Everyone Said the Internet Would Disrupt Riding. NIU, the Only One Getting Anywhere, Is Doing the Most Traditional Things

Better design, traditional sales channels, and the enormous demand left behind by motorcycle bans keep electric two-wheelers evolving.

On September 12, Chen Gu rode a new NIU electric scooter to a real estate agency near Guomao, on Beijing's East Third Ring Road. A little while later he left the scooter there and took the subway back to the electric-bike shop near Houhai, on the city's northwest Second Ring Road.

Riding a new NIU across Beijing and then taking the subway or a bus home is something Chen Gu has done often over the past year.

Chen Gu has worked three years at this shop, which mainly sells Aima electric bikes and moves more than 200 of them a month. NIU only arrived in the inventory last year. Some customers pick one out in the store and ride it away; a few order through the shop's Taobao store, and Chen Gu delivers by riding it over himself.

Among the electric bikes waiting at red lights on Beijing's streets, you spot a NIU now and then. It is easy to recognize: a plain white ring of light on the front, a body with no unnecessary decoration, and, unlike most delivery scooters, no Baidu or Ele.me food-delivery box strapped to the back seat.

Not only in congested big cities like Beijing — we have seen NIUs in small towns such as Jixi, in Anhui.

What says more about its presence is how other brands have reacted. Search "NIU N1" on Taobao and more than 1,500 listings come up. Many of those sellers are not selling NIUs at all; they have tagged the name onto their listings to catch buyers interested in the brand.

On August 26 this year, Yadea, which holds the largest share of China's electric-bike market, held a press conference. It is hard not to think of NIU when you hear what this Hong Kong-listed company, which sells 4 million units a year, chose to talk about: Panasonic lithium batteries, a new phone feature for locating your bike, marketing aimed at electric-bike enthusiasts…

Barely a year after it began shipping, NIU has already influenced quite a few electric-bike brands.

Over the past two years, plenty of companies have tried to change how you get around, all acting like internet companies

Between 2014 and 2015, more than a dozen tech companies launched riding-related products. Most of them wanted to bring a style of riding popular abroad into China.

What Niu Technologies, the company behind NIU, wanted to bring was a high-performance electric scooter.

The scooter itself is not new. It took off in Europe and the US in the 1950s, when the Second World War was over, the Cold War was still mild, and the shadow of nuclear war had not yet spread over the world.

In Roman Holiday, released in 1953, Audrey Hepburn and Gregory Peck ride an Italian Vespa through Rome, and audiences fell for the light little machine that suited men and women alike. The American poet and journalist Harry Roskolenko even called one of his collections Poet On A Scooter.

The difference is that the scooters that caught on in Europe and America all ran on gasoline. What NIU builds is electric.

Next to the electric bikes you see on the street every day, NIU has made a lot of improvements. In the details of its appearance, the body looks more finished, with no visible assembly seams. At the core, the motor and the battery come from partnerships with Bosch and Panasonic, giving it a range of up to 100 kilometers.

Some parts that affect the ride have changed too. NIU uses the electronic brakes common on motorcycles rather than the cable-pull brakes usual on electric bikes; the latter is a design that comes from bicycles.

Inevitably, the company also uses plenty of "smart" technology: an LCD dashboard showing the battery level, GPS tracking to recover the bike after a theft, even a button to call customer service.

Several startups like this have turned out polished products in different categories.

In October 2014, Zhang Xiangdong — who had already taken Sungy Mobile, the mobile internet company he founded (3G Portal, GO Launcher), public on Nasdaq — announced he was leaving, with $15 million in Series A funding for an urban bicycle project.

This well-known cycling enthusiast wanted to break the assumption that buying a good bike means buying a mountain bike or a road bike. Instead he wanted to build a line of bicycles suited to everyday riding in cities, and sell them online.

Qingke Bike, which shipped its product in 2015, raised 190 million yuan over two rounds from Tsinghua-affiliated investors, hoping to put the power-assist technology once used in cars onto bicycles.

Others piled in: startups such as Yunma and Begin ONE, and listed companies such as Baidu and LeEco, flying the banner of "artificial intelligence" or "ecosystem."

Without exception, every one of these products promised better design, a connection to your smartphone, and sensors — GPS, a speedometer.

But a year on, the handful of big Taiwanese manufacturers that control China's bicycle market had neither turned toward urban bicycles nor produced any hybrid-power or artificial-intelligence design.

NIU is the only new company that has made the traditional giants change.

At first, NIU put on the same show as any internet company

In April 2015, two months before the product launch, Li Yinan, then CEO of Niu Technologies, had already begun the kind of pre-launch warm-up internet companies favor: an exclusive interview with Tencent Tech introducing a star founding team drawn from Huawei, Xiaomi, Frog Design and Honda.

In it, Li Yinan said the company "will sell through internet channels. As for marketing, we have no plans at present to run any advertising."

If that sounds exactly like Xiaomi's early playbook, it is probably because NIU hired Zhang Yibo, who had run marketing at Xiaomi in its early days, to handle NIU's marketing and brand.

By the June 2015 launch, Niu Technologies had a stage with a dark backdrop, minimalist slides, and its CEO giving the keynote. This way of launching a product, copied from Apple, became standard practice for Chinese tech companies after Xiaomi reproduced it to great success in 2011.

After the launch, NIU went onto JD Crowdfunding, the channel nearly every new Chinese smart-hardware company reaches for first.

The wording on NIU's own website tells you what impression it wants to leave. Its offline franchise outlets are "O2O experience stores"; its stripped-down model is the "Youth Edition" — a phrase that caught fire when Xiaomi's seven founders parodied the poster for the Taiwanese film You Are the Apple of My Eye.

But what actually made NIU take off was the most traditional stuff

After the crowdfunding campaign, Niu Technologies' internet-style approach produced little further effect.

Look at Baidu, where many people search before they buy. NIU has bought several electric-bike keywords, including "Xiaoguiwang," "Lvjia" and "Luyuan," yet its search volume has not grown much this year. There is no sign that the brand has spread on social media.

Its online forum is quiet too — you can count a week's new posts on one hand.

In the end, what won NIU the kind of electric-bike shop you find a few blocks from anywhere was the most traditional stuff.

The shop where Chen Gu works has now sold NIUs for a year. It heard about the brand after the launch event last June, then phoned NIU to sign up and became an authorized repair store.

Being a repair store earns repair fees, and it also comes with a sales quota from NIU — currently about 10 to 20 units a month.

"NIU is often out of stock, but whenever there is stock it moves fast," Chen Gu said. In their best month they took in more than 40 NIUs and sold out in two weeks; half the buyers had never heard of the brand before.

Asked why it sells so well, Chen Gu said: "I don't think any one feature stands out. The design is what most people like, but it isn't unusual. A Panasonic lithium battery you can have fitted at a shop after you buy any electric bike… But no electric-bike maker has ever put better design, a better battery, smart positioning and insurance all into one product. Because that costs a lot of money, and it's easy to run into problems."

It still has plenty of flaws. The first generation weighs 40 kilograms; if the battery dies, a woman without much strength basically cannot push it up over a curb.

And the call-for-repair feature that sounded so convenient — many comments on Weibo describe waiting for a repair that never comes once something breaks.

Still, in every respect it is a little better than products at the same price.

Among the more than 30 repair stores and O2O stores around the country that QDaily visited or called, marking up the price of a NIU is common.

In first-tier cities and in places like Guizhou and Hainan alike, owners buy their stock from NIU directly and resell it for a few hundred yuan more — up to 1,000 yuan at the top end.

Another electric-bike shop, in the Jianggan district of Hangzhou, has put in more. The owner, a Mr. Qi, told QDaily that they became a NIU O2O experience store last October and now sell more than 200 NIU scooters a month, a quarter of the shop's total electric-bike sales.

NIU's website lists 997 of these "O2O experience stores" nationwide, and the number is still growing. Perhaps because too many people were asking, NIU has taken down the business-inquiry phone number it used to post online and replaced it with an application page. A shop that wants to join has to fill in its store details and its business registration.

NIU has started adjusting as well. According to information from one franchise store, a few weeks ago NIU also set up a general distributor in Beijing.

"Now that we have two products, NIU is planning to run more advertising." In a recent interview, Li Yan, COO of Niu Technologies, told QDaily that the company's advertising will change too. He said the reason is that the bikes are spread too thin — you still cannot see NIUs on the road regularly — which makes relying on word of mouth too hard.

More than two decades after the motorcycle bans, electric bikes have filled the gap in the market

NIU is only the latest step in more than 20 years of evolution in China's electric-bike market.

Starting in 1985, Beijing stopped issuing "Jing A" motorcycle plates, the first city in the country to "ban motorcycles." After that, city after city began to bar motorcycles from registering and from entering urban areas.

By the end of the 1990s, registering a motorcycle in a first- or second-tier city had become close to impossible.

Guangzhou is one example. The city that once had more motorcycles on its streets than any other in China capped private two-wheeled motorcycle plates at 500 a month from October 1991; in 1998 the downtown stopped issuing motorcycle plates altogether, and motorcycles could be registered only in Guangzhou's outlying districts.

Guangzhou did not ban motorcycles from downtown streets entirely until 2007, but by the end of the 1990s the motorcycle's growth had already been strangled. The same thing happened in nearly every first- and second-tier city in China.

But cars and public transport could not fully cover the commute, and not every family could afford a car. After the bans, ordinary people's need for a two-wheeler did not shrink. It moved to the electric two-wheeler.

The electric two-wheeler brands most common today — Aima, Luyuan, Sunra, Yadea — were all founded in the late 1990s and early 2000s, exactly when the motorcycle bans were rolling out.

For people moving around a city all day, an electric bike really is a better choice than a bicycle: less effort, no sweat, no fuel to burn so it costs less, and no fines.

By 2015 China had become the world's largest market for electric two-wheelers. Market research cited in Yadea's prospectus puts China's cumulative electric two-wheeler sales at 83.5 million units, with annual sales of 30 million units. The vehicles in use account for 85% of the world's total, and total sales account for 84% of the global figure.

Early electric two-wheelers were all solving the question of whether you had one at all, and they looked bulky and gaudy. Their rear mudguards carried the names of shops and all kinds of advertisements, and the riders did not mind.

For one thing, they all used old lead-acid batteries, heavy and short on range. Worse, given their performance and build quality, these bikes often had to be scrapped after a year or two: electric, but not exactly green.

Outside office buildings in Beijing, plenty of delivery riders and couriers still ride this kind of vehicle every day. They care far more about the price than about the styling or the ads on the body.

From 2010, things began to change. Small factories started copying European scooters, swapping the gasoline engine for a motor and a battery. A whole customization business grew up around these electric two-wheelers, with names like Daguiwang and Xiaoguiwang.

In the physical stores we visited, knockoff brands calling themselves "Electric Bike Alliance" and "Fast Bike Alliance" still sell these retro-shaped electric scooters today.

NIU built on that, and caught a key advance in technology: the lithium battery.

Pushed by smartphones and electric cars, lithium batteries have kept getting better while their price keeps falling. NIU and other newly launched mid- and high-end electric two-wheelers have begun using Panasonic's 18650 ternary lithium cells, the same as the Tesla Model S. That is the basis for balancing range against the size of the vehicle.

Better design and better performance: at three to five thousand yuan, NIU has met people's demand for a better electric bike.

That does not mean NIU can make money. Li Yan said NIU has sold 100,000 units over the past year. But Niu Technologies is still burning cash.

"NIU's price covers the cost of materials — counting the bike alone, we make money. But the company as a whole is still burning cash, and burning quite a lot of it."

As more traditional manufacturers catch on, the competition will get harder.

Asked what they will be selling in the future, several store managers who have sold bikes for years all said they don't know either.

In Chen Gu's words: "I think the competition NIU faces from here is going to be fierce. Other manufacturers are starting to say whose motor they use too. But whether or not this product is still around later, it is one of the better ones I have sold — a product that has actually pushed the market forward."

At the interviewee's request, Chen Gu is a pseudonym.