated in USD14,631,59011,477,109Total cash balances held at Hong Kong S.A.R. financial institutions14,709,79611,556,322Total cash balances held at financial institutions in other locations3,453,5147,203,416Total cash and cash equivalents balances held at financial institutions533,697,058872,102,927 Table of ContentsF-15(g) Term depositsTerm deposits include current and non-current term deposits. Current term deposits represent deposits placed with bank with originalmaturities of more than three months but less than one year. Non-current term deposits represent deposits placed with bank with original maturitiesof more than one year. Term deposits are presented in the following table: As of December 31, 2022 2023 RMB RMBFinancial institutions in the mainland of the PRC—Denominated in RMB20,000,00020,000,000—Denominated in USD208,589,77077,555,565Total term deposits held228,589,77097,555,565Term deposits—current208,589,77097,555,565Term deposits—non-current 20,000,000—(h) Restricted cashRestricted cash is an amount of cash deposited with banks primarily in conjunction with borrowings from banks and notes payable. Restrictionon the use of such cash and the interest earned thereon is imposed by the banks and remains effective throughout the terms of the bank borrowingsand notes payable. Restricted cash is classified as current asset on the Company’s consolidated balance sheets, as all the balance are expected to bereleased to cash within the next twelve months from December 31, 2023. The Group’s restricted cash are denominated in RMB and USD and aredeposited at financial institutions in the mainland of the PRC.The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheetsthat sum to the total of the same such amounts shown in the consolidated statements of cash flows.As of December 31, 2022 2023RMBRMBCash and cash equivalents 534,286,849 872,573,460Restricted cash 186,340,321 107,666,733Total cash, cash equivalents and restricted cash 720,627,170 980,240,193(i) Short-term investmentsThe Group’s short-term investments represent the Group’s investments in financial products managed by financial institutions in the PRCwhich are redeemable at the option of the Group on any working day or have the original maturities of less than twelve months.The Group classified the short-term investments, with aggregate amounts of RMB6,032,000,000 and RMB2,593,000,000 purchased for theyear ended December 31, 2021 and 2022, respectively, as available-for-sale securities and are reported at fair value. Unrealized holding gains orlosses, net of the related tax effect, on available-for-sale securities were excluded from earnings and recorded as a separate component ofaccumulated other comprehensive income (loss) until realized. Realized gains or losses from the sale of short-term investments are determined on aspecific identification basis and are recorded as investment income when earned.The Group purchased short-term investments with aggregate amounts of RMB420,000,000 for the year ended December 31, 2023, and electedthe fair value option at the date of initial recognition in accordance with Accounting Standards Codification (“ASC”) Topic 825, FinancialInstruments, (“ASC 825), as the Group believes this approach can better reflect the economics of its investment interest. Changes in the fair valueof these investments in the amount of RMB1,426,370 for the year ended December 31, 2023 were reflected on the consolidated statement ofcomprehensive income (loss) as investment income. Fair value is estimated based on quoted prices provided by financial institutions at the end ofeach reporting period. Table of ContentsF-16(j) InventoriesInventories, consisting of raw materials, work in progress and finished goods, are stated at the lower of cost or net realizable value. The cost ofinventory is determined using the weighted average cost method. Cost of work-in-process and finished goods comprise direct materials, directproduction costs and an allocation of production overheads based on normal operating capacity. The Group takes ownership, risks and rewards ofthe products purchased. Inventory is written down for damaged and slow-moving goods, which is dependent upon factors such as historical andforecasted consumer demand. When appropriate, write downs to inventory are recorded to write down the cost of inventories to their net realizablevalue.(k) Property, plant and equipment, netProperty, plant and equipment are stated at cost less accumulated depreciation and any recorded impairment.Costs incurred in the construction of property, plant and equipment, including down payments and progress payments, are initially capitalizedas construction in progress and transferred into their respective asset categories when the assets are ready for their intended use, at which timedepreciation commences.The estimated useful lives are as follows:Estimated useful livesBuilding 50 yearsMachinery and equipment3 - 10 yearsFurniture 3 - 5 yearsLeasehold improvements The shorter of the estimated useful life or remaining lease termOffice and electronic equipment 2 - 5 yearsMotor vehicles 3 - 4 yearsDepreciation on property, plant and equipment is calculated on the straight-line method over the estimated useful lives of the assets.Depreciation of property, plant and equipment attributable to manufacturing activities is capitalized as part of inventories, and recognized ascost of revenues when the inventory is sold.When items are retired or otherwise disposed of, income is charged or credited for the difference between net book value and the proceedsreceived thereon. Ordinary maintenance and repairs are charged to expense as incurred, and replacements and betterments are capitalized andamortized over the remaining useful life.(l) Intangible assets, netIntangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets with finite livesare carried at cost less any accumulated amortization and any accumulated impairment losses.Intangible assets with finite lives are amortized over the useful economic life on straight-line basis and assessed for impairment whenever thereis an indication that the intangible assets may be impaired.(m) LeasesThe Group adopted ASC Topic 842, Leases (“ASC 842”) as of January 1, 2021, and elected the package of practical expedients that not toreassess:(1) whether any expired or existing contracts are or contain leases, (2) lease classification for any expired or existing leases, and (3) initialdirect costs for any expired or existing leases. The Group also elected the practical expedient of the short-term lease exemption for contracts withlease terms of twelve months or less. The Group categorizes leases with contractual terms longer than twelve months as either operating or financelease. However, the Group has no finance leases for any of the periods presented. Table of ContentsF-17The Group determines if an arrangement is a lease or contains a lease at lease inception. For operating leases, the Group recognizes a right-of-use asset and a lease liability based on the present value of the lease payments over the lease term, reduced by lease incentives received, plus anyinitial direct costs, using the discount rate for the lease at the commencement date. Variable lease payments not dependent on an index or rate areexcluded from the right-of-use asset and lease liability calculations and are recognized in expense in the period which the obligation for thosepayments is incurred. As the rate implicit in the Group’s lease is not typically readily available, the Group uses an incremental borrowing rate basedon the information available at the lease commencement date in determining the present value of lease payments. This incremental borrowing ratereflects the fixed rate at which the Group could borrow on a collateralized basis the amount of the lease payments in the same currency, for asimilar term, in a similar economic environment. The Group’s lease terms may include options to extend or terminate the lease. Such options areaccounted for only when it is reasonably certain that the Group will exercise the options. Lease expense for lease payments is recognized on astraight-line basis over the lease term.From time to time, the Group purchases the rights to use government-owned land for a fixed period of time. Prior to the adoption of ASC 842,these land use rights were recorded at cost less accumulated amortization and any accumulated impairment losses in land use right, net in theconsolidated balance sheets. Amortization is provided on a straight-line basis over the estimated useful lives, which is 50 years and represents theshorter of the estimated usage years or the terms of the land use rights certificate. Upon the adoption of ASC 842 on January 1, 2021, land userights acquired assessed in accordance with ASC 842 and recognized in operating right-of-use assets if they meet the definition of lease.(n) Impairment of long-lived assetsLong-lived assets such as property, plant and equipment, intangible assets and operating lease right-of-use assets with finite lives are evaluatedfor impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be fully recoverable or that theuseful life is shorter than the Group had originally estimated. When these events occur, the Group evaluates the impairment for the long-livedassets by comparing the carrying value of the assets with an estimate of future undiscounted cash flows expected to be generated from the use ofthe assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, theGroup recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. No impairment oflong-lived assets was recognized for the years ended December 31, 2021, 2022 and 2023.(o) Value added taxesThe Company’s PRC subsidiaries are subject to value added tax (“VAT”). Revenues from sales of products are generally subject to VAT at therate of 13%. Revenues from services are generally subject to VAT at the rate of 6%. VAT are subsequently paid to PRC tax authorities after nettinginput VAT on purchases and VAT export rebates. The excess of output VAT over input VAT and VAT export rebates is reflected in accrued expensesand other current liabilities, the excess of input VAT and VAT export rebates over output VAT is reflected in prepayments and other current assets inthe consolidated balance sheets.(p) Fair value measurementsFair value represents the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction betweenmarket participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptionsthat market participants would use in pricing an asset or a liability.Accounting guidance defines fair value, establishes a framework for measuring fair value and expands disclosures about fair valuemeasurements. Accounting guidance establishes a three-level fair value hierarchy and requires an entity to maximize the use of observable inputsand minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy isbased upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs are:Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.Level 2—Include other inputs that are directly or indirectly observable in the marketplace.Level 3—Unobservable inputs which are supported by little or no market activity. Table of ContentsF-18Accounting guidance also describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach;(2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactionsinvolving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single presentvalue amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach isbased on the amount that would currently be required to replace an asset.Financial assets and liabilities of the Group primarily consist of cash and cash equivalents, term deposits, restricted cash, short-terminvestments, accounts receivable, other receivables, short-term bank borrowings, notes payable, accounts payable, and other payables. The Groupmeasures short-term investments at fair value on a recurring basis. Short-term investments include financial products issued by financialinstitutions, which are valued based on prices per unit quoted by issuers. They are categorized in Level 2 of the fair value hierarchy.As of December 31, 2022 and 2023, the carrying values of other financial instruments approximated to their fair values as their interest ratesare comparable to the prevailing interest rates in the market.The Group’s non-financial assets, such as property, plant and equipment, intangible assets and operating lease right-of-use assets, would bemeasured at fair value only if they were determined to be impaired.(q) Revenue recognitionThe Group generates substantially all of its revenues from sales of electric scooters, accessories and spare parts to the Group’s PRC domesticoffline distributors and overseas offline distributors or directly to individual customers online. The Group also generates its revenues from itssubscription-based mobile application services, as well as insurance service as an agent.The Group recognizes revenues upon the satisfaction of its performance obligation (upon transfer of control of promised goods or services tocustomers) in an amount that reflects the consideration to which the Group expects to be entitled to in exchange for those goods or services,excluding amounts collected on behalf of third parties (for example, value added taxes). For each performance obligation satisfied over time, theGroup recognizes revenue over time by measuring the progress toward complete satisfaction of that performance obligation. If the Group does notsatisfy a performance obligation over time, the performance obligation is satisfied at a point in time.To achieve that core principle, the Group applies the five steps defined under Accounting Standards Codification Topic 606: (i) identify thecontract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate thetransaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performanceobligation. The Group assesses its revenue arrangements against specific criteria in order to determine if it is acting as principal or agent. Revenuearrangements with multiple performance obligations are divided into separate distinct goods or services. A performance obligation is considereddistinct from other obligations in a contract when it (a) provides a benefit to the customer either on its own or together with other resources that arereadily available to the customer and (b) is separately identified in the contract. The Group allocates the transaction price to each performanceobligation based on the relative stand-alone selling price (“SSP”) of the goods or services provided. Revenue is recognized upon the transfer ofcontrol of promised goods or services to a customer.ProductsThe Group identified one performance obligation which is to sell products, such as electric scooters, accessories and spare parts, to the Group’sPRC domestic offline distributors and overseas offline distributors or directly to individual customers online. For all sales of products, the Grouprequires a signed contract or purchase order, which specifies pricing, quantity and product specifications. Revenue of product sales is recognized ona gross basis upon the satisfaction of its performance obligation, which is to transfer the control of the promised products to customers.The transfer of control of the products is satisfied at a point in time, which occurs when the products are accepted by the domestic offlinedistributors, overseas offline distributors or individual customers. When the Group sells its products to its domestic offline distributors for domesticsales in PRC, acceptance of the products by the domestic offline distributors is evidenced by goods receipt notes signed by the domestic offlinedistributors, which is generally at the Group’s warehouse. When the Group sells its products to overseas offline distributors for oversea sales,acceptance of the products by overseas offline distributors is evidenced by shipping documents dependent upon the terms of the underlyingcontract. When the Group sells its products to individual customers through its own online store and third-party e-commerce platform, the Group isresponsible for the delivery to individual customers. Acceptance of the products is evidenced by goods receipt notes signed by individualcustomers. Table of ContentsF-19The Group provides sales volume rebate to qualified distributors based on the volume sold to such distributors in a certain period and grantsonline individual customers unconditional right to return the products within 7 up to 30 days after their acceptance.Revenues are measured as the amount of consideration the Group expects to receive in exchange for transferring products to domestic offlinedistributors, overseas offline distributors or individual customers. Consideration is recorded net of sales volume rebate, sales returns and VAT. Salesreturns is estimated based on historical experiences, which were insignificant for the years ended December 31, 2021, 2022 and 2023.The Group utilizes delivery service providers to deliver products to overseas offline distributors and individual customers (“shippingactivities”), but the delivery service is not considered as a separate obligation as the shipping activities are performed before the overseas offlinedistributors and individual customers obtain control of the products. Therefore, shipping activities are not considered a separate promised service tothem but rather are activities to fulfill the Group’s promise to transfer the products. Outbound shipping charges to overseas offline distributors andindividual customers are included as a part of the revenues, and outbound shipping-related costs are included in our inventory and recognized ascost of revenue upon sale of products to overseas offline distributors and individual customers. Shipping costs incurred for sales of products andrecognized as cost of revenues were RMB49,456,660, RMB101,970,407 and RMB52,541,201 for the years ended December 31, 2021, 2022 and2023, respectively.For some sales, the Group collects cash before delivery. Cash collected before product delivery is recognized as advances from customers.ServiceWhen the Group sells its smart electric scooters to its customers, it also provides mobile application services for free for one to two years (the“free service period”). Customers are able to locate their smart electric scooters, as well as obtain the operating status (e.g. battery status), andclaim online repair and maintenance requests of their smart electric scooters, upon their registration of their smart electric scooters on the Group’smobile application. Customers may subscribe to such service after the free service period if they want to continue using aforementioned functions.Such revenue arrangements are divided into separate distinct performance obligations, including electric scooters and mobile applicationservices. The Group determines the SSP for electric scooters and mobile application services based on their relative selling prices.The allocated revenue to mobile application services of free service period and subscribed mobile application service revenue is deferred andrecognized on a straight-line basis over the service period, as the Group determines that the customer simultaneously receives and consumesbenefits provided by the Group as the Group performs during the free service period or the subscription period.The deferred revenue that will be recognized in the next twelve months is classified as current portion, and the remaining balance of deferredrevenue is classified as non-current portion.The Group also sells insurance plan for electric scooters (“NIU Cover”) to individual customers at their option. The insurance is provided bythird party insurance companies. The Group determines that it acts as an agent for the NIU Cover service because it does not obtain control of theservice before the service is transferred to the customers. The Group recognizes revenue on net basis when the insurance agreement is entered intobetween individual customers and insurance providers. Table of ContentsF-20Remaining performance obligationsThe remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to be recognized as of the end ofthe reporting period and an explanation as to when the Group expects to recognize these amounts in revenue. Additionally, as a practical expedient,the Group does not disclose the remaining performance obligations of contracts that have an original duration of one year or less.As of December 31, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations that are unsatisfied orpartially unsatisfied was RMB74,227,696. Given the profile of contract terms, RMB61,059,585 of the remaining performance obligation isexpected to be recognized as revenue within the next 12 months and RMB13,168,111 is expected to be recognized as revenue between next 12 to36 months.(r) Contract BalancesTiming of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable are recorded at the invoiced amountand do not bear interest. Amounts collected on accounts receivable are included in net cash provided by operating activities in the consolidatedstatements of cash flows.The Group adopted Accounting Standards Codification Topic (“ASU”) No.2016-13, Financial Instruments - Credit Losses, Measurement ofCredit Losses on Financial Instruments, and subsequent amendments to the initial guidance within ASU 2018-19, ASU 2019-04, ASU 2019-05,ASU 2019-11 and ASU 2020-02, collectively referred to as “ASC 326” on January 1, 2021 using the modified retrospective approach. Uponadoption of ASC 326 starting from January 1, 2021, the provision of credit losses for accounts receivable is based upon the current expected creditlosses (“CECL”) model. The CECL model requires an estimate of the credit losses expected over the life of accounts receivable since initialrecognition, and accounts receivable with similar risk characteristics are grouped together when estimating CECL. In assessing the CECL, theGroup considers both quantitative and qualitative information that is reasonable and supportable, including historical credit loss experience,adjusted for relevant factors impacting collectability and forward-looking information indicative of external market conditions. While the Groupuses the best information available in making determination, the ultimate recovery of recorded receivables is also dependent upon future economicevents and other conditions that may be beyond the Group’s control. Accounts receivable which are deemed to be uncollectible are charged offagainst the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. There is a time lagbetween when the Group estimates a portion of or the entire account balances to be uncollectible and when a write off of the account balances istaken. The Group does not have any off-balance sheet credit exposure related to its customers. This adoption did not have material impact on theCompany’s consolidated financial statements.A contract liability is recognized when the Group has an obligation to transfer products or services to a customer for which the Group hasreceived consideration from the customer, or for which an amount of consideration is due from the customer. Contract liabilities are included inadvances from customers and deferred revenue on the consolidated balance sheets.Changes in the Group’s contract liabilities (advances from customers and deferred revenue) are presented in the following table for the yearsended December 31, 2022 and 2023:Contract liabilities as of January 1, 2022 60,718,426Cash received in advance, excluding VAT 2,852,443,422Revenue recognized from opening balance of contract liabilities (50,024,734)Revenue recognized from contract liabilities arising during 2022 (2,789,235,984)Contract liabilities as of December 31, 2022 73,901,130Cash received in advance, excluding VAT 2,118,016,702Revenue recognized from opening balance of contract liabilities (62,471,630)Revenue recognized from contract liabilities arising during 2023 (2,055,218,506)Contract liabilities as of December 31, 2023 74,227,696 Table of ContentsF-21(s) WarrantiesThe Group provides for the estimated costs of warranties at the time when revenue is recognized. The specific terms and conditions of thosewarranties vary among different parts of electric scooters. Factors that affect the Group’s warranty obligation include product defect rates and costsof repair or replacement. These factors are estimates that may change based on new information that becomes available during the reported period.The portion of the warranty reserve expected to be incurred within the next 12 months is included within accrued expenses and other currentliabilities while the remaining balance is included within other non-current liabilities on the consolidated balance sheets.(t) Cost of RevenuesCost of revenues mainly consists of the cost of products sold, logistics costs, write-downs of inventories and warranty costs.(u) Selling and Marketing ExpensesSelling and marketing expenses mainly consist of advertising expenses, promotion expenses and payroll and related expenses for personnelengaged in selling and marketing activities. Advertising expenses, which consist primarily of online and offline advertisements, are expensed whenthe services are received. The advertising expenses were RMB160,415,978, RMB191,776,905 and RMB177,824,898 for the years endedDecember 31, 2021, 2022 and 2023, respectively.(v) General and Administrative ExpensesGeneral and administrative expenses mainly consist of allowance for doubtful accounts, payroll and related costs for employees involved ingeneral corporate functions, professional fees, foreign currency exchange gains (losses) and other general corporate expenses, as well as expensesassociated with the use by these functions of facilities and equipment, such as depreciation and rental expenses.(w) Research and Development ExpensesResearch and development expenses mainly consist of payroll and related costs for employees involved in researching and developing newproducts and technologies, design and development expenses, and expenses associated with the use by these functions of facilities and equipment,such as depreciation and rental expenses. Research and development expenses are expensed as incurred.(x) Government GrantsGovernment grants are recognized when there is reasonable assurance that the Group will comply with the conditions attached to it and thegrant will be received. Grants that compensate the Group for expenses incurred are recognized in the Group’s consolidated statements ofcomprehensive income (loss) on a systematic basis in the same periods in which the expenses are incurred. Grants that compensate the acquisitioncost of an asset are recorded as a liability in the Group’s consolidated balance sheets and are recognized in the Group’s consolidated statements ofcomprehensive income (loss) over the useful life of the asset. As of December 31, 2022 and 2023, nil of liability was related to the governmentgrants that compensate the acquisition cost of an asset.The Group’s government grants mainly consist of certain subsidies or tax refund from local government or industrial parks where its officeslocate. For the years ended December 31, 2021, 2022 and 2023, RMB48,726,818, RMB16,385,038 and RMB2,968,735 of government grants arerecognized in the consolidated statements of comprehensive income (loss), respectively. There were no significant commitment, contingencies orprovision for recapture conditions for the government grants received for the years ended December 31, 2021, 2022 and 2023.(y) Share-based CompensationThe Company periodically grants share-based awards, including but not limited to, restricted share units and share options to eligibleemployees and directors.Share-based awards granted to employees and directors are measured at the grant date fair value of the awards, and are recognized ascompensation expense using the straight-line method over the requisite service period, which is generally the vesting period. Forfeitures areaccounted when they occur. Table of ContentsF-22A change in any of the terms or conditions of share-based awards is accounted for as a modification of the awards. The Group calculatesincremental compensation cost of a modification as the excess of the fair value of the modified awards over the fair value of the original awardsimmediately before its terms are modified at the modification date. For vested awards, the Group recognizes incremental compensation cost in theperiod the modification occurs. For awards not being fully vested, the Group recognizes the sum of the incremental compensation cost and theremaining unrecognized compensation cost for the original awards over the remaining requisite service period after modification.Share-based compensation in relation to the restricted share units is measured based on the fair value of the Company’s ordinary shares at thegrant date of the award. The fair value is the closing prices of the Company’s ordinary shares traded in the open market as of the grant date. Share-based compensation in relation to the share options is estimated using the Binominal Option Pricing Model. The determination of the fair value ofshare options is affected by the share price of the Company’s ordinary shares as well as the assumptions regarding a number of complex andsubjective variables, including the expected share price volatility (estimated based on the historical volatility of the Company and comparable peerpublic companies with a time horizon close to the expected term of the Company’s options), risk-free interest rate, exercise multiple and expecteddividend yield. The fair value of these awards was determined with the assistance from a valuation report prepared by an independent valuationfirm using management’s estimates and assumptions.(z) Employee BenefitsThe Company’s subsidiaries and the VIE and VIE’s subsidiaries in PRC participate in a government mandated, multiemployer, definedcontribution plan, pursuant to which certain retirement, medical, housing and other welfare benefits are provided to employees. PRC labor lawsrequire the entities incorporated in China to pay to the local labor bureau a monthly contribution calculated at a stated contribution rate onthe monthly basic compensation of qualified employees. The Group has no further commitments beyond its monthly contribution. Employee socialbenefits included as cost of revenues and expenses in the accompanying consolidated statements of comprehensive income (loss) amounted toRMB31,122,424, RMB42,637,403 and RMB42,376,447 for the years ended December 31, 2021, 2022 and 2023, respectively.(aa) Income TaxesCurrent income taxes are provided on the basis of net income (loss) for financial reporting purposes, and adjusted for income and expenseitems which are not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions. Deferredincome taxes are provided using the asset and liability method. Under this method, deferred income tax assets and liabilities are recognized for thetax effects of temporary differences and are determined by applying enacted statutory tax rates that will be in effect in the period in which thetemporary differences are expected to reverse to the temporary differences between the financial statements’ carrying amounts and the tax bases ofassets and liabilities. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset deferred tax liabilities and assets,and they relate to income taxes levied by the same tax authority on the same taxable entity.A valuation allowance is provided to reduce the amount of deferred income tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred income tax assets will not be realized. The effect on deferred income taxes arising from achange in tax rates is recognized in the consolidated statements of comprehensive income (loss) in the period of change.The Group applies a “more likely than not” recognition threshold in the evaluation of uncertain tax positions. The Group recognizes the benefitof a tax position in its consolidated financial statements if the tax position is “more likely than not” to prevail based on the facts and technicalmerits of the position. Tax positions that meet the “more likely than not” recognition threshold are measured at the largest amount of tax benefitthat has a greater than fifty percent likelihood of being realized upon settlement. Unrecognized tax benefits may be affected by changes ininterpretation of laws, rulings of tax authorities, tax audits, and expiry of statutory limitations. In addition, changes in facts, circumstances and newinformation may require the Group to adjust the recognition and measurement estimates with regard to individual tax positions. Accordingly,unrecognized tax benefits are periodically reviewed and re-assessed. Adjustments, if required, are recorded in the Group’s consolidated financialstatements in the period in which the change that necessities the adjustments occur. The ultimate outcome for a particular tax position may not bedetermined with certainty prior to the conclusion of a tax audit and, in certain circumstances, a tax appeal or litigation process. The Group recordsinterest and penalties related to unrecognized tax benefits (if any) in interest expenses and general and administrative expenses, respectively. As ofDecember 31, 2022 and 2023, the Group did not have any significant unrecognized uncertain tax positions. Table of ContentsF-23(bb) Foreign currency translation and foreign currency risksThe Company’s reporting currency is Renminbi (“RMB”). The functional currency of the Company and its subsidiary incorporated at HongKong S.A.R., the United States and Singapore is the United States dollars (“US$”). The functional currencies of the Company’s subsidiaryincorporated in British Virgin Islands, Indonesia, Switzerland and Germany are Great Britain Pound (“GBP”), Indonesia Rupiah (“IDR”), SwissFranc (“CHF”) and European Monetary Unit (“EUR”), respectively.The functional currency of the Company’s PRC subsidiaries, VIE and VIE’s subsidiaries is RMB.Transactions denominated in currencies other than the functional currency are remeasured into the functional currency at the exchange ratesprevailing at the dates of the transactions. Monetary assets and liabilities denominated in a foreign currency are remeasured into the functionalcurrency using the applicable exchange rate at the balance sheet date. The resulted exchange differences are recorded as foreign currency exchangegains (losses) in the consolidated statements of comprehensive income (loss).The financial statements of the Company, its subsidiaries incorporated at Hong Kong S.A.R., the United States, Singapore, British VirginIslands, Indonesia, Switzerland and Germany are translated from the functional currency into RMB. Assets and liabilities are translated into RMBusing the applicable exchange rates at the balance sheet date. Equity accounts other than earnings generated in the current period are translated intoRMB using the appropriate historical rates. Revenues, expenses, gains and losses are translated into RMB using the average exchange rates for therelevant period. The resulted foreign currency translation adjustments are recorded as a component of other comprehensive loss in the consolidatedstatements of comprehensive income (loss) and the accumulated foreign currency translation adjustments are recorded as a component ofaccumulated other comprehensive loss in the consolidated statements of changes in shareholders’ equity.The RMB is not a freely convertible currency. The PRC State Administration for Foreign Exchange, under the authority of the PRCgovernment, controls the conversion of RMB to foreign currencies. The value of the RMB is subject to changes of central government policies andinternational economic and political developments affecting supply and demand in the China foreign exchange trading system market.(cc) Concentration and riskConcentration of customers and suppliersThe following tables summarized the customer with greater than 10% of the total revenue and accounts receivable: For the Year Ended December 31, 20212022 2023 RMB % RMB % RMB %Greater than 10% of the total revenue Customer A****319,208,69312%As of December 31, 2022 2023 RMB % RMB %Greater than 10% of the accounts receivable Customer B 135,105,131 45%90,892,779 34%Customer C * *32,443,005 12%As of December 31, 2022 2023 RMB % RMB %Greater than 10% of advances from customersCustomer D2,787,48211%2,396,33312%The following tables summarized the suppliers with greater than 10% of the total purchase: Table of ContentsF-24 For the Year Ended December 31, 20212022 2023 RMB % RMB % RMB %Greater than 10% of total purchase Supplier X 298,264,146 12%354,956,312 13%* *Supplier Y * * * * 286,132,811 16%No suppliers individually represent greater than 10% of accounts payable of the Group as of December 31, 2022 and 2023.*The amount was less than 10% of total balance.Concentration of credit riskFinancial instruments that potentially expose the Group to concentrations of credit risk consist principally of cash and cash equivalents, termdeposits, restricted cash, short-term investments and accounts receivable, net.The Group’s investment policy requires cash and cash equivalents, term deposits, restricted cash and short-term investments to be placed withhigh-quality financial institutions and to limit the amount of credit risk from any one issuer. The Group regularly evaluates the credit standing ofthe counterparties or financial institutions.The Group conducts credit evaluations on its customers prior to delivery of goods or services. The assessment of customer creditworthiness isprimarily based on historical collection records, research of publicly available information and customer on-site visits by senior management.Based on this analysis, the Group determines what credit terms, if any, to offer to each customer individually. If the assessment indicates alikelihood of collection risk, the Company will not deliver the services or sell the products to the customer or require the customer to pay cash, postletters of credit to secure payment or to make significant down payments.Interest rate riskThe Group’s short-term bank borrowing bears interests at fixed rates. If the Group were to renew these loans, the Group might be subject tointerest rate risk.(dd) Earnings (Loss) per ShareBasic earnings (loss) per share is computed by dividing net income (loss) attributable to holders of ordinary shares by the weighted averagenumber of ordinary shares or ordinary share equivalents outstanding during the year using the two-class method. Vested share options, which areexercisable for nominal consideration, and vested restricted share units are included in the calculation of the weighted-average number of shares ofordinary shares as ordinary share equivalents. Under the two-class method, any net income is allocated between ordinary shares and otherparticipating securities based on their participating rights. A net loss is not allocated to participating securities when the participating securitiesdoes not have contractual obligation to share losses.Diluted earnings (loss) per share is calculated by dividing net income (loss) attributable to ordinary shareholders by the weighted averagenumber of ordinary shares used in calculating basic net earnings (loss) per ordinary share and dilutive ordinary equivalent shares outstandingduring the period. Ordinary equivalent shares consist of ordinary shares issuable upon the exercise of outstanding share option with the exceptionof vested share options with nominal exercise consideration and unvested restricted share units (using the treasury stock method). Ordinaryequivalent shares are calculated based on the most advantageous conversion rate or exercise price from the standpoint of the security holder.Ordinary equivalent shares are not included in the denominator of the diluted earnings (loss)per share calculation when inclusion of such shareswould be anti-dilutive.(ee) Segment ReportingThe Company’s chief operating decision maker has been identified as the Chief Executive Officer, who reviews consolidated results whenmaking decisions about allocating resources and assessing performance of the Group. For the purpose of internal reporting and management’soperation review, the Company’s Chief Executive Officer and management personnel do not segregate the Group’s business by product. Allproducts and services are viewed as in one and the only operating segment. Table of ContentsF-25(ff) Statutory ReservesIn accordance with the PRC Company Laws, the Group’s PRC subsidiaries, VIE and VIE’s subsidiaries must make appropriations from theirafter-tax profits as determined under the Generally Accepted Accounting Principles in the PRC (“PRC GAAP”) to non-distributable reserve fundsincluding statutory surplus fund and discretionary surplus fund. The appropriation to the statutory surplus fund must be 10% of the after-tax profitsas determined under PRC GAAP. Appropriation is not required if the statutory surplus fund has reached 50% of the registered capital of the PRCcompanies. Appropriation to the discretionary surplus fund is made at the discretion of the PRC companies.The statutory surplus fund and discretionary surplus fund are restricted for use. They may only be applied to offset losses or increase theregistered capital of the respective companies. These reserves are not allowed to be transferred to the Company by way of cash dividends, loans oradvances, nor can they be distributed except for liquidation.For the years ended December 31, 2021, 2022 and 2023, the Group’s PRC subsidiaries made appropriations to the statutory reserves ofRMB20,875,864, RMB42,654 and nil, respectively.(gg) Recent Accounting PronouncementsIn November 2023, the Financial Accounting Standard Board (“FASB”) issued ASU 2023-07, Segment Reporting (Topic 280), Improvementsto Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily throughenhanced disclosures about significant segment expenses. In addition, it provides new segment disclosure requirements for entities with a singlereportable segment. The guidance will be effective for the Company for annual periods beginning January 1, 2024. Early adoption is permitted. TheCompany is currently evaluating the impact on its financial statement disclosures.In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures, which requiresdisaggregated information about the effective tax rate reconciliation as well as information on income taxes paid. The guidance will be effective forthe Company for annual periods beginning January 1, 2025, with early adoption permitted. The Company is currently evaluating the impact on itsfinancial statement disclosures.3. SHORT-TERM INVESTMENTSShort-term investments consisted of the following:As of December 31, 2022 2023RMBRMBAggregate cost basis 160,000,000 —Gross unrealized holding gain 406,301 —Aggregate fair value 160,406,301 —The Group’s short-term investments represent wealth management products issued by commercial banks in the PRC which are redeemed upondemand of the Group. The wealth management products are invested in debt securities issued by the PRC government, corporate debt securities,bank deposits, central bank bills and other securities issued by other financial institutions. As of December 31, 2022 and 2023, there were no grossunrealized holding losses. Table of ContentsF-264. ACCOUNTS RECEIVABLE, NETAccounts receivable, net consisted of the following: As of December 31, 2022 2023 RMBRMBAccounts receivable 329,336,616263,994,880Allowance for doubtful accounts (29,593,693)(169,038,710)Accounts receivable, net 299,742,92394,956,170The movement of the allowance for doubtful accounts was as follows: For the Year Ended December 31, 2021 2022 2023 RMBRMBRMBBalance at the beginning of the year 3,307,3814,549,36629,593,693Additions 1,272,45425,044,327139,445,017Write-off(30,469)——Balance at the end of the year 4,549,36629,593,693169,038,7105. INVENTORIESInventories consisted of the following: As of December 31, 2022 2023 RMBRMBFinished goods 267,036,620244,373,815Works in progress 69,2906,925Raw materials 149,903,238148,409,401Inventories 417,009,148392,790,141Write-downs of inventories from the carrying amount to its estimated net realizable value amounted to RMB3,679,669, RMB8,991,793 andRMB21,681,652 were made for the years ended December 31, 2021, 2022 and 2023, respectively, and were recorded as cost of revenues. Table of ContentsF-276. PREPAYMENTS AND OTHER CURRENT ASSETSPrepayments and other current assets consisted of the following: As of December 31, 2022 2023 RMBRMBDeductible input VAT and VAT rebates receivable 104,391,993123,335,099Prepayments to suppliers 54,722,15735,692,402Receivable from online platforms11,555,50012,258,397Deferred charge14,359,45211,722,400Interest receivable 1,916,2407,357,967Income tax receivable13,349,6029,450Others* 5,400,7734,696,414Prepayments and other current assets 205,695,717195,072,129*Others mainly include deposits receivable.7. PROPERTY, PLANT AND EQUIPMENT, NETProperty, plant and equipment consisted of the following: As of December 31, 2022 2023 RMBRMBFurniture 380,987,667375,782,740Machinery and equipment 135,365,960173,869,199Building 148,449,403149,465,476Office and electronic equipment 31,868,49533,252,080Leasehold improvement 10,778,71810,792,479Motor vehicles3,811,1603,811,160Property, plant and equipment 711,261,403746,973,134Less: Accumulated depreciation (313,904,608)(423,860,768)Property, plant and equipment, net 397,356,795323,112,366Depreciation expense on property, plant and equipment was allocated to the following expense items: For the Year Ended December 31, 2021 20222023 RMBRMB RMBCost of revenues 19,702,39223,554,26626,811,275General and administrative expenses 7,856,9688,113,5359,057,825Selling and marketing expenses 62,949,248104,721,594107,996,726Research and development expenses 3,092,2904,381,7073,641,514Total depreciation expense 93,600,898140,771,102147,507,340 Table of ContentsF-288. INTANGIBLE ASSETS, NETIntangible assets consisted of the following: As of December 31, 2022GrossNet Amortization carrying Accumulated carryingRMBperiodamountamortizationamountTrademarks5-10 years8,983,153(8,503,451)479,702Domain name5-10 years3,820,913(3,618,766)202,147License 10 years 1,943,396 (767,925) 1,175,471Total 14,747,462 (12,890,142) 1,857,320As of December 31, 2023GrossNetAmortizationcarryingAccumulatedcarryingRMB period amount amortization amountTrademarks5-10 years9,130,529(8,976,570)153,959Domain name5-10 years3,826,626(3,655,316)171,310License 10 years 1,943,396 (962,264) 981,132Total 14,900,551 (13,594,150) 1,306,401Amortization expense on intangible assets was allocated to the following expense items:For the Year Ended December 31, 2021 2022 2023RMBRMBRMBCost of revenues 194,340194,340194,340General and administrative expenses 1,677,8101,745,967363,079Total amortization expense 1,872,1501,940,307557,419As of December 31, 2023, estimated amortization expense of the existing intangible assets for each of the next five years is RMB264,453,RMB264,453, RMB250,275, RMB248,986 and RMB248,986.9. OTHER NON-CURRENT ASSETSOther non-current assets consisted of the following:As of December 31, 2022 2023RMBRMBPrepayment for an investment7,000,000—Deposits2,376,3502,728,406Prepayment for property, plant and equipment1,914,4112,231,253Others 1,392,3291,770,719 Other non-current assets 12,683,0906,730,378 Table of ContentsF-2910. SHORT-TERM BANK BORROWINGS As of December 31, 20222023 RMB RMBSecured borrowing160,000,000100,000,000In July 2021, a commercial bank in the PRC provided the Group with a ten-month short-term credit bank borrowing of RMB20,000,000bearing interest of 3.5% per annum. In May 2022, the Group fully repaid this borrowing, and obtained a new one-year short-term borrowing ofRMB20,000,000 bearing interest of 3.3% per annum. In November 2022, the borrowing was fully repaid. As of December 31, 2022, theoutstanding balance of this borrowing was nil.In June 2021, the Group entered into a two-year secured loan facility agreement with a commercial bank in the PRC, pursuant to which theGroup is entitled to borrow a secured bank loan of up to RMB160,000,000. In June 2021, the Group drew down RMB160,000,000 under thisfacility agreement bearing interest of 3.5% per annum, and repaid RMB40,000,000 and RMB120,000,000 in September and December 2021,respectively. In December 2021, June 2022 and December 2022, the Group drew down RMB160,000,000 each under this facility agreement forthree times, bearing interest of 3.2%, 3.0% and 3.0%, respectively, and fully repaid in June 2022, December 2022 and January 2023, respectively,and the cash collateral in this bank was released accordingly. As of December 31 2022, and 2023, total outstanding balance of these borrowingswas RMB160,000,000 and nil, respectively, and the cash collateral in the form of a US dollar deposit held with the bank was equivalent toRMB176,204,380 and nil, respectively.In March 2023, the Group entered into a twelve-months secured loan facility agreement with a commercial bank in the PRC, pursuant to whichthe Group is entitled to borrow a secured bank loan of up to RMB160,000,000. In June and August 2023, the Group drew down RMB41,380,805and RMB58,619,195, respectively, under this facility agreement bearing interest of 3.2% per annum. As of December 31, 2023, the totaloutstanding borrowings were RMB100,000,000 and the Group provided cash collateral in the form of a US dollar deposit equivalent toRMB107,521,732 held with the bank.As of December 31, 2022 and 2023, the outstanding short-term bank borrowings bore a weighted average interest rate of 3.0% and 3.2% perannum, respectively, and were denominated in RMB. These loans were obtained from financial institutions located in the PRC.As of December 31, 2022 and 2023, unused secured loan facility amounted to nil and RMB60,000,000, respectively.11. NOTES PAYABLEIn December 2021, the Group entered into a twelve-month loan facility agreement with a commercial bank in the PRC. Pursuant to thisagreement, the Group was entitled to borrow a short-term bank borrowing and notes payable of up to RMB200,000,000.In April 2022, the Group entered into a twelve-month revolving loan facility agreement with a commercial bank in the PRC, and was entitledto extend maturity date to April 2024. Pursuant to this agreement, the Group was entitled to borrow a short-term bank borrowing and notes payableof up to RMB300,000,000.As of December 31, 2022 and 2023, notes payable represent non-interest-bearing bank acceptance notes issued by the Group to suppliers thatare due within twelve months.As of December 31, 2022 and 2023, unused loan facility amounted to RMB183,167,887 and RMB132,717,312, respectively. Table of ContentsF-3012. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIESAs of December 31, 2022 2023 RMB RMBRefundable payment from franchised stores—current41,735,51539,203,959Accrued selling and marketing expenses8,506,65829,159,625Accrued payroll and social insurance28,508,46917,566,486Warranty—current 24,797,169 16,736,341Construction payable 16,512,545 14,372,306Operating lease liabilities—current (Note 20)7,743,6485,094,066Sales rebate 13,878,273 4,975,640Other taxes payable18,813,5403,542,993Interest payable280,00087,671Others* 31,317,126 34,772,309Accrued expenses and other current liabilities 192,092,943 165,511,396*Others mainly include accrued professional fees and other general corporate expenses.The Group provides limited warranty to its end customers for terms varying from 6 months to 36 months, subject to certain conditions, such asnormal use. For certain key components of electric scooter, the Group provides quality warranty varying from 12 months to 24 months. Forlithium-ion battery packs, the Group provides a 24-month or 20,000-kilometer warranty or a 36-month or 30,000-kilometer warranty, depending onthe model. For the other components of the electric scooters, the Group provides quality warranty varying from 6 months to 36 months dependingon the parts. The Group is responsible for replacing or repairing the faulty products during their respective warranty terms.Movement of provision for warranty was as follows:For the Year Ended December 31, 2021 2022 2023Accrued warranty—beginning of year 59,195,896 47,788,122 33,812,290Accrual for warranties issued during the year 35,181,557 20,355,810 23,248,155Warranty claims paid (22,554,689) (23,894,070) (30,051,582)Pre-existing warranty expired (24,034,642) (10,437,572) (1,683,024)Accrued warranty—end of year 47,788,122 33,812,290 25,325,83913. OTHER NON-CURRENT LIABILITIESOther non-current liabilities consisted of the following:As of December 31, 2022 2023RMBRMBWarranty—non-current 9,015,121 8,589,498Refundable payment from franchised stores—non-current 1,233,466 379,021Others3,192,795—Other non-current liabilities 13,441,382 8,968,51914. ORDINARY SHAREThe Company’s authorized share capital is US$500,000 divided into 5,000,000,000 shares comprising of (i) 4,900,000,000 Class A ordinaryshares with a par value of US$0.0001 each, (ii) 50,000,000 Class B ordinary shares with a par value of US$0.0001 each and (iii) 50,000,000 shareswith a par value of US$0.0001 each of such class or classes (however designated) as the Board of Directors may determine in accordance with theCompany’s Memorandum and Articles of Association. Table of ContentsF-31Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. Each Class Aordinary share entitles the holder to one vote on all matters subject to vote at general meetings of the Company, and each Class B ordinary shareentitles the holder to four votes on all matters subject to vote at general meetings of the Company. Class A ordinary shares are not convertible intoClass B ordinary shares under any circumstances.On May 17, 2021, a Class B ordinary shareholder converted 1,440,000 Class B ordinary shares to Class A ordinary shares.As of December 31, 2022, there were 137,719,542 Class A ordinary shares and 16,542,020 Class B ordinary shares outstanding.As of December 31, 2023, there were 138,575,010 Class A ordinary shares and 16,542,020 Class B ordinary shares outstanding.15. SHARE-BASED COMPENSATIONShare options and restricted share unitsa)2016 Global Share Incentive PlanIn January 2016, the Company’s Shareholders and Board of Directors approved 2016 Global Share Incentive Plan and amended it in March2018 (the “Amended 2016 Plan”). Under the Amended 2016 Plan, a maximum aggregate number of 5,861,480 ordinary shares may be issuedpursuant to all awards granted. Share options or restricted share unites expire 10 years from the grant date.b)2018 Share Incentive PlanIn September 2018, the Company’s Shareholders and Board of Directors approved the 2018 Share Incentive Plan (the “2018 Plan”). Under the2018 Plan, the maximum aggregate number of ordinary shares available for issuance is 6,733,703 ordinary shares, which shall be increased by anumber equal to 1.5% of the total number of ordinary shares issued and outstanding on the last day of the immediately preceding fiscal year, eachfiscal year during the term of the 2018 Plan, if determined and approved by the Board of Directors for the relevant fiscal year. The Board ofDirectors has approved annual increases of 2,285,407, 2,305,212 and 2,313,923 ordinary shares for the years ended December 31, 2021, 2022 and2023, representing 1.5% of total issued and outstanding shares as of December 31, 2020, 2021 and 2022, respectively, pursuant to the 2018 ShareIncentive Plan.A summary of the share options activities under the Amended 2016 Plan and the 2018 Plan for the year ended December 31, 2023 waspresented below: Weighted Weighted averageremainingAggregateNumber of exercisecontractualintrinsic shares price years valueUS$US$Outstanding at January 1, 20234,414,6082.11——Exercised(464,300)0.20——Forfeited/Expired(7,250)0.20——Outstanding at December 31, 20233,943,0582.344.561,190,466Exercisable as of December 31, 20233,943,0582.344.561,190,466Compensation expenses recognized for share options for the years ended December 31, 2021, 2022 and 2023 were allocated to the followingexpense items: For the Year Ended December 31, 2021 2022 2023 RMBRMB RMBCost of revenues 8,318——Selling and marketing expenses 2,235,1021,936,414905,764Research and development expenses 4,018,1263,862,1892,191,242General and administrative expenses 6,649,2555,008,3823,047,542Total share options compensation expenses 12,910,80110,806,9856,144,548 Table of ContentsF-32No share options had been granted for the years ended December 31, 2021, 2022 and 2023. The total intrinsic value of share options exercisedfor the years ended December 31, 2021, 2022 and 2023, were RMB77,271,754, RMB3,708,615 and RMB4,799,425, respectively. The total fairvalue of shares vested for the years ended December 31, 2021, 2022 and 2023 were RMB15,732,201, RMB10,976,490 and RMB11,027,023,respectively.As of December 31, 2023, total unrecognized compensation expense related to share options was nil.A summary of the restricted share units activities for the year ended December 31, 2023 was presented below: Weightedaverage grantNumber ofdate fairsharesvalueUS$Unvested as of January 1, 2023 3,890,6584.59Granted 232,0002.31Vested(1,507,862)4.44Forfeited(611,722)4.30Unvested as of December 31, 2023 2,003,0744.53The restricted share units are generally scheduled to be vested over four equal annual installments, except 128,000 restricted share units weregranted in 2022 with vesting in two equal annual installments under the 2018 Plan. For the year ended December 31, 2023, 232,000 restricted shareunits were granted with vesting in four equal annual installments.Compensation expenses recognized for restricted share units for the years ended December 31, 2021, 2022 and 2023 were allocated to thefollowing expense items:For the Year EndedDecember 31, 2021 2022 2023 RMBRMBRMBCost of revenues 838,5151,224,7961,237,902Selling and marketing expenses 11,057,53013,497,2709,085,924Research and development expenses 13,043,89818,499,55319,462,704General and administrative expenses 9,367,41214,190,58211,728,226Total restricted share units compensation expenses 34,307,35547,412,20141,514,756As of December 31, 2023, RMB48,330,116 of total unrecognized compensation expense related to restricted share units was expected to berecognized over a weighted average period of approximately 1.92 years.Total share-based compensation expenses recognized for the years ended December 31, 2021, 2022 and 2023 were allocated to the followingexpense items: For the Year EndedDecember 31, 2021 2022 2023 RMB RMB RMBCost of revenues 846,8331,224,7961,237,902Selling and marketing expenses 13,292,63215,433,6849,991,688Research and development expenses 17,062,02422,361,74221,653,946General and administrative expenses 16,016,66719,198,96414,775,768Total share-based compensation expense 47,218,15658,219,18647,659,304 Table of ContentsF-3316. FAIR VALUE MEASUREMENTThe following tables presents the fair value hierarchy for those assets measured at fair value on a recurring basis as of December 31, 2022: December 31, 2022 TotalRMB Level 1 Level 2 Level 3 Fair ValueShort-term investments (Note 3) — 160,406,301 — 160,406,301There was no financial assets and liabilities measured at fair value as of December 31, 2023.17. INCOME TAXa) Income taxCayman IslandsUnder the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain. Additionally, the Cayman Islandsdoes not impose a withholding tax on payments of dividends to shareholders.No stamp duty is payable in respect of the issue of the shares or on an instrument of transfer in respect of a share.United StatesUnder the current U.S. federal corporate income tax, the Company’s subsidiary in United States are subject to 21% income tax on its taxableincome generated from operations in United States. The company’s subsidiaries have no taxable income for all periods presented.British Virgin IslandsUnder the current laws of the British Virgin Islands (“B.V.I.”), entities incorporated in the B.V.I. are not subject to tax on their income orcapital gains.IndonesiaUnder the current laws of the Republic of Indonesia, the Company’s subsidiaries in Indonesia are subject to 25% income tax on its taxableincome generated from operations in Indonesia.Hong KongUnder the Hong Kong tax laws, subsidiaries in Hong Kong are subject to the Hong Kong profits tax rate at 16.5% and they are exempted fromincome tax on their foreign-derived income and there are no withholding taxes in Hong Kong on remittance of dividends. A two-tiered profits taxrates regime was introduced in 2018 where the first HK$2 million of assessable profits earned by a company will be taxed at half of the current taxrate (8.25%) whilst the remaining profits will continue to be taxed at 16.5%. There is an anti-fragmentation measure where each group will have tonominate only one company in the group to benefit from the progressive rates. The Company did not make any provisions for Hong Kong profittax as there were no assessable profits derived from or earned in Hong Kong for any of the periods presented.PRCThe Group’s mainland China subsidiaries, the VIE, and VIE’s subsidiaries are subject to the PRC Corporate Income Tax Law (“CIT Law”),and are generally subject to a statutory income tax rate of 25%. Under the CIT Law, preferential tax treatments will be granted to entities whichconduct businesses in certain encouraged sectors and to entities otherwise classified as “High and New Technology Enterprises” (“HNTE”).Jiangsu Xiaoniu and Beijing Niudian were qualified as HNTEs and enjoy a preferential income tax rate of 15% for the fiscal years from 2021 to2023 and 2022 to 2024, respectively. An entity could re-apply for the HNTE certificate when the prior certificate expires. The foregoingpreferential income tax rates, however, are subject to periodic review and renewal by PRC authorities. Table of ContentsF-34The CIT Law also provides that an enterprise established under the laws of a foreign country or region but whose “de facto management body”is located in the PRC be treated as a resident enterprise for PRC tax purposes and consequently be subject to the PRC income tax at the rate of 25%for its global income. The Implementing Rules of the CIT Law define the location of the “de facto management body” as “the place where theexercising, in substance, of the overall management and control of the production and business operation, personnel, accounting, property, etc., of anon-PRC company is located.” Based on a review of surrounding facts and circumstances, the Group does not believe that it is likely that itsoperations outside the PRC should be considered a resident enterprise for PRC tax purposes.The components of income (loss) before income taxes are as follows:For the Year EndedDecember 31, 2021 2022 2023RMBRMBRMBCayman (9,397,404) (10,448,513) (1,192,264)Indonesia(881,810)(984,230)(1,268,462)Hong Kong S.A.R. (6,700,069) (14,613,793) (7,930,644)B.V.I.—(278,774)(48,100)Others——(840,681)PRC, excluding Hong Kong S.A.R. 289,836,300 (44,894,563) (270,748,715)Total 272,857,017 (71,219,873) (282,028,866)Income tax expense (benefit) consists of the following:For the Year Ended December 31, 202120222023 RMB RMB RMBCurrent income tax expense (benefit) 42,715,007 (15,677,411) 759,425Deferred income tax expense (benefit) 4,321,601 (6,079,533) (10,952,309)Total 47,036,608 (21,756,944) (10,192,884)Withholding tax on undistributed dividendsThe CIT law also imposes a withholding income tax of 10% on dividends distributed by a foreign investment enterprise (“FIE”) to itsimmediate holding company outside of China, if such immediate holding company is considered as a non-resident enterprise without anyestablishment or place within China or if the received dividends have no connection with the establishment or place of such immediate holdingcompany within China, unless such immediate holding company’s jurisdiction of incorporation has a tax treaty with China that provides for adifferent withholding arrangement. The Cayman Islands, where the Company is incorporated, does not have such tax treaty with China. Accordingto the arrangement between Mainland China and Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Preventionof Fiscal Evasion in August 2006, dividends paid by an FIE in China to its immediate holding company in Hong Kong will be subject towithholding tax at a rate of no more than 5% (if the foreign investor owns directly at least 25% of the shares of the FIE). The Group plans toindefinitely reinvest the undistributed earnings of the Group’s PRC entities, and therefore, no provision for PRC dividend withholding tax wasaccrued. Table of ContentsF-35Reconciliation of the differences between PRC statutory income tax rate and the Group’s effective income tax rate for the years endedDecember 31, 2021, 2022 and 2023 are as follows: For the Year Ended December 31, 2021 2022 2023 RMBRMB RMBComputed expected income tax expense (benefit) 68,214,254(17,804,968)(71,077,803)Non-PRC entities not subject to income tax 4,244,8216,581,3272,820,038Research and development expenses bonus deduction (23,328,287)(34,910,421)(30,807,283)Non-deductible share-based compensation expenses 11,015,40613,866,73411,742,974Other non-deductible expenses 723,768638,8982,491,593Preferential tax rate difference —(3,075,033)7,301,540Tax filing differences2,682,378(3,770,720)229,108Change in valuation allowance(16,515,732)16,717,23967,106,949Actual income tax expense (benefit) 47,036,608(21,756,944)(10,192,884)Effect of preferential tax rates on basic earnings per Class A and Class B ordinary share—0.02(0.05)Effect of preferential tax rates on diluted earnings per Class A and Class B ordinary share—0.02(0.05)b) Deferred income tax assets and deferred income tax liabilities As of December 31, 2022 2023 RMB RMBDeferred income tax assetsNet operating loss carry forwards 33,325,461 74,876,303Accrued warranty 5,071,844 3,798,876Advertising expense—2,113,991Deferred revenue 8,470,357 8,938,710Allowance for doubtful accounts 7,037,684 41,878,340Lease Liabilities3,334,7051,099,451Write-downs for inventories 825,208 4,529,042Less: Valuation allowance (40,764,285) (107,782,306)Total deferred income tax assets, net17,300,97429,452,407Deferred income tax liabilitiesOperating lease right of use assets3,334,7051,099,451Short-term investments60,946—Property, plant and equipment9,171,1039,968,429Total deferred income tax liabilities12,566,75411,067,880Net deferred income tax assets6,132,49920,747,021Net deferred income tax liabilities1,398,2792,362,494As of December 31, 2023, the Group had net operating loss carry forwards of RMB334,224,635 attributable to the PRC subsidiaries, the VIEand VIE’s subsidiaries. Tax losses of nil, RMB29,986,636, RMB21,713,526, RMB75,298,399 and RMB207,226,074 will expire, if unused, by2024, 2025, 2026, 2027 and 2028, respectively. Table of ContentsF-36A valuation allowance is provided against deferred income tax assets when the Group determines that it is more likely than not that someportion or all of the deferred income tax assets will not be utilized in the foreseeable future. The valuation allowance as of December 31, 2022 and2023 was primarily provided for the deferred income tax assets of certain PRC subsidiaries, VIE and VIE’s subsidiaries. In making suchdetermination, the Group evaluates a variety of factors including the Group’s operating history, accumulated deficit, existence of taxable temporarydifferences and reversal periods. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable incomeduring the periods in which those temporary differences become deductible or utilizable. Management considers projected future taxable incomeand tax planning strategies in making this assessment.Changes in valuation allowance are as follows: For the Year Ended December 31, 2021 2022 2023 RMBRMB RMBBalance at the beginning of the year 41,219,052 24,508,473 40,764,285Additions 5,567,822 25,114,239 68,593,841Reduction(22,278,401)(8,858,427)(1,575,820)Balance at the end of the year 24,508,473 40,764,285 107,782,306According to the PRC Tax Administration and Collection Law, the statute of limitation is three years if the underpayment of taxes is due tocomputational errors made by the taxpayer or the withholding agent. The statute of limitation is extended to five years under special circumstanceswhere the underpayment of taxes is more than RMB100,000. In the case of transfer pricing issues, the statute of limitation is ten years. There is nostatute of limitation in the case of tax evasion. The income tax returns of the Company’s PRC subsidiaries, consolidated VIE and VIE’s subsidiariesfor the years from 2019 to 2023 are open to examination by the PRC tax authorities.18. NET INCOME (LOSS) PER ORDINARY SHAREThe following table sets forth the basic and diluted net income (loss) per ordinary share computation and provides a reconciliation of thenumerator and denominator for the years presented: For the Year Ended December 31, 2021 2022 2023 RMBRMB RMBNumerator:Net income (loss) 225,820,409(49,462,929)(271,835,982)Denominator:Weighted average number of ordinary shares outstanding153,174,715154,109,051154,795,461Weighted average number of ordinary shares equivalents outstanding497,6431,067,8712,020,644Denominator for basic net income (loss) per ordinary share 153,672,358155,176,922156,816,105Dilutive effect of outstanding share options4,366,690——Dilutive effect of unvested restricted share units2,421,928——Denominator for diluted net income (loss) per ordinary share160,460,976155,176,922156,816,105Net income (loss) per ordinary share—Basic 1.47(0.32)(1.73)—Diluted 1.41(0.32)(1.73) Table of ContentsF-37Securities that could potentially dilute basic net income (loss) per share in the future that were not included in the computation of diluted netincome (loss) per share because to do so would have been antidilutive for the years ended December 31, 2022 and 2023 were as follow:For the Year EndedDecember 31, 2022 2023Share options4,414,6083,943,058Unvested restricted share units3,890,6582,003,07419. REVENUE INFORMATIONRevenues consisted of the following: For the Year Ended December 31, 2021 2022 2023 RMB RMBRMBElectric scooter sales 3,252,988,5122,853,895,4232,358,658,368Accessory and spare parts sales 397,088,122242,296,734197,634,073Service revenues 54,460,78572,405,17795,465,205Revenues 3,704,537,4193,168,597,3342,651,757,646The following summarized the Group’s revenues from the following geographic areas (based on the location of customers): For the Year Ended December 31, 2021 2022 2023 RMB RMB RMBPRC 3,158,966,932 2,583,843,616 2,247,593,239Europe 430,201,301 343,157,877 151,521,237Others 115,369,186 241,595,841 252,643,170Revenues 3,704,537,419 3,168,597,334 2,651,757,64620. OPERATING LEASESThe Group leases its facilities and offices under non-cancelable operating lease agreements. For the years ended December 31, 2021, 2022 and2023, the operating lease cost were RMB11,947,682, RMB9,352,700 and RMB7,549,026, respectively, and the short-term lease cost wereRMB1,357,660, RMB847,735 and RMB1,480,259, respectively. There were no leasing costs other than operating lease costs or short-term leasecosts.A summary of supplemental information related to operating leases as of December 31, 2022 and 2023 was as follows: As of December 31,20222023RMBRMBOperating lease right-of-use assets 86,597,121 76,821,285Operating lease liabilities—current (Note 12) 7,743,648 5,094,066Operating lease liabilities—non-current 7,569,128 280,421Total operating lease liabilities 15,312,776 5,374,487 Table of ContentsF-38 For the Year Ended December 31,202120222023RMBRMBRMBCash paid for amounts included in the measurement of operating lease liabilities 9,569,023 8,046,8287,711,479Right-of-use assets obtained in exchange for new operating lease liabilities10,201,553921,4053,744,607Right-of-use assets obtained in exchange for prepayment for land use right26,550,000——Modification to right-of-use assets (11,469,923) —(5,217,099)The weighted average remaining lease term as of December 31, 2023 was 1.1 years, and the weighted average discount rate of the operatingleases was 3.92%.Maturities of lease liabilities under the Group’s non-cancellable operating leases as of December 31, 2023 were as follows: As of December 31, 2023RMBWithin 1 year 5,176,941After 1 year but within 2 years 284,407Total undiscounted lease payment 5,461,348less: Imputed interest (86,861)Present value of lease liabilities 5,374,487As of December 31, 2023, the Group has no significant lease contract that has been entered into but not yet commenced.21. COMMITMENTS AND CONTINGENCIESThe Group did not have any significant capital or other commitments or guarantees or contingencies as of December 31, 2022 and 2023.22. PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATIONFor the presentation of the parent company only condensed financial information, the Company records its investment in subsidiaries,consolidated VIE and VIE’s subsidiaries, under the equity method of accounting as prescribed in ASC 323, Investments-Equity Method and JointVentures. Such investments are presented on the condensed balance sheets as “Investment in and amount due from subsidiaries, consolidated VIEand VIE’s subsidiaries” and the subsidiaries, consolidated VIE and VIE’s subsidiaries’ income as “Share of income (loss) from subsidiaries,consolidated VIE and VIE’s subsidiaries” on the condensed statements of results of operations. The parent company only condensed financialinformation should be read in conjunction with the Company’s consolidated financial statements. As of December 31, 2022 and 2023, there wereno material contingencies, significant provisions of long-term obligations, mandatory dividend or redemption requirements of redeemable stocks orguarantees of Niu Technologies, except for those, which have been separately disclosed in the consolidated financial statements. Table of ContentsF-39(a)Condensed Balance SheetsAs of December 31, 2022 2023RMBRMBAssetsCurrent assetsCash and cash equivalents12,375,894233,958,655Term deposits-current208,589,77077,555,565Restricted cash176,204,380107,521,733Prepayments and other current assets12,486,23812,035,145Total current assets409,656,282431,071,098Non-current assetsInvestment in and amount due from subsidiaries, consolidated VIE and VIE’s subsidiaries906,298,879671,329,320Other non-current assets1,219—Total assets1,315,956,3801,102,400,418LiabilitiesCurrent liabilitiesAmount due to subsidiaries, consolidated VIE and VIE’s subsidiaries4,262,2704,564,315Accrued expenses and other current liabilities1,596,2334,219,869Total current liabilities and total liabilities5,858,5038,784,184Shareholders’ equity:Class A ordinary shares89,42890,031Class B ordinary shares10,31610,316Additional paid-in capital1,915,825,6411,964,138,365Accumulated other comprehensive loss(16,536,686)(9,495,674)Accumulated deficit(589,290,822)(861,126,804)Total shareholders’ equity1,310,097,8771,093,616,234Total liabilities and shareholders’ equity1,315,956,3801,102,400,418(b)Condensed Statements of Results of Operations For the Year Ended December 31, 2021 2022 2023 RMBRMB RMBTotal operating expenses (11,441,931) (15,414,575) (17,739,201)Share of income (loss) from subsidiaries, consolidated VIE and VIE’s subsidiaries 235,264,719 (39,264,560) (270,498,551)Interest income 1,997,621 5,216,206 16,401,770Income (loss) before income taxes 225,820,409 (49,462,929) (271,835,982)Income tax expense — — —Net income (loss) 225,820,409 (49,462,929) (271,835,982) Table of ContentsF-40(c)Condensed Statements of Cash Flows For the Year Ended December 31, 2021 2022 2023 RMBRMB RMBNet cash provided by (used in) operating activities 25,839,822 (23,565,305) 14,392,402Net cash provided by (used in) investing activities 16,132,750 (95,940,040) 133,818,900Net cash provided by financing activities6,246,3842,203,086654,023Effect of foreign currency exchange rate changes on cash, cash equivalents and restrictedcash (6,107,381) 21,972,182 4,034,789Net increase (decrease) in cash, cash equivalents and restricted cash 42,111,575 (95,330,077) 152,900,114Cash, cash equivalents and restricted cash at the beginning of the year 241,798,776 283,910,351 188,580,274Cash, cash equivalents and restricted cash at the end of the year 283,910,351 188,580,274 341,480,388 Exhibit 8.1List of Principal Subsidiaries, the Variable Interest Entity and the Subsidiaries of the Variable Interest EntitySubsidiaries Place of IncorporationNiu Technologies Group LimitedHong KongBeijing Niudian Information Technology Co., Ltd.PRCVariable Interest Entity Place of IncorporationBeijing Niudian Technology Co., Ltd.PRCSubsidiaries of the Variable Interest Entity Place of IncorporationJiangsu Xiaoniu Diandong Technology Co., Ltd.PRCShanghai Xiaoniu Internet Technology Co., Ltd.PRCChangzhou Niudian International Trading Technology Co., Ltd.PRC Exhibit 12.1Certification by the Principal Executive OfficerPursuant to Section 302 of the Sarbanes-Oxley Act of 2002I, Yan Li, certify that:1.I have reviewed this annual report on Form 20-F of Niu Technologies;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to theperiod covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in allmaterial respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;4.The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by otherswithin those entities, particularly during the period in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designedunder our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusionsabout the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d)Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the periodcovered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financialreporting; and5.The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control overfinancial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalentfunctions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting whichare reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’sinternal control over financial reporting.Date:April 24, 2024By:/s/ Yan LiName:Yan LiTitle:Chairman of the Board of Directorsand Chief Executive Officer Exhibit 12.2Certification by the Principal Financial OfficerPursuant to Section 302 of the Sarbanes-Oxley Act of 2002I, Fion Wenjuan Zhou, certify that:1.I have reviewed this annual report on Form 20-F of Niu Technologies;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to theperiod covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in allmaterial respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;4.The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by otherswithin those entities, particularly during the period in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designedunder our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusionsabout the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d)Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the periodcovered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financialreporting; and6.The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control overfinancial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalentfunctions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting whichare reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’sinternal control over financial reporting.Date:April 24, 2024By:/s/ Fion Wenjuan ZhouName:Fion Wenjuan ZhouTitle:Director and Chief Financial Officer Exhibit 13.1Certification by the Principal Executive OfficerPursuant to Section 906 of the Sarbanes-Oxley Act of 2002In connection with the Annual Report of Niu Technologies (the “Company”) on Form 20-F for the year ended December 31, 2023 as filedwith the Securities and Exchange Commission on the date hereof (the “Report”), I, Yan Li, Chief Executive Officer of the Company, certify,pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operationsof the Company.Date:April 24, 2024By:/s/ Yan LiName:Yan LiTitle:Chairman of the Board of Directorsand Chief Executive Officer Exhibit 13.2Certification by the Principal Financial OfficerPursuant to Section 906 of the Sarbanes-Oxley Act of 2002In connection with the Annual Report of Niu Technologies (the “Company”) on Form 20-F for the year ended December 31, 2023 as filedwith the Securities and Exchange Commission on the date hereof (the “Report”), I, Fion Wenjuan Zhou, Chief Financial Officer of the Company,certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operationsof the Company.Date:April 24, 2024By:/s/ Fion Wenjuan ZhouName:Fion Wenjuan ZhouTitle:Director and Chief Financial Officer Exhibit 15.1Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in the registration statement (No. 333-229190) on Form S-8 of our reports dated April 24,2024, with respect to the consolidated financial statements of Niu Technologies and the effectiveness of internal control over financial reporting./s/ KPMG Huazhen LLPBeijing, ChinaApril 24, 2024 Exhibit 15.2Date: April 24, 2024Niu TechnologiesNo.1 Building, No. 195 Huilongguan East Road,Changping District, Beijing 102208People’s Republic of ChinaDear Sir/Madam:We hereby consent to the use of our name and the summary of our opinion under the headings, “Item 3. Key Information—D. Risk Factors—RisksRelated to Our Corporate Structure” and “Item 4. Information on the Company—C. Organizational Structure”, included in Niu Technologies’Annual Report on Form 20-F for the year ended December 31, 2023 (“Annual Report”), which will be filed with the Securities and ExchangeCommission (“SEC”) in the month of April 2023, and further consent to the incorporation by reference into the Registration Statement (Form S-8No. 333-229190) pertaining to Niu Technologies’ Amended and Restated 2016 Global Share Incentive Plan and 2018 Share Incentive Plan. Wealso consent to the filing of this consent letter with the SEC as an exhibit to the Annual Report.In giving such consent, we do not hereby admit that we come within the category of persons whose consent is required under Section 7 of theSecurities Act of 1933, or under the Securities Exchange Act of 1934, in each case, as amended, or the regulations promulgated thereunder.Yours Sincerely,/s/ DaHui LawyersDaHui Lawyers 1Exhibit 97NIU TECHNOLOGIESCLAWBACK POLICYThe Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of Niu Technologies (the“Company”) believes that it is appropriate for the Company to adopt this Clawback Policy (the “Policy”) to be applied tothe Executive Officers of the Company and adopts this Policy to be effective as of the Effective Date.1.DefinitionsFor purposes of this Policy, the following definitions shall apply:a)“Company Group” means the Company and each of its subsidiaries or consolidated affiliated entities, asapplicable.b)“Covered Compensation” means any Incentive-Based Compensation granted, vested or paid to a person whoserved as an Executive Officer at any time during the performance period for the Incentive-BasedCompensation and that was Received (i) on or after October 2, 2023 (the effective date of the Nasdaq listingstandards), (ii) after the person became an Executive Officer, and (iii) at a time that the Company had a class ofsecurities listed on a national securities exchange or a national securities association such as Nasdaq.c)“Effective Date” means December 1, 2023.d)“Erroneously Awarded Compensation” means the amount of Covered Compensation granted, vested or paid toa person during the fiscal period when the applicable Financial Reporting Measure relating to such CoveredCompensation was attained that exceeds the amount of Covered Compensation that otherwise would have beengranted, vested or paid to the person had such amount been determined based on the applicable Restatement,computed without regard to any taxes paid (i.e., on a pre-tax basis). For Covered Compensation based on stockprice or total shareholder return, where the amount of Erroneously Awarded Compensation is not subject tomathematical recalculation directly from the information in a Restatement, the Committee will determine theamount of such Covered Compensation that constitutes Erroneously Awarded Compensation, if any, based on areasonable estimate of the effect of the Restatement on the stock price or total shareholder return upon whichthe Covered Compensation was granted, vested or paid and the Committee shall maintain documentation ofsuch determination and provide such documentation to Nasdaq.e)“Exchange Act” means the U.S. Securities Exchange Act of 1934.f)“Executive Officer” means the Company’s president, principal financial officer, principal accounting officer (orif there is no such accounting officer, the controller), any vice-president of the Company in charge of aprincipal business unit, division, or function (such as sales, administration, or finance), any other officer whoperforms a policy-making function, or any other person (whether or not an officer or employee of theCompany) who performs 2similar policy-making functions for the Company. “Policy-making function” does not include policy-makingfunctions that are not significant. Both current and former Executive Officers are subject to the Policy inaccordance with its terms.g)“Financial Reporting Measure” means (i) any measure that is determined and presented in accordance with theaccounting principles used in preparing the Company’s financial statements, and any measures derived whollyor in part from such measures and may consist of IFRS/U.S. GAAP or non-IFRS/non-U.S. GAAP financialmeasures (as defined under Regulation G of the Exchange Act and Item 10 of Regulation S-K under theExchange Act), (ii) stock price or (iii) total shareholder return. Financial Reporting Measures need not bepresented within the Company’s financial statements or included in a filing with the SEC.h)“Home Country” means the Company’s jurisdiction of incorporation, i.e., the Cayman Islands.i)“Incentive-Based Compensation” means any compensation that is granted, earned or vested based wholly or inpart upon the attainment of a Financial Reporting Measure.j)“Lookback Period” means the three completed fiscal years (plus any transition period of less than nine monthsthat is within or immediately following the three completed fiscal years and that results from a change in theCompany’s fiscal year) immediately preceding the date on which the Company is required to prepare aRestatement for a given reporting period, with such date being the earlier of: (i) the date the Board, acommittee of the Board, or the officer or officers of the Company authorized to take such action if Board actionis not required, concludes, or reasonably should have concluded, that the Company is required to prepare aRestatement, or (ii) the date a court, regulator or other legally authorized body directs the Company to preparea Restatement. Recovery of any Erroneously Awarded Compensation under the Policy is not dependent onwhether or when the Restatement is actually filed.k)“Nasdaq” means the Nasdaq Stock Market.l)“Received”: Incentive-Based Compensation is deemed “Received” in the Company’s fiscal period duringwhich the Financial Reporting Measure specified in or otherwise relating to the Incentive-Based Compensationaward is attained, even if the grant, vesting or payment of the Incentive-Based Compensation occurs after theend of that period.m)“Restatement” means a required accounting restatement of any Company financial statement due to thematerial noncompliance of the Company with any financial reporting requirement under the securities laws,including (i) to correct an error in previously issued financial statements that is material to the previouslyissued financial statements (commonly referred to as a “Big R” restatement) or (ii) to correct an error inpreviously issued financial statements that is not material to the previously issued financial statements but thatwould result in a material misstatement if the error were corrected in the current period or left uncorrected inthe current period (commonly referred to as a “little r” restatement). Changes to the Company’s financialstatements that do not represent error corrections under the then current relevant accounting standards will notconstitute Restatements. Recovery of any 3Erroneously Awarded Compensation under the Policy is not dependent on fraud or misconduct by any person inconnection with the Restatement.n)“SEC” means the U.S. Securities and Exchange Commission.2.Recovery of Erroneously Awarded CompensationIn the event of a Restatement, any Erroneously Awarded Compensation Received during the Lookback Period prior tothe Restatement (a) that is then-outstanding but has not yet been paid shall be automatically and immediately forfeited and(b) that has been paid to any person shall be subject to reasonably prompt repayment to the Company Group in accordancewith Section 3 of this Policy. The Committee must pursue (and shall not have the discretion to waive) the forfeiture and/orrepayment of such Erroneously Awarded Compensation in accordance with Section 3 of this Policy, except as providedbelow.Notwithstanding the foregoing, the Committee (or, if the Committee is not a committee of the Board responsible forthe Company’s executive compensation decisions and composed entirely of independent directors, a majority of theindependent directors serving on the Board) may determine not to pursue the forfeiture and/or recovery of ErroneouslyAwarded Compensation from any person if the Committee determines that such forfeiture and/or recovery would beimpracticable due to any of the following circumstances: (i) the direct expense paid to a third party (for example,reasonable legal expenses and consulting fees) to assist in enforcing the Policy would exceed the amount to be recovered,including the costs that could be incurred if pursuing such recovery would violate local laws other than the Company’sHome Country laws (following reasonable attempts by the Company Group to recover such Erroneously AwardedCompensation, the documentation of such attempts, and the provision of such documentation to Nasdaq), (ii) pursuingsuch recovery would violate the Company’s Home Country laws adopted prior to November 28, 2022 (provided that theCompany obtains an opinion of Home Country counsel acceptable to Nasdaq that recovery would result in such a violationand provides such opinion to Nasdaq), or (iii) recovery would likely cause any otherwise tax-qualified retirement plan,under which benefits are broadly available to employees of the Company Group, to fail to meet the requirements of 26U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder.3.Means of RepaymentIn the event that the Committee determines that any person shall repay any Erroneously Awarded Compensation, theCommittee shall provide written notice to such person by email or certified mail to the physical address on file with theCompany Group for such person, and the person shall satisfy such repayment in a manner and on such terms as requiredby the Committee, and the Company Group shall be entitled to set off the repayment amount against any amount owed tothe person by the Company Group, to require the forfeiture of any award granted by the Company Group to the person, orto take any and all necessary actions to reasonably promptly recover the repayment amount from the person, in each case,to the fullest extent permitted under applicable law, including without limitation, Section 409A of the U.S. InternalRevenue Code and the regulations and guidance thereunder. If the Committee does not specify a repayment timing in thewritten notice described above, the applicable person shall be required to repay the Erroneously Awarded Compensation tothe Company Group by wire, cash, cashier’s check or other means as agreed by the Committee no later than thirty (30)days after receipt of such notice. 44.No IndemnificationNo person shall be indemnified, insured or reimbursed by the Company Group in respect of any loss of compensationby such person in accordance with this Policy, nor shall any person receive any advancement of expenses for disputesrelated to any loss of compensation by such person in accordance with this Policy, and no person shall be paid orreimbursed by the Company Group for any premiums paid by such person for any third-party insurance policy coveringpotential recovery obligations under this Policy. For this purpose, “indemnification” includes any modification to currentcompensation arrangements or other means that would amount to de facto indemnification (for example, providing theperson a new cash award which would be cancelled to effect the recovery of any Erroneously Awarded Compensation). Inno event shall the Company Group be required to award any person an additional payment if any Restatement would resultin a higher incentive compensation payment.5.MiscellaneousThis Policy generally will be administered and interpreted by the Committee, provided that the Board may, from timeto time, exercise discretion to administer and interpret this Policy, in which case, all references herein to “Committee”shall be deemed to refer to the Board. Any determination by the Committee with respect to this Policy shall be final,conclusive and binding on all interested parties. Any discretionary determinations of the Committee under this Policy, ifany, need not be uniform with respect to all persons, and may be made selectively amongst persons, whether or not suchpersons are similarly situated.This Policy is intended to satisfy the requirements of Section 954 of the Dodd-Frank Wall Street Reform andConsumer Protection Act, as it may be amended from time to time, and any related rules or regulations promulgated by theSEC or the Nasdaq, including any additional or new requirements that become effective after the Effective Date whichupon effectiveness shall be deemed to automatically amend this Policy to the extent necessary to comply with suchadditional or new requirements.The provisions in this Policy are intended to be applied to the fullest extent of the law. To the extent that any provisionof this Policy is found to be unenforceable or invalid under any applicable law, such provision will be applied to themaximum extent permitted and shall automatically be deemed amended in a manner consistent with its objectives to theextent necessary to conform to applicable law. The invalidity or unenforceability of any provision of this Policy shall notaffect the validity or enforceability of any other provision of this Policy. Recovery of Erroneously Awarded Compensationunder this Policy is not dependent upon the Company Group satisfying any conditions in this Policy, including anyrequirements to provide applicable documentation to the Nasdaq.The rights of the Company Group under this Policy to seek forfeiture or reimbursement are in addition to, and not inlieu of, any rights of recovery, or remedies or rights other than recovery, that may be available to the Company Grouppursuant to the terms of any law, government regulation or stock exchange listing requirement or any other policy, code ofconduct, employee handbook, employment agreement, equity award agreement, or other plan or agreement of theCompany Group.6.Amendment and TerminationTo the extent permitted by, and in a manner consistent with applicable law, including SEC and Nasdaq rules, theCommittee may terminate, suspend or amend this Policy at any time in its discretion. 57.SuccessorsThis Policy shall be binding and enforceable against all persons and their respective beneficiaries, heirs, executors,administrators or other legal representatives with respect to any Covered Compensation granted, vested or paid to oradministered by such persons or entities. NIU TECHNOLOGIESCLAWBACK POLICYACKNOWLEDGMENT, CONSENT AND AGREEMENTI acknowledge that I have received and reviewed a copy of the Niu Technologies Clawback Policy (as may beamended from time to time, the “Policy”) and I have been given an opportunity to ask questions about the Policy andreview it with my counsel. I knowingly, voluntarily and irrevocably consent to and agree to be bound by and subject to thePolicy’s terms and conditions, including that I will return any Erroneously Awarded Compensation that is required to berepaid in accordance with the Policy. I further acknowledge, understand and agree that (i) the compensation that I receive,have received or may become entitled to receive from the Company Group is subject to the Policy, and the Policy mayaffect such compensation and (ii) I have no right to indemnification, insurance payments or other reimbursement by orfrom the Company Group for any compensation that is subject to recovery and / or forfeiture under the Policy. Capitalizedterms used but not defined herein have the meanings set forth in the Policy.Signed:Print Name:Date:
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