The company is joining a recent tide of Chinese electric bike, scooter and motorcycle makers setting up new factories overseas in a bid to jumpstart their stalling growth

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Key Takeaways:

• Luyuan has launched an R&D and manufacturing center in Thailand and formed a major partnership in Singapore in its fledgling drive to develop the global market
• The company is joining a growing tide of Chinese electric two-wheeler makers setting up production centers in Southeast Asia, where such vehicles are popular

The race is on.

Luyuan Group Holding (Cayman) Ltd. (2451.HK) has joined a fledgling move by Chinese two-wheeler makers setting up factories abroad, with its Thursday announcement of plans for a new facility in Thailand. It joins peers like Yadea (1585.HK) and TAILG, which have also recently set up similar new facilities in Southeast Asia to tap local markets for electric bicycles, scooters and motorcycles.

Several factors are driving the trend, led by intense competition in China where all of these companies still derive nearly all of their sales. Another factor is the big potential in Southeast Asia for these two-wheeled vehicles, which are hugely popular as the most affordable mobility option over pricier cars. Lastly, such bases offer geographic diversification as a hedge against potential geopolitics if countries slap protective tariffs on Chinese products in the future.

Truth be told, we're a bit surprised this group has taken so long to start setting up overseas production bases. At least part of the reason lies in the huge size of their home China market, which has embraced electric two-wheelers to replace dirtier fuel-burning motorcycles and scooters. The government has aggressively supported the industry, with the result that the vast majority of electric two-wheelers now on the road in China are emissions-free.

But like the higher-profile market for electric cars, China's electric two-wheeler market is starting to mature. Complicating matters, Beijing rolled out new standards in the second half of last year aimed at improving safety, especially reducing hazards from batteries that can catch fire. The new rules, which strictly limit the use of plastic components and require stronger fire-resistance for non-metallic materials, took effect last September, with the sale of non-compliant models banned starting in December.

All of that brings us back to the sudden urgency Luyuan and its peers are feeling to seek new opportunities outside China. Luyuan's latest turn is taking it to Thailand, where the company announced its establishment of a center that will "focus on localized product adaptation, rapid supply chain response, and service network building." While Luyuan doesn't say so specifically, the center looks like it will manufacture two-wheelers for the Thai market using parts imported from China.

Luyuan said the center is aiming to sell 50,000 units annually through 200 sales channels by 2028, which would make it the third-largest player in the market. It points out Thailand is the world's third largest motorcycle market, with 1.8 million fuel-powered units sold annually. But only 12% of the market was for electric vehicles in the first quarter of 2025, highlighting the big potential for growth as the penetration rate increases.

"This is not a sales office. We are moving our supply chain capability and manufacturing system directly to the front line," said Luyuan founder and CEO Hu Jihong. "Together with local partners, we co-build production capacity and share growth, delivering the most suitable and stable green mobility solutions to users in Thailand and beyond."

Singapore partnership

Concurrent with the Thailand announcement, Luyuan also unveiled the opening of another center in Singapore, though that initiative looks less focused on manufacturing and more on developing products and services for the broader Southeast Asia region. That initiative will see Luyuan work with Kilats Group, which has a partnership with local ride-sharing giant Grab dating back to 2024. Kilats is also an expert in battery-swapping technology, operating nearly 1,000 swapping motorcycles in the Indonesian markets of Bali and Bandung.

"Going forward, we will combine Kilats' battery technology and swapping network with Luyuan's platform to deliver full-scenario electric mobility solutions," said Kilats CEO Vincent Yap. The two sides emphasized the new initiative is more than just a sales office, describing it as an "innovation base for new business models like battery swapping and leasing."

Luyuan isn't the only one among its peers taking bolder steps to set up manufacturing bases and product development partnerships outside China.

Industry leader Yadea launched a $100 million manufacturing plant in Vietnam earlier this year, with initial production capacity of 100 million units. In its latest annual report, released in late April, Yadea said it has earmarked another 123 million yuan ($18 million) from a 2022 share placement for building up its overseas manufacturing and sales network. In addition to Vietnam, the company is also targeting Indonesia and the Philippines.

Meantime, TAILG, which this year applied for a Hong Kong IPO, also currently operates a factory in Vietnam with annual capacity of 100,000 vehicles. The company also has big hopes for the global market, with plans to build another factory nearby with annual capacity of 900,000 units.

Despite those lofty plans, TAILG, Yadea, Luyuan and most of the Chinese manufacturers currently get very little revenue from overseas. TAILG got just 2.7% of its revenue from foreign markets last year, and Yadea doesn't even break out an international figure, saying that more than 90% of its revenue still comes from China.

One of the few to make a more serious global drive is the smaller Niu Technologies (NIU.US), though even Niu only got 6% of its revenue from global markets last year – and the figure was down 33% from 2024. A big part of the problem is the high degree of regulation and other specific needs for each market, which makes local product design and manufacturing and finding good local partners critical to success.

Luyuan typifies the group in terms of slowing business in China, reporting its revenue growth decelerated to 11% in the second half of last year from 22% in the first half, partly due to the introduction of the new standards in September. Its profit growth also more than halved to 30% in the second half of the year from 67% in the first half.

Given all the challenges at home and relatively low penetration rates for electric two-wheelers outside China, Luyuan's strategy of opening local design and production centers and forging major partnerships with local companies like Kilats seems prudent. Now, the company and its peers will need to start showing some growth in their overseas sales to meaningful levels to convince investors that their global expansions can offset stalling business at home.

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Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.