Chinese electric scooter maker Niu pushes forward into US despite imposed tariffs
- Niu is transferring increased tariff costs to consumers as trade war drags on
- The scooter company has plans to go into retail, chief executive Li Yan said
Niu Technologies, a Chinese electric scooter company, is pushing ahead with its plans to expand in the US despite the trade war and 25 per cent tariffs imposed on Chinese goods. US consumers will just have to pay more.
Niu was among the earliest batch of companies affected by the increased US duties on Chinese goods, in which the tariffs had been raised to 25 per cent before the company entered the US earlier this year, leading to higher prices for this market, Li Yan, chief executive of Niu said in an interview in Hong Kong last week.
“Our clients in the US have to bear the losses,” Li said. “I definitely hope the tariffs will be cut.”
The world’s two biggest economies have engaged in a prolonged trade war since last year, in which the US imposed higher tariffs on Chinese goods, with a spotlight on technology, a sector that China has aspired to lead.
A threatened US is moving to cut Chinese firms off from American scientific know-how, targeting Chinese tech companies that are global leaders in their respective fields, such as smartphone and telecommunications equipment maker Huawei Technologies, by restricting their access to US hi-tech suppliers.
Li is less concerned about the tech divide. While Niu deploys some technologies including chips from the US, the core technologies such as the lithium battery cell are mostly from China and Japan, he said.
Li has served as chief executive of Niu since 2017, after joining the company in 2016 from KKR & Co, an investment firm. Niu was founded in 2014 by Baidu’s former chief technology officer, Li Yinan, and former Microsoft designer Token Yilin Hu. The company went public in the US in October.
Niu has been stepping up its international efforts after success in its home market in China, where it rose to become the largest lithium-ion battery-powered electric scooter maker in China, according to data from China Insights Consultancy. The global electric scooter market is projected to reach US$29 billion by 2025, with North America as the fastest growing region, according to a report by ResearchAndMarkets.com in November.
Despite the uncertainties over the trade war, the Beijing-based company expanded into the US market after obtaining a licence from the federal government in March, and 1,000 electric scooters supplied by Niu are on the streets of Brooklyn in New York City as the fleet operated by Revel, the city’s scooter sharing service.
The partnership with Revel, which is popular with young people, will help Niu educate the local consumers and cultivate a scooter culture in a market where two-wheelers are not yet a mainstream choice of transport, Li said.
“We want to present the cool design of Niu’s scooters, more than just a means of transport,” he said.
The notion of ride-sharing in the US has been expanded from cars, as pioneered by Uber and Lyft, to a wider array of mobility devices targeting users making shorter trips, such as dockless bikes and scooters operated by Lime Bike, Spin and Bird. Uber and Lyft are also joining the new mobility fields, with Uber acquiring Jump Bikes and investing in Lime, while Lyft is launching its own scooter platform.
Scooter maker Niu says US is ready for this super cheap transport fix
Li said that after deploying its scooters through sharing services, Niu plans to go into retail and the company plans to open new stores in the US.
Niu’s US plan echoes its journey in the Europe, currently Niu’s biggest overseas market, as its expansion was driven by sharing platforms such as Belgium-based Scooty as well as retailers. Sales in Europe have increased to 16,000 units in 2018 from a few hundred when it first entered the continent in 2016, according to Li.
Among the 66,284 smart e-scooters it sold globally in the first quarter of 2019, overseas markets accounted for 18.8 per cent of Niu’s overall sales. Li declined to share the company’s expectation for this ratio in the future, but expected overseas markets will continue to grow as the need for more mobility options is not unique to China. Two-wheelers are in huge demand globally for its affordability compared to other solutions of transport, Li said.
Niu reported a profit for the first time in the first quarter of 2019 with 12 million yuan, compared to a loss of 62 million in the same period last year.
