Statement of the Board of Directors regarding ESG matters

Sustainable development under the dual carbon background is an "inevitable product of the development of social productive forces and technological progress" and is the "golden key" to solving current global issues such as climate warming. The realization of the "dual carbon" goals relies on the green transformation of economic and social development, and also requires industry-leading enterprises with a sense of social responsibility to bravely break through bottleneck technologies and firmly forge a path of technological innovation and development.

In order to actively respond to the national policy of "carbon peak and carbon neutrality" and follow the development concept that "lucid waters and lush mountains are invaluable assets," the company will continuously integrate the pursuit of a better life into the green and low-carbon cause, aiming to meet the ever-upgrading demands of economic and social development. It will shoulder the responsibility of leading industry progress and industrial upgrading, fully utilizing its accumulated experience in the industry, and actively carrying out forward-looking layouts in the fields of consumer electronics, passenger vehicles, and special equipment. The company will accelerate the cultivation of low-carbon and environmentally friendly products, as well as research on cutting-edge technologies and core technologies related to special functional coating materials, leading the green and sustainable development of the industry.

　　Digital upgrade, green operation management.

A new round of technological revolution is driving deep industrial transformation. The new materials industry is accelerating the transformation of manufacturing towards intelligence and greenness, especially with the rapid development of digital technology, promoting the transformation from traditional models to modern models. Currently, industries such as consumer electronics, new energy, passenger vehicles, and high-end equipment are growing rapidly, and competition in the domestic and international markets is becoming increasingly fierce. Changes in technological innovation, customer demand, and dynamic costs are constant. The company is actively using digital means to embed the concept of sustainable development into its specific business in the form of data and intelligence, empowering the entire process of production, management, and even employment, thereby improving the efficiency of enterprise operation management.

To explore the path of high-quality sustainable economic development driven by digital transformation, the company has been the first to apply digital technology to various resources and processes since its establishment in 2016, becoming the first coating manufacturing enterprise in the domestic UV coating field to invest in a DCS automated distributed control system, achieving modern intelligent manufacturing and green factory construction, driving the adjustment of the industry’s industrial structure and leading the upgrading of the industry. In 2020, the company fully launched digital upgrades, empowering greenness through digital intelligence to promote the construction of low-carbon or zero-carbon factories throughout the process. While shortening the research and development cycle, production efficiency and product first-pass success rate have significantly improved, and the company has been successfully recognized as a smart manufacturing demonstration enterprise in Changsha, a green factory in Hunan Province, and a national green factory, fulfilling its commitment to sustainable development to society and investors with practical actions.

　　Green and low-carbon, environmental protection first.

Under the dual carbon background, there has been an increase in global efforts to reduce carbon emissions in products in fields such as consumer electronics, automobiles, and industrial manufacturing, vigorously promoting the transformation to low-carbon production. Thanks to years of deep cultivation in low VOCs coatings such as light-curing coatings and water-based coatings, the company evaluates the carbon footprint of products based on life cycle assessment, assessing the carbon footprint throughout the life cycle from raw materials, resin synthesis, solvents, monomers, pigments, transportation to final product packaging and storage, and controlling key elements that are most sensitive to carbon footprint, such as raw materials, resins, and solvents.

To further improve the sustainability of raw materials, formulations, and manufacturing processes, the company, on one hand, makes "additions" in technology and environmental protection, maintaining R&D investment at over 10% of operating income for the past three years, continuously investing a high proportion in R&D, and vigorously introducing high-end professional talents in the industry to promote carbon reduction through technological innovation, while supporting comprehensive environmental safety facilities. On the other hand, it makes "subtractions" in energy consumption, working from the source to find methods to reduce environmental impact, overcoming core coating technologies through optimizing resin structures and exploring new processes, and proactively developing a series of environmentally friendly coatings and ink products with outstanding performance.

On the road to pursuing green and low-carbon development, the company has never stopped exploring, both focusing on major calculations and being a "technological reform fanatic," such as through the online process of document flow and energy-saving equipment transformation; advocating for paperless office, saving electricity, cherishing water sources, waste classification, planting greenery, and accelerating the formation of a green lifestyle; establishing a green raw material supply system, actively guiding procurement to use green products; carrying out lean 6S actions for all employees, adding ventilation and waste gas treatment facilities, classifying and managing waste disposal and recycling, and promoting packaging reuse to help achieve carbon peak and carbon neutrality goals.

　　Technological innovation, low-carbon first.

Since its establishment, the company has established a research and development concept of "demand-oriented, forward-looking planning, highlighting characteristics, and proactive iteration" and a strategic development path of "Mitsui Technology," emphasizing technological innovation. In 2009, it established a corporate technology center, and in 2011, it was approved to build the Hunan Province UV Coating Engineering Technology Research Center. In 2015, it was recognized as a technology center for enterprises in Hunan Province, and in 2021, it was rated as one of the top 100 enterprises in R&D investment in the Xiangjiang New Area of Hunan Province. In 2022, it was recognized as a national enterprise technology center by the National Development and Reform Commission... The relentless pursuit of technology continuously injects strong momentum into the company's growth; the persistent commitment to innovation ensures the company's steady and powerful development. To create a gravitational field for gathering technological innovation elements and a main position for cultivating strategic technological forces, the company continues to increase R&D investment and the construction of innovation achievement transformation bases. After establishing the Mitsui Research Institute in Hunan in 2020, it continued to establish the Mitsui Guangdong Research Institute in Dongguan, China in 2021, and registered the Shanghai Mitsui Research Institute in Shanghai, China in 2022, embracing outstanding talents from all over the world with the ambition of "gathering talents from all over the world and utilizing them." At the same time, the company continues to deepen cooperation with universities such as Central South University and Hunan University in joint research and development, focusing on the application of surface treatment and functional coating materials such as coatings, inks, and adhesives in strategic emerging fields such as consumer electronics, passenger vehicles, and special equipment, aiming to solve surface and functional coating protection issues in complex and harsh environments such as high heat, high humidity, deep sea, and deep space.

　To innovate to the extreme, we will go all out.

The company takes "continuously surpassing to create a wonderful grand scene" as its noble mission, continuously exceeding customer needs, providing leading system solutions, and creating diverse value to gain more favor and love from consumers. For example, under the guidance of customer demand, the company has innovated its existing silicone feel coating products, pioneering the provision of silicone feel coating solutions for automotive parts in China, and successfully using them in multiple automotive interior and exterior parts projects. At the same time, it actively seeks ways and plans from a process perspective to truly create value for customers, thereby promoting efficiency improvements across the entire industry and value chain, creating a win-win ecosystem for upstream and downstream enterprises.

　　With a mission on our shoulders, we move forward with determination.

The company supports economic development with products and technology, contributing to the high-quality development of China's manufacturing industry. While staying true to its original intention and remembering its roots, it participates in social welfare activities such as educational assistance, poverty alleviation, and emergency disaster relief, demonstrating corporate responsibility through small efforts. By implementing safety training, hazard identification, special inspections, and safety assessments, the company reduces operational risks for employees; it establishes occupational disease prevention measures, regularly conducts monitoring and protection, values employees' physical and mental health, and actively creates a safe, orderly, and harmonious work environment. Additionally, it has set up a mutual aid fund to provide assistance to employees and their families in need. The company also aims to become a learning organization, building a talent ladder at different levels, continuously promoting the standardization and normalization of employee learning and growth, and employing diverse methods such as internal mentoring, job rotation, external exchanges, and school-enterprise cooperation to fully stimulate employees' enthusiasm for learning and continuously optimize their knowledge structure. It constructs a fair and just talent evaluation and incentive mechanism to fully inspire employees at all levels to create value and continuously exceed their dreams.

To establish a scientific, standardized, effective, and efficient modern corporate governance system, the company strictly operates according to the governance structure of the shareholders' meeting, board of directors, board of supervisors, and management. The "three meetings and one layer" exercise their decision-making, execution, and supervisory powers according to their responsibilities, ensuring that major decisions and actions are legal, compliant, authentic, and effective, safeguarding the company's long-term development and compliant operations.

The company values reasonable investment returns for investors. Based on the company's profitability and the actual needs of its future business development strategy, it has established a continuous and stable dividend return mechanism for investors, maintaining consistency, rationality, and stability in its profit distribution policy. The company strictly fulfills its responsibilities and obligations for information disclosure as a listed company, ensuring timely and accurate disclosure of company information to investors, fully safeguarding investors' right to know. It adopts a "value communication strategy," actively organizing various shareholder meetings and investor receptions, facilitating communication channels to enhance investors' understanding of the company and establish a good relationship between the company and its shareholders.

Those who are determined will find it easy despite difficulties; those who keep moving will reach their destination despite the distance. A green and sustainable beautiful future is not just a slogan, but a cumulative force that can impact the environment, society, and industry. The company will move forward with a stronger sense of mission and responsibility.

　II. Environmental Information

Has an environmental protection mechanism been established?	Yes
Investment in environmental protection funds during the reporting period(Unit: Ten thousand yuan)	236.38

　　(1) Is it a key pollutant discharge unit announced by the environmental protection department?

　　The company is not a key pollutant discharge unit announced by the environmental protection department.

　1. Construction and operation status of pollution prevention facilities

The company thoroughly implements relevant laws and regulations such as the "Environmental Protection Law" and the "Energy Conservation Law," promoting resource conservation from multiple angles. It responds to the call for "green environmental protection and low-carbon living," taking on the corporate responsibility of protecting the environment, and fully integrating the awareness of resource conservation and energy saving into the environmental management process. The company has established internal systems such as the "Greenhouse Gas Control Management System" and the "Energy Resource Management System," actively carrying out energy-saving and consumption-reduction transformations within the factory area, improving energy efficiency, and reducing pollution and harmful waste generated during operations to mitigate environmental damage. At the same time, the company reasonably disposes of emissions and conducts systematic monitoring to ensure that solid waste is discharged in compliance with standards. The company has been recognized as a demonstration enterprise for intelligent manufacturing in Changsha and a green factory in Hunan Province.

　2. Environmental impact assessment of construction projects and other environmental protection administrative licensing status

The company has developed the "EHS Simultaneous Management System for Construction Projects" in accordance with the "Environmental Impact Assessment Law." According to the system requirements, the company entrusts qualified institutions to undertake the environmental impact assessment of construction projects during the feasibility study phase, submits the environmental impact assessment report to the competent environmental protection administrative department for approval, and commences construction after obtaining approval.

3. Emergency plan for sudden environmental incidents

The company has established an emergency leadership group and developed the "Emergency Plan for Sudden Environmental Incidents" based on actual risks, which has been filed with the environmental authority (filing number 430124-2021-011-H). To ensure that emergency work can respond and operate quickly in the event of a sudden environmental incident, the company regularly conducts professional training and emergency drills, continuously enhancing all employees' ability to handle crisis events and prevent safety risks.

In response to environmental risks, the company has established a comprehensive environmental management and occupational health and safety management system and procedures, which include both macro-level guiding policies and micro-level practical processes, such as the "Hazard Identification, Risk Assessment, and Control Procedures" and the "EHS Incident Reporting and Handling System." By regularly identifying and assessing the risk levels of environmental factors, strengthening daily environmental pollution monitoring, increasing investment in environmental protection to upgrade facilities and equipment, and enhancing the capacity for emergency response to environmental incidents, the company continuously improves its environmental protection level.

In identifying significant environmental factors, the company analyzes the environmental factors of production and operational activities and evaluates their risk levels using qualitative and quantitative methods, forming a list of significant environmental factors and developing comprehensive management plans and control measures to prevent environmental risk incidents.

4. Environmental self-monitoring plan

The company has developed an environmental self-monitoring plan based on the "Technical Guidelines for Self-Monitoring of Pollutant Discharge Units - Coating and Ink Manufacturing" (GB1807-2020) and the "Emission Standards for Atmospheric Pollutants in the Coating, Ink, and Adhesive Industries" (GB37824-2019), and has entered it into the national pollutant discharge permit management information platform - enterprise end, and the national pollution source monitoring information management and sharing platform.

The company commissions a qualified third-party professional organization to conduct monthly testing of rainwater, waste gas, and noise generated by the company and issues testing reports. The testing results are promptly uploaded to the national pollutant discharge permit management information platform - enterprise end and the national pollution source monitoring information management and sharing platform.

(2) Administrative penalties due to environmental issues during the reporting period

During the reporting period, the company did not receive any administrative penalties due to environmental issues.

(3) Resource consumption and emission information

The company is a low-energy consumption enterprise, with the main energy consumption during operations being water and electricity.

The company's production only involves physical reactions, with no chemical reactions, and does not include heavily polluting processes. The pollutants generated during production and operations mainly consist of waste gas, wastewater, solid waste, and noise. Among them: (1) Waste gas mainly consists of volatile organic waste gas (volatile organic compounds) generated from the natural evaporation of materials and kitchen oil fumes; (2) Wastewater mainly consists of mechanical seal cooling water, equipment cleaning water, floor cleaning water, and a small amount of domestic wastewater; (3) Solid waste mainly consists of discarded raw and auxiliary packaging materials, filter residue from the filtration process, and some domestic waste; (4) Noise mainly comes from production equipment and other equipment.

In summary, the amount of hazardous waste involved in the company's production and operations is small, and it does not involve harmful substances such as heavy metals, resulting in minimal environmental impact.

　1. Greenhouse gas emissions.

The waste gas generated by the company mainly consists of volatile organic waste gas (volatile organic compounds) produced by the natural evaporation of materials and cooking fumes from the cafeteria. The company has established a "Waste Gas Management System" in accordance with the "Air Pollution Prevention and Control Law". Volatile organic gases from production facilities and operational areas are comprehensively collected through an exhaust system, treated in waste gas treatment facilities to meet standards for high-altitude emissions, and undergo third-party testing. Continuous efforts are made to reduce the total amount of pollutants through measures such as the renovation of exhaust pipelines in workshops, purchasing steam, upgrading VOCs treatment facilities, and increasing catalytic combustion treatment facilities to reduce emissions of VOCs, particulate matter, and non-methane total hydrocarbons.

2. Energy Resource Consumption Status

Regarding water resources, the company has established a "Wastewater Management System" in accordance with the "Water Pollution Prevention and Control Law". The company mainly uses municipal pipeline water in its office, construction, and operations. Through measures such as the use of energy-saving and water-saving equipment, renovation of greening irrigation systems, rainwater and sewage diversion design, and configuration of reclaimed water recycling systems, the company continuously improves the proportion of wastewater recovery and reduces the consumption of water resources and the impact on the water environment from various business activities. At the same time, a third-party testing agency is hired to regularly test the COD (Chemical Oxygen Demand), ammonia nitrogen, pH, and other indicators of discharged wastewater to ensure compliance with discharge standards.

For electricity resources, the company adopts intelligent lighting, controls the use of air conditioning by season, time period, and temperature settings, and arranges production centrally to reduce electricity consumption.

For gasoline and diesel resources, consumption is mainly reduced through overall planning of the logistics process.

3. Waste and Pollutant Emission Status

The company has established scientific waste management control procedures, chemical management procedures, and other relevant specifications to minimize the impact of its business operations on the environment, strictly control pollution, achieve green production, and contribute to the fight against pollution.

For hazardous waste, a dedicated hazardous waste storage facility has been established. Hazardous waste is uniformly handed over to qualified hazardous waste treatment companies for processing, and management plans are filed with the local competent authority on the Hunan Province Solid Waste Information Management Platform in accordance with hazardous waste management regulations.

For solid waste, a waste list has been established; a "Common Solid Waste Classification Standard" has been developed for clear classification; different trash bins or collection containers are set up according to classification, with clear labeling; a dedicated waste storage facility is established, with registration and classified storage, and regular disposal by qualified units.

For recyclable waste, such as waste paper and waste plastic, employees are encouraged to sort garbage. Classification trash bins are set up in each office floor, cafeteria, and other areas, requiring employees to sort recyclable and non-recyclable materials. Promotional materials on waste classification and environmental protection knowledge are printed, which has had a good promotional effect.

In addition, the company has increased the use of environmentally friendly and energy-saving materials, improved production processes, and enhanced equipment automation levels to control and reduce the generation of pollutants from the source. It also promotes paperless office practices to reduce paper usage; encourages double-sided printing to minimize paper waste. Departments are required to collect and package unusable waste paper and shredded documents, which are centrally recycled twice a year to mitigate the environmental impact of paper consumption.

　4. Company Environmental Protection Management System Status

The company strictly complies with the requirements of the "Environmental Protection Law", "Environmental Impact Assessment Law", and "Solid Waste Pollution Prevention and Control Law", continuously strengthening environmental risk management to ensure that the company's production operations comply with relevant laws, regulations, and standards.

At the same time, in line with the characteristics of the coatings, inks, and adhesives industry and production practices, the company continuously establishes and improves its environmental management system, formulating internal management systems such as "Environmental Protection, Occupational Health, and Safety Management Responsibility System", "Rainwater Management System", "Wastewater Management System", and "Solid Waste Management System", vigorously promoting clean production.

In addition, the company has established an EHS management concept of "prevention first, full participation, and strict governance", continuously strengthening environmental risk identification and control, and has set up an EHS department to coordinate environmental management, with dedicated personnel responsible for environmental management, supervising and guiding environmental protection work; responsible for the specific implementation of energy conservation and emission reduction, three waste emissions, and environmental protection investments, ensuring the effective operation of the company's environmental management system and the continuous improvement of environmental management.

(4) Measures and Effects Taken to Reduce Carbon Emissions During the Reporting Period

Whether carbon reduction measures have been taken	Yes
Reduction of carbon dioxide equivalent emissions (unit: tons)	Not applicable
Types of carbon reduction measures (e.g., using clean energy for power generation, using carbon reduction technologies in production processes, developing new products that help reduce carbon emissions, etc.)	The company adopts advanced intelligent manufacturing technology, enhancing the coverage of automated production processes, resulting in improvements in production efficiency and quality.

Specific description

The company pays great attention to energy conservation and environmental protection and its impact on the surrounding environment, integrating energy conservation and emission reduction concepts into daily production and operations, strictly implementing national and industry-related regulations in areas such as infrastructure, office waste and wastewater treatment, lighting, and park greening, creating a good, green, and healthy office environment.

In terms of air conditioning use, the company follows the requirements of the "Notice of the General Office of the State Council on Strictly Implementing Temperature Control Standards for Air Conditioning in Public Buildings", which states that "the indoor air conditioning temperature in offices, conference rooms, and other office areas should not be set lower than 26°C in summer and not higher than 20°C in winter". The administrative center uniformly sets and centrally controls the opening permissions of the central air conditioning to reduce the usage rate of air conditioning, effectively controlling electricity consumption and carbon emissions.

In terms of on-site management, the company implements 6S management to improve the working environment, enhance employee work efficiency, extend equipment lifespan, and reduce pollutant emissions.

In terms of green office practices, the company advocates a green office concept, improving the OA system and meeting system for online meetings, promoting "paperless intelligent office". It has formulated management measures for administrative vehicle use, strengthening management of fuel usage and vehicle maintenance to reduce exhaust emissions. The company encourages electricity conservation, optimizes lighting circuits, promotes paper recycling and double-sided printing, advocates water conservation, reduces ink cartridge usage, encourages employees to reduce smoking for a healthier lifestyle, and actively promotes the use of commuter buses provided by the Ningxiang Economic Development Zone for green, low-carbon, and civilized travel.

(5) New Technologies, Products, and Services in Carbon Reduction

The company establishes information systems such as MES, DCS, and ERP through information integration, along with supporting digital tools like PDA, to achieve stable management of the production process, quality data management, large-screen management, and equipment management, thereby reducing resource waste. At the same time, a flexible production operation mode using PLC has been established to achieve multi-variety co-line production. The production process is equipped with automated feeding systems and fully automatic packaging equipment to realize assembly line operations for product feeding, mixing, and packaging.

　Social Responsibility Work

　　1. Types and Contributions of Public Welfare and Charity Activities

Type	Quantity	SituationDescription
ExternalDonation
Among them:Funds (ten thousand yuan)
Material discount (ten thousand yuan)
Public welfareProject
Among themFunds(ten thousand yuan)	8.54	Used for employee and family mutual assistance
RescueNumber of people(people)	11
Rural revitalization
Among themFunds(ten thousand yuan)	2.00	Used forNingxiang City“Ten thousand enterprises to revitalize ten thousand villages”Poverty alleviation
MaterialsDiscount(ten thousand yuan)	1.68	Used forNingxiang City“Poverty alleviation and assistance to farmers”Activity
HelpNumber of employed(people)

 

　1. Specific situation of engaging in public welfare activities

(1) In August 2022, the company participated in the Ningxiang City "Ten Thousand Enterprises to Revitalize Ten Thousand Villages" poverty alleviation activity, donating 20,000 yuan to a certain village for the improvement of agricultural infrastructure.

(2) In August 2022, the company participated in the Ningxiang City "Poverty Alleviation and Assistance to Farmers" activity, purchasing agricultural products worth 16,800 yuan to distribute to employees, reflecting care for employees while assisting farmers.

(3) Throughout 2022, the company's mutual assistance fund provided assistance to several employees and their families in need, with a total expenditure of 85,400 yuan, effectively providing security for employees' concerns.

　2. Protection of shareholders and creditors' rights

1. Continuously improve the corporate governance structure to ensure shareholders fully exercise their rights.

The company strictly adheres to the requirements of the Company Law, Securities Law, and the Code of Corporate Governance for Listed Companies, continuously improving the working systems of the shareholders' meeting, board of directors, board of supervisors, and general manager, forming an effective balance of power among the governing bodies, decision-making bodies, supervisory bodies, and management. The company continuously improves its management system, standardizes its operations, and has established various corporate governance systems, including the Rules of Procedure for Shareholders' Meetings, Rules of Procedure for Board Meetings, and Rules of Procedure for Supervisory Meetings, and has mechanisms for cumulative voting to elect directors and separate voting for small and medium investors. It has stipulated that statutory matters should be voted on via online meetings to ensure shareholders' rights and continuously improve the procedures and mechanisms for major corporate decisions, strengthening internal controls.

2. Actively fulfill information disclosure obligations and build good investor relations.

The company strictly fulfills its information disclosure obligations in accordance with relevant laws and regulations, ensuring that information disclosure is true, accurate, timely, complete, and fair. At the same time, the company has established effective channels for communication with investors, disseminating the company's brand value and industrial value through emails, on-site research, conference calls, Shanghai Stock Exchange e-interaction, and the investor relations WeChat public account of Songjing Co., Ltd., timely conveying the company's strategic ideas, management philosophy, and interim operational development results within compliance.

3. Financial stability and compliance, excellent asset quality, avoiding operational and financial risks.

The company has a sound financial management system, and the accounting work is standardized. The quality of major assets is excellent, the asset structure is reasonable, and they are in good use and turnover status; the company's finances are stable, and the provisions for asset impairment are in line with the actual asset quality, being sufficient and reasonable; at the same time, the company's internal control system is sound, ensuring the safe and reasonable use of funds. The company operates with integrity, does not harm the legitimate rights and interests of creditors, has never defaulted on bank loans, and strictly fulfills its contractual obligations with suppliers and customers, maintaining a high level of credibility.

While safeguarding the interests of shareholders, the company also considers the interests of creditors, strictly fulfilling debts according to contracts signed with creditors, maintaining good communication and cooperation with them to reduce operational and financial risks.

4. Actively implement a cash dividend policy, emphasizing reasonable returns on investment for shareholders.

While striving for rapid growth in enterprise scale and steady growth in economic benefits, the company implements a prudent profit distribution policy based on profitability and operational development needs, combined with reasonable returns for investors, allowing shareholders to not only obtain stable and long-term investment returns but also enjoy the sense of honor and social respect brought by the brand's excellence.

　3. Protection of employee rights

The company has established a human resource management philosophy of "inspiring people with dreams, uniting people with culture, and achieving people with platforms," always viewing talent as the source of enterprise development and the most valuable asset of the company. Therefore, in management, it insists on taking humanity and human heart as the starting point and destination, respecting and conforming to the positive aspects of human nature, meeting employees' reasonable needs in material, spiritual, and psychological aspects, creating a professional platform suitable for talent growth, ensuring that talents are fully utilized, thus achieving mutual growth between employees and the company, making employees and the company a community of shared interests.

The company strictly complies with the Labor Law, Labor Contract Law, and other laws and regulations to protect employees' legitimate rights and interests. The company signs labor contracts with all employees who establish labor relations with the company and timely and fully pays various statutory social insurance and benefits, including basic pension insurance, basic medical insurance, unemployment insurance, work injury insurance, maternity insurance, and housing provident fund. In addition to statutory rights, the company provides group accident insurance for all employees and offers medical mutual assistance for employees in Changsha.

The company follows the principles of distribution according to work and equal pay for equal work, distributing based on employees' working conditions, labor results, and work responsibilities, conducting collective wage negotiations with employees, signing Collective Wage Agreements, Collective Contracts, and Collective Contracts for the Protection of Female Employees' Rights, conducting annual employee satisfaction surveys and organizing health check-ups. To enhance employees' safety awareness and self-protection capabilities, the company regularly organizes training and education on occupational health and safety and environmental protection, continuously improving work safety conditions and enhancing the company's safety management level.

To enrich employees' leisure life, indoor badminton courts, cinemas, and gyms have been built, and seven employee activity associations have been established, including badminton, basketball, billiards, table tennis, fishing, fitness, and running clubs, with regular activities held. To enhance employees' sense of happiness, the labor union committee regularly organizes interesting activities such as a 30-kilometer hiking event, badminton competitions, Science and Technology Workers' Day, corporate culture presentations, billiards competitions, fishing competitions, and more, creating a team atmosphere of unity, friendship, progress, and harmony.

The company emphasizes employees' career planning, creating multiple channels for career development. It has established ten career development systems in marketing, formula research and development, application process research and development, color matching, production, warehousing, finance, and administrative management. All employees can choose their preferred and suitable career development paths based on their interests and personality traits. The company conducts an internal title review once a year to provide development space for employees. In 2022, the company continued to invite external experts to carry out the second phase of the systematic talent development project, organizing research on learning map course development and training for cadres and key personnel. After multiple rounds of guidance and co-creation, dozens of internal high-quality course materials have been successfully extracted, condensed, and output. The teaching methods and skills of the cadre team and core position team have been improved, exploring a practical internal talent training model, preparing for better talent system construction in the next phase.

Employee shareholding situation

EmployeeHoldSharesNumber of people(people)	70
Number of employee shareholdersTotal number of the companyEmployeeTotalProportion (%)	10.45%
Employee shareholdingQuantity(Ten thousand shares)	674.26
EmployeeShareholding quantity as a proportion of total share capitalProportion(%)	8.45%

 

Note 1: The number/quantity of employee shareholders as of the end of the reporting period includes the directors and senior executives who directly hold shares in the company, as well as the number/quantity of employees to whom the first and reserved portions of the 2020 restricted stock incentive plan belong, excluding the number/quantity of employees who purchase company stock in the secondary market.

Note 2: The calculation formula for the proportion of employee shareholders to the total number of employees in the company uses the total number of employees as of December 31, 2022 as the denominator.

IV. Protection of the rights and interests of suppliers, customers, and consumers

The company has always established cooperative relationships with suppliers and customers based on integrity and the principle of equality and mutual benefit, strengthening collaboration to achieve win-win results.

The company adheres to the business philosophy of 'high-end leadership, rapid response', always focusing on and researching customers, quickly meeting various needs of customers by providing high-quality products and excellent services, driving the implementation of the company's strategy with customer needs, helping customers solve various problems, getting close to customers, and winning their trust, truly becoming a long-term partner of customers and achieving itself in the success of customers.

The company upholds the concepts of openness, transparency, and win-win cooperation with suppliers, growing together with them. A comprehensive procurement management system and supplier management system have been established and implemented, with clear regulations on supplier selection, procurement processes, inventory management, and strict supervision of execution. In selecting suppliers, in addition to focusing on the quality of products and services provided, the company's business ethics, environmental impact, labor rights, occupational health and safety, and other indicators are included in the evaluation system. In supplier management, agreements on product quality assurance are signed with qualified suppliers to strictly control product quality and safety, ensuring that suppliers' products and measures meet company requirements; insisting on transparent procurement, signing integrity and honesty agreements with each supplier, and establishing various complaint channels such as phone, public email, and fax to eliminate any occurrence of bribery or illegal activities. In addition, the company strictly implements price control, and for medium and large projects with relatively high amounts, the procurement department opens a bidding system and collaborates with all departments for joint pricing.

V. Product safety assurance situation

Since its establishment, the company has regarded providing high-quality products and services to customers as its mission, making product quality the basic bottom line for survival, and adhering to the quality management philosophy of 'source control, process monitoring, continuous improvement' to guide quality management work.

In source control, based on the requirements of ISO9001/IATF16949/IEQC QC080000 and ISO14001 standards, the company has established and passed ISO9001/IATF16949/IEQC QC080000 and ISO14001 certification. Comprehensive testing and characterization of the company's raw materials and products are conducted to ensure the stability of product quality. A complete internal quality management system has been established, strictly controlling different sources such as customer demand exploration, project management, product design and development, supplier management, and production process management to prevent quality defects.

In process monitoring, the company implements total quality management, requiring all employees to ensure product quality through work quality, and has built a complete inspection mechanism combining self-inspection, mutual inspection, and special inspection. Full-process monitoring is conducted from R&D, procurement, production, warehousing logistics to customer sampling and mass production, leaving no quality risks and defects unchecked. Advanced testing equipment from both domestic and international sources has been introduced, with complete testing capabilities, and the laboratory operates strictly according to CNAS requirements, successfully passing CNAS certification. Special inspection points are set up for important and critical processes, and SPC tools are used for SPC analysis of process inspection results to ensure that every batch of products shipped to customers is qualified.

In continuous improvement, through customer surveys, benchmarking against peers, and internal audits, customer audits, and third-party audits, the company continuously identifies problems in the construction and execution of the quality management system, takes corrective measures in a timely manner, and continuously improves quality.

In addition, to continuously enhance the quality awareness of all employees, the company actively carries out quality culture construction activities internally, including the 'Continuous Innovation' themed annual activities (with activities focusing on management innovation, 'three small innovations', QC improvements, etc.), and designates every September as the company's Quality Month, conducting 'Quality Activity Month' (activities include record competitions, quality knowledge contests, quality document training, etc.). Through these quality activities, all employees are guided to understand quality concepts, practice system documents, and continuously improve quality.

VI. Other situations in undertaking social responsibility

The company has established the core values of advocating 'prosperity and growth, striving for great achievements', requiring every employee to 'remember the well-digger when drinking water', and to establish a spirit of character nourished by well water. While adhering to legal operations and solving employment issues, the company pays close attention to people's livelihood, actively participates in various social welfare activities, and promotes excellent moral culture.

The company actively strengthens its connections with the government, industry associations, regulatory agencies, and media, establishing good and smooth communication channels, proactively accepting supervision and management, and continuously enhancing the transparency of the company's social responsibility fulfillment. At the same time, the company actively participates in industry association and standardization organization activities, contributing to the improvement of industry technology levels and the common development of the industry.