The 17-year-old striker spent time on trial with the Gunners last week but the club's first offer for the Frenchman, although described as "not derogatory", has been turned down
The Gunners have moved to sign the highly-rated forward who has been linked to several other Premier League clubs.
The 17-year-old made his professional debut for Caen back in April 2011 but couldn't save the club from relegation to Ligue 2 last season.
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"It [the bid] is not derogatory, but it's not what we want," club president Jean-Francois Fortin told West France.
Niang had been urged by his coach, Patrice Garande, to continue his development in France before seeking a move away to a bigger club.
He scored two goals in 23 league appearances for the Normandy club last season and has appeared for the France Under-21 team.