About this Report
Message from theChairmanAbout KaizhongPrecision
Corporate Governance
Innovation and Operation
EnvirnomentSocietyAppendix
Sustainability Governance
About this ReportNotesReferences
How to obtain this Report
Contact information
Preparation basis
Scope
Source
This Report, the rst Environmental, Social and Governance (ESG) Report releasedby Shenzhen Kaizhong Precision Technology Co., Ltd., discloses the Company'spractices and performance in environmental, social, corporate governance (ESG) andother responsible areas to all stakeholders.
For ease of presentation, Shenzhen Kaizhong Precision Technology Co., Ltd. is referredto as "Kaizhong Precision" and "the Company" in this Report.This Report is available in both simplified Chinese and English. In case of anydi?erences between the two versions, the simplied Chinese version shall prevail.The electronic version of this Report is available on the Company's o?cial website(http://www.kaizhong.com), the Shenzhen Stock Exchange (http://www.szse.cn)and the CNINFO website (http://www.cninfo.com.cn).If you have any suggestions for this Report, you can contact us through thefollowing methods:
Address: No. 1 Guihua 4th Road, Longtian Neighborhood, Pingshan District,ShenzhenEmail: ESG@kaizhong.com
This Report refers to the Global Reporting Initiative (GRI)'s Sustainability ReportingStandards and the Self-Regulatory Guidelines of the Shenzhen Stock Exchange forListed Companies No. 3 - Preparation of Sustainability Reports, and aligns with theUnited Nations Sustainable Development Goals (SDGs).
Organization: Shenzhen Kaizhong Precision Technology Co., Ltd. and its subsidiaries.Period: January 1, 2024 to December 31, 2024, with time extended for some content.Release cycle: This Report is an annual report.
The nancial data in this Report are derived from the 2024 annual nancial report,and other data are derived from the Company's internal documents and actualrecords of operations. The nancial data in this Report are in RMB. In case of anyinconsistency with the Company's annual nancial report, the latter shall prevail.
About KaizhongPrecision
Message from theChairman
About this Report
Corporate Governance
Innovation and OperationEnvirnomentSocietyAppendix
Sustainability Governance
Message from the Chairman
Faced with the dual challenges of intensifyingglobal climate challenges and escalatingresource demands, and under the strategicguidance of the state's promotion of high-qualityeconomic development, we have consistentlyplaced environmental protection and socialresponsibility at the forefront of corporatedevelopment. In 2024, the Company integratedESG concepts into strategic decision-makingand operational practices. While providingcustomers with integrated solutions forcore precision components, we vigorouslypromoted the construction of a sustainabledevelopment management system in an all-round way, continuously improved the corporategovernance mechanism, accelerated the greenand low-carbon transformation, and activelyfullled our social responsibilities.In retrospect, we achieved in 2024, remarkableresults in technological innovation, green andlow-carbon development, digital transformation,corporate governance, and fulllment of socialresponsibility. These achievements should beattributed to the wisdom and hard work of allemployees, and also to the strong support ofpartners and all sectors of society. On behalf ofthe Board of Directors, I would like to expressmy sincere gratitude to all peers and partnersfor their long-term support for the developmentof Kaizhong Precision!
Improve corporate governance and consolidate thefoundation for developmentSound corporate governance is the fundamental guarantee forthe sustainable development of an enterprise. We continuedin 2024 to optimize our governance structure and strengtheninternal control and comprehensive risk management systems,ensuring corporate compliance in operations. Attaching greatimportance to the protection of the rights and interests ofstakeholders such as shareholders, employees, customers andsuppliers, we have been striving to build a mutually beneficialand win-win ecosystem. By incorporating ESG concepts into thedecision-making process, we have improved our sustainabledevelopment management and created greater comprehensivevalue for all stakeholders.Adhere to innovation-driven development and strengthencore advantagesWe consistently regard innovation as the core driving force fordevelopment. In 2024, the Company continued to increase itsR&D investment, focusing on breakthroughs in key technologiesof intelligent manufacturing and green manufacturing whilemaintaining its technological leadership in the eld of precisioncomponents. On the one hand, we seized the opportunitiesin new energy vehicles, intelligent connected vehicles andother industries, and carried out in-depth cooperation with topinternational customers to jointly develop solutions for high-performance precision components; on the other hand, weactively promoted the innovative application of new materialsand new technologies to inject green momentum into industrialupgrading. In terms of digital transformation, we activelyaccelerated the construction of a digital factory system thatintegrates intelligent manufacturing systems, industrial big dataplatforms and Internet of Things technologies, forming a virtuouscycle of "data-driven R&D - intelligently-optimized production",and providing all-round support for the transformation of high-end precision manufacturing towards intelligence and greenness.
Deepen green development and implement "dual carbon"commitmentAchieving green and low-carbon development is not onlya global consensus, but also one of our responsibilities. In2024, we signicantly reduced energy consumption per unitof output value and carbon emission intensity through apackage of measures including process innovation, energy-saving equipment upgrades and energy management systemoptimization. We accelerated the construction of greenfactories in an all-round way, increasing the proportion ofrenewable energy utilization and building an efficient andlow-carbon production and operation system. Meanwhile, weworked closely with supply chain partners to jointly promotethe construction of green supply chains, contributing tothe realization of the country's "dual carbon" goals throughpractical actions.Commit to social responsibility and share in collectiveprogressAs a responsible corporate citizen, we always integratesocial responsibility into the genes of corporate development.In 2024, we continued to improve our employee careerdevelopment system and to create a fair and inclusivegrowth platform; we actively participated in public welfareundertakings such as community building and educationsupport; meanwhile, we also deepened cooperation withthe government, industry associations and other parties tojointly promote the healthy and sustainable development ofthe industry. Looking ahead, we will continue to uphold theconcept of sustainable development, with improved corporategovernance as a guarantee, technological innovation as anengine, and green transformation as a direction, and workhand in hand with all stakeholders to jointly create greatereconomic, environmental and social value. We rmly believethat with the joint e?orts of us all and the sustained support ofpartners and all sectors of society, the Company will usher ina more brilliant tomorrow!
Chairman Zhang Haoyu
About Kaizhong Precision
Shenzhen Kaizhong Precision Technology Co., Ltd. ("Kaizhong Precision", stock code: 002823) is a national high-tech enterprise and a leading enterprise in the commutator industry.As a professional in the customization and development of various high-tech commutators, collector rings, connectors and other precision components, the Company specializes inprecision components business, and focuses on the development of three core EV technologies (battery, motor, and electronic control systems), intelligent driving systems, automotivelightweighting solutions. Our products are widely used in elds of automotive electrication and intelligent driving, hydrogen energy, energy storage, rail transit, aviation, communications,consumer electronics, health care, smart home and o?ce, smart equipment, photovoltaic power generation equipment, etc.The Company possesses proprietary intellectual property rights and capabilities in the R&D, design, and manufacturing of precision stamping/bending molds, plastic injection molds,automated precision machining lines, and automated inspection systems. With a fully integrated industrial chain, we deliver integrated solutions for high-end precision componentsto global clients. Relying on advanced manufacturing technology and rst-class product quality, the Company has earned wide recognition from many well-known customers throughcontinuous innovation.
About the Company
Sales and R&D centers, and production basesCountries of key accounts
HuizhouChangshaGermany
ShanghaiHeyuan
JapanTaiwan region
Shenzhen
Dongguan
HongKongThe Company is headquartered inShenzhen, Guangdong Province, China,and has multiple sales and R&D centersand production bases in Huizhou, Heyuan,Dongguan, Changsha, Shanghai, HongKong, Taiwan region, Germany and Japan.
About the Company
Recognition and honorsA glimpse of 2024
About Kaizhong Precision
About this ReportMessage from the
Chairman
Appendix
Corporate Governance
Innovation and Operation
EnvirnomentSociety
Sustainability Governance
About the CompanyRecognition and honorsA glimpse of 2024
About Kaizhong Precision
About this ReportMessage from theChairman
Appendix
Corporate Governance
Innovation and OperationEnvirnoment
Society
Sustainability Governance
The Company's development history
Kaizhong CommutatorLimited was establishedPassed ISO9001certication
1999
Became suppliers forwell-known clients suchas BOSCH, Valeo,Denso, Mabuchi, etc.
2006
2003
Passed QS9000certicationEntered the automotivesupply chain
Acquired KeshunInsulation Materials
2019
NEV "Three-electric System" &Autonomous DrivingConnectors were putinto mass production
2015
Listed on theShenzhen StockExchange (stockcode 002823);Acquired VOGT, aGerman company
2016
Headquarters wasmoved to ShenzhenPingshanChangsha IndustrialPark was put intoproductionAcquired SMK, aGerman company
2018
The production and salesvolume of commutatorsranked rst in the worldSlip rings and multi-layerinsulated wires were putinto mass production
2013
Commutators wererecognized as "IndividualChampion Product inManufacturing" by theMinistry of Industry andInformation TechnologyHeyuan Industrial Parkwas put into production
Awarded the titleof "National GreenFactory"Huizhou IndustrialPark was put intoproduction
2021
2023
Keshun was awardedthe title of "Specialized,Rened, Characteristic,and Innovative Enterprisein Guangdong Province"
2022
About the CompanyRecognition and honorsA glimpse of 2024
About Kaizhong Precision
About this ReportMessage from theChairman
Appendix
Corporate GovernanceInnovation and OperationEnvirnoment
Society
Sustainability Governance
Recognition and honors
National Green Factory
China Patent Excellence AwardExemplary Enterprise in Labor
Law Compliance and Integrity
High-tech enterprise certicateExcellent supplier in China's new
energy vehicle industry
Individual ChampionProduct in Manufacturing
Innovative Enterprise inGuangdong Province
Intelligent Manufacturing MaturityAssessment (Level 3) Certicate
Honorary Certicate ofShenzhen Renowned Brand
Research Center of the Mechanical Industry Micro
Commutator EngineeringTechnology Research Center of Micro Commutator
Engineering of Guangdong ProvinceShenzhen Enterprise Technology CenterHeyuan Engineering Technology Center
Research and technology centersInnovation and Practice BasesPostdoctoral Innovation and Practice BaseApplication Demonstration Base, National Mold Key
Laboratory Industry-University-Research BaseMicroforming Technology Experimental Base, BeijingResearch Institute of Mechanical and Electrical TechnologyMold Experimental Base, Huazhong University of Science
and TechnologyEngineering Technology Research Center in Guangdong
Academician Expert Enterprise Workstation
in Guangdong
Academician expert workstation
About the CompanyRecognition and honors
A glimpse of 2024About Kaizhong Precision
About this ReportMessage from theChairman
Appendix
Corporate GovernanceInnovation and Operation
EnvirnomentSociety
Sustainability Governance
A glimpseof 2024
Revenue RMB
Net prot attributable to shareholders RMB3,049.6076
million
170.1108
million
Financial Performance
Governance Performance
Information security and privacyprotection
Information security trainingcompletion rate:
100%
major informationsecurity incidentsFemale directorsaccount for
44.44%
Independent directors account for
33.33%
Cash dividends:
RMB
108.3
million
Cninfo responded to
inquiries
Anti-graft and anti-corruption
Rate of employees signinganti-bribery commitment:
100%
100%
of employees received anti-corruption training
Board diversityInvestor relations management
authorized and valid patentsR&D investment:
RMB
76.0642
million
product recall
The annual average numberof PPM (product defects permillion) was
0.08
Customer complainthandling rate:
100%Customer satisfaction:
98.5%
100%
of suppliers conductedenvironmental and socialimpact assessments
The rate of suppliers signingthe Integrity CooperationCommitment of Suppliers:
100%Conducted ESGtraining for suppliers
Operational Performance
R&D innovationSupply chain managementProduct qualityCustomer service
With
100%
of suppliers
participating in it
About the CompanyRecognition and honorsA glimpse of 2024About Kaizhong Precision
About this ReportMessage from theChairman
Appendix
Corporate GovernanceInnovation and OperationEnvirnoment
Society
Sustainability Governance
Environmental protectioninvestment:
RMB
9.9911
million
Water resource recycling rate:
24%
54.24%
of waste is recycled
Total greenhouse gas emissions:
107,195.93
tCO
eCarbon intensity:
0.0091
tCO
e/ RMB mnEmployeesatisfaction:
91.78%
Conducted1,411
employee training sessions
Red Cross rst aid workers
employees holding safetymanagement certicatesProduction safety investment:
RMB
1.0845
million
Satisfaction with organizationalatmosphere:
3.95
points (out of 5 points)
The average trainingtime per employee was
82.76
hours
Labor contract signing rate:
100%
Social insurancecoverage rate:
100%Employee turnover rate:
6.28%
Newly recruited femaleemployees accounted for
33.18%
disabled employees
ethnic minority employees
People-oriented PerformanceEnvironmental PerformanceEmployee recruitment
Environmental protection
Water resource management
Waste management
Greenhouse gas emissions
Employee communication and careSta? training and developmentOccupational health and safety
About this ReportMessage from theChairman
Appendix
About KaizhongPrecision
SustainabilityGovernanceSustainabilityManagement
Responding to SDGs’TargetsStakeholderCommunicationAnalysis of substantiveissuesCorporate GovernanceInnovation and OperationEnvirnoment
Society
SustainabilityGovernance
? Sustainability Management? Responding to SDGs’ Targets? Stakeholder Communication? Analysis of substantive issues
Kaizhong Precision integrates the concept of sustainabledevelopment into its strategic decision-making and dailyoperations, committed to making continuous progress in theelds of environmental, social and governance (ESG). In orderto effectively fulfill its commitments to various stakeholdergroups, the Company continued to optimize its sustainabledevelopment governance structure and built a managementsystem covering the entire value chain. Through regularstrategic evaluation and dynamic adjustment mechanisms, theCompany regularly reviewed and continuously optimized itssustainable development strategies and policies to ensure thatvarious commitments were transformed into quantifiable andtraceable practical results, while promoting the harmoniouscoexistence of the enterprise, society and the environment, andseizing sustainable development opportunities in the new era.
Chairman
Appendix
About Kaizhong
PrecisionSustainabilityGovernanceSustainabilityManagement
Responding to SDGs’TargetsStakeholderCommunicationAnalysis of substantiveissuesCorporate GovernanceInnovation and Operation
Envirnoment
Society
SustainabilityManagement
Sustainable development is a core component ofKaizhong Precision's business management philosophyand an important cornerstone for us to achieve long-termvalue growth. The Company always places sustainabledevelopment at a strategic level, continuously improvesits ESG management system, and strengthens the Boardof Directors' supervision and decision-making functionson sustainable development issues. We established ascientific and efficient sustainable development gover-nance structure, formulated clear management policies,and closely centered on the Company's strategic goalsand business development directions to dynamicallyoptimize sustainable development plans to ensure theirforesight, feasibility and e?ectiveness.Through systematic management and continuous im-provement, the Company is committed to deeply integrat-ing the concept of sustainable development into everyaspect of corporate operations, promoting the coordinat-ed growth of economic, environmental and social values,and creating a more sustainable future for stakeholders.
The Board of Directors of Kaizhong Precision attachesgreat importance to the global ESG developmenttrends and changes in the macroeconomicenvironment, incorporating sustainable developmentmanagement into the core of strategic decisions.Through continuous communication with internal andexternal stakeholders, combined with the Company'sstrategic roadmap, operating realities and feedbackfrom all parties, we systematically identified risksand opportunities in the ESG field and dynamicallyadjusted management strategies to ensure that ESGconcepts and practices always kept pace with thedevelopment of the times.Under the supervision and guidance of the Board ofDirectors, we established a normalized assessmentmechanism for ESG risks and opportunities, deeplyintegrating sustainable development into strategicdecisions and business operations, and promotingthe steady improvement of the Company's long-termvalue.
Sustainable developmentmanagement policy
Chairman
Appendix
About Kaizhong
Precision
SustainabilityGovernanceSustainabilityManagement
Responding to SDGs’TargetsStakeholderCommunicationAnalysis of substantiveissuesCorporate GovernanceInnovation and OperationEnvirnoment
Society
Incorporate ESGmanagement into operationalmanagement decisionsThe Company has integrated ESGmanagement into its strategic and operationalmanagement decision-making system. Formatters involving major project investmentdecisions, social benefit assessment shouldbe an important basis for decision-makingby the Company's Board of Directors andmanagement. The Company encouragesinvestors to integrate ESG factors withother important factors when makingfinancial forecasts and valuations, and tocomprehensively consider and adjust variousvariables when making investment decisions.
During the reporting period, Kaizhong Precision formulated the ESG Management System and established an ESGmanagement system with a complete structure, clear hierarchy, clear rights and responsibilities, and e?cient operation, andprovided unied leadership, decision-making, and organization for the implementation of related work.
Sustainable development management system
Sustainability governance structure
As the research and guidance body for ESG work, the Strategic Committee of the Board ofDirectors is responsible for studying and making recommendations on major issues suchas ESG strategic planning and goals, the construction of the ESG management system,supervising and inspecting the implementation of ESG work, and reviewing and submitting theCompany's ESG-related reports to the Board of Directors.Composed of senior o?cers of the Company, relevant persons in charge of relevant functionaldepartments and subsidiaries, the ESG Working Group of the Strategic Committee of the Boardof Directors is responsible for implementing the Company's ESG development strategy andgoals, organizing and arranging various executive units to implement ESG work, understandingthe demands, opinions and suggestions of stakeholders, analyzing substantive issues, andexecuting the information collection, preparation and disclosure of ESG reports. Meanwhile, italso summarizes the problems and achievements in ESG work, and provides feedback on ESGwork to the Strategy Committee of the Board of Directors and o?ers suggestions.
As the leadership and decision-making body for ESG work, the Board of Directors is responsiblefor determining the Company's ESG development direction and goals, reviewing and approvingmajor issues such as the Company's ESG governance structure and important systems, andreviewing the Company's ESG report.
Assume the main responsibility within the scope of duties, be responsible for implementing ESGwork tasks in accordance with the Company's overall plan and report on the implementationstatus regularly.
Board ofDirectors
Strategy Committee
of the Board of
Directors
ESG Working Group
of the StrategyCommittee of theBoard of Directors
ESG units composedof various departmentsand subsidiaries of theCompany
Chairman
Appendix
About KaizhongPrecisionSustainabilityGovernanceSustainabilityManagementResponding to SDGs’TargetsStakeholderCommunicationAnalysis of substantiveissuesCorporate GovernanceInnovation and OperationEnvirnomentSociety
Responding to SDGs’ TargetsKaizhong Precision takes actions on highly important substantive issues, hoping to benet mankind's common sustainable development goals through corporate value creation. Inresponse to the United Nations Sustainable Development Goals (SDGs), the Company has been taking the following actions.
Continue to build and optimizethe sustainable developmentmanagement systemPromote board diversityStrengthen complianceoperationsActively communicate withinvestorsTransparent informationdisclosureZero tolerance for corruptionProtection of whistleblowersComprehensive protection ofinformation and data security
Increase R&D benets andcontinue scientic researchinnovationImprove the qualitymanagement systemStrictly implement productquality testing and after-salesserviceOrganize and carry out qualityculture activitiesIntelligent manufacturingapplicationsCustomer relationshipmanagement and customersatisfaction surveyConduct responsiblemarketing trainingImprove the suppliermanagement systemConduct environmental andsocial impact assessments onsuppliersDeclaration of non-use ofconict minerals
Improve the environmentalmanagement systemContinue to invest inenvironmental protectionActively promote green andenvironmentally friendlypackaging materialsBuild a complete waterresource recycling systemCarry out technicaltransformation projects tosave energy and reduceconsumptionSet reasonable carbonintensity targetsClimate Change RiskManagementStrictly manage the threewastes to ensure that noenvironmental accidentsoccurAwarded the title of NationalGreen Factory
Promote high-quality employmentEqual employment and non-discriminationAnti-harassmentProhibition of child laborFight against forced laborFreedom of association and collectivebargainingProtect the rights of female workersProvide a competitive salary systemProvide perfect benets for employeesImplement employee stock ownershipplansConduct employee satisfactionsurveysConvene the Sta? and Workers' CongressEmployee Complaints and HandlingProvide high-quality employee trainingcoursesDene a clear employee developmentpath
Carry out charitableactivitiesContribute to ruralemploymentCarry out treeplanting activities
Chairman
Appendix
About KaizhongPrecisionSustainabilityGovernanceSustainabilityManagementResponding to SDGs’TargetsStakeholderCommunicationAnalysis of substantiveissuesCorporate GovernanceInnovation and Operation
EnvirnomentSociety
Stakeholder CommunicationKaizhong Precision attaches great importance to the rights and needs of stakeholders, maintains two-way communication with stakeholders, deeply understands their needs, ensuresresponses and improvements to important issues, injecting positive impetus into the Company's sustainable development. Based on a deep understanding of the opinions of all parties,we have taken positive measures to respond to relevant needs, integrated the concept of sustainable development into corporate culture and strategy, and promoted the Company'ssustainable development through communication with stakeholders. During the reporting period, the Company selected out key stakeholder groups based on standard guidelinessuch as the Sustainability Reporting Standards (GRI Standards 2021), and recorded and responded to the issues of common concern of stakeholders. In the future, the Company willcontinue to deepen this practice and work with all parties to create long-term value.
Shareholdersand investors
Governmentand regulatory
agencies
CustomerPartnersEmployees
Community
and themasses
Regular communication mechanism with stakeholders
Corporate governanceTransparent nancialinformation disclosureStrengthen riskmanagementCreate economic value
Legal and compliantoperationsPay taxes according to lawRespond to national strategyServe regional developmentGreen and low-carbondevelopment
Provide diversiedproductsImprove customerserviceEnsure product qualityInformation security andprivacy protection
HonestcooperationTransparentprocurementWin-windevelopment
Protect employees' rights andinterestsCareer development path andtraining planDiverse, equal and inclusiveworking environmentEnsure occupational healthand safety
Sound communitydevelopmentRural revitalizationSocial welfareEmissions and wastemanagementGeneral MeetingPerformance briengs,brokerage strategyexchange meetingsPeriodic reports andannouncementsOn-site surveys, phonecalls, emails, and investorinteraction platforms
Information DisclosurePlatformRegulatory informationreportingVisitor receptionDaily work reporting andcommunication
Customer satisfactionsurveyCustomer events,technical seminarsProject visits,benchmark case visits,technical training
IndustryexchangemeetingSupplier surveyand visitBusinessnegotiation
Sta? and Workers' CongressEmployee complaint channelsRegular trainingEmployee satisfaction survey
Community communicationand constructionSupport and volunteeractivitiesMedia interviewsPollutant controlEnergy conservation andemission reduction activities
Categories ofstakeholders
Communicationchannels
Stakeholderexpectations
Chairman
Appendix
About KaizhongPrecision
SustainabilityGovernanceSustainabilityManagementResponding to SDGs’TargetsStakeholderCommunication
Analysis of substantiveissuesCorporate GovernanceInnovation and OperationEnvirnomentSociety
Analysis of substantive issues
During the reporting period, Kaizhong Precision, based on the national macro-policy orientation, domestic and international social responsibility standards research, industrybenchmarking, and combined with the Company's business development strategy, operating management, and issues of concern of stakeholders, conducted an analysis of substantiveissues through identication, assessment, and conrmation work processes, and selected out 25 substantive ESG-related issues for 2024, actively responding to stakeholder demands.The Company ranked substantive ESG-related issues by importance based on "importance to the Company's development" and "importance to stakeholders", which helped determinethe focus and priority of sustainable development management work this year and set long-term ESG goals and specic objectives.
Steps for assessing substantive issues
Based on the Company's businessdevelopment and ESG management status,referring to the latest national sustainabledevelopment policies, mainstream domesticand international sustainable developmentstandards, and benchmarking againstthe disclosure practices of outstandingpeers and the focuses of mainstream ESGrating agencies in the capital market, wecomprehensively identified ESG issuesrelated to the Company.
The Company keeps a close eye on socialneeds and policy trends, including regulatoryrequirements, sustainable development sta-tus and capital market trends, committed tomaintaining communication and exchangeswith stakeholders through multiple channels,establishing and maintaining necessarysound relationships, and understanding theopinions of various stakeholder groups onsustainable development issues.
Conduct an analysis of substantive issuesto identify the issues most relevant to theCompany’s sustainable development.Based on the interests of stakeholders,we evaluated the relevance of the issuesof concern to the Company's developmentand the impact on stakeholders, ranked theissues in order of importance, and identiedseven very important issues.
Benchmarking andscreening of issues
Stakeholdercommunication
Assess the importanceof the issues
Chairman
Appendix
About Kaizhong
PrecisionSustainabilityGovernanceSustainabilityManagementResponding to SDGs’TargetsStakeholderCommunicationAnalysis of substantiveissuesCorporate GovernanceInnovation and OperationEnvirnomentSociety
Product quality and safetyOccupational health and safetyOptimize customer serviceProduct R&D and innovation
Employeecompensation andbenetsCompliance operationand risk managementEmissionsmanagementEnvironmentalmanagement system
Green actionResource utilizationAntitrust and fair competition
Very important issues
Important issues
Secondary important issues
Energy use andmanagementEmployeecommunication anddemocratic managementEmployee training anddevelopmentInvestor relationsmanagement
Equal employment and protection ofrights and interestsSustainable supply chainBusiness ethics and anti-corruption
Address climate change andmanage carbon emissionsWater resource managementIntellectual property protectionESG governanceIndustry development andcooperation
Community buildingRural revitalization
Importance to the CompanyLow
High
High
List of substantive issues
Importance to stakeholders
GovernanceEnvironmentSociety
Community building
Intellectual property protectionAntitrust and fair competition
Energy use andmanagement
Water resourcemanagementEmissionsmanagementEnvironmentalmanagement system
Address climatechange and managecarbon emissions
Resource utilizationGreen action
Investor relationsmanagement
ESG governance
Compliance operation and
risk managementBusiness ethics and anti-corruptionIndustry developmentand cooperation
Employee communicationand democratic managementEmployee compensationand benets
Occupational health and safetyProduct R&D and innovation
Equal employment and protection
of rights and interestsProduct quality and safetyOptimize customer serviceSustainable supply chain
Rural revitalization
Sta? training anddevelopment
About this ReportMessage from theChairman
Appendix
About Kaizhong
Precision
Sound CorporateGovernanceStrengthen IntegrityBuildingInformation Securityand Privacy Protection
CorporateGovernance
Innovation and OperationEnvirnoment
Society
Sustainability Governance
CorporateGovernance
? Sound Corporate Governance? Strengthen Integrity Building? Information Security and Privacy Protection
In today's complex and ever-changing business environment,Kaizhong Precision has always regarded sound corporategovernance as the fundamental guarantee for corporatedevelopment. Based on compliant operations, the Companyadheres to the bottom line of business ethics. By establishinga sound supervision mechanism and continuously conductingintegrity education, we are committed to creating a cleancorporate culture while maintaining a zero-tolerance attitudetowards any form of corruption. The Company strictly adheresto the principle of fair competition and while respecting everycompetitor, firmly resists unfair competition and monopolisticpractices. Through continuous self-innovation and pursuit ofexcellence, we are committed to maintaining a healthy andorderly market order and promoting the sustainable developmentof the industry.
Chairman
Appendix
About KaizhongPrecision
Sound CorporateGovernanceStrengthen IntegrityBuildingInformation Securityand Privacy Protection
CorporateGovernance
Innovation and OperationEnvirnoment
Society
Sustainability Governance
Sound Corporate Governance
Governance structure
Kaizhong Precision continues to improve its corporate governance structure, attaching great importance to the protection ofinvestors' rights and interests. We have established a decision-making, execution and supervision mechanism with clear rights andresponsibilities and efficient operation to ensure that the Company's business management is conducted in a standardized andorderly manner, laying a solid foundation for sustainable development. For detailed information on the current status of corporategovernance and the appointment of directors, supervisors and senior o?cers, please refer to Section 4 Corporate Governance of the2024 Annual Report.
In strict accordance with the CompanyLaw of People's Republic of China, theSecurities Law of People's Republicof China, the Governance Guidelinesfor Listed Companies, the Guidelinesfor the Articles of Association of ListedCompanies, the Share Listing Rules of theShenzhen Stock Exchange, and the Self-regulatory Guidelines of the ShenzhenStock Exchange for Listed CompaniesNo.1 - Standardized Operation of ListedCompanies on the Main Board, KaizhongPrecision has built a mechanism of mutualcoordination and checks and balancesamong the power organs, decision-makingbodies, supervision institutions andmanagement. The governance structurefeatures clear rights and responsibilities,close cooperation and e?cient operation.The corporate governance structureconsists of the General Meeting, the Boardof Directors and its Strategy Committee,Audit Committee, Nomination Committee,Remuneration and Appraisal Committee,and the Board of Supervisors to ensurethe standardization and independence ofstrategic decisions.
Governance Structure
Management responsibilities
As the Company's authority body, theGeneral Meeting exercises the powers todecide the Company's business policiesand investment plans, review and approvethe reports of the Board of Directors and theBoard of Supervisors, the Company's profitdistribution plan and loss compensationplan, and amend the Company's Articlesof Association in accordance with thelaw to protect the rights and interests ofshareholders.As the Company's decision-making bodyresponsible to the General Meeting, theBoard of Directors exercises the powersto convene the General Meeting, reporton work, decide on business plans andinvestment programs, formulate financialbudgets and nal accounts, prot distributionand loss compensation plans, adjustregistered capital, plan major companyrestructuring, set up internal managementagencies, appoint and remove senior o?cers,and formulate basic management systems inaccordance with the law to ensure scienticand efficient corporate governance andsafeguard the interests of shareholders andthe Company.As the Company's internal supervisory body,the Board of Supervisors earnestly performsits supervisory duties, supervises theCompany's legal operations, nancial status,and the legality of the performance of dutiesby directors and senior o?cers, ensures thelegality and compliance of the Company'soperations, and promotes the Company'shealthy, stable and sustainable development.
Shareholders' Meeting
Board of Directors
Board of Supervisors
Senior Management
Audit CommitteeStrategy CommitteeRemuneration andAppraisal CommitteeNomination Committee
About this ReportMessage from theChairman
Appendix
About Kaizhong
Precision
Sound CorporateGovernance
Strengthen IntegrityBuildingInformation Securityand Privacy Protection
CorporateGovernance
Innovation and Operation
EnvirnomentSociety
Sustainability Governance
Professionalization of the Board of DirectorsThe Board of Directors operates with clearly dened responsibilities, upholding a strong sense of accountability andprofessionalism. Through rigorous execution of duties, the Board of Directors leverages professional expertise, forward-looking vision, and diligent commitment to provide wisdom and scientic decision support for the Company's strategicplanning, operation management, risk control and other key areas to ensure the efficient operation of the corporategovernance structure and to protect the legitimate rights and interests of investors. As of the end of the reporting period,the Company's Board of Directors had 9 members, including 6 non-independent directors and 3 independent directors,with independent directors accounting for 33.33%.The Company's Board of Directors has established the Strategy Committee, the Audit Committee, the NominationCommittee, and the Compensation and Appraisal Committee. Meanwhile, we have formulated rules of procedurefor each special committee to define the personnel composition, responsibilities and powers, and decision-makingprocedures of each committee. During the reporting period, each special committee faithfully performed its respectiveduties in accordance with the actual situation of the Company and its own rules of procedure with a serious, responsible,diligent and honest attitude, and provided scientic and professional opinions and references for the decision-making ofthe Board of Directors.
Percentage of Independent Directors on Special Committees of the Board of Directors
Strategy CommitteeThere are 4directors in total, of whichindependent directorsaccount for
25%
Audit CommitteeThere are 3 directors intotal, of which
67%
are independent directorsNomination CommitteeThere are 3 directors intotal, of which
67%
are independent directors
Remuneration and
Appraisal Committee
There are 3 directors in
total, of which
67%
are independent directors
Board diversity
The Company adheres to the principles of "employingpeople based on their talents" and "board diversity".When appointing directors, we fully consider multiplefactors such as candidates' gender, age, culturalbackground, education level, professional knowledgeand skills, major experience and years of service,committed to building a scientific, efficient, diverseand inclusive governance structure. Currently, theCompany has 4 female directors, accounting for
44.44%, fully reflecting the concept of gender equality,
diversity and inclusiveness. The members of the Boardof Directors come from a variety of fields includingindustry, technology, law, finance and accounting, withcomprehensive professional knowledge and skills.This diverse professional background provides richperspectives and deep wisdom for the Company'sdecision-making, and e?ectively guarantees the scienticoperation and e?cient decision-making of the Board ofDirectors.
The Company has
female directors
Accounting for
44.44%
Percentage of Female Directorson the Board of Directors
About this ReportMessage from theChairman
Appendix
About KaizhongPrecision
Sound CorporateGovernance
Strengthen IntegrityBuildingInformation Securityand Privacy Protection
CorporateGovernance
Innovation and Operation
Envirnoment
Society
Sustainability Governance
Investor relations management
In order to strengthen the communication between the Company and investors and potential investors, enhance investors'understanding of the Company, protect the legitimate rights and interests of investors, especially small and medium-sizedinvestors, and continuously improve the level of corporate governance, Kaizhong Precision, in strict accordance with theCompany Law of the People's Republic of China, the Securities Law of the People's Republic of China, the Guidelinesfor Investor Relations Management of Listed Companies and the Share Listing Rules of the Shenzhen Stock Exchangeand other relevant laws and regulations, normative documents and the Company Articles of Association, as well as itsactual situation, has formulated the Investor Relations Management System and the Investor Visit Reception ManagementSystem. These systems have dened the organizational structure and responsibilities of investor relations management,and improved the content and methods of investor relations management, demonstrating the great importance that theCompany attaches to the maintenance of investor relations.Investor communication channelsThe Company has established amulti-channel, all-round communica-tion platform to improve the e?cien-cy of interaction with investors andprovide investors with high-qualityservices. The Board of Directors hasa board secretariat under it, which isresponsible for coordinating informa-tion communication and exchangeswith investors, and communicatingwith investors on issues of concernthrough the Company's official web-site, investor hotline, email, and thecninfo platform of the ShenzhenStock Exchange. In addition, theCompany has established and im-proved channels for communicationwith investors. Through on-site sur-veys, telephone conferences, perfor-mance briengs, and online collectivereception days for investors, we havehelped investors gain an in-depth un-derstanding of the Company's opera-tions and development, and listenedcarefully to investors' opinions andsuggestions on the development ofthe Company.
During the reporting period, the Company responded to 97 inquiries onthe cninfo platform of the Shenzhen Stock Exchange.
Types of investor inquiries
Shareholders' equity
37.11%
Financial status
8.25%
Business management
12.37%
Market and competition
17.53%
Products and services
19.56%
Information disclosure
5.16%
Investor returnsIn order to establish a scientific, continuous andstable shareholder return mechanism, increase thetransparency and operability of profit distribution policydecisions, and effectively protect the legitimate rightsand interests of public investors, the Company hasformulated the Shareholder Return Plan for the NextThree Years (2023-2025) in accordance with the ChinaSecurities Regulatory Commission's Notice on FurtherImplementation of Matters Concerning Cash Dividendsof Listed Companies, the Guidelines for the Supervisionof Listed Companies No. 3 - Cash Dividends of ListedCompanies and the Self-regulatory Guidelines of theShenzhen Stock Exchange for Listed Companies No. 1- Standardized Operations of Listed Companies on theMain Board and other relevant laws, regulations andthe Company Articles of Association, taking into accountthe short-term and long-term interests of shareholdersto ensure the continuity and stability of the Company'sprofit distribution policy. During the reporting period,the Company distributed a total of RMB108.3 million individends.
The Company distributed a total ofRMB
108.3
million in dividends
During the reporting period,
About this ReportMessage from theChairman
Appendix
About KaizhongPrecision
Sound CorporateGovernance
Strengthen IntegrityBuildingInformation Securityand Privacy Protection
CorporateGovernance
Innovation and OperationEnvirnoment
Society
Sustainability Governance
Compliance management
Transparent disclosureThe Company always adheres to the principles of"fairness, justice and openness" to regulate informationdisclosure and protect the legitimate rights and interestsof investors. In accordance with the InformationDisclosure Management Measures for Listed Companies,the Listing Rules of the Shenzhen Stock Exchange andother relevant laws and regulations and the CompanyArticles of Association, the Company has formulatedand strictly implemented the Information DisclosureManagement System and the Internal ReportingSystem for Major Information, which have definedthe information disclosure procedures, responsibleparties and confidentiality requirements, ensuring thatinformation disclosure is true, accurate, complete andtimely, while faithfully fulfilling information disclosureobligations. The Company's documents for regular or adhoc disclosure are published in designated media. Alldisclosed content is open and transparent and is subjectto supervision by regulators and investors. Meanwhile,the Company also enhances the sense of responsibilityof directors, supervisors and senior officers throughinternal training to ensure compliance with informationdisclosure. In the future, we will continue to improveour information disclosure system, serve investors withhigher transparency and responsibility mechanisms, andcreate greater value for the sustainable development ofthe Company and society.
Kaizhong Precision regards compliance management asthe cornerstone of the Company's stable development.The Company integrates compliance requirementsinto various business and management processes,committed to building a complete and efficient riskmanagement and internal control system, enhancing riskawareness and response capabilities, and ensuring theaccuracy and transparency of information disclosure.
Internal controlIn strict accordance with the Basic Norms for Internal Control and its supporting guidelines, the Company has formulatedthe Internal Control Management System, established and improved an e?ective internal control system, set up threelines of defense for risk management and internal control, and carried out internal control management work in an all-round way.
Support the implementation of internal control systems, integrate riskmanagement into daily work, and manage risks in the actual operation ofeach business
Through internal audit, the Company reviews the effectiveness andadequacy of the Company's internal control and risk management, andsupervises the implementation of improvement measures
Organize the establishment and improvement and e?ective implementationof the internal control system, inspect and supervise the effectivenessof the implementation of the internal control system, and promote theconstruction of internal control culture
The rst lineof defense
The secondline of defense
The third lineof defense
Business Units
AuditDepartment
the Board ofDirectors, the Boardof Supervisors andthe Management
Chairman
Appendix
About KaizhongPrecision
Sound CorporateGovernance
Strengthen IntegrityBuildingInformation Securityand Privacy Protection
CorporateGovernance
Innovation and Operation
EnvirnomentSociety
Sustainability Governance
The Audit Department organized in September 2024, a training on the Basic Norms for Internal Control andits supporting guidelines, aiming to convey external regulatory requirements to the Company's personnelinvolved in the design, implementation, execution and supervision of internal control, and to provide relevantstandards and inspection results. The training content covered the background, application guidelines,evaluation guidelines and differences in audit guidelines of the Basic Norms for Internal Control and itssupporting guidelines.The training emphasized the importance of the internal control system, pointing out that the Company'sinternal control system should cover all management work and ensure that all decisions and activitiesare carried out under a sound internal control system. In addition, the training also covered the corerequirements of regulatory laws, including formulating and improving internal control systems and manuals,establishing an internal control self-appraisal mechanism, conducting internal control evaluations, andissuing evaluation reports.Through this training, employees gained a better understanding of the establishment and operation of theinternal control system, and how to improve the Company's management efficiency and risk preventioncapabilities through internal control.
Risk management
We have established a risk management committee to organize,coordinate and supervise the implementation of the Company'srisk management work. This system ensures that we canpromptly identify, evaluate and take e?ective countermeasuresto safeguard the Company's long-term development and theinterests of investors when facing various risks. Meanwhile, theCompany has established a major risk warning mechanism andan emergency response mechanism for emergencies, definedrisk warning standards, formulated emergency plans for possiblemajor risks or emergencies, specied responsible personnel, andstandardized handling procedures to ensure that emergenciesare handled promptly and properly.In addition, we have also established a comprehensive riskindicator platform, incorporating key metrics including customer,supply chain, legal affairs, and EHS (Environment, Health,and Safety) incidents into the platform for management, usingthis as a basis to assess each department and enhance theirsense of responsibility and risk prevention capabilities. Througha complete risk management system and digital tools, theCompany can accurately identify and e?ciently respond to risks,continuously optimizing its internal governance level, and layinga solid foundation for sustainable development.
The Company carried out the internal control evaluation work in an orderly manner in stages, coveringpreliminary preparation, data collection, on-site testing, report preparation and communication to ensure thecomprehensiveness, importance and objectivity of the internal control evaluation. The Company conducts aninternal nancial and non-nancial audit of its major wholly-owned subsidiaries every year, conducts special auditsevery quarter, and publishes the Internal Control Self-Appraisal Report on schedule to ensure the implementationof the Company's internal control management system.
The Audit Department conducted training on the Basic Norms for Internal Control
Chairman
Appendix
About Kaizhong
Precision
Sound CorporateGovernanceStrengthen IntegrityBuilding
Information Securityand Privacy Protection
CorporateGovernance
Innovation and OperationEnvirnoment
Society
Sustainability Governance
Strengthen Integrity Building
Kaizhong Precision operates in good faith and in accordance with the law, continuouslyimproves the construction of its business ethics system, and actively promotes theconstruction of an honest culture, committed to creating an honest and clean workingenvironment.Business ethicsConsistently believing in the values of "integrity and honesty", Kaizhong Precision iscommitted to establishing and maintaining high standards of business ethics in strictaccordance with the Company Law of the People's Republic of China, the Anti-UnfairCompetition Law of the People's Republic of China, the United Nations Convention againstCorruption and other relevant laws and regulations.We have formulated and promulgated a series of systems such as the Code of BusinessConduct and the Anti-Fraud and Whistleblowing Management System to ensure thatemployees' behavior complies with ethical standards and legal requirements, adhering tothe bottom line of "zero tolerance" for fraud and corruption.The Company has set up multiple reporting channels, including mailboxes, e-mails,telephones, letters, etc., to encourage all stakeholders to report and expose all kinds ofviolations of business ethics.
Reporting ChannelsEmail box of General Manager or email box of the AuditDepartment: audit@kaizhong.comHotline: 0755-66852689 extension 6353
Training site
Training on anti-fraud and anti-commercial bribery
On November 22, 2024, the Company issued a notice on organizing a company-wide study on the Anti-Fraud and Anti-Commercial Bribery. The training wasconducted both online and o?ine. Online training was delivered via the KaizhongE-Learning Platform, covering all employees with registered accounts, whileoffline training was specifically arranged for production line employees. Thetraining content included the types of fraud, common crimes and preventivemeasures, aiming to enhance employees' legal compliance awareness and anti-fraud capabilities. The training achieved extensive coverage and remarkableresults, and equipped employees with methods to identify fraudulent activitiesand effective response strategies, laying a solid foundation for fostering atransparent and ethical work environment within the Company.
About this ReportMessage from theChairman
Appendix
About Kaizhong
Precision
Sound CorporateGovernance
Strengthen IntegrityBuildingInformation Securityand Privacy Protection
CorporateGovernance
Innovation and Operation
EnvirnomentSociety
Sustainability Governance
Guided by its core value of integrity, the Company strictly abides by the Anti-Unfair Competition Law of the People'sRepublic of China, the Model Provisions on Protection of Anti-Unfair Competition, the Anti-Monopoly Law and otherdomestic and foreign laws, regulations and relevant standards. The Company has formulated the Code of BusinessEthics and Conduct, which incorporates anti-trust and unfair competition provisions. It explicitly prohibits employees fromusing illegal means to obtain trade secrets or condential information from third parties, and strictly forbids monopolisticpractices, bribery, fraud, or any other forms of unethical competition in business operations. Meanwhile, the Companyadheres to fundamental principles throughout its production and operational processes, causing no damage to otherenterprises' business reputation or public image; undermining no creditworthiness of competitors or their businessactivities; and refraining from misleading the public. These commitments collectively demonstrate our dedication tomaintaining a fair and equitable market competition landscape.In addition, the Company requires suppliers to respect and comply with all applicable fair trade, competition andantitrust laws and regulations and not to engage in any anti-competitive discussions or enter into any anti-competitiveagreements, including illegal manipulation of prices, market share, customer allocation or other illegal restrictive practicesat any level of the production or distribution chain.
During the reporting period,The Company did not face any litigation regarding unfair competition
Antitrust and fair competition
During the reporting period,
Whistleblower protection system
Attaching great importance to the protection ofwhistleblowers, the Company has formulated the Anti-Fraud and Whistleblowing Management System,which clearly defines the protection requirements forwhistleblowers with a "zero tolerance" attitude, includingstrictly prohibiting the disclosure of whistleblowerinformation, allowing anonymous or pseudonymousreporting, and strictly protecting whistleblower informationin all links such as registration, acceptance, investigation,and custody. It is strictly prohibited to retaliate againstwhistleblowers, and any form of retaliation will be subjectto criminal prosecution in accordance with national lawsand regulations.
100%
All employees participated inanti-corruption and anti-fraud training
100%
All employees signed theanti-bribery commitment
The number of anti-corruption andanti-bribery reporting incidents was
Chairman
Appendix
About Kaizhong
Precision
Sound CorporateGovernanceStrengthen IntegrityBuilding
Information Securityand Privacy Protection
CorporateGovernance
Innovation and Operation
Envirnoment
Society
Sustainability Governance
Kaizhong Precision implements the information securitymanagement policy of "ensuring information security, meetingcustomer needs, implementing risk management, and achievingcontinuous improvement", attaches great importance toinformation security and privacy data protection, and strives toprotect the rights and interests of employees and customers. Byformulating a series of information security management systemssuch as the Information Security Management Manual, thePersonal Information Protection Management System, and thePhysical and Environmental Safety Management Procedures,we continuously improve the information security managementsystem to provide employees with a safe service environment.
Information Securityand Privacy Protection
During the reporting period,
Important data backup completion rate:
100%
Information security training completion rate:
100%
System availability:
99.9%
Number of major information security incidents:
Number of information leaks:
Information security managementIn order to comprehensively protect information and data security, Kaizhong Precision organizes security vendorsto conduct security testing activities on the Company's main IT systems every year. A 10-person team consistingof the Company's network administrator, system administrator, security equipment engineer, and suppliertechnical experts conducts vulnerability scanning and ransomware risk investigation on the Company's mainIT systems. By deploying security probes, XDR and other equipment in the data center, the team can discovervulnerabilities and weaknesses in the system, and perform targeted patching operations on the system toimprove the security and stability of the system.In order to enhance the Company's emergency response capabilities for information security incidents,standardize the process for handling information security accidents, improve fault recovery e?ciency, shortenfault recovery time, and ensure production continuity, the Company has established an emergency responsemanagement team, formulated the Information System Emergency Plan, and defined emergency contacts,emergency response processes and measures. During the reporting period, the Company organized andcarried out two information security emergency drills: handling of power outages and core network failuresin the data center. For power outages in the data center, a simulated power outage was conducted in the ITroom of Pingshan Plant, and simulated operations were performed for both normal and abnormal startup of theemergency circuit to ensure normal operation of the system. For core network failures, the Company built a testplatform to simulate core network equipment failures, used replacement equipment, imported conguration les,replaced the current core equipment, and quickly restored normal network operation.In addition, the Company also conducted a number of information security training sessions for all employees.The training content included awareness campaigns on information security and company-specic informationsecurity protocols., aiming to enhance employees' awareness of information security.Information security certicationAs of the end of the reportingperiod, Kaizhong Precision hadpassed the ISO 27001 infor-mation security managementsystem certification and TISAXtrusted information security as-sessment certification, and thecertication covered the Compa-ny's entire business scope.
ISO 27001 CerticateTISAX Certicate
Chairman
Appendix
About Kaizhong
Precision
Sound CorporateGovernanceStrengthen IntegrityBuildingInformation Securityand Privacy Protection
CorporateGovernance
Innovation and Operation
Envirnoment
Society
Sustainability Governance
Asset classification: We have formulated the Information Classification and
Control Management Procedure to identify the Company's main information assetsand supporting assets, and dene the classication of information assets.Protection of condential assets: Through an e?ective data backup mechanism,
major information assets are effectively protected, and strict requirements areimposed on confidential information obtained in the course of work. Personnelinvolved should keep it properly, individuals are not allowed to bring it home or toany public place, and condential information must not be disclosed.Display of sensitive information: We have developed detailed desensitizationstandards based on different businesses and departments, and used masks toprovide security protection for sensitive information in the information system.
Software development: Enterprise WeChat, company mailbox, Internet behaviorcontrol system, desktop control system, and document encryption system arecombined to strictly control the outbound sending of les.Channel restrictions: Only two channels, corporate WeChat and email, are availablefor sending les, and all other channels are closed.Audit for outbound sending: We regularly organize audits of corporate WeChat and
email to prevent illegal leakage of internal information.
Permission control: We have formulated strict permission control measures
for information systems and internal shared files, stipulating that only specificauthorized personnel can have access to specic information.Authority review: We regularly review the allocation and recovery of authority to
ensure that authority allocation is reasonable and controllable.
Identification of sensitive positions: We identify information security sensitive
positions, conduct e?ective background checks on personnel in sensitive positions,and require all employees to sign information security condentiality agreements.Privacy protection training: We provide employees with privacy protection-relatedtraining and assessments.Management of outsiders: Outsiders entering the factory must strictly registernecessary identity information and purpose of visit. All collected information mustbe clearly informed of its purpose and storage period, and their consent must beobtained. When outsiders enter sensitive areas, they should be accompanied bydesignated personnel and restricted from using equipment with functions such asrecording, video recording, photography, and information storage.
During the reporting period,
The Company did not have any incidents of infringement of customer privacy or leakage of customer privacy data.
Privacy protectionAttaching great importance to the protection of partners' privacy data, Kaizhong Precision has ensured that all business activities are carried out under the premise of legality andcompliance. The Company strives to create a trustworthy business landscape. The Company has ensured that company information and partner privacy are strictly protected bystrengthening information access rights and le outbound control, improving information encryption methods, and carrying out privacy protection training.
Asset management
File outbound management
Access rights management
Personnel management
Chairman
Appendix
About Kaizhong
Precision
R&D InnovationIntelligent ManufacturingQuality ManagementSupply ChainManagement
Innovation andOperation
Corporate Governance
EnvirnomentSociety
Sustainability Governance
Innovation andOperation
? R&D Innovation? Intelligent Manufacturing? Quality Management? Supply Chain Management
In response to the country's "14th Five-Year Plan" andits "Made in China 2025" strategic guidelines, KaizhongPrecision has seized the development opportunities of thetransformation of the precision components industry towardshigh-end, intelligent, and green development. Adhering tothe philosophy of innovation-driven development, we arecommitted to becoming a global leading integrated solutionprovider for precision components by continuously promotingtechnological upgrades and deepening industry collaboration.While strictly implementing quality management to ensureexcellent product quality, the Company has built an operationlocal network to quickly respond to customer needs, andcreated a sustainable supply chain system to achieve synergyacross the entire industry chain. Our aim is to create valuewith customers for win-win results.
About this ReportMessage from theChairman
Appendix
About Kaizhong
Precision
R&D InnovationIntelligent ManufacturingQuality ManagementSupply ChainManagement
Innovation andOperation
Corporate Governance
Envirnoment
Society
Sustainability Governance
R&D InnovationRegarding science and technology as the core drivingforce for development, Kaizhong Precision is committed tocreating a dynamic R&D environment and establishing afair incentive mechanism so that every employee can givefull play to their innovative talents. Guided by customerneeds and future market trends, the Company strengthenscollaborative R&D between industry, academia andresearch, promotes the introduction and cooperation ofscientic research talents, constantly pursues technologicalprogress, continues high-intensity R&D investment, developsnew quality productive forces, and transforms it into marketresults, continuously creating value for customers. TheCompany has built an independent intellectual propertysystem to ensure that its technological advantages areconsolidated.Innovation systemKaizhong Precision attaches importance to and strengthensthe construction of the scientic and technological innova-tion system. In order to coordinate the Company's technicalresources and enhance its technological competitiveness,we have established the Engineering Technology ResearchInstitute and the German R&D Center to e?ciently coordi-nate R&D resources and information and realize the sharingof technical capabilities and platforms, covering productdevelopment, new material preparation, intelligent manu-facturing processes and equipment, pilot and experimentalverication and other innovative capabilities.Meanwhile, in order to continuously strengthen R&D mo-mentum and fully mobilize the enthusiasm of R&D per-sonnel, the Company uses innovative incentive systemssuch as the R&D Project Management Measures, the R&DIncentive Management Measures, and the Intellectual Prop-erty Incentive Management Measures as a guarantee toreward individuals and teams who have made outstandingcontributions to technological innovation. These e?orts havepromoted the Company's continuous breakthroughs in coretechnology elds.
Structure of the Institute of Engineering Technology
As of the end of the reporting period,
The Company has a total of
researchers and developers, accounting for
9.86%
of allemployees. Meanwhile, the Company made long-term, continuous and high-intensity R&D investment in theelds of R&D and innovation. This year's R&D investment was RMB
76.0642
million, accountingfor
2.49%
of the audited total operating income for the year.
Engineering Technology
Laboratory
Computer AidedEngineering LaboratoryStandard Research
RoomMaterials Technology
Laboratory
Commutator Engineering
Technology Center
Connector Engineering
Technology Center
New Materials Engineering
Technology Center
Institute of EngineeringGerman R&D Center
Laboratory
About this ReportMessage from theChairman
Appendix
About KaizhongPrecision
R&D InnovationIntelligent ManufacturingQuality ManagementSupply ChainManagement
Innovation andOperation
Corporate Governance
EnvirnomentSociety
Sustainability Governance
Intellectual property rightsKaizhong Precision adheres to the intellectual property management policy of "intellectual property promotes innovationand enhances global competitiveness" and strictly abides by the Intellectual Property Law of the People's Republic ofChina, the Patent Law of the People's Republic of China and other national laws and regulations. The Company hascontinuously established and improved the intellectual property management system, formulated and implementedthe Intellectual Property Management System Manual and other systems to control intellectual property maintenance,implementation, licensing, and transfer. While attaching importance to the protection of its own intellectual propertyrights, the Company also respects the intellectual property rights and trade secrets of others.As of the end of the reporting period,
The Company had passed the intellectual propertymanagement system certication. The certicationcerticate is in its validity period.
The Company's Intellectual Property
Management System CerticationCerticate and Patent Certicate
Including
invention patents
The Company had authorized
valid patents
utility model patents
international patents
The Intellectual Property Training Plan is formulatedevery year and intellectual property training conductedat different levels for the Company's management,intellectual property specialists, scientific researchers,purchasing personnel and sales personnel so thatall employees have a deep understanding of theintellectual property management work guidelines,goals, respective responsibilities, as well as the basicknowledge of intellectual property laws, regulations,systems and standards. These e?orts have continuouslyenhanced the scientific and technological innovationcapabilities of our scientific researchers and themanagement level of intellectual property managementpersonnel.
During the reporting period,
The Company had conducted a total of
internal intellectual property-related training sessions, coveringbasic knowledge of intellectualproperty, intellectual property mining,and standards for writing briengdocuments.
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| 国家知识产权局依照中华人民共和国专利法进行审查，决定授予专利权，颁发发明专利证书并在专利登记簿上予以登记。专利权自授权公告之日起生效。专利权期限为二十年，自申请日起算。专利证书记载专利权登记时的法律状况。专利权的转移、质押、无效、终止、恢复和专利权人的姓名或名称、国籍、地址变更等事项记载在专利登记簿上。局长申长雨 2024年02月13日 | ||||||||||||
| *2018100154987* | ||||||||||||
Chairman
Appendix
About KaizhongPrecision
R&D InnovationIntelligent ManufacturingQuality ManagementSupply ChainManagement
Innovation andOperation
Corporate Governance
EnvirnomentSociety
Sustainability Governance
Kaizhong Precision has consistently attached great importance to industry exchanges and cooperation, actively joinedindustry associations and participated in industry forums and summits. It is the initiator of the National Innovation Instituteof Digital Design and Manufacturing and a director unit of the Industry Alliance. The Company actively participates inthe revision of industry standards. During the reporting period, we participated in the research of 5 national standards,industry standards and group standards, promoting knowledge sharing and business cooperation. Meanwhile, weorganized more than 500 external technical exchanges, academic seminars and exhibitions to promote the circulation ofknowledge, and jointly carried out more than 100 technical research projects with mainstream automobile companies toaccelerate industrial upgrading.In addition, the Company also took the initiative to carry out in-depth cooperation with experts from well-known scienticresearch institutes to form internal and external synergy. Based on customers' demand for higher performance of multi-layer insulated wires in terms of environmental protection and high frequency and high voltage, the Company cooperateddeeply with the Shenzhen Institute for Advanced Polymer Materials of the Chinese University of Hong Kong to developtwo high-performance insulation materials and complete the construction of material preparation capabilities.
Open collaboration
Participation in the annual meeting of the Micromotor Industry AssociationIn October 2024, Kaizhong Precision, as amember representative of the Micro-SpecialMotor and Components Branch of the ChinaElectronic Components Association, wasinvited to attend the annual meeting heldby the Micro Motor Industry Association.Focusing on the cutting-edge technologies,key technologies, and core technologies ofmicro-special motors and bringing togetherrepresentatives of outstanding companies inthe industry to carry out in-depth discussionson how to e?ectively promote the sustainabledevelopment of the micro-special motorindustry, the event aimed at promoting thetransformation, upgrading and sustainableprosperity of the industry through in-depthexchanges and cooperation.
Chairman
Appendix
About Kaizhong
Precision
R&D InnovationIntelligent ManufacturingQuality ManagementSupply ChainManagement
Innovation andOperation
Corporate Governance
EnvirnomentSociety
Sustainability Governance
Intelligent Manufacturing
As an advanced enterprise in the field of intelligent manufacturing of precision components, Kaizhong Precision aims to build an "industry lighthouse factory", promoting digitaltransformation in an all-round way and building an intelligent manufacturing system covering the entire value chain including production, quality control, warehousing, and logistics.
In the eld of intelligent manufacturing, Kaizhong Precision has formulated an implementation plan for the MOM system, and has further expanded the depth and breadth of automationand informatization in key areas such as planning and scheduling, process management, equipment management, quality management, inventory management, data integrationand analysis. We strive to gradually achieve the transformation goal of intelligent manufacturing in all aspects of operations, while providing solid technical support and managementguarantees for the Company's sustainable development and value creation.
Intelligent operation
Data collection in production processRapid response in production process
Visualization
Phase 1
(2025)
Phase 2
(2026)
Phase 3(2027)
Program managementWarehouse managementQuality managementEquipment managementTechnology management
InterconnectionIntelligent decision-makingIntelligent production scheduling
AI quality analysis
Transparency in productionManagement informationizationIntelligent manufacturing
Chairman
Appendix
About KaizhongPrecision
R&D InnovationIntelligent ManufacturingQuality ManagementSupply ChainManagement
Innovation andOperation
Corporate Governance
EnvirnomentSociety
Sustainability Governance
Intelligent manufacturing achievementsRelying on multiple information platforms and with the support of cutting-edge technologies such as articial intelligence, the Internet of Thingsand 5G, Kaizhong Precision has built an intelligent manufacturing systemand an intelligent operation system. Through full-range collaborationin human resources management, financial management, safetymanagement, product R&D, production and manufacturing, and supplychain management, the Company has achieved lean management of theentire value chain, improved production efficiency and product quality,and provided more exible and e?cient solutions for production.
Based on the intelligent manufacturing system, the Company activelyapplies articial intelligence, automation and information technology tocontinuously improve the intelligence level and operational efficiencyof each production base and to adapt to the rapidly changing marketdemand. The Company has successfully built multiple informationand technology platforms, achieving full-scenario coverage from ordermanagement, process management, spare parts inventory managementto document management while ensuring efficient coordination ofprocess control and decision-making.
Intelligent manufacturing applications
(1) Automatic visual inspection system
The Company has actively introduced automatic visual inspection equipment with deep learningcapabilities in multiple domestic production bases to replace traditional manual inspection methods,and achieved accurate and rapid product inspection, and real-time monitoring of product qualitystatus and production progress, signicantly improving inspection e?ciency and accuracy, productquality and production e?ciency, and optimizing production management processes.
(2) Flexible full-process automatic production line
The company's Huizhou factory has invested in multiple automated production lines, realizing theautomation of the entire process from stamping, injection molding, assembly to inspection. Theseproduction lines not only have fast switching functions and can exibly respond to the productionneeds of di?erent products, but are also equipped with advanced real-time monitoring systems thatcan grasp the production status in real time and ensure the stability and continuity of production.Besides, with powerful data analysis capabilities, these production lines can also optimizeproduction processes, improve production e?ciency and reduce production costs through in-depthmining and analysis of production data.
(3) Fully automatic extrusion production platform
The Company has independently developed an extrusion automation platform. With its advancedtechnical architecture and deep learning algorithms, the platform has successfully realizedunmanned operation of the extrusion process, significantly improving production efficiency andenhancing the stability and consistency of product quality. By integrating an efficient automaticmonitoring system, the platform can collect production data in real time and conduct in-depthanalysis, thereby optimizing the production process and achieving precise quality control. Inaddition, with its quick switching function, the platform can exibly adapt to the production needs ofdi?erent products, further enhancing production exibility and market response speed.
(4) Intelligent Manufacturing of the Processing Center of Pingshan
Production Base, ShenzhenThanks to the application of advanced production management systems such as MES(Manufacturing Execution System) and Mold Manager, the Company has achieved real-timemonitoring of production equipment and production progress. Through these systems, we cane?ciently carry out order management, process management, spare parts inventory managementand document management, achieving full-scenario coverage and significantly improvingproduction efficiency and product quality while providing strong support for the Company'sintelligent production and lean management.
Established platforms
Platforms under construction
Planning and construction platform
ERP system
MOMplatform
SPC system
PLM system
Intelligentpark
PM System
CRM systemOA system
Model managerCost controlsystem
MES platformDigital nancial
platform
Contractmanagementplatform
HCM platform
Chairman
Appendix
About Kaizhong
Precision
R&D InnovationIntelligent Manufacturing
Quality ManagementSupply ChainManagement
Innovation andOperation
Corporate Governance
Envirnoment
Society
Sustainability Governance
Quality Management
Kaizhong Precision attaches great importance to product quality management and strictly implements the quality policy of "participation by all, prevention rst, continuous improvement,and long-term and stable satisfaction of customers' demand". By building a systematic quality management system and obtaining external certication, we have formulated a soundinternal management system to continuously improve the quality management level of all links in the product life cycle and create safe and quality products for customers.High-quality products and services are the guarantee for the Company to gain a good reputation. With its outstanding pursuit of quality and innovative spirit, perfect quality managementsystem, full industrial chain layout and high-quality customer service, the Company has earned high recognition and deep trust from many world-class customers, enjoyed a goodreputation among world-class customers, and won many honorary awards from customers, further consolidating its competitiveness in the eld of global precision components.
Global Excellent Supplier (4 consecutive times), ExcellentSupplier in China, Innovation Award for China
Global VIP Supplier, VWS Excellent Supplier in China,Global Excellent Supplier, VWS Best Quality Award forChina
Excellent Supplier, Excellent Supplier in China, BestQuality Award for Plants in Jiangsu
Excellent Quality Award
Excellent Supplier in China, Global Excellent Supplier,Innovation Award for Asia Pacic
Excellent Supplier
Excellent Quality AwardExcellent Quality Award, Excellent Competitiveness Award,Best Cooperation Award for Plants in Hangzhou, ExcellentSupplier Award for Plants in West Asia, Global ContributionAward
Chairman
Appendix
About KaizhongPrecision
R&D InnovationIntelligent Manufacturing
Quality ManagementSupply ChainManagement
Innovation andOperation
Corporate Governance
EnvirnomentSociety
Sustainability Governance
Certication of Major Management SystemsQuality management system
Kaizhong Precision has built a systematic productquality management system based on ISO 9001 qualitymanagement system requirements, IATF16949 qualitymanagement system for automotive production partsand related service parts organizations, ISO 14001environmental management system specifications anduser guidelines, and IS0 45001 occupational healthand safety management system specications. In strictaccordance with relevant national laws, regulations andrelevant professional standards, we have formulated theSystem Management Manual, laying a solid foundationfor the operation of the product management systemto achieve standardized and efficient operations. Inaddition, we have formulated the Internal Audit Plan forQuality Management System and conducted internalinspections on the implementation of the Company'squality management system every year to evaluatethe conformity, suitability and effectiveness of themanagement system.
The Company planned and carried out
internal audits
During the reporting period,
external supervisory audits
Shenzhen Kaizhong Precision
Technology Co., Ltd.
IATF 16949, ISO 14001, ISO 45001, ISO 9001, ISO 50001, ISO17025, ISO 27001, TISAX
Changsha Kaizhong Electrical
Technology Co., Ltd.
IATF 16949
Huizhou Kaizhong Precision
Technology Co., Ltd.
IATF 16949, ISO 14001, ISO 45001, ISO 9001
Heyuan KaizhongPrecision Manufacturing
Technology Co., Ltd.
IATF 16949, IATF90001, ISO 14001, ISO 45001
Heyuan Keshun Insulation
Materials Co., Ltd.
IATF 16949, ISO 9001
SMK Systems Metal Composite
Materials Co., Ltd.
IATF16949, ISO 50001, ISO 14001
Chairman
Appendix
About KaizhongPrecision
R&D InnovationIntelligent ManufacturingQuality ManagementSupply ChainManagement
Innovation andOperation
Corporate Governance
EnvirnomentSociety
Sustainability Governance
Hazardous substancemanagementThe Company is committed to promoting theprotection of the earth's environment and pollutionprevention activities. In strict accordance with theEU Directive on the Restriction of the Use of CertainHazardous Substances in Electrical and ElectronicEquipment (RoHS Directive), the Regulation onthe Registration, Evaluation, Authorization andRestriction of Chemicals (REACH Regulation), thePersistent Organic Pollutants Regulation (POPsRegulations), the Battery Directive, the U.S.Toxic Substances Control Act (TSCA), China'sManagement Measures for the Restriction of the Useof Hazardous Substances in Electrical and ElectronicProducts and other domestic and foreign hazardoussubstance standards and regulations, the Companyhas formulated the Control Standards for ProhibitedSubstances to effectively control raw materials,processes, shipments and other links to ensurethat the products provided do not contain prohibitedsubstances. These efforts have continuouslyimproved product quality.In addition, when cooperating with suppliers, theCompany requires that the products (including rawmaterials, parts, semi-assemblies and/or finishedproducts) supplied by suppliers must comply withthe restrictions of the REACH regulations, the EUPersistent Organic Pollutants (POPs) Regulation, theEU ELV Directive and the RoHS Directive, and mustnot contain environmentally prohibited chemicalsspecied in the relevant regulations. Meanwhile, rawmaterial suppliers are required to provide effectiveenvironmental-related substance testing reports fromthird-party laboratories that comply with regulatorystandards such as RoHS and REACH to ensurethat the raw materials and components in the supplychain meet the requirements on the restriction ofhazardous substances.
Laboratory certicationThe Company strictly follows the requirements of ISO17025 system to ensure that product testing and measurement meetquality requirements. Product testing items cover appearance, performance, environmental reliability, corrosiveness, etc.,and calibration items include temperature, pressure, electromagnetic and other contents. Equipped with advanced testingequipment such as precision measurement, reliability testing, mechanical properties testing, electrical properties testing,polymer material analysis, metal material testing, and environmental testing, the Laboratory has the ability to internally calibratelength, electrical, and mechanical measuring equipment. As of the end of the reporting period, the Laboratory had obtainedCNAS certication and passed a number of regular reviews such as measurement audits and prociency verication.
CNAS-certied laboratory's test results are
internationally recognized
Participation in measurement audit and prociency
verication and the certicates obtained
Chairman
Appendix
About Kaizhong
Precision
R&D InnovationIntelligent ManufacturingQuality ManagementSupply ChainManagement
Innovation andOperation
Corporate Governance
Envirnoment
Society
Sustainability Governance
Building of quality cultureAttaching importance to customer demands, Kaizhong Precision continuouslyimproves product quality, and conveys quality management concepts to everyemployee by organizing quality culture construction activities every year. During thereporting period, we organized a total of 80 quality and safety-related internal andexternal training sessions, covering all employees of the Company. The total trainingtime was approximately 300 hours, and the training topics covered managementsystem, quality management tools, quality audit capability, etc. The trainingpopularized quality management knowledge among all employees, instilled productquality management awareness in the hearts of employees, and thereby improved theCompany's product quality management level.
Employees participated in "Zero-Defect" quality activities
From October to December 2024,the Company organized the "zerodefect" quality culture knowledgecompetition for all employees ofeach product line with the theme of"Pursue zero defects, create unlimitedpossibilities". Through the form ofa quality knowledge competitionwith prizes, the Company promotedthe "zero defect" quality culture,popularized quality management-related knowledge, and enhancedthe quality management awarenessof all employees. With a participationrate of employees from business linesreaching over 80%, this quality activityeffectively stimulated employees'enthusiasm for learning and promotedthe construction of the Company'squality culture.
Process quality control
Kaizhong Precision adopts process quality control measures such as automated production,automatic detection, and process error-proong design, and combines intelligent technicalmeans such as machine vision to reduce the product abnormality rate and impact duringthe production process. In the actual operation of quality control, by using QRQC, 8D andother quality tools to analyze the root causes of abnormalities, we have achieved continuousoptimization and improvement in building the core competitiveness of the "zero defect"production system.After-sales serviceIn order to respond to customer needs quickly and promptly and ensure that customerdemands are resolved e?ciently, the Company has formulated and implemented a series ofinternal systems, including the Customer Complaint and Return Resolution Protocol and theOn-Site After-Sales Service Management System, which clearly dene the responsibilitiesand work processes of the after-sales technical team, and ensure that the Company'sdomestic and international teams can respond to customer demands within 24 hours andsolve quality problems on customer sites e?ciently and with high quality.Being well aware that after-sales service is an important guarantee for customer satisfaction,the Company continues to strengthen the quality of after-sales service and improve theprofessional skills and service level of the after-sales team through regular training. Byestablishing a customer feedback mechanism, we can collect customer opinions in a timelymanner to further optimize the service process. In addition, the company also pays attentionto communication and collaboration with customers. Through regular return visits andcustomer satisfaction surveys, it deeply understands customer needs and further improvesservice quality.During the reporting period,
The Company did not see any product recall incidents caused due toquality reasons
Chairman
Appendix
About KaizhongPrecision
R&D InnovationIntelligent ManufacturingQuality Management
Supply ChainManagement
Innovation andOperation
Corporate Governance
EnvirnomentSociety
Sustainability Governance
Customer relation managementThe Company has formulated the procedure documentfor the Customer Satisfaction Evaluation, continuouslyimproved the customer satisfaction evaluation system,defined the responsibilities and authorities of eachdepartment in maintaining customer satisfaction, andregularly conducted internal satisfaction evaluations,customer scorecard reviews, and customer satisfactionsurveys every year through internal quarterly satisfactionevaluations and annual evaluations by externalcustomers. Regular inspections are conducted onthe quality of products and services provided by theCompany. The inspection dimensions include productquality, service quality, timeliness of delivery, andenvironment. Improvement plans are formulated forprojects that do not meet the requirements to finddirections for improvement and continuously improvecustomer satisfaction.
The Company collects customer comments on itsproducts and services through a variety of channelsand methods. These channels include customercommunication activities, customer online portals, marketshare analysis, dealer reports, customer testimonialsand claims guarantees. Attaching great importance tocustomer feedback, the Company promptly transmits thecustomer demand information obtained to the relevantdepartments, respond quickly and make continuousoptimization and improvement to ensure that productsand services always meet customer expectations.
The customer satisfaction survey rate was
98.5%
During the reporting period,
Customer service
Consistently regarding "continuously creating value for customers" as its mission and upholding the core value of"customer first", Kaizhong Precision is committed to providing customers with valuable services based on customerneeds and to designing personalized services and professional countermeasures for them.The Company sets annual sales targets every year based on its product development plan. By timely collectinginformation such as industry trends, customer needs, and competitor dynamics, we have been developing newcustomers in new market areas, strengthening relationships with old customers, and increasing the market share ofexisting products. Meanwhile, we continue to innovate and improve product and service quality, timely adjust andoptimize marketing strategies, continuously improve customer satisfaction and product market competitiveness.In addition, we have established long-term and stable cooperative relationships with customers, creating value forcustomers and contributing to the sustainable development of the Company. In the past three years, the number ofcustomer complaints has not exceeded the target value of customer complaints set for the year.During the reporting period,
Customer complaint handling rate:
100%
The annual average number of PPM(product defects per million) was
0.08
About this ReportMessage from theChairman
Appendix
About KaizhongPrecision
R&D InnovationIntelligent Manufacturing
Quality ManagementSupply ChainManagement
Innovation andOperation
Corporate Governance
EnvirnomentSociety
Sustainability Governance
Responsible marketingDuring the market promotion and marketing process, theCompany is committed to following the highest standardsof business conduct, strictly abiding by various nationallaws and regulations such as the Advertising Law ofthe People's Republic of China and the Anti-UnfairCompetition Law of the People's Republic of China.We regularly conduct the training courses of the Codeof Business Conduct, and strictly prohibit exaggeratedpublicity, false publicity and other behaviors, enhancingsales personnel's compliance awareness while resolutelymaintaining a transparent environment for salespromotion. In addition, we strictly review the releaseand management of external promotional materials, andexpand the Company's inuence and brand e?ect on thebasis of ensuring that external promotional informationand product information are authentic and reliable.
100%
The Company's responsible marketingtraining averaged
22.5
hours per person
covering all marketing employees
During the reporting period,
In addition, when conducting business cooperation with each customer, the Company attaches great importance tocustomer information security and protection of their rights and interests, requiring all employees who have accessto confidential information to sign a confidentiality agreement, or clearly including confidentiality clauses in relevantcontracts. We have strictly defined the scope and authority of use of confidential information, ensuring customerinformation security and fully safeguarding the legitimate rights and interests of customers.
"Kaizhong Tech Day" activities
On September 20, 2024, the Company organized a large-scale "Kaizhong Tech Day" event at the request of itscustomers. The event deepened customers' understanding of Kaizhong Precision through PPT, video explanationsand other forms. During the event, on-site and online audiences had in-depth discussions and exchangeson technical details such as the Company's busbar cost-reduction design plan, soft connection technology,electroplating process, welding process, fisheye needle application, and Kaizhong's mold making and coppermaterial making techniques. Through this event, we fully displayed our technical process to customers, which playeda positive role in promoting the Company's technological advantages, process level, and product quality, and laid thefoundation for future technical communication and development of new business.
Chairman
Appendix
About Kaizhong
Precision
R&D InnovationIntelligent ManufacturingQuality Management
Supply ChainManagement
Innovation andOperation
Corporate Governance
EnvirnomentSociety
Sustainability Governance
Supply ChainManagement
A stable and sustainable supply chain is one of thekey factors for the enterprise to maintain long-termcompetitiveness. Upholding the concept of sustainabledevelopment, Kaizhong Precision is committed to creatinga green and responsible supply chain. We actively workwith supply chain partners to jointly assume our socialresponsibilities. While establishing and improving itssupplier management mechanisms, the Company regularlyconducts supplier knowledge and lean managementtraining so as to promote the sustainable development ofthe supply chain and help the enterprise and its partners toachieve green development.
Supplier management system
Supplier access
Committed to building a stable and responsible supplychain, Kaizhong Precision has formulated the SupplierManagement Manual to manage suppliers from theaspects of supplier development, review, performancerating, annual review, improvement, etc., to establish highstandards for supplier behavior norms in terms of laborrights and environmental responsibilities and to promotethe process-based, standardized and efficient suppliermanagement.
The Company develops new suppliers based on the five principles of "quality system requirements, automotiveindustry priority, supply chain security, classified development, and market competitiveness." In terms of qualitysystem, we give priority to suppliers that have passed IATF16949, ISO 9001, and ISO 14001 management systemcertication. Suppliers engaged in special work and service processes are required to have corresponding professionalqualications to ensure compliance and safety of their work.
ISO9001, IATF16949, ISO14001 and customer-specic requirementsManagement system certication requirements for suppliers
Manufacturers:
Suppliers withIATF16949and ISO14001certication arepreferred.
Electroplating suppliers:
Electroplating suppliersare required to passISO14001 environmentalmanagement systemcertication, and theminimum requirement is topass ISO9001 certication,except for traders.
Auto parts suppliers:
Auto parts suppliersmust pass IATF16949certication. Suppliersthat have not yet beenapproved shouldhave plans to obtaincertication.
3737
Chairman
Appendix
About Kaizhong
Precision
R&D InnovationIntelligent ManufacturingQuality Management
Supply ChainManagement
Innovation andOperation
Corporate Governance
EnvirnomentSociety
Sustainability Governance
Supplier managementThe Company conducts daily performance appraisals on suppliers and monthly QCDS appraisals on suppliers, mainlyin four aspects: Q (quality), C (cost), D (delivery), and S (service). The appraisal indicators involved include batchdefective rate, average purchase price, on-time delivery rate, on-time response rate, timely response rate, etc. Supplierperformance results, grades and management measures are as follows:
In addition, in order to strengthen the quality assessmentof suppliers, the Company arranges regular on-site auditsof suppliers every year. For suppliers whose on-siteaudit results are unqualified, the Company will requirethem to submit a corrective and preventive measuresplan to the Supplier Management Department within 7working days, and the Company's supplier managementpersonnel will provide guidance to the supplier. Suppliersshould complete improvements within 3 months. After theimprovements are completed, the Supplier ManagementDepartment will arrange a re-inspection. Suppliers thatfail the re-inspection will be eliminated.In early January of each year, the Supplier ManagementDepartment will summarize and analyze the supplierassessment results of the previous year, and on thisbasis dene the quality improvement goals and suppliertutoring plan for the year, ll in the supplier performancein the Supplier QCDS Performance Report and send itback to the supplier, and ask them to conrm and sign.The improvement goals will be delivered to suppliers inthe form of a letter of contact. Suppliers need to sign theletter of contact to conrm the improvement goals for theyear and take corresponding measures to achieve theimprovement goals.
Deepen cooperation and increase purchasing volume.
Maintain cooperation, ask suppliers to provide improvement reportsbased on the problem, and track the improvement results.
Suppliers are required to provide improvement reports and theirimprovement effects are tracked. If they are rated Level C for threeconsecutive months, the supplier replacement procedure will be initiated.
We do not renew the contract or add new contracts, and will suspendcooperation until they have passed rectication acceptance. Otherwisethe supplier replacement procedure will be initiated.
Level-A supplier
Level-B supplier
Level-C suppliers
Level-D supplier
Chairman
Appendix
About Kaizhong
Precision
R&D InnovationIntelligent ManufacturingQuality ManagementSupply ChainManagement
Innovation andOperation
Corporate Governance
EnvirnomentSociety
Sustainability Governance
Sustainable constructionof supply chain
Supply chain SER audit
Kaizhong Precision is committed to workingtogether with its business partners for com-mon development, optimizing managementpolicies and strategies, strengthening sup-plier sustainable development management,and actively carrying out supplier capacitybuilding activities to help suppliers grow. Inaddition, we explicitly prohibit "conict min-erals" from entering the Company's supplychain ecosystem, and actively promote thetraceability of conict minerals and due dili-gence of supplier conict minerals.
Suppliers are strictly prohibited from imposing restrictions on employees of the Company, excessiverecruitment fees, conscation of ID cards and/or passports, withholding of wages, abusive workingconditions, debt bondage, violence or any other type of exploitation or abuse.
Suppliers are required not to bribe company employees by giving gifts or red envelopes.Suppliers are required to maintain permanent confidentiality responsibilities and obligations forthe relevant information provided by the Company, and the confidentiality obligations shall not beexempted regardless of whether or not the nal cooperation is reached.Suppliers are required to monitor, track and record their consumption of natural resources such aswater, raw materials and energy;Suppliers are encouraged to adopt green raw materials.
Suppliers are required to monitor, track and record their facilities’ emissions to air, water and soil, aswell as wastewater and solid waste generated in their processes.Suppliers are required to monitor, track and record the composition of packaging materials.Suppliers are required to identify potentially hazardous substances in chemical products and articlesused in production.Suppliers are required to supply products (including raw materials, parts, semi-assemblies and/or nished products) that comply with the restrictions of the REACH Regulation, the EU PersistentOrganic Pollutants (POPs) Regulation, the EU ELV Directive and the RoHS Directive, and must notcontain any environmentally prohibited chemical substances specied in the relevant regulations.Suppliers are required to ll in the Supplier Environmental Governance Substance Self-DeclarationForm issued by the Company and provide RoHS reports and REACH reports for their products.Suppliers are required to provide safety information to educate, train and protect employees fromhazardous materials and to provide employees with adequate personal protective equipment.
Resourcee?ciencyand energyconsumptionEmissionsand wastemanagement
HazardousSubstanceManagement
Businessethics
Laboremployment
The Company conducts social and environ-mental responsibility (SER) risk assessmenton its suppliers. When developing newsuppliers, the Company takes social andenvironmental responsibility factors intoconsideration in the selection process, anddistributes and collects the Supplier Envi-ronmental Controlled Substance Self-Ap-plication Form and the Supplier Environ-mental Safety Survey Form. Meanwhile, inresponse to green environmental protectionand human-oriented management, theCompany has actively introduced ISO14001and ISO45001 environmental managementsystem/occupational health and safety man-agement system, calling on all suppliers tojointly build a sustainable supply chain interms of human rights and labor, businessethics, health and safety, environment andhazardous substances, energy conservationand consumption reduction. In addition, weconduct social environmental responsibilityimpact assessments on all qualied suppli-ers every year.
Chairman
Appendix
About KaizhongPrecision
R&D InnovationIntelligent ManufacturingQuality Management
Supply ChainManagement
Innovation andOperation
Corporate Governance
Envirnoment
Society
Sustainability Governance
During the reporting period,
No major environmental or social riskswere found among suppliers
Supplier training
To help suppliers grow, the Company actively carries out supplier capacity building activities and regularly conducts supplierquality training. Through systematic training, technical support and guidance, the Company is committed to helping suppliers todeeply understand the quality management system and master advanced quality control methods, and to enhancing suppliers'quality awareness and supply quality. Meanwhile, paying attention to the improvement of the ESG capabilities of suppliers,every year we publicize the Company's supply chain ESG management requirements among suppliers and share withsuppliers experiences in fullling social responsibilities through online and o?ine training, eld visits, and supplier conferences.These e?orts have promoted the continuous, stable and healthy development of suppliers.
Supplier ESG trainingDuring the reporting period, the Company organized two supplier ESG training sessions, covering all suppliers. It mainlyprovided guidance and specications to suppliers based on three ESG standard documents: the ESG Management SystemRequirements and Usage Guidelines for China's Automotive Industry, the ESG Information Disclosure Guidelines forChina's Automotive Industry and the ESG Evaluation Guidelines for China's Automotive Industry, to help the enterprise toform a closed-loop ESG management improvement path of "management - evaluation - information disclosure - feedback -management improvement", and to further improve the sustainable development level and management capabilities.
Conict minerals managementIn response to the zero-tolerance policy, the Company has made the commitment of not purchasing minerals (gold, tantalum,tungsten, cobalt, tin and other metal minerals) from "conict areas" in the Democratic Republic of the Congo or its adjacentcountries. Meanwhile, the Company actively carried out conict mineral traceability and supplier conict mineral due diligence,and sends Conflict-Free Metals investigation letters to suppliers every year, requires suppliers to conduct "conflict-freeinvestigations" on their own to identify all smelters that supply tin, tantalum, tungsten, cobalt and gold to it and its suppliers, andurges suppliers not to provide support for armed conicts or human rights violations in conict areas or high-risk areas. As ofthe end of the reporting period, the Company had never been involved in the use of minerals from conict areas.
100%
of suppliers hadsigned the Integrity CooperationCommitment of Suppliers and theCondentiality Agreement
100%
of suppliers had beensubject to social and environmentalresponsibility impact assessments
100%
of new suppliers werescreened using social and environmentalresponsibility criteria
As of the end of 2024,the Company had developed a total of
major suppliers
During the reporting period,The Company conducted supply chain ESG training
100%
of the Company's suppliers participated in ESG training
About this ReportMessage from theChairmanAbout KaizhongPrecision
Practice Green and Low-carbon ConceptsWater ResourceManagementPollutant ManagementEnvironmental ProtectionCapacity Building
Envirnoment
Appendix
Corporate GovernanceInnovation and Operation
Society
Sustainability Governance
Envirnoment
? Practice Green and Low-carbon Concepts? Water Resource Management? Pollutant Management? Environmental Protection Capacity Building
Faced with increasingly severe global environmentalchallenges, Kaizhong Precision has actively responded tothe country's "3060" dual-carbon strategic goals. Under thevision of "building a green global supply chain, providinggreen products and services, and building a better homelandtogether", the Company has deeply integrated the conceptof sustainable development into the core of its corporatestrategy. The Company is fully committed to promoting energyconservation, emission reduction and green transformation,and contributing to the efficient use of resources and theindustry's green development and biodiversity protection,with a view to achieving carbon peak by 2025 and carbonneutrality by 2050. The Company has demonstrated its senseof responsibility and commitment with practical actions byearnestly fullling its corporate environmental responsibilitiesand working with all parties to build a green homeland andprotect our planet.
ChairmanAbout KaizhongPrecision
Practice Green and Low-carbon ConceptsWater ResourceManagementPollutant ManagementEnvironmental ProtectionCapacity Building
Envirnoment
Appendix
Corporate GovernanceInnovation and Operation
Society
Sustainability Governance
Practice Greenand Low-carbonConceptsKaizhong Precision actively practices thegreen and low-carbon concept and adheres tothe environmental and safety policy of "greenmanufacturing, reducing consumption, preventingpollution, participation by all, early prevention,and ensuring safety". While actively participatingin environmental protection initiatives, we arecommitted to achieving environmental protectionand sustainable development by improving theenvironmental management system, promotingthe construction of green factories, activelyresponding to climate change, optimizing energyuse and implementing energy-saving andemission reduction projects.
In strict accordance with the Environmental Impact Assessment Law of the People's Republic of China, theClean Production Promotion Law of the People's Republic of China and other national laws and regulationsand environmental management system standards, the Company has actively promoted the construction of theinternal environmental management system. In order to monitor environmental factors, we have formulated aseries of environmental management-related policies and systems such as the Environmental Area ManagementImplementation Measures, the Energy Conservation and Emission Reduction Management Regulations, etc., andenvironmental management procedure documents such as the Safety, Health, and Environmental Management, theIdentication and Evaluation of Environmental Factors, etc. In addition, the Company actively promotes and carriesout external third-party system certication and review work, strictly follows the audit regulations, and accepts externalthird-party supervision and audit once a year to ensure the continued e?ective operation of the management system.Renewal audits are conducted every three years to meet the latest requirements of the certification standards.Besides, the Company conducts an internal system audit and a comprehensive self-inspection of the managementsystem every year. We have formulated and implemented e?ective corrective measures for any non-conformitiesfound, ensuring that all problems are thoroughly resolved, and further improving the scienticity and standardizationof the Company's management system.
Environmental management system
Certicate of EnvironmentalManagement System
Certication
Certicate of EnergyManagement SystemCertication
As of the end of the reporting period,
Kaizhong Precision had passed ISO50001:2018 energy managementsystem certication.
Kaizhong Precision, HeyuanKaizhong, Huizhou Kaizhong, andDongguan Ruixi had all passedISO 14001:2015 environmentalmanagement system certication.
ChairmanAbout Kaizhong
Precision
Practice Green and Low-carbon Concepts
Water ResourceManagementPollutant ManagementEnvironmental ProtectionCapacity Building
Envirnoment
Appendix
Corporate GovernanceInnovation and Operation
Society
Sustainability Governance
Environmental honors and titlesEnvironmental protectioninvestment
In response to the country's "dual carbon" strategic goals, the Company is committed to promoting ESG concepts, andto achieving green transformation through systematic environmental protection measures. The Company will continueto increase its investment in environmental protection, drive green development through technological innovation, andprovide replicable green solutions for industry transformation and upgrading.
The Company has consistently regarded environmentalprotection as the top priority of corporate development.With a strong sense of responsibility and mission, itcontinues to invest environmental protection funds forenvironmental monitoring, environmental remediation,introduction of advanced environmental protectionequipment, upgrading of production processes, R&D ofenvironmental protection technologies, and implemen-tation of energy-saving and emission reduction projects,with a view to ensuring the efficient advancement ofenvironmental protection work in all aspects. Throughits unremitting e?orts, the Company has achieved greenand sustainable development and contributed to the de-velopment of ecological civilization in the whole society.During the reporting period,
The Company investedRMB
9.9911
millionin environmental protection
National "Green Factory” Award
Intelligent “Green Factory”
Optimization of resource recycling systemContinuous improvement of production technologyThorough implementation of the clean production modelUpgrade of environmental protection technology andequipment
Strengthen the benchmarking and demonstration e?ectof "green factories"Improve the low-carbon circular manufacturing systemDeepen the integration of smart manufacturing andgreen productionContinuously improve energy e?ciency per unit ofoutput value
National-level "Green Factory" (Ministry of Industry andInformation Technology's 2023 Green Manufacturing List)Provincial-level "Environmental Protection IntegrityEnterprise"Municipal-level "Clean Production DemonstrationEnterprise"
Core practices
Future development focus
Honors and achievements
ChairmanAbout KaizhongPrecision
Practice Green and Low-carbon Concepts
Water ResourceManagementPollutant ManagementEnvironmental ProtectionCapacity Building
Envirnoment
Appendix
Corporate GovernanceInnovation and Operation
Society
Sustainability Governance
Environmental risk management
The Company has formulated internal procedural documents such as the Environmental Operation Control and the Identication and Evaluation of Environmental Factors. Througha systematic process, the Company conducts comprehensive and in-depth identication and scientic evaluation of EHS risks and environmental factors in various departments andthroughout the entire production service process to ensure that risks are controllable and environmentally friendly.
Identicationand evaluationof opportunities
Kaizhong Precision keeps pace with the national dual-carbon strategy and promotes the national 3060 strategy. Based on its own business development, it has formulated the dual-carbon goals of "achieving carbon peak by 2025 and carbon neutrality by 2050". While fullling its commitment to environmental responsibility with resource investment and practicalactions, the Company is embracing a carbon-neutral future.Carbon target
Improve energy e?ciencyOptimize energy structure
Help suppliers reduce
emissions
Promote low-carbon designImplement green operations
Equipment heat recovery and reuseReplacement of high energyconsumption equipment andenergy-saving transformationConstruction of digital energyconsumption management platform
Purchase green electricityRaise the access standards ofequipment energy e?ciencyDevelop green energy such asphotovoltaic/wind power
Implement supplierenergy-saving projectsReduce energyconsumption in supplychain transportationProduct carbon footprint
Product packaging design andutilizationSolid waste classication andrecyclingLow energy consumptionprocess design
Advocate green travelImplement clean productionPlan the construction of agreen factory
Save 5 million kWh of energyClean energy usage ratio: 50%Help suppliers to save 3 million kWh of energyWere to reduce carbon intensity by 50%Achieving 100% carbon neutrality
Reduce absolute carbon emissions by 50% for Scope 1 and 2
Achieve carbon neutrality by 2050Long-term carbon goal 2050The Science Based Targets 2030Short-term goals by 2025
Identication and Evaluation Process of Environmental Factors
Phased
goal
Criticalstrategy
Determinethe scope
Dehumidicationreview ofinternalenvironmentalfactors
Initial reviewof externalenvironmentalfactors
Establishment ofidentication andevaluation team
Identicationand evaluation
Majorenvironmental
factors and
controls
Updatemanagementof identicationand evaluation
Carbon Neutrality Roadmap
ChairmanAbout Kaizhong
Precision
Practice Green and Low-carbon ConceptsWater ResourceManagementPollutant ManagementEnvironmental ProtectionCapacity Building
Envirnoment
Appendix
Corporate GovernanceInnovation and Operation
Society
Sustainability Governance
Climate change is one of the most pressing challenges facing the world today. Kaizhong Precision is clearly aware of the far-reaching impact of the risks and opportunities brought aboutby climate change on its own business and industrial chain. By systematically analyzing the risks and opportunities brought about by climate change, the Company has formulatedscientic and e?ective response measures to actively respond to climate change and contribute to promoting global sustainable development.
Combat climate change
Climate Change Risk Management
The Company conducts in-depth analysis of the impact of climate risks and opportunities on its value chain, implements targeted measures to reduce adverse impacts, and seizesopportunities to promote corporate transformation, upgrading and sustainable development.
Risk typeRisk descriptionCountermeasures
Physical risks
Acute risks
Extreme weather such as typhoons, heavy rains, andoods may a?ect production
Formulate emergency response mechanisms for natural disasters and emergency plans for extreme weatherevents, reserve emergency supplies and strengthen safety inspections, and conduct corresponding extremeweather drills regularly.Rationally adopt commercial insurance and other measures to reduce the losses that may be caused byextreme weather.Chronic
risks
Chronic risks such as continued high temperatures andprolonged droughts a?ect production and operatione?ciency
Scientically arrange production plans, carefully deploy production organizations, and improve operationale?ciency.Make plans for high temperature and other weather conditions, arrange production reasonably, and equip withheat and sun protection equipment and supplies.
Transformation
risks
Policy andlegal risks
Governments of countries and regions around the worldhave introduced stricter carbon emission managementpolicies and regulations to mitigate climate change,and companies are facing stricter supervision andmanagement and compliance risks
Continue to pay attention to carbon emission policies and regulations at home and abroad, and respondappropriately to policy and legal updates.Actively carry out energy conservation and emission reduction work and increase the proportion of cleanenergy.Technicalrisks
Transition to low-carbon emission technologies is facingfurther R&D and investment in low-carbon technologies
Enhance the Company's R&D capabilities through talent development and retention measures.Continue to study and apply low-carbon technologies, increase investment in low-carbon technology R&D, andactively carry out industry cooperation.Select low-energy production equipment, optimize production process ow, explore and carry out energy-savingand emission reduction projects, and reduce energy consumption.Market risks
The scarcity of non-renewable resources and energy,and consumer demand for green and low-carbonproducts will a?ect product costs and prices.
Strengthen procurement management, implement price forecasting, energy consumption monitoring andanalysis, and improve energy management and control capabilities.Actively develop green and low-carbon products to meet consumer demand and continuously promote resourceconservation.Reputationalrisks
Investors and stakeholders are paying more attentionto climate change action
Actively disclose climate-related risks and opportunities and their responses.Establish energy conservation and emission reduction management targets and regularly monitor theachievement of targets.Improve the transparency of relevant management and proactively respond to inquiries from stakeholders.
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Energy saving goal
Climate risk management measures
We have established a systematic climate risk identification and assessment mechanism to regularly analyze thepotential impact of climate change on the Company's business. By cooperating with professional organizations, theCompany has regularly conducted carbon inventories and has set a reduction target of “reducing carbon intensity by 3%per year”. We also conduct regular risk assessment to ensure that the Company’s actions in addressing climate changehave a clear direction and can be measured when progress is made.
[Note] Scope 1: The Company's direct carbon emissions mainly came from emissions generated by fixed emissionsources (such as natural gas, coal, etc.), mobile emission sources (such as self-owned vehicles, etc.) and otherproduction auxiliary facilities. Scope 2: The Company’s indirect carbon emissions mainly came from purchased electricity.
Upholding the concept of green development, KaizhongPrecision has formulated the Energy Conservation andEmission Reduction Management Regulations to clearlydefine energy-saving targets, scope of application andresponsibilities at all levels. Focusing on key equipmentsuch as air conditioners, production equipment, powerdistribution facilities and air compressors, the Companyhas optimized energy use from all aspects of technologyand management, and formulated detailed energy-saving management rules. Meanwhile, the Companyactively encourages employees to propose energy-savingtechnical solutions and rational suggestions, and ensuresthe effective implementation of management regulationsthrough a reward and punishment mechanism. In addition,the Company has established a sound supervision andinspection mechanism to regularly evaluate energy usage,and has set scientic and reasonable energy-saving targetsto ensure e?cient and economical energy use.
Optimize energy use
Energy consumption decreases by3%
per year
Kaizhong Precision's greenhouse gas emissions in 2024
YearTotal carbon volume for
Scope 1 (tCO
e)
Total carbon volume forScope 2 (tCO
e)
Total carbon volume(tCO
e)
Carbon intensity (tCO
e/RMB mn)2024190.48107,005.45107,195.930.0091
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Green operation
The Company actively responds to the call of the national "double reduction" policy and comprehensively implementsthe green operation strategy, launching energy-saving and emission reduction initiatives to all employees from thethree major aspects of low-carbon office, low-carbon life, and low-carbon manufacturing. Through energy-savingelectricity, paperless o?ce, green travel, resource management optimization and production e?ciency improvement,the Company actively responds to the national call for energy conservation and emission reduction and is committedto achieving sustainable development goals.
Energy-saving electricity: Use energy-saving lamps and advocate the use of strongnatural light for lighting. It is strictly required that electrical appliances be turned o? whenleaving the o?ce, and that computer screen saver time be set appropriately; regulate theuse of air conditioners and stop using them on specic days.Paperless o?ce: Promote paperless communication and document processing (usingOA electronic o?ce platform, video conferencing), save printing paper, and encouragedouble-sided printing.
Green travel: Implement the "3-5-10 travel plan" (3 kilometers of walking, 5 kilometersof cycling, 10 kilometers of public transportation, and more than 10 kilometers of driving),encourage walking, cycling and public transportation, and drive one day less per week.
Energy-saving and emission-reduction behaviors: advocate taking stairs, garbagesorting and recycling, saving resources (water, paper, electricity), and cultivatingenvironmentally friendly habits.Resource management: timely discover and deal with "leakage" phenomena to reduceenergy waste.
Production e?ciency: Ensure that the machine stops when people leave, turn o?unnecessary power, improve production quality and e?ciency to save energy.Energy saving and improvement: Encourage the proposal of energy-saving equipment
and improvement suggestions to improve the Company's operating e?ciency.
Low carbono?ce
Low-carbonLife
Low-carbonManufacturing
Air Compressor Waste HeatRecovery Project
The air compressor needs to dissipate heat when it isrunning. Under traditional methods, the heat emitted bythe air compressor is dissipated into the nature throughthe cooling tower, which fails to e?ectively utilize energyand leads to energy waste. Therefore, the Companyinvested in the construction of an air compressorwaste heat recovery project. The project uses the aircompressor waste heat system for heating, transferringthe waste heat to the circulating water through a plateheat exchanger. The recovered heat is sent to thecleaning line, while improving the heat dissipationefficiency of the cooling tower. In addition, the wasteheat can also be transported to the heating tank ofthe finishing line to meet its heating needs, therebyreplacing the electric heating method of the originalheating tank, realizing the effective recovery andutilization of energy and reducing energy consumption.In 2024, the Company saved 313,500 kWh of electricityand reduced carbon emissions by 297.6 tCO
e throughthis project.
Waste Gas Tower Energy-savingTechnical Transformation Project
Before the energy-saving technical transformationof the waste gas tower, a manual on/off mode wasused, which resulted in employees often forgetting toturn o? the equipment when dining or changing shifts,causing waste of electricity and manpower. To solve thisproblem, the Company made technical improvementsto synchronize the operation of the waste gas towerwith the working hours of the production workshop, andmodified the PLC program to add a timed power onand o? function. This project not only improves energyutilization efficiency, but also optimizes the productionprocess and achieves the goal of energy conservationand emission reduction. In 2024, the Company saved39,125 kWh of electricity and reduced carbon emissionsby 37.13 tCO
e through this project.
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Corporate GovernanceInnovation and Operation
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Sustainability Governance
Water ResourceManagementKaizhong Precision regards water conservationand reuse as an important part of sustainabledevelopment, strictly abides by the Water Lawof the People's Republic of China, the WaterPollution Prevention and Control Law of thePeople's Republic of China and other laws andregulations, and systematically plans the useof water resources in production and operation.The Company continuously carries out zero-discharge sewage treatment station projects, andthrough internal control, third-party monitoringand reclaimed water reuse measures, ensuresthat wastewater is treated in compliance withstandards and is recycled, thereby minimizing theimpact on the surrounding water environment.
Kaizhong Precision actively formulates and implements a series of scientic and reasonable water-saving measuresto carry out delicacy management of water use in various aspects such as production and life. For example, in theproduction workshop, by optimizing the production process and adopting advanced water-saving equipment andtechnology, the water consumption can be accurately controlled to reduce the consumption of water resources in theproduction process. In o?ce areas, we promote the use of water-saving appliances, continuously carry out water-savingpublicity and education for employees, and help them develop water-saving awareness.
In terms of water resource reuse, the Company has invested in the construction of an advanced water treatment andreuse system. After professional collection, deep treatment and strict purification of production wastewater, waterresources that meet the reuse standards are reused in production processes and equipment cooling, forming a closed-loop water resource management system.
Conduct water balance tests: Accurately control water consumption through real-time monitoring andanalysis of test data.Grinding machine wastewater recycling: In order to solve the problem that the two grinding machines wasteabout 10 cubic meters of water every day, the wastewater is recycled after sedimentation to reduce the useof fresh water.Optimization of the recycled water system: In the pipeline well, by connecting the ends of the cleaningmachine and grinder to the recycled water pipe, about 3 cubic meters of water can be recycled every day.Foot valve update: Replace the foot valves in the bathroom that are often damaged and do not rebound intime to reduce water waste caused by equipment failure.Intelligent urinals: Change the urinals in men's washrooms from mechanical to intelligent ushing types toimprove ushing e?ciency and reduce water waste.Faucet maintenance: Check the sink faucets and replace any that are leaking or not tightly closed to avoidunnecessary water loss.Cooling tower water circulation: Add recycled water to the process cooling tower and replace the oat valveto achieve water recycling and reduce the addition of new water.
Utilization of water resource
Main water conservation management measures
Pingshan PlantZero emissions, saving 15,000 tons of water annuallyHeyuan PlantMetering, supplying water on demand, saving 15,000 tons of water annuallyHuizhou PlantZero emissions, 100% reuse of industrial water, saving 21,000 tons of water annually
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With the Zero-discharge sewage treatment station project, treated waterthat meets the standards can be reused in production
To address the environmental pressures faced by the Company and the need for e?cient water resource utilization,a zero-discharge wastewater treatment station was established at the Pingshan Plant. The station processesemulsion cutting uid, high-concentration wastewater, and composite wastewater from the plant. High-concentrationwastewater undergoes specic treatment procedures before being mixed with composite wastewater, followed bymultiple treatment stages, including sedimentation, ltration, biological treatment, and membrane treatment. Duringthe process, concentrated water, sludge, and other byproducts are properly managed—some are recirculatedfor further treatment, while others are handled by certied third-party units. After the implementation of the zero-discharge wastewater station, the Company achieved complete wastewater elimination, with the rst-stage andsecond-stage reverse osmosis (RO) treated water being reused. The reclaimed water meets the standards outlinedin the Water Quality Standards for Urban Wastewater Reuse in Industrial Water, fullling production water demandswhile signicantly enhancing the Company's environmental benets. In 2024, the wastewater treatment capacityreached 70 tons per day.Meanwhile, in order to support the production of the electroplating workshop and the e?cient use of water resourcesin the park, the Company has begun to build an industrial wastewater zero-discharge sewage treatment station inHuiyang Plant. After the completion of the sewage treatment station, 99% of the industrial wastewater dischargedfrom the workshop will be reused in cleaning, electroplating, grinding and other processes after meeting thestandards through deep treatment. The remaining 1% of concentrated waste liquid will be outsourced to a unit withhazardous waste treatment qualications for disposal. The reuse of reclaimed water complies with the requirementsof the Water Quality for Industrial Water Recycling in Urban Wastewater. It is expected that the treatment capacitywill achieve the design target of 600 tons per day after the completion of the project.
Zero-Discharge Sewage Treatment Station
Kaizhong Precision strictly abides by the Water PollutionPrevention and Control Law of the People's Republic ofChina and other national and local wastewater pollutionprevention and control policies and regulations, andstrictly implements the Water Pollutant Emission Limits- Guangdong Provincial Local Standards and the OdorPollutant Emission Standards and other standards.During the production and operation process, theCompany strictly controls various pollutants, ensuringzero wastewater discharge through professionaltreatment processes and effectively fulfilling itsresponsibility of protecting water resources.The Company has established a complete wastewatermanagement system, formulated normative documentssuch as the Wastewater Treatment ManagementOperation Manual, and implemented a daily watervolume monitoring and data verification mechanism toensure that the monitoring data is accurate and reliable.When abnormal water volume occurs, the early warningmechanism will be immediately activated and adjustmentmeasures will be taken to ensure the stable operation ofthe sewage treatment system. Meanwhile, the Companyregularly entrusts qualified third-party testing agenciesto conduct quarterly monitoring and comprehensiveinspections on emissions of pollutants such as waste gasand wastewater. All previous test reports have shownthat the Company's pollutant emission indicators are infull compliance with national and local standards, fullydemonstrating the Company's standardized managementand outstanding results in environmental protection.
Wastewater management
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PollutantManagementKaizhong Precision continues to optimize thepollutant emission management system, focusingon strengthening waste gas treatment and wastemanagement, significantly improving VOCsemission reduction results and resource recyclingrates and ensuring environmentally friendly andcompliant operations. Meanwhile, the Companyactively practices the concept of circular economyand effectively reduces environmental burdenthrough waste resource utilization, achievingcoordinated development of economic andecological benets.
Kaizhong Precision has formulated a series of internal management systems, including the Waste Gas Treatment FacilityManagement Operation Manual, incorporating waste gas management into the core process of daily operations whileimplementing full-process control through "three-xed" management (xed time, xed location, and xed personnel).
The Company has established a closed-loop mechanism of "monitoring - early warning -disposal" to ensure the e?cientoperation of treatment facilities and continuously reduce the concentration of atmospheric pollutant emissions throughreal-time data monitoring and preventive maintenance.
Optimize the waste gas collection system to ensure that all waste gas is collectedImplement standardized operations on key equipment such as spray towers and UVactivated carbon puriersConduct online monitoring of emission data to ensure stable compliance with standards
Waste gas management
The Waste Gas Treatment Upgrade Project achieved e?cient emission reductionand promotes green developmentThe Company has upgraded the extrusion and cleaningprocesses, changing the collection method of the extrusionprocess from a gas collection hood to an enclosed overallexhaust, and the cleaning process from unorganizedemissions to an enclosed gas collection. In addition, theend-of-pipe treatment facilities for organic waste gashave been upgraded to water spray + two-stage activatedcarbon adsorption. After the transformation was completedin 2024, the results were signicant. The VOCs grade wasrated A, the collection efficiency increased from 30% to50%, the treatment efficiency jumped from 31% to 80%,and the VOCs emission reduction reached 0.583 tons.The transformation not only optimized our productionenvironment, but also set an environmental protectionbenchmark for the industry and demonstrated our sense ofresponsibility in addressing climate change.
Waste Gas Treatment Upgrade Project
Control atthe sourceProcessmanagementEnd monitoring
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Ensure that the collection, storage and transfer of hazardous wastes comply withnational laws and regulations and company regulations. It is strictly prohibited todump them into the environment or mix them with non-hazardous wastes. Usestandard containers and packaging and set identication signs.
Kaizhong Precision strictly abides by the Law of thePeople's Republic of China on the Prevention andControl of Environmental Pollution by Solid Wastes andother laws and regulations while building a full life cyclemanagement system for hazardous wastes.
Classify and manage general industrial solid waste (wastemetal, waste paper, etc.) and hazardous waste (oily rags,waste engine oil, waste light bulbs, etc.) to ensure a100% compliance disposal rate.
Waste management
Hazardous waste management measures
The person in charge of the hazardous waste warehouse must keep recordsof the management ledger in accordance with regulations. The EnvironmentalProtection Group of the Equipment and Power Department shall regularly inspectthe generation, collection, storage, transfer, operation of pollution prevention andcontrol facilities, pollution damage, execution of rectication within a time limit, andimplementation of management systems.Standardizedrecords andinspections
Full process
control
Develop and regularly practice preventive measures and emergency plans forhazardous waste pollution accidents.
Prevention and
emergencypreparedness
Once a pollution accident or emergency occurs, the emergency plan will beimmediately activated, the affected units and individuals will be notified in a timelymanner, and the environmental protection department will be reported for investigationand handling.Accident
response
Establish regulatory documents such as theWaste Management Regulations and theHazardous Waste Management System
Institutional guarantee
Implement the standardized process of "classiedcollection - standardized storage - legal disposal"
Process control
Regularly conduct emergency drills for hazardouswaste leaksEmergency management
Realize the traceability of the entire processof hazardous waste generation, transfer anddisposalLedger management
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Circular economy
Under the guidance of the circular economy concept, the Company actively practicesthe model of e?cient resource utilization and sustainable development. The Companyrequires comprehensive treatment of recyclable general waste to transform it into usefulmaterials and achieve recycling. In this way, the Company can not only effectivelyreduce the pollution of waste to the environment, but also save a lot of energy andrealize the recycling of resources. For example, waste paper and waste metal that havebeen professionally processed can be reused as raw materials or packaging materials,thereby extending the life of resources, reducing the exploitation of natural resources,and promoting harmonious coexistence between the enterprise and environment.
During the reporting period, the packaging materials used by the Company (such ascartons, PE tapes, packing tapes, etc.) all complied with RoHS and other environmentallyhazardous substance standards to ensure their environmental friendliness.
Use recycled input materials to ensure sustainable packaging materials.Reuse plastic cartons provided by suppliers to reduce the consumption ofpackaging materials and the waste of raw materials.
The Company continues to strengthen the management of packaging materials,actively promotes green and environmentally friendly packaging materials, andtakes the following measures:
Processing Copper Cleaning and Recycling ProjectIn 2024, the Company cleaned the copper scraps produced in the workshop,removed the oil and dirt, and reused them as raw materials, thus achievingefficient recycling of resources. The project adopted environmentally friendlycleaning technology, strictly controlled wastewater discharge, and ensured thequality of recycled copper materials through drying, sorting and other steps. Afterthe implementation of the project, not only the costs of raw material procurementand waste disposal have been reduced, but also environmental pollution has beensignicantly mitigated and production e?ciency has been improved, bringing botheconomic and environmental benets to the enterprise.
Environmental ProtectionCapacity BuildingKaizhong Precision has built a comprehensive environmental protection system.Through annual emergency drills, it has enhanced the emergency responsecapabilities of employees and the coordination capabilities of departments,ensuring a rapid and orderly response to sudden environmental incidents.Meanwhile, the Company pays attention to environmental protection training andpublicity and strives to enhance employees' environmental awareness and skills;strictly comply with ecological and environmental management requirements andfocus on biodiversity protection throughout the project life cycle; enhance thelevel of environmental management and lay a solid foundation for sustainabledevelopment through continuous improvement.
Kaizhong Precision formulates an annual environmental emergency drill planat the beginning of each year and organizes and implements drill activitiesstrictly in accordance with the plan. The drill content covers multiple scenarios,including common environmental risk events such as sudden wastewater leakage,excessive waste gas emissions, and accidental leakage of hazardous chemicals.By simulating real scenarios, the Company has not only effectively improvedthe emergency response capabilities of its employees, but also enhanced thecollaborative capabilities among departments, ensuring that it can respond quicklyand in an orderly manner when sudden environmental incidents occur. In addition,the Company pays attention to the post-drill summary and feedback. After eachdrill, a review meeting is organized for department heads and participatingemployees to analyze the strengths and weaknesses of the drill in detail, proposetargeted improvement measures, and incorporate them into the optimization planfor the next drill. Through continuous improvement, the Company continues toimprove its emergency response plan to ensure its scienticity and e?ectivenessin practical applications.
Emergency drills
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On-site disposal drill for hazardouswaste pollution incidentsTo standardize environmental managementand strengthen environmental emergencyresponse capabilities, the Company organizedan environmental emergency drill on December14, 2024. The drill simulated the scenarioof "emergency response to leakage duringhazardous waste sludge transfer". Sewagetreatment technician A transferred sludge and itleaked. After notifying the person in charge, theperson in charge arranged for alert and organizedemergency response. After clean-up, hazardouswaste management training was conducted,transfer was resumed and the drill was reviewed.This environmental emergency drill achievedthe expected results and fulfilled the expectedobjectives, effectively enhancing the Company'semergency response capabilities for suddenenvironmental incidents and the environmentalawareness and skills of its employees.
Emergency response drill forhazardous waste sludge leakage
during transportation
Kaizhong Precision attaches great importance to the cultivation of environmental awareness and continues tostrengthen environmental protection training and publicity activities. By carrying out systematic environmentaleducation and training, the Company imparts to employees the knowledge of environmental laws and regulations,energy conservation and emission reduction, and green production concepts, helping them establish correctenvironmental values. Meanwhile, the Company uses various channels to carry out environmental protectionpublicity activities, such as posting environmental protection posters and organizing environmental protectiontheme activities to create a strong environmental protection atmosphere and further enhance employees' attentionand sense of responsibility for environmental issues. Through these initiatives, we have not only enhancedemployees' awareness of environmental and social responsibility, but also stimulated their enthusiasm to activelyparticipate in environmental protection actions, laying a solid foundation for promoting the sustainable developmentof the Company.
Environmental protection training and publicity
Industrial solid waste standardized management training in Pingshan District
In 2024, in order to improve the standardized management level of hazardous waste in enterprises inPingshan District and ensure that corporate operations complied with environmental protection laws andregulations, the Pingshan District Government held standardized management training on industrial solidwaste and interpreted the Technical Specications for the Setting of Hazardous Waste Identication Marks(HJ1276 - 2022) and the Pollution Control Standards for Storage of Hazardous Waste (GB18597 - 2023).The training system explained the basic concepts and standards of hazardous waste, and used practicalcases, such as companies being punished for setting up incorrect signs, enabling trainees to gain an intuitiveunderstanding of the consequences of irregular management. In addition, the training also included aninteractive Q&A session to deal with the problems that trainees may encounter in their actual work, andmaterials were distributed to assist them in learning. The Company organized 10 employees to participate inthis training, which further improved its standardized level of hazardous waste management and e?ectivelyreduced the risk of environmental pollution.
Biodiversity is related to human survival and sustainable social development and is a valuable resource withstrategic significance. Kaizhong Precision strictly follows the national "three lines and one list" ecologicalenvironment zoning control requirements, prioritizes biodiversity protection throughout the project feasibilityassessment, construction, and operation process, strictly controls the damage caused by production and operation,and strives to achieve a virtuous interaction between economic development and ecological protection. During thereporting period, the Company's production operations, products and services did not have a signicant impact onbiodiversity.
Biodiversity protection
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Employee Recruitmentand Talent DevelopmentEmployee WelfareOccupational Health andSafetyEngage in Social Welfare
Society
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? Protection of Employees' Rights and Interests? Employee Recruitment and Talent Development? Employee Welfare? Occupational Health and Safety? Engage in Social Welfare
As the international community pays increasing attentionto labor rights, protecting employee rights has become animportant issue in global sustainable development. Adheringto the "people-oriented" concept, Kaizhong Precision iscommitted to building a fair, respectful and inclusive workingenvironment. The Company attaches great importance tothe construction and development of the talent team. Bycontinuously introducing outstanding talents and improvingthe training system, it has created a high-quality, e?cient andprofessional talent team to provide strong talent guaranteefor the Company's sustainable development. Meanwhile, theCompany strictly protects the legitimate rights and interestsof employees. By improving the employee care system anddemocratic management mechanism, the Company haseffectively guaranteed the occupational health and safetyof employees and continuously improved their sense ofbelonging and satisfaction.
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Protection of Employees'Rights and InterestsKaizhong Precision respects and protects the legitimate rights andinterests of employees, strictly abides by relevant regulations suchas the Labor Law of the People's Republic of China, the Law of thePeople's Republic of China on the Protection of Women's Rights andInterests, and the Special Provisions on Labor Protection for FemaleEmployees, as well as applicable laws and regulations of overseasoperations, and implements international labor conventions andinitiatives with high standards, including the Universal Declarationof Human Rights, the Core Conventions of the InternationalLabor Organization, and the United Nations Guiding Principles onBusiness and Human Rights. In order to build a complete labor rightsmanagement mechanism, the Company has formulated labor rightsprotection systems such as the Employee Handbook, the LaborProtection Regulations for Underage Workers and Female Employees,and the Employee Complaint Management Procedure.
Measures to protect workers' rights and interests
the Company had not found any incidents involving violationsof freedom of association and collective bargaining rights,forced labor, illegal slavery, child labor, or any type ofdiscrimination.
As of the end of the reporting period,
We do not interfere with employees’ freedom of belief.We do not discriminate against employees in hiring, compensation, trainingopportunities, promotion, dismissal or retirement based on ethnicity, race,nationality, religious beliefs, gender, etc.After a discrimination incident occurs or a related complaint is received,an investigation will be conducted in a timely manner, and reasonableassistance will be provided to those a?ected, such as legal aid, nancialcompensation, psychological counseling, etc.
Eliminate all types of harassment, such as psychological harassment,sexual harassment, verbal harassment, etc.Encourage employees to report any possible or existing harassment orabuse to their company’s human resources administrator or departmenthead.When harassment or abuse occurs or a related complaint is received,timely investigation shall be conducted into the incident and reasonableassistance shall be provided to those a?ected, such as legal aid, nancialcompensation, psychological counseling, etc.
Strictly conrm the age of applicants by checking their ID cards andresorting to other means to ensure that no child laborers or underageworkers enter the company to work.Once child labor is discovered, their work will be stopped immediately inaccordance with the provisions of the Labor Law, they will be sent to aspecialized institution for a health check, returned to their guardians in atimely manner, and assisted in continuing their compulsory education.
Anti-discrimination
Anti-harassment
Prohibitionof child
labor
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Sign labor contracts with employees in accordance with the law and clearly dene employment conditions.It is strictly prohibited to collect deposits from employees in any form, and it is not allowed to hold or destroy, hide or conscate documents except underthe circumstances prescribed by law.Once forced labor is discovered, an investigation will be conducted promptly. While those responsible are held accountable, reasonable assistance willbe provided to those a?ected, including legal aid, nancial compensation, psychological counseling, etc.The Company supports the establishment of trade unions and ensures that employees exercise their right to organize in an environment free of violence,pressure, fear, intimidation and threats.For matters involving the vital interests of employees, such as wages, welfare, labor safety and health, and social insurance, we will listen to employees'opinions through democratic forms such as the Sta? and Workers' Congress and trade union meetings, and care about and pay attention to employees'reasonable demands.
Conduct testing of occupational disease hazards in the workplace every year.Conduct regular occupational health examinations every year.Adopt hierarchical control and provide personal protective equipment for risky positions.If any incident endangering occupational health and safety occurs, we provide medical assistance to employees in a timely manner.
Position arrangement and transfer of female employees: It is prohibited to arbitrarily arrange female employees to inappropriate positions. If a position isnot suitable due to production changes, the position should be transferred in time. Female employees can apply for a job transfer due to health reasonswith a hospital certicate.Labor protection during pregnancy: It is prohibited to arrange overtime work for pregnant employees. Women who are pregnant for more than sevenmonths will not be assigned night shifts and will be given time for rest. We regularly monitor the working hours and tasks of pregnant employees.Breastfeeding protection: Female employees who are breastfeeding their babies will not be arranged to work overtime or night shifts.Maternity leave and breastfeeding leave: Maternity leave, breastfeeding leave and childcare leave for female employees are protected in accordancewith the law.
Fightagainstforcedlabor
Freedom ofassociationand collectivebargaining
Protect femaleemployees
Protectoccupationalhealth and
safety
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Employee satisfactionKaizhong Precision always regards employees as the core force of corporate development and attaches great importance to employees' demands and experiences. Therefore, theCompany has established a normalized and systematic employee communication mechanism, through which an employee satisfaction questionnaire is organized every quarter. Bywidely collecting employees' opinions and suggestions, we can gain a deeper understanding of their ideas and expectations on work environment, career development, teamwork andwelfare benets to ensure that every employee's voice is heard and valued.
We are clearly aware that organizational atmosphere is an important link for mutualshaping and common growth between the Company and its employees. A positiveorganizational atmosphere will have a positive impact on employees' motivation,performance, potential and cultural integration. Therefore, the Company used theGallup Q12 assessment tool to distribute questionnaires to formal employees at theheadquarters and factories to conduct surveys on organizational climate. In 2024,the Company's overall organizational climate score was 3.95 (out of 5).
Satisfaction surveyFront-desk express deliveryInbound call managementMeeting room arrangementand pre-meeting preparationDispatching of o?cialvehicles
2022
85.45%
85.25%
91.78%
60%70%90%80%100%
20232024
Water, electricity and othersupporting facilities indormitoriesDormitory ManagementSystemHygiene in public areas ofdormitoriesDormitory administrators' workattitude
Greening maintenanceTimely cleaning of o?ceareasCleanliness of o?ce areasCleaning sta?'s serviceattitude
Dining environment incanteensHygiene of canteen foodVariety of canteen foodFreshness of canteen foodPortion of canteen mealsService attitude of canteensta?
Timeliness of logisticsmaintenanceMaintenance quality oflogistics maintenanceCleanliness of the logisticsmaintenance siteWork attitude of logisticsmaintenance personnel
Employee satisfaction
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Employee complaints
Kaizhong Precision has formulated the Employee Complaint Management Procedure,which is applicable to the submission and handling of complaints by all employees,ensuring that the Company's employee complaint channels are unobstructed,guiding internal employees to use internal complaint tools reasonably and e?ectively,standardizing internal employee complaints and handling procedures, and ensuringthat complaints are accepted in a fair, just and open manner, thereby improvingemployee satisfaction and enhancing employees' sense of identity and belonging.
The Company clearly stipulates that all complaints must strictly follow established methodsand formal channels. The Human Resources Department is committed to improving andprotecting these legitimate methods and normal channels, and fully safeguarding the rightsof employees to express their demands and make appeals reasonably and legitimately.
Employee complaints management
Department heads should rst accept employee complaints and try their bestto resolve their demands. When the employee relations team conducts a fact-nding investigation, they should fully cooperate and provide information andsupport during the investigation.
Responsible for collecting complaint information within the Company, and forhandling, feedback and supervision of complaints from company employeesor departments.
Responsible for handling employees’ further appeals when they aredissatised with the handling results of the appeal by the Human ResourcesDepartment, in order to safeguard the legal and legitimate rights and interestsof employees and avoid infringement of their legal and legitimate rights andinterests.
Department o?cers
Employee Relations Handling Group
Employee Appeal Committee
Employee complaint channels
Before an employee les a formal complaint, they should report to his or herdepartment and seek a solution.They should also make an oral or written complaint to the Employee RelationsHandling Group.Channels are: call the Employee Relations Specialist, e-mail, suggestion boxof the Human Resources Department and the general manager’s mailboxIf an employee is still dissatised with the outcome after going throughthe appeal channel, they may submit a written complaint to the EmployeeComplaint Committee.
ChairmanAbout KaizhongPrecision
Appendix
Protection of Employees'Rights and Interests
Employee Recruitmentand Talent DevelopmentEmployee WelfareOccupational Health andSafetyEngage in Social Welfare
Society
Corporate GovernanceInnovation and Operation
Envirnoment
Sustainability Governance
Employee Recruitmentand Talent Development
Kaizhong Precision always adheres to the "people-oriented"concept and is committed to building a fair, transparent andefficient talent development system. The Company focuseson the introduction and training of potential and professionaltalents. By improving training resources and promotionchannels, it promotes employee capacity improvement andcareer development, and realizes the organic unity of personalvalue and corporate strategy. The growth of every employeeis the driving force for the Company's development. We willcontinue to optimize the talent training mechanism, builda high-quality and highly cohesive professional team, andprovide strong talent guarantee for the Company's sustainabledevelopment.Employee recruitment
Recruitment
In strict accordance with the Labor Law of the People'sRepublic of China, the Regulations for the Implementation ofthe Labor Contract Law of the People's Republic of China andother laws and regulations, Kaizhong Precision has formulatedthe Recruitment Management Regulations, adhering to theprinciple of equal employment and opposing any form of forcedlabor. We are committed to building a diverse workforce andproviding fair employment opportunities for job seekers fromdi?erent backgrounds.In 2024, upholding the recruitment principles of "openness,transparency, competition and selection, and sta?ng control",the Company attracted talents through campus recruitmentand social recruitment. Campus recruitment injected newforces of innovation and vitality into the Company, while socialrecruitment brought in experienced professionals. This dual-track parallel model successfully created a diversified talentpool.
Diversity and equalityThe Company is committed to creating an inclusive and equal working environment and to eliminatingdiscrimination while paying attention to vulnerable groups. In order to safeguard the legal rights and interestsof underage workers and female employees and ensure their health in production and labor in the enterprise,the Company has specially formulated the Labor Protection Regulations for Underage Workers and FemaleEmployees, strictly prohibiting child laborers and underage workers from entering the company to work. Meanwhile,the Company evaluates and classies all positions, identies positions that are not suitable for female employees.For positions suitable for female employees, the Human Resources Department shall not refuse to recruit femaleemployees during recruitment activities. In 2024, the Company did not recruit or use child labor. The proportion ofnewly recruited female employees reached 33.18%.The Company actively assumes the role of a corporate citizen and ensures employment for key and specialgroups. We have employed 9 people with disabilities, who are provided with equal benefits and promotionopportunities.During the reporting period,
disabledemployees
ethnicminority employees
Labor contractsigning rate:
100%
Social insurancecoverage rate:
100%
Proportion of newlyrecruited female employees:
33.18%
Employeeturnover rate:
6.28%
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Appendix
Protection of Employees'Rights and Interests
Employee Recruitmentand Talent DevelopmentEmployee WelfareOccupational Health andSafetyEngage in Social Welfare
Society
Corporate GovernanceInnovation and Operation
Envirnoment
Sustainability Governance
Sta? trainingKaizhong Precision attaches great importance to talent cultivation. Every year, we carryout a variety of internal and external training sessions for all employees, covering newemployees, business implementation, management, professional track, professionalquality, legality and compliance to help employees improve their capabilities in an all-round way and achieve sound career development. In 2024, the Company held a totalof 1,411 online and o?ine open learning projects, with a total of 26,312 participants, atotal training time of 304,711 hours, an average training time of 82.76 hours per person,and an average satisfaction rate of 90.02%.
New employee training site
Training for new employees
The Company provides comprehensive induction training for new employees, in-cluding the Training on the Corporate Culture and Human Resources AdministrationSystem, the Training on Factory-level Safety Education, the Training on Anti-fraudKnowledge, etc. Every quarter, we also regularly conduct the Training on Perfor-mance Management, the Training on Personal Income Tax Settlement, the Trainingon Intellectual Property and the Training on Corporate Culture. The online learningplatform provides rich resources to help new employees gain a deeper understandingof the Company.
Professional skills training
Professional skills training on the Operation Manual forMaterial Supply Management Process
On August 28, 2024, the Company organized professional skills training on theOperation Manual for Material Supply Management Process, and invited planners, sitesupervisors, material control specialists, and cost accounting personnel to participatein the training. The purpose was to strengthen the understanding and cognition ofthe supply chain planning system among business department personnel throughthe promotion of relevant planning system knowledge, thereby further promoting
Leadership training
On April 16, 2024, the Company organized a training on the Role Positioning andCognition of Managers. 36 managers at the middle level and above participated in thetraining. The training content covered aspects such as manager role transformation,positioning misunderstandings, positioning analysis and cognition. By combining theorywith cases, it helped the trainees to deeply understand the roles and responsibilitiesof managers. After the training, trainees said that they had understood their rolepositioning and improved their decision-making capabilities and managemente?ciency.From September 23 to 24, 2024, the Company conducted the training titled Advancingto True Executives. 22 managers at the middle level and above participated in thetraining. The training content revolved around the definition, responsibilities, rolesand capabilities of true executives. Through the training, the trainees gained an in-depth understanding of the multi-dimensional requirements of true executives,improved their management capabilities, and laid a solid foundation for the Company'scompetitiveness.
In department-level train-ing, after new employeesreturn to the department,the mentor will provideprofessional skills trainingaccording to the job train-ing plan. Through the du-al-channel training model,new employees can fullyunderstand the companyand positions, improvetheir comprehensive abil-ities, enhance corporatecohesion and competitive-ness, and help achievethe Company's strategicgoals.
the collaborative cooperation of variousbusiness links. There were 45 participantsin this training. The training contentinvolved a review of the S4 system design,the three lines of defense in the supplychain, the importance of the supply chain,and specic implementation methods. Thetrainees' satisfaction rate for this sessionreached 90 points. In terms of improvingknowledge and skills, the trainees hada deeper and more comprehensiveunderstanding of the relevant professionalcontent, which could help improve theire?ciency at work.
ChairmanAbout KaizhongPrecision
Appendix
Protection of Employees'Rights and InterestsEmployee Recruitmentand Talent Development
Employee WelfareOccupational Health andSafetyEngage in Social Welfare
Society
Corporate GovernanceInnovation and OperationEnvirnoment
Sustainability Governance
Employee promotion
Encourage academic advancement
Kaizhong Precision has established a 7-level, 23-grade job grade system, set up three major tracks: management, specialty, and operation, and formulated the Job Grade ManagementSystem to provide employees with clear career development channels and cross-track development opportunities.
We have established academic allowances to encourage employees to continue their studies, improve their professional qualities, and grow with the Company.
Management channelProfessional trackOperation track
M17 Management ExpertM16 Senior ExecutivesM15 Senior ManagerM14 Mid-level Manager
P16 ExpertP15 SeniorP14 AdvancedP13 IntermediateP12 Junior, employee-level
014 Senior technician013 Technician012 Senior technical worker012 Intermediate technical worker
011 Junior technician/operator
ChairmanAbout Kaizhong
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Appendix
Protection of Employees'Rights and InterestsEmployee Recruitmentand Talent DevelopmentEmployee WelfareOccupational Health andSafetyEngage in Social Welfare
Society
Corporate GovernanceInnovation and Operation
Envirnoment
Sustainability Governance
Employee WelfareKaizhong Precision has built a market-competitive salary and benets systemto meet employee demands through diversied measures and to continuouslyenhance employees' sense of belonging and cohesion. The Company regularlyevaluates salary levels and formulates scientific salary strategies basedon market dynamics to ensure that we can maintain our advantages in thecompetition for talent and provide talent guarantee for sustainable development.Employee compensation and incentives
Compensation policy and performance
Kaizhong Precision has formulated and improved a series of compensation andincentive systems such as the Salary Management System, the PerformanceManagement System, the Production Incentive Award Management Measures,and the Sales Commission Award Management Measures, aiming to provideemployees with incentive and competitive compensation levels that t their jobresponsibilities, and to pay performance bonuses on time every year based onthe Company's existing policies, operating conditions, and personal performanceappraisals.
When hiring new employees, the Company determines individual salaries basedon their education, work experience and professional capabilities (includingyears of professional work experience and level of professional knowledge) toensure pay equity without discrepancies based on gender, age, nationality, race,ethnicity, gender identity, religion, marital status or physical and mental disability.In order to maintain salary competitiveness, the Company coordinates theannual salary policy plans and adjustments of each park based on changesin the external economic environment. In addition to following the localgovernment's minimum wage standards, we also assess local market salarylevels through external salary surveys and formulate salary adjustment planswhen appropriate. Meanwhile, the Company conducts regular monthly andannual performance appraisals based on individual employee performanceand issues performance bonuses to fully stimulate employee enthusiasm andcreativity, while promoting the continuous progress and development of itsbusiness.
Selection of Monthly Awards winners
On April 17 and 18, 2024, Pingshan Plant and Huiyang Plant, where the Company's connector productlines are located, held commendation meetings for outstanding employees for February and March2024 respectively. The meetings summarized the work achievements from February to March andcommended outstanding line leaders and employees, aiming to motivate employees to keep up thegood work and serve as role models.
Group photo of Monthly Awards winners
Selection of Annual Awards winners
On February 7, 2024, the Company carriedout the 2023 annual evaluation work. Aftercomprehensive selection and recommendationby various departments, review by the HumanResources Management Department, andselection by the Evaluation Group, outstandingindividuals and teams in 2023 werecommended, and bonuses and related benetswere issued to outstanding employees.Among them, the Company awarded theProduction Model Award, Technology PioneerAward, Outstanding Talent Award, EliteBackbone Award, Professional Elite Award,and Outstanding Rising Star Award to 95employees in total. Outstanding teams wereawarded the Technological Innovation Awardand the Management Innovation Award. A totalof 4 teams won the awards.
Group photo of Annual Awards winners
13 employees from Pingshan Plantand 16 employees from HuiyangPlant won awards. Representatives ofoutstanding employees shared theirwork insights, and some employeesalso put forward self-improvement plansand improvement suggestions. TheHuman Resources and AdministrationDepartment collected and followed upon the employees' suggestions. It isexpected that the workshop will furtherimprove in production and management.
ChairmanAbout KaizhongPrecision
Appendix
Protection of Employees'Rights and InterestsEmployee Recruitmentand Talent DevelopmentEmployee Welfare
Occupational Health andSafetyEngage in Social Welfare
Society
Corporate GovernanceInnovation and Operation
Envirnoment
Sustainability Governance
Helping employees in need
Care for pregnant employeesThe Company attaches great importance to the rights and interests of femaleemployees. During the reporting period, we provided extra meals for pregnantemployees several times. In addition, the Administrative Department planned andarranged extra meals every Wednesday, providing them with free nutritious soup orfruit.
The Company has established an employee mutual aid fund, which is mainly usedto subsidize members and their families who have di?culties in seeking medicaltreatment or attending school, as well as members who have suffered majorlosses or di?culties in life due to natural disasters, emergencies, etc. During thereporting period, with the mutual aid fund, we completed 12 rescue operations anddistributed RMB50,400 in relief funds.
Employee benets
Paying close attention to employee welfare, Kaizhong Precision has established and improved the Welfare Management System, and implemented a layered and multi-category welfaresystem for all employees, including statutory welfare, xed welfare, special welfare, and exible welfare programs. These benets have e?ectively met the multi-level demands ofemployees, stimulated employees' work enthusiasm, and improved employee stability.
Statutory benetscovering pension insurance, medical insurance, work-related injury insurance,unemployment insurance, maternity medical care, and housing provident fund.Fixed benetscovering living allowance, regular physical examination, care for employees duringimportant holidays and other benets.
Special benets
comprehensive welfare support covering family, transportation, communication, etc.
Flexible benets
covering commercial insurance, training, and education support, etc.
Employee stock ownership plan
In order to improve the interest sharing mechanism between workers and owners and achieve consistency in the interests of the Company, shareholders and employees, the Companyhas launched an employee stock ownership plan. In 2024, a total of 110 outstanding employees participated in the stock ownership plan. Through the employee stock ownership plan,the Company further improves its governance structure and long-term and e?ective incentive and constraint mechanism, ensuring its long-term, stable and healthy development.Meanwhile, we have deepened the incentive system for the management of the headquarters of the Company and its subsidiaries, fully mobilized the enthusiasm and creativity ofemployees, attracted and retained outstanding management talents and business backbones, and enhanced the cohesion of our employees and the Company's competitiveness.
ChairmanAbout KaizhongPrecision
Appendix
Protection of Employees'Rights and InterestsEmployee Recruitmentand Talent DevelopmentEmployee Welfare
Occupational Health andSafetyEngage in Social Welfare
Society
Corporate GovernanceInnovation and OperationEnvirnoment
Sustainability Governance
Sta? activitiesKaizhong Precision integrates employee care into its corporate culture. By carrying out diversified activities, we have enriched employees' spare time, increased communicationopportunities between the Company and its employees, enhanced cohesion among employees, and created a harmonious working atmosphere.
The activity site at Pingshan Base on Women's Day
Pingshan Base saw female employees celebrating Women's Day
On March 8, 2024, the Company gathered all female employees at the KaizhongPingshan Base to celebrate Women's Day. We organized games to create a happyatmosphere and distributed holiday gifts. The event site was decorated with afestive atmosphere, filled with joy and vitality. This activity mainly created a joyfulatmosphere for all female employees in the form of games, and the Company alsoprepared nice holiday gifts for them. When the female employees received the gifts,their faces beamed with happy smiles. It was not only a gift, but also the Company'srecognition of their hard work and good wishes for the festival. The whole eventended successfully in a harmonious and joyful atmosphere. It was an unforgettableholiday.
Fun sports site
A fun sports meetingDuring the reporting period, the Company, in conjunction with its plants, organizeda fun sports meeting. We set up extremely challenging and interesting gamelevels to test the team members' teamwork ability. The combination of traditionalsports competitions and fun games fully mobilized the enthusiasm of employees,demonstrated the vigorous, positive and youthful spirit of our employees, created alively cultural atmosphere, and enhanced communication, exchanges and cooperationamong colleagues.
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Protection of Employees'Rights and InterestsEmployee Recruitmentand Talent DevelopmentEmployee WelfareOccupational Health andSafetyEngage in Social Welfare
Society
Corporate GovernanceInnovation and Operation
Envirnoment
Sustainability Governance
Exciting basketball games
In 2024, the Company held the 16th "KaizhongCup" employee basketball game. After a monthof fierce competition, 7 representative teams fromvarious plants and departments took the game as anopportunity to exchange skills, made friends throughbasketball, fought with all their might, and presented9 fun and exciting games. On August 3, the much-anticipated final came to a successful conclusionin Heyuan Plant. After the competition, an awardceremony was held on site. Manager Zhou Jianfengof Heyuan Commutator Manufacturing DepartmentII and Manager Su Hanmei of Human ResourcesManagement Department presented trophies, medalsand prizes to the winning teams.
Champion team of "Kaizhong Cup"
Group photo of the “Kaizhong Cup”
Basketball Games
Spring Festival activitiesNew lecturers and outstanding lecturers
Welcoming the Spring Festival warmlyTeachers' Day activitiesIn order to promote traditional culture and enrichthe cultural life of employees, before the SpringFestival in 2024, various parks of Kaizhong Precisionorganized festival activities, enabling employeesto feel the unique charm of traditional festivals in ahappy and peaceful atmosphere. During the event,each park carefully decorated the venue with a festiveatmosphere, hung red lanterns and couplets, creatinga strong festive atmosphere. The interactive gameswere even more lively, including traditional gamessuch as guessing riddles, pitching pots, and hooping,allowing employees to feel the charm of traditionalculture in laughter. The games also enhancedcommunication and cooperation between employees,and strengthened team cohesion and their sense ofbelonging.
September 10, 2024 was the 40th Teachers' Day ofour country. The Pingshan headquarters of KaizhongTraining Center and Heyuan Plant jointly launchedactivities to celebrate the Teachers' Day. KaizhongTraining Center reviewed the training achievementsin the past year: 104 training solutions, more than5,000 participants, 289.9 training hours, and 95.7points for the average trainer satisfaction score.These impressive training data were inseparablefrom the hard work of the trainers. Group leadersissued appointment letters and certicates of honor tonew and outstanding lecturers. In the end, KaizhongTraining Center presented holiday gifts to all lecturersto thank them for their hard work, generous sharingand patient guidance, which helped all employees tocontinue to grow and surpass themselves.
About this ReportMessage from theChairmanAbout Kaizhong
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Appendix
Protection of Employees'Rights and InterestsEmployee Recruitmentand Talent DevelopmentEmployee WelfareOccupational Health andSafetyEngage in Social Welfare
Society
Corporate GovernanceInnovation and OperationEnvirnoment
Sustainability Governance
Occupational Health and Safety
Kaizhong Precision always puts the health and safety of its employees rst, actively creates a healthy, hygienic and safe working environment, and continuously strengthens theprevention and management of occupational health and safety risks to safeguard the physical and mental health of its employees.OHS Management SystemIn strict accordance with the Occupational Disease Prevention and Control Law of the People's Republic of China, theProduction Safety Law of the People's Republic of China and other laws and regulations, as well as the occupationalhealth and safety standards and regulations of overseas operation locations, and referring to the requirements ofindustry associations such as the International Labor Organization, we have formulated a series of production safetyrules and regulations, including the Safety Management Regulations, the Production Safety Target Management System,the Production Safety Target Assessment and Evaluation System, the Production Safety Responsibility System, theProduction Safety Responsibility Assessment System, the Safety Education and Training Management System, theProduction Safety Risk Management System, the Occupational Health (Hygiene) Management System, the OccupationalHazard Notication System and the Emergency Management System so as to strengthen the Company's productionsafety and occupational health management, and ensure the Company's production safety, environmental safety andoccupational health safety. In addition, we have also established a production safety committee to further strengthen theCompany's production safety management, e?ectively implemented the main responsibility for production safety, andensured that safety measures are e?ectively implemented, thereby e?ectively preventing and reducing the occurrence ofproduction safety accidents. As of the end of the reporting period, Kaizhong Precision and its branches and subsidiarieshad passed the ISO 45001:2018 occupational health and safety management system certication.
Certicate of Occupational Health andSafety Management System CerticationSafety goals for production safety
Four goals
achieved
Six zeros
The employee production safetyeducation and training rate: 100%The rate of special operationpersonnel holding certicates: 100%
The rectication rate of accident
hazards: 100%The compliance rate of workplace hazard factors:
100%
0 deaths and serious injuries (including tra?c-
related accidents)0 major re (explosion) accidents0 major equipment accidents0 major accidents0 major environmental pollution accidentsThe incidence rate of occupationaldiseases among employees: 0
ChairmanAbout KaizhongPrecision
Appendix
Protection of Employees'Rights and InterestsEmployee Recruitmentand Talent DevelopmentEmployee Welfare
Occupational Health andSafety
Engage in Social Welfare
Society
Corporate GovernanceInnovation and OperationEnvirnoment
Sustainability Governance
Comprehensively check the re hazards of electrical facilities andissue professional inspection reports.Systematically detect the operating status of re protection facilitiesand complete the statutory annual inspection.Carry out regular safety inspections to eliminate potential safetyhazards in a timely manner.Hold regular safety meetings to promote safety experience exchangesbetween management and employees.Through the above systematic management and control measures,the Company continues to improve its production safety level,e?ectively protects the health of employees and ensures productionsafety.
Production safety risks and control
The Company always adheres to the production safety policy of "safety rst, preventionfirst, and comprehensive management", strictly follows the three-level productionsafety standardization enterprise standards, standardizes the safety standardizationmanagement measures of each park, and completes the reporting and publicity work inaccordance with government requirements. For new, modied and expanded projects,the Company strictly implements the "three simultaneous" system, conducts preliminaryevaluations to assess safety and occupational health risks, and implements controle?ectiveness evaluations to ensure that on-site safety and occupational health hazardsare e?ectively managed and controlled.The Company has established a complete production safety inspection mechanism:
Noise reduction measures in Heyuan Plant aimed to protectemployee health
In September 2024, the Safety Department of Heyuan Kaizhong implemented noisereduction measures to address the problem of air discharge noise from pneumaticequipment in the commutator production workshop. After purchasing and testingvarious types of silencers, the cavity filter silencer solution was finally selected.The Company purchased and installed 1,000 silencers for this purpose. After thetransformation, the noise in the workshop was signicantly reduced to 84.9 decibels,which is acceptable to human ears. The exhaust noise of the cold press was alsoreduced from 98.6 decibels to 83.5 decibels, effectively protecting the workingenvironment and physical health of employees.
Fixed chamber ltering and silencing solution
Annualinspection
Monthly
manage-ment
About this ReportMessage from theChairmanAbout KaizhongPrecision
Appendix
Protection of Employees'Rights and InterestsEmployee Recruitmentand Talent DevelopmentEmployee Welfare
Occupational Health andSafety
Engage in Social Welfare
Society
Corporate GovernanceInnovation and Operation
Envirnoment
Sustainability Governance
Safety culture constructionKaizhong Precision strengthens the construction of safetyculture and improves employees' safety awareness andemergency response capabilities by regularly carryingout activities such as Safety Month and Fire ProtectionMonth.
In addition, the Company strictly abides by laws andregulations such as the Design Hygiene Standards forIndustrial Enterprises and the Management Regulationsfor Workplace Occupational Health, and regularlyprovides relevant knowledge and skills training to rst aidpersonnel, safety management personnel, etc.
The Company had owned a total of
Red Cross rst aid workers
employees holding safetymanagement personnel certicates
As of the end of the reporting period,
Attending the launch ceremony ofPingshan District Fire Safety Month
Inviting Pingshan Fuyou Health Center's emergency medicalteam to provide on-site training on rst aid knowledge
The Safety Month event aims topopularize safety knowledge in theworkplace and enhance employees'safety awareness.The Fire Protection Month activitiesaim to enhance employees’ self-rescue and mutual rescue capabilitiesin fire situations through fire preven-tion and emergency response training.
Pingshan District Emergency Management Bureau organizedsafety training for enterprisesOn May 21, 2024, Kaizhong Precision activelyresponded to the call of national production safetyregulations. In order to further strengthen productionsafety work, the Company invited safety emergencyexperts appointed by the Pingshan District EmergencyManagement Bureau to organize a training onproduction safety. The Company attached greatimportance to this training and carefully arrangeda total of 41 department heads, supervisors, part-time safety officers and employee representativesto participate in the training. The training instructorsgave in-depth explanations on key topics suchas production safety management knowledge,prevention of work-related accidents, and re safety.Through vivid case analysis and practical skillsteaching, they e?ectively helped various departmentsof the Company improve their safety managementlevel. This training provided the Company with strongknowledge and skills support in e?ectively preventingsafety accidents and creating a safe and stableproduction environment during production operations.
Pingshan District Emergency Management
Bureau's training on production safety
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Appendix
Protection of Employees'Rights and InterestsEmployee Recruitmentand Talent DevelopmentEmployee WelfareOccupational Health andSafety
Engage in Social Welfare
Society
Corporate GovernanceInnovation and Operation
Envirnoment
Sustainability Governance
Fire drill
Emergency drill on food poisoning
Emergency drill on electrical shock
Emergency drill on conned space
Safety emergency planIn order to ensure the timely control and e?ective response to production safety accidents, the Company has formulatedthe Emergency Plan for Production Safety Accidents in accordance with relevant laws and regulations and the Guidelinesfor the Preparation of Emergency Plans for Production Safety Accidents for Production and Operation Units (GB/T29639-2020). By standardizing and guiding emergency rescue actions, it requires all departments to train employees to preventaccidents, e?ectively control the situation and ensure a rapid response after an accident occurs, with a view to protectingemployee safety and the Company’s property.
Publicity on occupational diseases
Occupational health examination
Attaching great importance to occupational healthmanagement, the Company carries out the Detectionof Hazardous Factors of Occupational Diseases in theWorkplace every year, conducts the Evaluation of the Statusof Hazardous Factors of Occupational Diseases every threeyears, and identifies positions with hazardous factors ofoccupational diseases based on the report. The Companyhas signed an occupational health examination agreementwith Pingshan People's Hospital on arranging physicalexaminations for employees at di?erent stages. Before takingup the post, a physical examination will be scheduled withinone month of the employee's exposure to hazardous factors.During the work period, employees who have worked for oneyear or more will be scheduled for physical examinationsafter we analyze the hazardous factors they are exposedto. When leaving the job, employees who are exposed tohazardous factors apply for resignation. The departmentwill hand over the Resignation Form to a specialist andthen schedule for a physical examination. In addition, newemployees in noise-related positions are required to conducttheir own noise testing before joining the Company. Duringthe reporting period, the employee physical examinationcoverage rate was 100%.
ChairmanAbout Kaizhong
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Appendix
Protection of Employees'Rights and InterestsEmployee Recruitmentand Talent DevelopmentEmployee WelfareOccupational Health andSafetyEngage in Social Welfare
Society
Corporate GovernanceInnovation and Operation
Envirnoment
Sustainability Governance
Engage in Social Welfare
In order to contribute to building a harmonious society,Kaizhong Precision actively fulfills its corporate socialresponsibility, continuously carries out public welfare andcharity activities, repays the society by promoting ruralemployment, helping disadvantaged groups and practicingenvironmental protection and low-carbon actions.Fireghting charity donation
Contributing to ruralemployment
Ecological protection
During the reporting period, Kaizhong Precision donatedto the Heyuan Red Cross Firefighting Rescue Foundation,aiming to provide regular assistance to o?cers and soldiersin difficult circumstances and those with disabilities, as wellas the families of martyrs and o?cers and soldiers who diedin the line of duty, and to provide timely assistance to peoplewho have di?culties in life due to re disasters. Heyuan Plantwas awarded the "2024 Advanced Collectives for Engagementin Firefighting Public Welfare" by the Heyuan Red CrossSociety.
In response to the employment difficulties in HeyuanCity (a relatively underdeveloped area in GuangdongProvince), Kaizhong Precision built a new energy vehicleparts intelligent manufacturing industrial base in the localarea in 2017 to:
On March 12, 2024, Arbor Day, ve representativesof Kaizhong Precision Party members activelyparticipated in the tree planting activity under thearrangement of Zhukeng Community, and donatedRMB10,000 in cash for purchase of saplings.After the activity, the Company received a letter ofthanks from the Party Building Office of LongtianNeighborhood, Pingshan District, Shenzhen,expressing sincere gratitude for the Company'sgood deeds.
The Heyuan Red Cross Society awarding the "2024 Advanced
Collectives for Engagement in Fireghting Public Welfare"
Company employees planting trees
The Company had provided
jobs in Heyuan CityAs of the end of the reporting period,
promote the transformation and upgrading oflocal industriescreate a large number of jobs (as of the end ofthe reporting period: 988 employees in total,including 460 local employees)give priority to hiring local people with di?cultynding a jobpromote high-quality development of regionaleconomy
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Sustainability Governance
Message from the
Chairman
Indicator nameUnit2024
RevenueRMB mn3,049.6076Net prot attributable to shareholdersRMB mn170.1108Total amount of tax paidRMB mn83.9Total cash dividendsRMB mn108.30Proportion of female directors%44.44%Proportion of independent directors%33.33%Proportion of independent directors on theAudit Committee
%66.67%Is the convener of the Audit Committee anaccounting professional
/YesProportion of independent directors on theCompensation Committee
%66.67%Proportion of independent directors on theNomination Committee
%66.67%Proportion of independent directors on theStrategy and Compensation Committee
%66.67%Coverage rate of employees receiving anti-corruption training
%100%Coverage rate of directors receiving anti-corruption training
%100%Rate of employees signing anti-briberycommitment
%100%Environmental protection investmentRMB mn9.9911
AppendixKey Performance Data Sheet
Indicator nameUnit2024Energyconsumption
DieselL47,606.29GasolineL14,692.37Purchased electricityKWh112,968,623.90Total energy consumptionTons of standard coal13,958.52Greenhousegasemissions
Greenhouse gas emissionsfor Scope 1
Tons of CO
equivalent190.48Greenhouse gas emissionsfor Scope 2
Tons of CO
equivalent107,005.45Total greenhouse gasemissions
Tons of CO
equivalent107,195.93Carbon intensity
Tons of carbon dioxideequivalent/RMB mn
0.0091
Use of waterresource
Total water consumptionCubic meters175,836Water resource recyclingrate
%24%Circulating waterconsumption
Tons41,659Waterpollutantdischarge
Total wastewater dischargeTons100,819Gaspollutantemissions
Total waste gas emissions10,000 cubic meters255,053.06
The greenhouse gas emissions for Scope 1 mainly come from direct greenhouse gas emissions generated by the consumption of fossil fuels in the Company's operation/production process (such as gasoline,liqueed petroleum gas, etc.). The emission factors and calculation methods refer to the Guidelines for the Accounting and Reporting of Greenhouse Gas Emissions from Other Industrial Industries (for TrialImplementation). The calculation formula used is: Carbon dioxide emissions from fossil fuels = fuel consumption * low caloric value * carbon content per unit caloric value * fuel carbon oxidation rate * 44/12.
The greenhouse gas emissions for Scope 2 mainly come from indirect greenhouse gas emissions generated by purchased electricity consumed in the company's operations/production processes. Thecalculation method refers to the HKEX (Hong Kong Exchanges and Clearing Limited) document Appendix 2: Guidelines for Reporting of Key Environmental Performance Indicators. The electricity emissionfactor adopts the Emission Factor of China Regional Grid Baseline, which is 0.9489 tCO
/MWh for the Southern Regional Grid.
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Message from theChairman
Indicator nameUnit2024
Wastedischarge
Total amount of non-hazardous waste
Tons2,390Total amount of non-hazardous wasteincineration
Tons900Total amount of non-hazardous waste recycled
Tons1,490Total amount of hazardouswaste
Tons357Total hazardous wastelandll
Tons357Percentage of wasterecycled
%54.24%Customer satisfaction%98.50%Customer complaint handling rate%100%Number of quality and safety trainings/80Total quality and safety training timeHours300Percentage of suppliers who have signed theCode of Conduct for Suppliers
%76%Percentage of suppliers that have signedclauses that include environmental and laborrequirements
%100%Percentage of new suppliers screened usingenvironmental criteria
%100%Percentage of suppliers screened usingsocial criteria
%100%Percentage of suppliers that have conductedenvironmental impact assessments
%100%Percentage of suppliers that have conductedsocial impact assessments
%100%Percentage of suppliers that implement theCompany's supplier access system
%100%Percentage of suppliers identied as havingactual and potential signicant negativeenvironmental impacts
%0%
Indicator nameUnit2024
Number of employeesPerson3,682
By gender
MalePerson2,365FemalePerson1,317By region
Chinese mainlandPerson3,272Other countries and regionsPerson410Number of employees of ethnic minoritiesemployed
Person462Number of local employees Person612Number of employees with disabilitiesPerson9Number of veterans recruitedPerson2Total employee turnover rate%6.28%Labor contract signing rate%100%Social insurance coverage rate%100%Total number of training courses conducted/1,411Total hours of training received by employeesHours304,711Healthand safetyinvestment
Total safety training timeHours24,196Production safety investmentRMB mn1.0845Employee satisfaction%91.78%Number of the Sta? and Workers' Congressheld
/4Sta? seminar/6
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Corporate Governance
Innovation and OperationEnvirnoment
Society
Appendix
Sustainability Governance
Message from the
Chairman
GRIStandards
DisclosuresSection
GRI 2:
GeneralDisclosures2021
2-1 Organization detailsKaizhong Precision2-2 Entities included in the organization’ssustainability report
About this Report2-3 Reporting period, reporting frequencyand contact person
About this Report2-6 Activities, value chain and otherbusiness relationships
Kaizhong Precision and Its
Supply Chain Management2-7 Employees
Protection of Employees'
Rights and Interests, Employee
Employment and Talent
Development, Employee Welfare2-9 Governance structure andcomposition
Sound Corporate Governance2-10 Nomination and selection of thehighest governance body
Sound Corporate Governance2-11 Chair of the highest governancebody
Sound Corporate Governance2-12 The oversight role of the highestgovernance body in managing impacts
Sound Corporate Governance2-13 Delegating responsibility formanaging impacts
Sound Corporate Governance2-14 The role of the highest governancebody in sustainability reporting
Sustainable Development
Management System2-15 Conicts of interestBusiness Ethics2-16 Communication on important issuesof concern
Stakeholder Communication2-17 Shared knowledge of the highestgovernance body
Responding to SDGsGRI 2:
GeneralDisclosures2021
2-19 Remuneration policy
Employee Compensation and
Incentives2-20 Procedure for determining salary
Employee Compensation and
Incentives2-22 Statement on sustainabledevelopment strategy
Sustainable Development
Management Policy
GRI StandardsDisclosuresSection
GRI 2: GeneralDisclosures2021
2-25 Processes to remediate negativeimpacts
StakeholderCommunication2-26 Mechanisms for seeking advice andraising concerns
StakeholderCommunication2-27 Comply with laws and regulationsCompliance Management2-28 Membership of the AssociationOpen Collaboration2-29 Methods of stakeholder engagement
StakeholderCommunicationGRI 3:
SubstantiveIssues 2021
3-1 Process for determining substantiveissues
Analysis of SubstantiveIssues3-2 List of substantive issues
Analysis of SubstantiveIssues3-3 Management of substantive issues
Analysis of SubstantiveIssuesGRI 201:
EconomicPerformance2016
201-1 Economic value directly generatedand distributed
Key Performance Table201-2 Financial impacts and other risks andopportunities arising from climate change
Combat Climate Change201-3 Dened benet plan obligations andother retirement plans
Employee WelfareGRI 205: Anti-corruption 2016
205-1 Operation points that have undergonecorruption risk assessments
Business Ethics205-2 Communication and training on anti-corruption policies and procedures
Business Ethics205-3 Conrmed incidents of corruption andactions taken
Business EthicsGRI 206: Anti-competitivePractices 2016
206-1 Legal actions against anticompetitivebehavior, antitrust, and antimonopolyPractices
Antitrust and Fair
CompetitionGRI 302:
Energy 2016
302-1 Energy consumption within theorganization
Optimize Energy Use302-4 Reduce energy consumptionOptimize Energy Use302-5 Reduce the energy requirements ofproducts and services
Optimize Energy Use
GRI Index TableKaizhong Precision reported the information cited in the GRI Content Index in accordance with GRI standards from January 1 to December 31, 2024.
About Kaizhong
Precision
About this Report
Corporate Governance
Innovation and OperationEnvirnoment
Society
Appendix
Sustainability Governance
Message from the
Chairman
GRIStandards
DisclosuresSection
GRI 302:
Energy 2016
302-4 Reduce energy consumptionOptimize Energy Use302-5 Reduce the energy requirementsof products and services
Optimize Energy UseGRI 303:
Water andWastewater2018
303-1 Interactions between organizationsand water as a shared resource
Water Resource Management303-2 Management of drainage-relatedimpacts
Water Resource Management303-3 Water withdrawalWater Resource Management303-4 DrainageWater Resource Management303-5 Water consumptionWater Resource ManagementGRI 305:
Emissions2016
305-1 Direct (Scope 1) greenhouse gasemissions
Combat Climate Change305-2 Energy indirect (Scope 2)greenhouse gas emissions
Combat Climate ChangeGRI 306:
Waste 2020
306-1 Waste generation and signicantwaste-related impacts
Pollutant Management306-2 Management of signicant waste-related impacts
Pollutant Management306-3 Waste generatedPollutant ManagementGRI 308:
SupplierEnvironmentalAssessment2016
308-1 New suppliers screened usingenvironmental assessment dimensions
Supply Chain Management308-2 Negative environmental impacts inthe supply chain and actions taken
Supply Chain ManagementGRI 401:
Employment2016
401-1 New employee hires and employeeturnover
Employee Recruitment401-2 Benets provided to full-timeemployees (excluding temporary or part-time employees)
Employee Benets
GRI 403:
OccupationalHealth andSafety 2018
403-1 Occupational Health and SafetyManagement System
Occupational Health and
Safety403-2 Hazard identication, riskassessment and incident investigation
Occupational Health and
Safety403-3 Occupational health services
Occupational Health and
Safety403-4 Occupational health and safetymatters: worker participation, consultationand communication
Occupational Health and
Safety
GRI StandardsDisclosuresSection
GRI 403:
OccupationalHealth andSafety 2018
403-5 Occupational health and safety training forworkers
Occupational Healthand Safety403-6 Promotion of workers' health
Occupational Healthand Safety403-7 Prevention and mitigation of occupationalhealth and safety impacts directly related tobusiness relationships
Occupational Healthand Safety403-8 Workers covered by the occupationalhealth and safety management system
Occupational Healthand SafetyGRI 404:
Training andEducation 2016
404-1 Average hours of training per employeeper year
Sta? Training404-2 Employee skills development programsand transition assistance programs
Sta? TrainingGRI 405:
Diversity andEqual
405-1 Diversity of governance bodies andemployees
Employee
RecruitmentGRI 406: Anti-discrimination2016
406-1 Incidents of discrimination and correctiveactions taken
Protection of
Employees' Rights
and InterestsGRI 409:
Forced orCompulsoryLabor 2016
409-1 Operations and suppliers with signicantrisk of incidents of forced or compulsory labor
Protection of
Employees' Rights
and InterestsGRI 413: LocalCommunity2016
413-1 Operations with local communityengagement, impact assessments, anddevelopment plans
Engage in Social
WelfareGRI 414:
Supplier SocialAssessment2016
414-1 New suppliers screened using socialassessment dimensions
Supply Chain
Management414-2 Negative social impacts in the supplychain and actions taken
Supply Chain
ManagementGRI 416:
CustomerHealth andSafety 2016
416-1 Assessment of health and safety impactsof product and service categories
Quality Management416-2 Non-compliance incidents involving healthand safety impacts of products and services
Quality ManagementGRI 418:
CustomerPrivacy 2016
418-1 Substantiated complaints involving breachof customer privacy and loss of customer data
Information Security
and Privacy
Protection
About KaizhongPrecision
About this Report
Corporate Governance
Innovation and Operation
Envirnoment
Society
Appendix
Sustainability Governance
Message from theChairman
Reader Feedback Form
Dear Readers,Thank you for taking time off to read this Report. In order to provide you and otherstakeholders with more complete, professional and valuable ESG information andimprove the quality of the Company's ESG reports, the Company sincerely invites youto assist in completing the relevant questions in the Feedback Information Form. Pleasefeel free to o?er your advice.
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