Report Description
About This Report Review and Approval
This report is the first Environmental, Social, and Governance (ESG) report The data in this report contains no false records, misleading statements, or
released by Zhejiang Sanhua Intelligent Controls Co., Ltd. (hereinafter referred significant omissions. This report was reviewed and approved by the Company's
to as " Sanhua Intelligent Controls," "the Company," or "we") to present the Board of Directors on April 28, 2024.
Company's ESG performance in 2023. Through this report, we aim to communicate
with our stakeholders on ESG management policies, actions, and achievements.
Reporting Guidelines Access and Feedback
This report is prepared in accordance with the Rules Governing the Listing of This report is available in both Simplified Chinese and English. In case of any
Shares on Shenzhen Stock Exchange and the Self-regulatory Guidelines for the discrepancies between the two versions, the Simplified Chinese version shall
Companies Listed on the Shenzhen Stock Exchange No. 1 – Standardized Operation prevail. The electronic version of the report can be obtained from the Company's
of the Companies Listed on the Main Board . It refers to the Sustainability Reporting official website (http://www.zjshc.com), the Shenzhen Stock Exchange (http://www.
Standards (2021 Edition) of the Global Reporting Initiative (GRI) (referred to as GRI szse.cn), and the CNINFO website (http://www.cninfo.com.cn).
Standards) for relevant requirements.
Your feedback is crucial for improving our ESG performance. If you have any
questions or feedback regarding this report or the Company's ESG issues, please
Reporting Scope feel free to contact us via the following channels:
Address: Address: No. 219, Woxi Avenue, Chengtan Street, Xinchang, Shaoxing,
Organizational Scope: Unless otherwise specified, the organizational scope of Zhejiang, China.
this report is Zhejiang Sanhua Intelligent Controls Co., Ltd., the listed entity. Telephone: (0571) 2802 0008, (0575) 8625 5360
Timeframe: From January 1, 2023, to December 31, 2023. Some content extends Email: shc@zjshc.com
beyond this timeframe.
Release Cycle: Each financial year, synchronized with the annual report.
The financial data in this report is sourced from the audited financial report in 2023,
while other data is sourced from internal documents and relevant statistics. Some
content and data appropriately trace back to previous years. Monetary amounts
mentioned in the report are in RMB unless otherwise stated.
Contents Feature on Responsibility
Scientific and Technological innovation 21 Flower of Technology
Drives High-quality Development
Strengthening Scientific and Technological 21
Blooms for Green
Innovation and R&D Development
Deepening Digital Transformation 27
Low-carbon and Innovative Development 59
Report Description 01
CONTENTS
Quality Products Creating Sustainable 31 Strengthening Environmental Protection 63
Message from Chairman Value
Product Quality Management
About Us 07 Customer Relationship Management
Sustainable Development 12 Consumer Health and Safety 37
Management
Flower of Management Flower of Talents
Blooms for a Better Blooms for Prosperity
Future
Corporate Governance Structure 41 Ensuring Employee Rights 81
Risk Management System 43 Occupational Health and Safety 87
Integrity and Compliant Operation 45 Empowering Employee Growth 89
ESG Performance 99
Protecting Information Security 49 Participation in Charity and Public Welfare 97
Appendix 105 Supply Chain Management 51
Protecting Intellectual Property Rights 56
Message from Chairman
MESSAGE FROM CHAIRMAN
Sanhua Intelligent Controls is committed to the vision of green and low-carbon Intelligent monitoring and green production. At the production and manufacturing level, Sanhua Intelligent
development. Guided by the principles of "Three flowers of management, technology, and Controls has implemented a smart energy IoT management platform. This platform monitors and analyzes
talent", the Company has become a global leader in the field of HVAC&R, home appliances, energy usage data to identify and address energy waste, mitigate environmental impacts, and reduce carbon
new energy automobile thermal management. Our commitment extends to the field of emissions while also lowering energy costs. By establishing an energy analysis model, it analyzes the
biomimetic robotics, where we strive to meet customer needs, drive industry progress, and correlation between energy consumption behavior and actual energy usage in real time, gradually optimizing
contribute to social development through innovative products and technologies. Since our energy utilization. By monitoring carbon emissions, it ensures compliance with regulatory requirements
inception, we have remained steadfast in our mission, staying focused, professional, and and industry standards. By improving energy efficiency to reduce carbon emissions, the Company aims to
abreast of industry trends, thereby leading the global market. Looking forward, we anticipate establish itself as a green enterprise.
a greener, more low-carbon market. To this end, we will continue to pursue an innovation-
driven, energy-saving, low-carbon, and technology-leading development strategy, making
Global layout and steady progress. "Where the market is, there is Sanhua Intelligent Controls," the Company
significant contributions to achieving the global "dual-carbon" goal through product and
has been expanding its international presence since its establishment, gradually realizing the globalization of
technological innovation.
marketing, manufacturing, logistics, and research and development (R&D). It is committed to deepening the
integration of globalization and localization, staying attuned to market trends, addressing customer needs,
Low-carbon intelligence and innovative development. Sanhua Intelligent Controls has and fulfilling local social responsibilities. By establishing manufacturing and logistics bases worldwide,
been committed to the vision of Developing smart and low-carbon Economy, Creating Eco- Sanhua Intelligent Controls ensures that its products are closer to customers, reducing transportation
friendly Environment for Mankind since 2008. In 2019, this vision was further developed into distances and significantly cutting carbon emissions associated with logistics. Looking ahead, Sanhua
"Develop smart low-carbon economy, create eco-friendly environment for mankind" Sanhua Intelligent Controls plans to further expand its global footprint by constructing overseas factories in countries
Intelligent Controls remains steadfast in its commitment to professional management, such as Mexico, Poland, and Vietnam. These efforts will enhance manufacturing and operational capabilities,
focusing on thermal management for home appliances, commercial refrigeration, and new improve logistics efficiency, and reduce carbon emissions, thereby contributing to local economic and social
energy vehicles, while also expanding into biomimetic robotics. With the ongoing green development.
energy revolution, Sanhua Intelligent Controls is increasing its focus on heat pumps and
other new energy-saving technologies, which hold significant promise. It is also prioritizing
Green and low-carbon development is a globally recognized consensus and a crucial factor for enterprises to
the advancement of heat pump technology and thermal management products, accelerating
achieve sustainable and high-quality growth. Sanhua Intelligent Controls is committed to embracing the ESG
the adoption of refined production and digital transformation, and driving market promotion,
concept and driving innovation to promote green development. We aim to ensure that every Sanhua Intelligent
application, and rapid iteration upgrades. These efforts are aimed at creating more green
Controls product, through technological advancements, contributes to reducing energy consumption and
value for customers and the industry as a whole.
emissions, thereby fostering a greener future.
Zhang Yabo
April 28, 2024
About Us
About Us
Zhejiang Sanhua Intelligent Controls Co., Ltd. is the world's largest manufacturer
of refrigeration control components and the world's leading manufacturer of
automotive air conditioning and thermal management system control components.
First-tier
"Sanhua Intelligent Controls" refrigeration intelligent control components have Market value among listed
become a world-famous brand, and a strategic partner of many automobile enterprises in Zhejiang
enterprises and air-conditioning refrigeration appliance manufacturers in the world. Province
By the end of 2023, Sanhua Intelligent Controls 's market value had increased by
more than 40%, ranking among the top listed enterprises in Zhejiang Province.
The Company takes "Constantly Pursue Perfection and Excellence" as the core, and As of the end of 2023,
takes up the responsibility of improving the energy efficiency of various terminal
products, and leads the way to promote the global transformation of energy-
saving and environmental protection products. After decades of development, the
Company has established a leading position in the global refrigeration appliances
and automotive thermal management industry. The market share of the Company's
Electronic Expansion Valve, Four-way Reversing Valve, Solenoid Valve, Microchannel
Heat Exchanger, Automotive Electric Expansion Valve, Thermal Management
Intellectual property rights
obtained 1,879
Integrated Module for new energy vehicle, Omega Pump ranks first globally. The Invention patents
market share of the Company's Service Valve, Automotive Thermal Expansion Valve
and Receiver Drier is in the leading position in the world. Meanwhile, the Company
has established a complete and strict quality assurance system, achieved ISO9001
quality management system certification, IATF16949 quality management system
for the automotive industry, QC080000 quality system certification for hazardous
substances management. The Company won the National Quality Award, Zhejiang
Quality Award, National Technological Innovation Demonstration Enterprise and
won the high comments from JCI, Daikin, Carrier, Midea, Gree, Haier, Toyota, Benz,
Volkswagen, Valeo and other well-known enterprises at home and abroad.
As a national high-tech enterprise, the Company has always adhered to the technological route of independent
development and innovation. For decades, it has focused on the field of intelligent control and vigorously
"Constantly Pursue Perfection and Excellence"
cultivated core technologies with independent intellectual property rights. As of the end of 2023, the Company
has obtained 3,792 intellectual property rights at domestic and abroad, including 1,879 invention patents.
The Company adheres to the "Dedication, leadership. Innovation, surpassing" The Company has established a comprehensive multi-disciplinary R&D team for product development and
business path, takes the research and application of heat pump technology and technical research, and established a matrix R&D organizational structure. Utilizing the model of product
thermal management system products as the core, firmly grasps the development development driven by technological research, we can promote innovation. Meanwhile, a technical expert
theme of energy conservation, environmental protection and intelligent control, committee has been established to guide and manage technological development. All products, services and
upgrades from "mechanical parts development" to "system control technology quality of the Company take meeting the needs of customers as the first priority.
solution development of electronic control integration". The Company’s products
series are expanded from household A/C and refrigerator components to the field
The Company adheres to the vision of "Develop smart low-carbon economy, create eco-friendly environment
of commercial A/C and commercial refrigeration, and extending to the direction
for mankind", and continues to practice the concept of sustainable development. It carries out scientific
of inverter control technology and system integration and upgrading. Meanwhile,
management in the fields of corporate governance, environmental protection and social responsibility, drives
after the injection of automotive components business, it gives full play to the
the synergistic development of enterprises in the whole industrial chain, facilitates economic globalization,
synergy effect with the original business, continues to deepen the research and
and delivers a higher quality development of the enterprise.
development of new energy vehicle thermal management system components,
and actively explores the deeper application of thermal management components
and subsystems in the automotive field, so as to provide global customers with
competitive environmental intelligent control solutions.
ESG Performance Overview
ESG Performance Overview Awards and Recognition
March 2024 December 2023
Business Performance 1
Social Responsibility of Private in Zhejiang Province (Sanhua
Total assets Total revenue
Enterprises in Zhejiang Province Holding Group)
in 2023 (Sanhua Holding Group)
Federation of Industry and Commerce of
Leading Group Office of
Manufacturing High-Quality
Zhejiang Province Development of Zhejiang Province
Net profit Total tax
December 2023 December 2023
Social Performance 2
Science and Technology Award-Third Provincial High-tech Enterprise
Proportion of female employees Number of patents Number of hosting/participating in national or
Prize (Sanhua Commercial Refrigeration)
industry standards Department of Science and
Zhejiang Machinery Industry
Technology of Zhejiang Province
% Federation
Environmental Performance 3
Number of ISO14001 certified companies Number of green factories
Zhejiang Province Science and 2023 Innovation Method Pilot
Technology Leading Enterprise Enterprise of Zhejiang Province
Total installed capacity of energy storage stations Total installed capacity of energy
Zhejiang Science and Technology
Department of Science and
Publicity and Education Center (Zhejiang
MW MWh Technology of Zhejiang Province
Base for Promotion and Application of
Innovation Methods of the Ministry of
Science and Technology)
The scope of economic statistics is consistent with the scope of the Company's consolidated financial statements.
The scope of social performance data covers the listed body of Zhejiang Sanhua Intelligent Controls Co., Ltd, excluding the overseas part.
The scope of photovoltaic installed capacity data covers electromechanical parks in Meizhu, Daming, Hangzhou, Binhai, Wuhu, and Sitong; the scope of
installed capacity data in energy storage stations covers parks in Meizhu, Daming, Hangzhou, and Binhai.
ESG
Sustainable Development 绩效总览
Management
Sustainable Development
Management
November 2023 November 2023 With the vision of "Develop smart low-carbon economy, create eco-friendly environment for mankind", Sanhua Intelligent Controls
focuses on environmental protection and energy saving while pursuing economic benefits. We take the construction of resource-
City (Sanhua Holding Group) Enterprises of Zhejiang Province promotes the strategic transformation from "cost leadership" to "technology leadership", and continuously researches and develops
Shaoxing Enterprise Confederation
in Innovation capability a series of new products and technologies with independent intellectual property rights in energy saving, environmental protection,
Shaoxing Enterprise Directors High-tech Enterprise Association of material saving and consumption reduction.
Association Zhejiang Province
Corporate Culture System
In the course of development, the Company has been summarizing practical experience and refining cultural connotation to guide
its development. It has formed an "evergreen" corporate culture system that originates from the development history, guides the
development practice, and leads the development in the future.
Vision
Develop smart low-carbon economy,
create eco-friendly environment for mankind
September 2023 August 2023
(No. 441) (Sanhua Holding Group) Reduction Contribution Award Mission
With dedication and technologies, establish a kingdom of intelligent climate control,
of China Energy Conservation and lead the industry in the world
China Enterprise Confederation
Association - Excellent Parts and
China Enterprise Directors
Components Brand in Heat Pump
Association
Industry
Heat Pump Committee of China Energy Strategy
Dedication, leadership, innovation, surpassing
Conservation Association
Values Guidance
Three ?owers of management, technology and talent Global operation, production specialization, technology advancement, lean
management, brand internationalization
July 2023 February 2023
Soul Core values Principles
Benchmarking Enterprise for
Constantly pursue perfection Serve customers promptly and
Emphasize human value,
and excellence take action immediately
constantly innovate, Social responsibility
Management Benchmarking and
to satisfy customers, employees,
Practice in Automotive Industry suppliers, shareholders, society
(Sanhua Automotive) Improvement of Zhejiang Province
China Association of Automobile Department of Economy and
Manufacturers Information Technology of
Zhejiang Province
Philosophy of Talent
“Philosophy of Root”: enterprise is the tree, talents are roots; the deeper the roots, the more ?ourishing the tree.
Evergreen Sanhua Culture Tree
ESG
Sustainable Development 绩效总览
Management
ESG Management
The Board of Directors
The Company attaches great importance to ESG management, taking into account the concerns from regulators and the evaluation
The Company's management attaches great importance to ESG management. The Board of Directors, as the highest
systems of ESG rating agencies in mainstream capital markets (e.g., MSCI ESG4, EcoVadis5) to guide the consolidation of governance
governance body, is fully responsible for the Company's environmental, social and governance strategies and related
and sustainable development. In 2023, the Company launched an ESG systematic work program. All departments actively took on
supervision, formulates the Company's ESG/sustainability strategies, target frameworks, and major policies, and
the important responsibility of improving the ESG sustainability rating and participated in the formulation of ESG and sustainability
monitors the development trends, risks, and opportunities regarding ESG/sustainability, as well as evaluates their
strategies and action plans. By doing so, we ensure the effective implementation of ESG work, and regularly report the progress
impact on the Company's long-term development.
to the Strategic Management and ESG Committee to comprehensively deepen the ESG management and promote the Company's
sustainable and long-term development.
In 2023, the Company's ESG Task Force took active actions. It has held 9 ESG working meetings to review and make decisions on
core issues such as ESG and sustainable development strategies and goals, and figured out the focus of work in detail. Meanwhile, The Strategic Management and ESG Committee
the Company attaches great importance to ESG promotion and capacity building. It has organized 19 ESG training sessions covering
various aspects such as policy interpretation and practice cases, attracting more than 200 participants. We have effectively The Company has established the Strategic Management and ESG Committee, which is mainly responsible for:
enhanced employees' ESG awareness and practice ability, providing strong support for the sustainable development of the organizing, implementing and effectively managing the Company's strategic development plans; leading and
Company. promoting the construction of the Company's ESG governance system to promote its long-term sustainable operation;
ensuring the effective implementation of the Company's ESG strategies and plans, and promoting the improvement of
ESG management performance and the implementation of sustainable development goals; guiding and facilitating the
effective implementation of ESG work by the ESG project team and all business units.
The ESG Task Force
The Board of
Within the year, the ESG Task Force of the Company was established as a standing body of the management to
Directors incorporate ESG work into the entire work architecture. It enhanced the management's continuous and effective
efforts into ESG work and ensured that ESG will be fully integrated into the Company's decision-making process
and closely linked to strategy and risk management. The ESG Task Force is composed of the Company's senior
managers, with the Company's Human Resources Director and Procurement Director as the leaders, and delegates
from each functional department and each business unit as members.
The Strategic Management and The main responsibilities of the ESG Task Force include:
ESG Committee
undertaking duties related to the promotion of the Company's ESG sustainability rating; participating in the
formulation of the Company's ESG and sustainability work planning and action points; holding regular ESG work
meetings to discuss and determine the duties of each member, implementing daily ESG work, and reporting to the
Strategic Management and ESG Committee on a regular basis; responding to ratings, inquiries, questionnaires,
etc. from investors and rating agencies regarding the Company's ESG and sustainability efforts; taking the lead in
planning ESG information disclosure work and assisting in preparing annual ESG reports in accordance with the
requirements of regulators, investors and rating agencies.
The ESG Task Force
Morgan Stanley Capital International (MSCI), is an international authority on indices and ESG analysis.
ESG
Sustainable Development 绩效总览
Management
Stakeholder Communication
Sanhua Intelligent Controls actively expands communication channels with stakeholders in its Communication and
Stakeholders Concerns and Expectations
daily operation and services. Through a regular communication mechanism, we carry out multi- Engagement Methods
channel and multi-form communication activities. We fully understand the expectations and Corporate Governance
Regular Announcements
demands of stakeholders, actively respond to their concerns, and build a harmonious and stable
Business Ethics
relationship. Performance Reporting Meetings
Innovation and Intellectual Property Rights
Daily Communication
Management Risk Management
Communication and Questionnaires
Stakeholders Concerns and Expectations Emissions and Waste
Engagement Methods
Corporate Governance Employee Congress
Integrity and Compliance Employee Training Occupational Health and Safety
Communication and Reporting Risk Management Employee Events Pooling and Retaining Talents
Responding to Climate Change Social Media Human Rights Protection
Government and Regulators Compliance Disclosure Employees
Emissions and Waste Intranet Human Capital Development
Employee Rights and Interests Employee Satisfaction Surveys
Network and Information Security
Timely Telephone Communication Responding to Climate Change Regular Communication
Occupational Health and Safety
Investor conferences Emissions and Waste Suppliers' Official Websites
Sustainable Procurement
Corporate Governance Suppliers/Service Providers Questionnaires
Performance Release Consumer Health and Safety
Risk Management
Shareholders' Meeting
Investors Innovation and Intellectual Property Rights
Roadshows Sustainable Procurement Company Website
Questionnaires Innovation and Intellectual Property Rights
Product Lifecycle Management Industry Communication
Fair Competition
Industry Associations Questionnaires
Social Media Product Life cycle Management
Customer Relationship Management
Customer Satisfaction Surveys Media Interviews
Consumer Health and Safety Responding to Climate Change
Customer Complaints Company Website
Customers Compliance and Integrity Community and Public Welfare
Questionnaires Media Questionnaires
Network and Information Security
ESG
Sustainable Development 绩效总览
Management
Highly important
Materiality Analysis
In 2023, Sanhua Intelligent Controls established this year's material issues pool based on the macro environment and both
internal and external conditions. It also identified the key material issues of sustainable development through a combination of
questionnaires and key stakeholder interviews. Through the dual material analysis, we respond to stakeholder concerns in this
report. 6
Established ESG Conducted Formed material
Identified key stakeholders
Importance to stakeholders
material issues pool stakeholder surveys analysis results
Identified key stakeholders 13
Based on stakeholders' "influence by the enterprise" and "influence on the enterprise", we have identified 8 major categories of
stakeholders, including: employees, management, government and regulatory agencies, suppliers/service providers, customers,
industry associations, media, and investors. 22
Established ESG material issues pool 17
Through benchmarking against international supervision and policy trends, industry trends, peer performance, etc., as well as 9
reference to the United Nations Sustainable Development Goals (SDGs), MSCI ESG ratings and S&P Corporate Sustainability
Assessment (CSA) issues of concern for benchmarking and analysis, Sanhua Intelligent Controls has established a material issue
pool for this year, covering a total of 23 issues in terms of environment, society and governance. 11
Important Importance to Sanhua Intelligent Controls 's operations Highly important
Conducted stakeholder surveys
Governance Issues Environmental Issues Social Issues
The issues included in the material issue pool were prepared into questionnaires and distributed to stakeholders for scoring.
understand their concerns and expectations. Management 17. Human Capital Development
Gas Emissions 19. Labor Practice Management
Property Rights
Formed material analysis results 9. Water Resources Management 20. Pooling and Retaining Talents
Combined with the results of stakeholder surveys, the Company ranked the 23 material issues. In the dimensions of "importance
to stakeholders" and "importance to Sanhua Intelligent Controls's operations", we formed the 2023 Sanhua Intelligent Controls 's
materiality matrix in 2023. 13. Emissions and Waste 23. Corporate, Citizens and Public
ESG
Sustainable Development 绩效总览
Management
Responding to SDGs goals
The Company is taking actions on highly important material issues, aiming to contribute to the common sustainable development
goals of humanity through corporate value. We have been actively engaged in the following key efforts in response to the United
Nations Sustainable Development Goals (SDGs).
UN SDGs Our Efforts UN SDGs Our Efforts
Actively taking up corporate responsibility to jointly deliver
Responding to the trend of industrial and technological
common prosperity, visiting the elderly in nursing homes, providing
transformation, and continuing to increase R&D investment and
paired-up assistance to the needy in communities, and supporting
expanding our scientific research and innovation platform to
the development of education to contribute to society and
accumulate technological advantages through scientific and
promote social harmony and sustainable development; carrying
technological innovation; promoting intelligent manufacturing
out university-enterprise cooperation to support the training of
and lean production to enhance the digitalization of the
talents in colleges and universities, and to promote high-quality
Company's production equipment; and responding to the
employment.
development trend of the new energy automobile industry by
Attaching importance to the health and safety of consumers, and providing energy-efficient and intelligently controlled thermal
identifying and avoiding potentially hazardous factors in product management products for new energy automobiles.
design and development; providing employees with a full range
of health protection, occupational disease protection and caring
measures, and carrying out investigation and rectification of Upholding the low-carbon sustainable development in the full
potential safety hazards to ensure that employees work in a safe life cycle of products and services, incorporating the concept
and comfortable environment. of ecological and environmental protection into product
development, design and production, improving the performance
of products, and adding whole-lifecycle carbon footprint tracking
Prohibiting discrimination or unfair treatment of employees due to
and other traceability information; promoting the construction
gender, age, etc.; implementing the principles of equality between
of photovoltaic, energy storage and other projects, and using
men and women, equal pay for equal work, and distribution
distributed photovoltaic to replace part of the purchased
according to work, and continuously optimizing the remuneration
electricity in the park.
and benefits and performance appraisal system; building a
scientific qualification system, combined with a clear career
development path, to help employees clarify the positions and
directions in their careers, and to provide employees with a broad Attaching importance to the impact of our operations on
space for development. stakeholders, continuing to develop and optimize our ESG
governance system, and enhancing the supervision and
Attaching importance to environmental impacts during participation of the Board of Directors and management in ESG
operation, preventing and controlling all types of pollutants, affairs; staying committed to high business ethics and showing
and strengthening environmental management and improving no tolerance for all types of corruption; working together with
environmental performance to ensure effective management of our supply chain partners under the principle of "Integrity and
emissions and conservation of resources; researching, developing Shared Value" and formulating sustainable procurement policies
and promoting environmentally friendly refrigerants, lead-free to improve the environmental and social performance in supply
products, etc., to reduce environmental pollution while reducing chains.
negative impacts on underwater and terrestrial organisms.
Feature on Responsibility
Feature on Strengthening Scientific and Technological The Company implements the mechanism of "Agile Development, Rapid Testing", and carries out collaborative development to
Responsibility Innovation and R&D
improve the reliability of product design while protecting patents. The R&D programs not only focus on improving the performance
of existing products, but also on the research and development of new products and technologies. In addition, it actively carries out
innovative R&D based on the existing technological advantages. As of 2023, the Company has achieved a number of achievements
The Company attaches importance to the innovation and establishment of
in its innovation programs.
management systems and mechanisms. The Company and its subsidiaries
quality Development
innovation Drives High-
Scientific and Technological
have introduced management measures for R&D and innovation such as
Project/Product Name Approval/Review Department
the Management Measures for Patent Work, Management Measures for
Scientific and Technological Project Management and Awards, Control
National Development and Reform Commission, Ministry of Science
Procedures for New Product Development, Management Measures for
National Enterprise Technology Center and Technology, Ministry of Finance, General Administration of
Reviewing New Product Development Projects, and Management Measures
Customs, State Taxation Administration
for Implementing Product Line Planning and Product Power Building. As a
result, it has formed unique innovation systems and mechanisms supported
Ministry of Human Resources and Social Security, National
by management systems and targeting resource integration. Post-doctoral Research Workstation
Postdoctoral Committee
We uphold innovation and take energy-saving, low-carbon
and intelligent control as the core concept of product Department of Science and Technology of Zhejiang Province,
development. We have developed a solid technological Provincial High-Tech Enterprise Department of Finance of Zhejiang Province, Zhejiang Provincial Tax
foundation by working intensively on core technologies such Service, State Taxation Administration
as fluid control, automatic pressure detection and control,
Focusing on
high-efficiency heat transfer, electromagnetic control and
fields National Technological Innovation Demonstration Ministry of Industry and Information Technology of the People’s
industrial automatic control. We focus on commercial air
conditioning, thermal management of new energy vehicles, Enterprise Republic of China
heat pumps, energy storage, and commercial and industrial
refrigeration, and are committed to realizing technological Key Enterprise Research Institute for Intelligent
breakthroughs and innovation in these fields. Control of Refrigeration Appliances in Zhejiang Department of Science and Technology of Zhejiang Province
We follow the strategic layout of "Reserving One Generation,
Province
Developing One Generation, and Producing One Generation" to
Scientific and technological innovation
ensure continuous technological advancement and product Industrial Internet Platform of Zhejiang Province Department of Economy and Information of Zhejiang Province
is the inexhaustible driving force leading
R&D Layout upgrading. We develop high-quality core components, control
the development of enterprises. It is also modules and system technology solutions for our global Electronic Expansion Valve Awarded the
the key to better applying technologies in customers to meet the diversified needs of the market and
Manufacturing Single Champion Product by the Ministry of Industry and Information Technology of the People’s
industrial scenarios, and to promoting the promote the sustained development of the industry.
Ministry of Industry and Information Technology Republic of China
continuous upgrading and transformation
As an enterprise driven by scientific and technological innovation, (2023-2025)
of industries. From the very beginning,
Sanhua Intelligent Controls has embedded the Company has been increasing R&D investment over the years. We
continue to accumulate technological advantages through scientific DC Drainage Pump for Air Conditioning Rated as
the concept of science and technology in Excellent Industrial Product Selection Committee of Zhejiang
and technological innovation, enhance product power, and form core Zhejiang Province's Excellent Industrial Product of
its genes and cultivated the values and Province
competitiveness. In 2023, the Company's R&D investment amounted to RMB 2023
culture of "Respecting Talents and Valuing
Science and Technology". Through decades 1,097 million, a year-on-year increase of 10.92% compared with the previous
year.
of development, Sanhua Intelligent Automotive Components Module
Controls has been drawing on its R&D Investment（RMB 100 million）
experience. Starting from "cost leadership", The Company has shaped scale and become a technological pioneer in the automotive components industry, with its products
we move towards "technology leadership", and technologies covering the fields of automotive air conditioning thermal management, power battery thermal management,
and constantly upgrade our strategies. We 7.51 motor thermal management and other full-vehicle thermal management. In recent years, the Company has been promoting
also put innovation and key technology intelligent manufacturing and lean production, grasping the opportunity of rapid development in the new energy automobile
breakthroughs as top priorities, and strive industry, deepening product development and innovation in the field of automotive thermal management. It has committed itself
to realize key technology breakthroughs to the research and development of more efficient and energy-saving, intelligently-controlled thermal management products and
by grasping market and technology 2020 2021 2022 2023 technological innovation.
development trends.
Feature on Responsibility
Product Application Type Product Name Functions and Advantages Home Appliances and Commercial Refrigeration Business
Electronic Expansion Valve
It can enhance temperature stability and capacity of 目前工作进展
The Company actively fulfills the Kigali Amendment to the Montreal Protocol on Substances that Deplete the Ozone Layer,
the battery cooler, precisely controlling flow rate.
collaborating with various sectors to limit HFCs to address ozone depletion and climate change. It explores alternative refrigerants
A/C Thermal A ball valve using refrigerant as a medium, features in the air conditioning industry to actively contribute to ozone protection and climate change mitigation.
Electric Ball Valve
Management low pressure drop
A cost-effective solution for refrigerant flow on/off The Company is actively advancing its technologies in clean refrigerants such as carbon dioxide (CO2) and R134a, which offer
Refrigerant Solenoid Valve
control advantages in energy efficiency, environmental friendliness, and high-pressure tolerance. These technologies have higher
demands and are harmless to the environment. They do not deplete the ozone layer, and have a low greenhouse effect. That’s why
Powertrain Thermal It can adjust flow rate on demand through variable
Electronic Oil Pump these technologies are being actively promoted and are gradually becoming mainstream in the home appliance and commercial
Management speed control, improving energy efficiency.
refrigeration industries. The Company holds numerous patents and has achieved significant technological advancements in the
field of home appliance and commercial refrigeration components, with many independently developed products that have broken
Electric Coolant Valve Precise flow control, highly resistant to impurities
Battery Thermal through technical barriers set by foreign enterprises.
Management
Chiller with Expansion Valve Simplified piping, minimizing packaging space
Other Applications Actuator Driven by a DC motor, responding instantly Two home appliance products won the "Golden Nail Award" of China's home appliance industry chain Case
The electronic expansion valve is a core component in the thermal In April 2023, the Company's refrigerator micro-channel condenser and drawer-type dishwasher dispenser of Sanhua
management of new energy vehicles, with high demands for both Aweco (Wuhu) won the "Golden Nail Award" of China's home appliance industry chain in 2023 at the China Home Appliance
software and hardware technologies. As a first mover, Sanhua Intelligent Industry Chain Conference.
Controls has taken the lead in applying electronic expansion valves
in the field of new energy vehicles, making it a signature product of
Refrigerator micro-channel condenser: light weight, small volume, high energy efficiency, less refrigerant charging,
the Company and maintaining a global leading market share for five
and applicable to R290, R600a and other combustible refrigerants; compact product structure, environmentally
consecutive years.
friendly materials that are easy to recycle; not only meets the customer's requirement of improving the space
utilization of the compressor compartment, but also conforms to the national strategy of low carbon and
In 2023, the Company leveraged its component product advantages to environmental protection.
develop integrated components, upgrading product structures to higher Drawer-type dishwasher dispenser: The product has a thin, light and minimalist design with high effective capacity.
value and higher technical barriers. Sanhua Automotive won the "Top It is intelligent and infinitely adjustable, enabling users' personalized settings, and prolonging the use cycle while
Awards with its "Intelligent Thermal Management Modules". New Supply Chain
New technology research on R290 heat pump for electric vehicles Cas e
The new energy vehicle is a future industry that aligns with the trend towards a greener and more digital society.
It is not only a paradigm of the new quality productive forces of our country, but also an important development
strategy for the transformation and upgrading of the global automotive industry. The Company has proactively
explored technical upgrades in new energy vehicle thermal management systems in response to the urgent
industry needs for replacing hydrofluorocarbons (HFCs). In collaboration with the Chinese Academy of Sciences,
and based on years of joint research with the Technical Institute of Physics and Chemistry, the Company signed
the Research Agreement on Key Components and System Performance of R290 Heat Pumps for Electric Vehicles
in August 2023. Significant progress has been achieved by the end of the reporting period. The scene of "Golden Nail Award" China's home appliance industry chain in 2023
Feature on Responsibility
The Company facilitated the application of low GWP6 refrigerants Case
Low GWP refrigerants tend to increase the risk of flammability and have high costs of components. To address these Building the test bench for R290-specific plate heat exchanger performance:
problems, the Company, as a supplier of components, has come up with numerous workable solutions:
To reduce the charge of R290 refrigerant and improve the heat exchange efficiency of R290 system, the Company is the
Electric ball valve (EBV): first in the industry to invest in the construction of R290-specific plate heat exchanger performance test bench, which
is used for the development and testing of R290-specific plate heat exchanger.
The Japan Refrigeration and Air Conditioning Industry Association released the JRAGL-16 standard for the use of
slightly flammable refrigerants in August 2017, which requires that the use of R32 refrigerant in commercial air
conditioners (mainly multi-connected units) must be equipped with a safety shut-off valve from 2025 onwards to
prevent accidents caused by refrigerant leakage. The Company's stepper motor-driven electric ball valves, EBVs,
have been widely adopted by the market for their design and performance advantages.
Electric ball valve (EBV) products Sanhua Brazed Plate Heat Exchanger
Enhancing product safety standards:
According to the EU regulations, R32 refrigerant will be phased out
in the future and replaced by R290 refrigerant which is flammable
and explosive. The Company has upgraded and certified the related
products at the first time to ensure that they meet the new safety
standards. Among them: four-way reversing valves, solenoid valves,
electronic expansion valves, pressure transmitters and pressure
switches have all obtained the relevant third-party certification.
Products that have obtained safety certification
Global Warming Potential (GWP) values, the index of the greenhouse effect produced by a substance, is used to
estimate and compare the potential impact of emissions of different gases on the climate system.
Feature on Responsibility
Emerging Business
The Company continues to develop and innovate more intelligent and digital products, automotive parts, HVAC appliances and other
The Company pays close attention to the global scientific and technological revolution and industrial change trends.
key products, to enhance the Company's comprehensive competitiveness in the field of HVAC appliances as well as automotive
Relying on the homology of technology, we actively lay out the development in energy storage, robotics and other fields,
thermal management. In terms of the green performance of its products, the Company has also developed many energy-efficient,
cultivate future industries to pool new quality productive forces, and enhance the new momentum for the Company's
low-carbon and environmentally friendly products to realize the sustainable development of its business.
development. In addition, the Company focuses on electromechanical actuators and other segments. With its own
technological advantages, it designs and develops electromechanical actuators for bionic robots, and has carried out
research and development of related products, trial production, adjustment.
Deepening Digital Transformation
The Company actively responds to the Plan for Development of the Digital Economy During the "14th Five-Year" Period,
which mentions the steady advancement of industrial digital transformation. It continues to improve the digitalization
of production equipment, and promote the integration and innovation of digital technology, application scenarios and
business models, so as to improve the Company's production efficiency.
Case
Intelligent solutions for Sanhua Automotive Binhai Factory
Under the guidance of the intelligent manufacturing strategy, Sanhua Automotive Binhai Factory has built an High Quality and Efficiency, Intelligent Production:
intelligent factory with stable quality, optimal cost and flexible delivery by focusing on the digitization of the full life
AGV (automatic guided vehicle), SH-PCS system (intelligent manufacturing execution system), 5G network and other
cycle of the products and automated and intelligent equipment.
equipment and facilities are fully put into use in Binhai Factory, realizing full automation in the workshop.
Tracking Data, Controlling Quality:
Binhai Factory has introduced a data collection and uploading system for automated production to improve the
stability of product delivery quality; the production line also applies the MES system, which analyzes key data and
helps to quickly identify problems and make improvements, further improving the stability of product delivery
quality.
Data Management, Agile Delivery:
Binhai Factory has set up a data collection team with strong professionalism and high executive power, to work
with the self-developed SH-PCS equipment data collection system. It greatly reduces the docking cycle and
improves the data management efficiency through the establishment of a unified data collection specification
with equipment manufacturers.
Independent R&D, Flexible Application:
The Company is strengthening its independent research and development efforts to improve the level of
intelligent manufacturing through the use of digital tools.
Sanhua Automotive Binhai Intelligent Factory
Feature on Responsibility
Electronic Expansion Valve Gold Processing Intelligent Control Cloud Platform
Digital empowerment of assets - Sanhua Intelligent Controls TMS Cloud Cas e
In October 2023, Sanhua Intelligent Controls TMS Cloud (Phase I) was launched, which directly connects the
settlement of many banks and integrates various business systems and capital platforms within the Company. The It realizes functions such as
first phase of the platform includes six functional modules and 299 accounts directly connected with banks and automated data collection and
enterprises, which has covered the balance, details, and return inquiries of major accounts in China, Singapore, analysis, provides data support for
Vietnam and North America, and realized the visualization, controllability and adjustability of funds in the above the Company's management when
regions. making decisions on equipment
resources, and monitors equipment
The successful launch of the system realizes the closed-loop operation of business, finance and fund information, abnormalities in real time, and
promotes the Company's "integration of business, finance and assets" and "paperless finance", and accelerates the alarms in advance.
Company's digital transformation.
Figure of the instrument panel of the Electronic Expansion Valve
Gold Processing Intelligent Control Cloud Platform
Fo r e a c h l e v e l o f m a n a g e m e n t
positions, 5 themes and 3 points are
identified, which are carried through to
daily or monthly performance appraisal.
TMS Cloud (Phase I) Launching Ceremony The model focuses on the Company's
operational goals, highlighting clue
In 2023, Sanhua Intelligent Controls gradually built and improved the industrial internet platform consisting of the
discovery and management, and
domestic supply chain collaboration sub-platform, the design and R&D collaboration sub-platform, the intelligent
effectively promoting the Company's
manufacturing sub-platform, the operation and management sub-platform, the intelligent warehousing and logistics sub-
"MASI" cycle.
platform, the intelligent energy IoT sub-platform, and the information security control sub-platform, and put a number of
projects into practice.
Figure of the 5+3 Visualization Window Project
CRM Marketing Window Project
sorting out the computer view of business staff in Full-lifecycle Traceability System
business units based on management objectives and
indicator systems; displaying the daily sales plan of Based on 5G "Industrial Gateway + Sinking UPF + Industrial Internet Platform + Application System", the system realizes full-
the sales staff; through the shipment and invoicing lifecycle traceability to meet the requirements of high-end customers. At the same time, it can be flexibly deployed and
to prejudge the achievement of sales targets; dynamically tuned to the equipment to improve the yield rate and reduce the number of customer complaints.
monitoring new products and strategic customer
sales in real time; assisting the business personnel in
assessing their own sales performance from multiple
In addition, the Company has created digital tools such as OA system (Collaborative Office Platform), EHR platform (Electronic
perspectives, guiding and motivating them. Figure of the CRM Marketing Window Project at PC end Human Resource Platform), M365 project (Document Collaboration Platform), etc., to improve the office and production
efficiency in all aspects from the daily office, human resource integration, and document sorting.
Feature on Responsibility
Feature on
Responsibility Product Quality Management Recall Mechanism
The Company strictly abides by the Product Quality Law of the People's
• Determination: Products delivered with large-scale non-conformance or safety hazards, or affected by other
Sustainable Value
Quality Products Creating
Republic of China, the Metrology Law of the People's Republic of China, the
changes (including technological, legal, regulatory, and conflict events) impacting the quality or safety of delivered
Standardization Law of the People's Republic of China and other laws and
products, as well as batches found internally affected by non-conforming products, are included in the recall scope.
regulations, and has formulated rules and regulations such as the Control
Procedures for Defective Products, to strictly conduct product quality
management, and to prevent defective products from unintended use or delivery. • Identification and Review: require quality engineers to complete the Recall Product Process Form and establish a
task force for recall review, with the general manager and legal counsel participating as necessary.
Responsibilities of Departments
• Implementation of Recall: Based on the review, the quality department deliver the Recall Product Process Form to
• The quality department coordinates product quality management, relevant departments; sales personnel are responsible for communicating with customers and providing feedback on
clearly identifies, determines, and handles non-conforming products, recall events; to ensure smooth product recall; coordination with customers is conducted via telephone, fax, email,
and issues instructions to stop or resume production; conducts etc.
statistical analysis of non-conforming products and supervises the
implementation of decisions on their disposal; and determines the • Disposal: Sold products are isolated, labeled, and registered in a separate area in the finished product warehouse;
responsibility for quality losses due to non-conforming products. products on the production line are isolated and labeled in a separate area by workshop personnel; products in
storage are isolated, labeled, and registered in a separate area by warehouse personnel; finally, instructions for
• The production department is responsible for identifying, reporting,
handling recall products are issued based on conclusions from review meetings.
isolating, reviewing, and handling non-conforming products in the
manufacturing process.
• The departments of supply management, planning, and sales are
Sanhua Intelligent Controls respectively responsible for reviewing and handling non-conforming
continues to improve its samples, batch products, and finished products in the warehouse.
product quality management
system to ensure that each
product meets or exceeds Review and Supervision Mechanism
customer expectations.
The Company is constantly A comprehensive management approach is adopted throughout
investing in research and the lifecycle of non-conforming products, involving classification,
development while also identification, review, disposal, data analysis, deductions, and other review
focusing on improving the and supervision procedures to ensure product quality standards, including:
effectiveness of its services.
It adheres to the principle of • Raw materials and outsourced • Customer products
components • Third-party warehouse products
integrity, putting quality first
to ensure the stability and • Raw materials and outsourced • Suspect products
reliability of product quality components used in production
• Recalled products
and providing customers with • Finished products during production
more excellent products and • Outsourced components before
services. processing
• Finished products in storage inspection
Feature on Responsibility
Sanhua Household conducted regular quality management activities Cas e Striving for excellence, supporting high-quality product testing Case
Sanhua Household regularly conducts quality management activities using the QRQC board as a platform and
face-to-face visual management as a means. Quality managers from each business unit focus on customer In March 2023, assessment experts from China National Accreditation Service for Conformity Assessment (CNAS)
concerns and potential market risks, delving into internal improvement work. Through visual quality management, conducted an on-site conformity assessment of Sanhua Intelligent Controls Metrology and Testing Center, and audited
we continuously improve product quality and services to meet customer needs and effectively address market the requirements of all management and technical elements of the accreditation guidelines covered by the quality
risks, laying a solid foundation for the Company's stable development. management system documents. The assessment involved a total of 7 testing objects and 110 testing parameters,
including valve product testing items, copper and copper alloy, metal material chemical and physical testing items. Since
the first CNAS accreditation in 2012, Sanhua Intelligent Controls Metrology and Testing Center has upheld the principle
of objectivity, impartiality, science and rigor. It continues to improve the testing services for the construction of the
Company's product quality system.
In 2023, the Company also placed significant emphasis on the quality digitalization
project, and both the Quality Master Data and Quality Window have been launched.
The uniqueness, integrity, and consistency of the Quality Master Data ensure data
Quality management activities at Sanhua Household accuracy, reducing business risks and costs while facilitating data sharing and
enhancing work efficiency. The Quality Window provides accurate, comprehensive,
and real-time data support, assisting management in making more scientific and
rational decisions, thus improving the Company's competitiveness and market
share. Furthermore, the construction of the Quality Management System (QMS)
has been completed, ensuring more timely access to quality information and
faster quality improvement. The Company has strengthened its efforts in special
external quality inspection, guaranteeing transparent quality data and efficient
control through measures such as separating external inspectors from sampling The Quality Master Data window interface
personnel and automatically uploading external inspection data in real-time. of Sanhua Commercial Refrigeration
Quality training at Sanhua Commercial Refrigeration Quality training at Sanhua Automotive
On-site quality investigation at Sanhua (Hangzhou) On-site quality investigation for Leaderway
Micro Channel Heat Exchanger Electronics
Feature on Responsibility
Customer Relationship Management
Verifying related information
The Company adheres to the service concept of "Customer First, Customer Foremost", continuously strengthens including product details, quality data, and customer demands.
the customer service before, during and after the sale, and builds a high-quality customer service system. It has
formulated customer relationship management systems, such as the Measures for the Management of Non-
conforming Products of Customers and the After-sales Service Control Procedures. During the reporting period,
the Company added the Handling and Assessment Standards for After-sales Quality Abnormalities to improve the
internal management of customer service and enhance the efficiency of response to customer needs. Issuing a quality anomaly investigation
to confirm the product's quality status and provide interim measures and investigation progress to
the customer within 24 hours; in the event of a batch of incidents or significant quality anomalies,
If customers return non-conforming products, the Company will take the following actions immediately reporting to the department director and quality director, and providing interim measures
to the customer within 24 hours.
Customer information feedback and acceptance Formulation of improvement measures
Preliminary investigation of the cause of defects Implementation of improvement measures and
and product disposal verification of effectiveness Initiating a product quality review
Defective product analysis Experience put into database with the responsible unit required to confirm the causes of the quality issue within 48 hours and
Determination of results Management of ineffective returned goods provide a written analysis report.
Incident handling
The Company attaches great importance to customer satisfaction, actively listening to customer feedback and
In the event of a situation causing the production stoppage or product quarantine of the customer,
opinions, and ensures that all negative feedback and complaints from customers on product quality and any related
the after-sales quality team sends personnel to the site for disposal to minimize quality losses.
information are timely and effectively received and rectified. The Company has established a sound mechanism
Simultaneously, we initiate a Quality Anomaly Risk Review Form, conduct testing or risk control
for handling after-sales quality exceptions and an accountability system, and clarified the responsibilities of each
investigations as necessary, and promptly communicate with the customer to clarify timelines,
department in the handling process. The handling process of after-sales quality exceptions mainly include problem
thereby preventing customer complaints.
disposal and analysis for improvement, and employees will be assessed for accountability.
Feature on Responsibility
Consumer Health and Safety
The Company prioritizes the health and safety of consumers. To ensure that all employees understand the principle of
product responsibility, during the reporting period, we revised the Control Procedures for Product Safety Management. In
addition, we defined, identified, and controlled safety-related products and characteristics, and established procedures we develop emergency plans for non-conforming products. Once non-conforming products are
Emergency Plan
for addressing potential or actual defects and their impacts. The specific control procedures are as follows: identified, they should be recalled immediately, and relevant personnel should be investigated.
we organize education and training in advance on product safety issues; when these
Principle
of Product issues occur, if safety-related products cause significant harm to customer interests,
Responsibility we will assume defendant responsibility, and relevant department directors will bear
primary responsibility. Document safety-related quality certification documents must be archived by the corresponding
Archiving department for at least 15 years (or according to customer requirements if specified).
we strictly adhere to relevant laws and regulations, conducting risk assessment, The Company has established the Control Procedures for Product Identification and Traceability to standardize the management
Product
evaluation, and validation of product safety characteristics; combining customer process of product identification throughout the stages from raw material/component inspection, warehousing, production, to
Design and
Development requirements, we conduct risk analysis on products to identify potential hazards delivery, ensuring the traceability of products.
during the manufacturing process, and taking preventive measures in advance.
Offline Product Information Traceability:
Raw Material we are responsible for the transfer and delivery of goods, products, and materials, products are traced by batch numbers and product models as unique identifiers. If there is no process flow path in the
Management with clear traceability markings on manufacturing batches. system, a flow card will be used to track the product's movement between various processes.
Online Product Information Traceability:
relying on the MES system for traceability management, comprehensive traceability of quality, production processes,
Product and materials is conducted. Additionally, QR codes are used as important identifiers for some products.
we submit product certification applications to third-party laboratories and promptly
Certification
notify customers.
Flower of
Management
Blooms for a
Better Future
Sanhua Intelligent Controls continuously improves the corporate governance structure, establishes and
enhances the internal control system, strengthens the information disclosure management, actively carries
out the investor relationship management, and regulates operations, so as to step up the level of corporate
Corporate Governance Structure Protecting Information Security
governance. In 2023, we revised the Articles of Association, the Rules of Procedure of the Shareholders'
Meeting, and the System of Independent Directors, etc., to deepen and improve the planning and formulation
of the corporate governance system. The actual situation of corporate governance is in line with the normative Risk Management System Supply Chain Management
documents of China Securities Regulatory Commission and the Stock Exchange regarding the governance of
listed companies. Integrity and Compliant Operation Protecting Intellectual Property Rights
Flower of Management Blooms for a Better Future
Corporate Governance Structure The remuneration of the Company's senior management personnel is determined in accordance with the standards of the
Company's unified remuneration management system, and the remuneration is determined on the basis of the Company's
operating results and performance assessment indicators through the Company's performance assessment mechanism, which
conducts regular appraisals of the senior management personnel.
Sanhua Intelligent Controls insists on building an open, transparent and efficient corporate governance system. We
have formulated and continuously revised the Articles of Association, the Rules of Procedure of the Shareholders' Investors’ Rights and Interests and Communication
Meeting, the Rules of Procedure of the Board of Directors, the Rules of Procedure of the Board of Supervisors and
other normative operational documents in strict accordance with the requirements of the Self-regulatory Guidelines Since its listing, the Company has insisted on rewarding its shareholders through a relatively stable profit distribution policy and
for the Companies Listed on the Shenzhen Stock Exchange No. 1 – Standardized Operation of the Companies Listed cash dividend program, and has conducted equal communication and built mutual trust with investors. The Company fulfils its
on the Main Board, and other relevant laws, regulations and normative documents. The Company has formed an information disclosure obligations voluntarily in strict accordance with the provisions and requirements of laws and regulations,
ensuring that the disclosure of information is true, accurate, prompt, complete and fair. In this way, we can help shareholders and
operational decision-making and supervision and management system structured by the Shareholders' Meeting,
creditors to promptly understand and grasp the Company's operating dynamics, financial situation and the progress of all major
the Board of Directors, the Board of Supervisors and the management, and has established an efficient internal
matters.
management system.
The Company emphasizes communication and exchange with investors, and takes seriously the opinions and suggestions of
investors, so that investors can fully obtain information to understand the Company through a variety of channels. In 2023, 11
investor research activities were organized, and the on-site participants were registered in accordance with the relevant provisions
and signed a commitment letter, and the record sheet of investor activities and relationships was promptly disclosed. Meanwhile,
Board of Directors Governance we actively communicate with investors through strategy meetings, the interactive platform of Shenzhen Stock Exchange, emails
and telephone calls.
The Board of Directors of consists of 9 directors and is accountable
In order to fully protect the rights and interests of the Company's shareholders, especially minority shareholders, the Articles of
to the Shareholders' Meeting. Its main duties include implementing
Association and the Rules of Procedure of the Shareholders' Meeting clearly stipulate the duties of the Shareholders' Meeting, the
the resolutions of the Shareholders' Meeting, exercising the decision-
Board independence convening procedures, the submission and deliberation of proposals, and the form of voting on the motions. The Board of Directors
making authority on major matters, formulating the working regulations
exercises its powers in accordance with the law, and all directors exercise their rights diligently and conscientiously, attend the
of specialized committees and regulating the operation of specialized
meetings of the Board and the Shareholders' Meeting, actively participate in relevant trainings to improve their business knowledge.
committees. Under the Board, there are Audit Committee, the Nomination
In 2023, the Company convened and held four general meetings in accordance with the Articles of Association and the Rules of
Committee, the Remuneration and Assessment Committee, the Strategic
Procedure of Shareholders' Meeting. The combination of online and offline voting was adopted for all the matters deliberated by
Management and the ESG Committee, all of which are responsible to the
the shareholders' meeting. Additionally, for the significant matters affecting the interests of minority investors, the voting used
Board of Directors; among them, the members of specialized committees
Person Person separate vote counting, which effectively protected the legitimate rights and interests of minority shareholders.
are all composed of directors, and independent directors account for the
Executive Director Independent Director
majority and act as convenors of the Audit Committee, the Nomination
Committee, and the Remuneration and Assessment Committee. In 2023,
the Company held a total of 10 Board of Directors' meetings, and the 9 2023
directors attended all 10 meetings, with an attendance rate of 100%.
Board Diversity
Periodic report
To ensure the independence and effectiveness of the Board of Directors,
the Company makes a clear distinction between supervisory and executive
Pcs
functions. Currently, the number of independent directors is 3, accounting
for one-third of the total number of directors.
Person Person of information
The Company focuses on the diversity of its Board of Directors. Currently,
there is one female director. A study has been conducted to increase the
Female Director Male Director
Announcement
Pcs
Other
Pcs
proportion of female directors, and the Nomination Committee assumes announcements
the responsibility for identifying suitable candidates.
Flower of Management Blooms for a Better Future
Risk Management System The Company aims to regulate the auditing behaviors and processes, strengthen the Company's supervision, management and
auditing of its departments and subsidiaries (branches), promote the effective implementation of rules and regulations, and
contribute to the healthy and stable development of the Company. To achieve these goals, we have formulated the Internal Audit
System in accordance with the Audit Law of the People's Republic of China, the Provisions of the National Audit Office on Internal
Auditing, the China Internal Audit Principles, the Self-regulatory Guidelines for the Companies Listed on the Shenzhen Stock
Exchange No. 1 – Standardized Operation of the Companies Listed on the Main Board, the Guidelines for Auditing of Enterprise
A sound internal control and risk management system is the guarantee for the Company's robust governance. In Internal Controls and other relevant laws and regulations in order to strengthen the internal auditing work of the Company.
for Enterprises and its accompanying guidelines, and other relevant regulatory requirements for internal control In 2023, the Company invited a third party to carry out an internal control audit of the financial reports in accordance with the
from CSRC and the SZSE. Taking into account its own actual situation and characteristics and management needs, Guidelines for Auditing of Enterprise Internal Controls and the relevant requirements of the Practice Standards for Certified
the Company has formulated an internal control system covering the entire Company and ensured that it is operated Public Accountants of China. Meanwhile, the Company improves its risk management system, and promotes comprehensive risk
effectively without any major omissions, so as to effectively manage risks. management work in terms of process management, training and crisis response for risk identification, assessment, response and
improvement.
The Company has established a "three lines of defence" mechanism to ensure the effectiveness of its risk management and
internal control system.
The first line of defence The second line of defence The third line of defence
Business oversight: consisting Fu n c t i o n a l s u p e r v i s i o n : Internal audit and supervision:
of business units that are consisting of functional consisting of internal audit Internal audit training of Sanhua Intelligent Controls
responsible for daily operations departments, assisting and supervision departments,
and management, and for the first line of defence in regularly providing independent
designing and implementing establishing and improving its evaluations of the effectiveness of
relevant measures to address risk management and internal the Company's risk management
In response to information security risks, the Company has formulated the Information Security
risks. control system, and performing and internal control system, and
Risk Management Procedures to standardize and guide the identification, statistics and risk
supervisory duties to ensure promoting the value of integrity,
assessment of information assets, stipulating the identification, statistics, risk assessment and
that the risk management the investigation and handling of
risk management methods and processes. It also requires that risk assessment activities for
and internal control work of corruption reports for employees.
information security be conducted on a regular basis, with routine risk assessment activities
the first line of defence is
implemented once a year. In the event of the following circumstances, the Company will
effectively implemented.
temporarily initiate a new risk assessment: the addition of important information assets, such
as: new on-line business systems, the acquisition of new servers, the addition of new network
resources, etc.; significant changes in the business environment; major changes in management
or technological innovations.
Flower of Management Blooms for a Better Future
The Company opens a legal affairs column on the " Sanhua Intelligent Controls E-learning Platform", produces and uploads training
Integrity and Compliant Operation courses and related training slides, such as a brief analysis of customs supervision on employees carrying goods in and out of the
country and the promotion of knowledge on enterprises' overseas investment. Furthermore, we establish a database of laws and
regulations related to the Company's business for the exchange of and study by the employees.
Time Legal trainings in 2023 (off-line)
The Company adheres to integrity and compliant operation, and regards law-abiding and compliant operation as
a prerequisite for its sound development. The Company has formulated and issued the Contract Management
March Training on "Building a Trade Secret Protection System"
Measures, the Trademark Management Measures, the External Lawyer Management Measures, the Overseas Legal
Affairs Management Measures and other systematic documents; at the same time, it has formulated/revised the
"16+22" standard contract model texts to strengthen the Company's standardized operation. April Training on "Explaining Contracts for Sanhua Automotive Customers"
April Training on "Antitrust Compliance"
Compliant Management May Training on "Patent Application and Protection for Process Equipment"
The Company identifies, monitors and examines the compliance situation in production and operation through daily legal work June Training on "Exchanges in Mexican Import and Export Businesses".
(including but not limited to legal answers, contract review, trademark management, business administration, dispute resolution,
and exchanges and discussions with business departments), compiles risk points, provides improvement or enhancement
July Training on "Corporate Compliance Knowledge"
solutions, upgrades systems and optimizes processes. In 2023, the Company has formed special reports on compliance issues
such as fixed employee remuneration, evaluation of customer contracts, use of commercial fonts, export control, data entry and
exit, filing of overseas investment, protection of trade secrets, etc., and the overall compliance situation was good. At the same August Training on "Trade Secret Protection System and Enforcement".
time, the Company includes special improvement recommendations in the compliance special reports and sent them to relevant
departments or business units for implementation or reference, which promotes continuous rectification and improvement in key Training on "Compensation as Part of a Series of Trainings on Labor Compliance in
compliance areas, as well as enhanced the compliance awareness of various departments and business units to firmly control September
Enterprises".
business compliance risks.
October Training on "Contract Management Methods and Contract Evaluation Process".
The Company emphasizes compliance risk prevention and other management work, and is actively committed to strengthening
employees' awareness of the compliance culture. In 2023, the Company held 14 legal trainings, with 1,500 employees in key positions Training on "Recruitment as Part of a Series of Trainings on Labor Compliance in
as participants, to strengthen the management's awareness of compliance, and to create a favorable atmosphere of compliance November
Enterprises"
awareness within the Company.
December Training on "Independence Compliance for Listed Companies".
December Training on "Contract Management Practices"
In 2023, the Company had no significant compliance risk
incidents and was not involved in any major litigation
cases. The Company provides its employees with access
to compliance counselling. During the year, employees
Total number of legal enquiries from
business staff made over 200 legal enquiries to the Company's legal
Compliant operation training staff.
Flower of Management Blooms for a Better Future
Integrity and Business Ethics
The Company has zero tolerance for corruption. We insist on investigating and punishing any case of corruption, and safeguard our
legitimate rights and interests in accordance with the law. In order to strengthen the construction of anti-corruption and integrity
of enterprises, we have formulated the monitoring work method, the system of integrity return visit, the cooperation agreement of
integrity, the agreement of employees' integrity, and the management method of employees' acceptance of gifts and other related
documents.
Employees’ Integrity Governance
In order to build the ideological and institutional defence of "not daring to corrupt", "not being able to corrupt" and "not wanting to
corrupt", and to continuously promote the sound and sustainable high-quality development of the Company, we have established
and revised the internal supervision management system in accordance with the relevant laws and regulations and in combination
with the actual situation of the Company. We actively carry out the publicity and education of integrity practice, investigate and
handle all kinds of illegal and disciplinary behaviors, and put forward opinions on the handling of these behaviors.
The Company emphasizes integrity management, formulates anti-corruption policies and strategic plans, and promotes Organizing anti-corruption training for employees
the construction of anti-corruption systems and the effective implementation of relevant systems and regulations. In
addition, we strengthen our ability to supervise the integrity of suppliers and other key partners, forming an internal and Supplier Integrity Governance
external corruption governance pattern.
The Company continuously strengthens the internal control, auditing, monitoring and supervision of the supply system, and
The Company pays attention to the cultivation of integrity consciousness of all staff. During the endeavors to provide a favorable competitive environment for its suppliers by identifying risk points, clarifying the responsible
By the end of 2023
reporting period, in order to strengthen the education and management of personnel in sensitive persons, opening up reporting channels and carrying out special supervision work in the field of infrastructures. In this way, we can
positions, build up the ideological line of defence of not wanting to commit corruption, and make continuously improve the integrity management system of our suppliers, prevent and detect problems in advance, and resolutely
efforts to curb the occurrence of illegal and disciplinary incidents, the Company organized its % eradicate the occurrence of underhand dealings, commercial bribery and improper transactions. We endeavor to provide a good
procurement personnel in batches to go to the "Zhejiang Provincial Law and Discipline Education competitive environment for suppliers and promote long-term and stable cooperation between the Company and suppliers.
Base" (Xiaoshan Nanjiao Prison) to acquire warning education. This activity disseminates the culture The coverage rate of anti-
corruption training for The Company requires suppliers to comply with laws and regulations, honesty and trustworthiness, fair competition, protection of
of probity and strengthens the staff's awareness of the law. By the end of 2023, the coverage rate of
procurement staff intellectual property rights. Additionally, they are asked to regulate marketing behavior, resolutely guard the bottom line, put an end
anti-corruption training for procurement staff was 100%.
to bribery and unfair competition, and strictly prevent theft, infringement of other people's financial behavior and the dissemination
of false information. Acting in good faith, suppliers should also regulate the operation under the premise of "open, fair and just"
Integrity risk Identify integrity risks and formulate countermeasures to clearly identify those assuming responsibility; to carry out cooperation, building a strong dam against commercial bribery. At the same time, the Company strengthens the
prevention Identify problems through investigations, upgrade systems and plug loose holes; supervision and management of suppliers, insists on carrying out return visits to suppliers, and carries out special promotion for
suppliers and subcontractors. We require suppliers sign the Integrity and Self-discipline Cooperation Agreement, with the signing
Carry out special infrastructure prevention, conduct special supervision and preventive investigations in
rate reaching 96%.
the area of infrastructure, sort out key risk points and countermeasures, and set up reporting boxes to
receive reports for supervision;
Sort out the basic situation of personnel in sensitive positions and complete a program of classified
Whistleblowing Management
supervision and management.
The Company opens up various reporting channels, continuously improves the provisions on the acceptance and disposal of reports,
and encourages employees to report violations of business ethics to protect the interests of individuals and enterprises from being
infringed upon. The Company has set up a report box in each business unit, posted a report publicity notice to clarify the content
Integrity Strengthen staff awareness, organize training seminars, and sign the Employee Integrity and Self-Discipline
of the report and complaints. Reporting methods include web pages, telephone, e-mail, public number, microblogging, mailboxes,
training Agreement;
report boxes, etc., so as to give full play to the role of employees and external affiliates of the supervision, and to effectively protect
Set up a special integrity account, hand over to the Company all gifts received, and adhere to the "three
the legitimate rights and interests of the whistleblowers, creating a fair, open and just i working environment of integrity. The
prohibitions principle" in dealing with the issue;
Company focuses on whistleblower protection. We allow anonymous or pseudonymous reporting, and protect whistleblowers’
Send short message reminders before traditional festivals, and a total of 38,465 messages were sent to information in the acceptance, registration, custody, investigation and other aspects. In addition, we strictly prohibit retaliation
employees to remind them of the integrity of the festivals during the year. for whistleblowers, any form of retaliation will be investigated for criminal responsibility in accordance with national laws and
regulations.
Flower of Management Blooms for a Better Future
The Company steps up information security awareness training for new employees and technicians, and carries out information
security awareness promotion for employees in the form of monthly e-mails. In addition, the Company carries out internal detection
of situational awareness and threat intelligence analysis, and conducts daily statistics and checking and erasing of out-of-service
Protecting Information Security and high-risk assets; and increases the vulnerability scanning, IPS, and other security equipment, so as to reduce the vulnerability
of the Company's internal security and strengthen the ability of defending against external attacks. In order to prevent information
security loopholes caused by human operations, the Company also conducted information security drill tests to enhance
employees' awareness.
Sanhua Intelligent Controls strictly abides by the Data Security Law of the People's Republic of China, the Personal
Information Protection Law of the People's Republic of China and other laws and regulations in carrying out its
Conduct two phishing email prevention campaigns in the form of emails to employees;
business.
Organise an internal phishing email drill in which 1,800 employees were randomly selected and sent phishing emails,
With the rapid development of business, the Company's information security management boundary has been expanded to the and provide targeted training and guidance to employees based on the test results;
upstream and downstream supply chain. In 2023, the Company regulated the safe use and management of the information network,
safeguarding the smooth operation of the information network and the safe use of computer resources, and guarding against the
risks to the information system or data due to the unauthorized access to the network resources. Also, the Company has issued the Produce a special information security training PPT on phishing emails and select the topics for the training test;
network security management specification to maintain network security.
Complete on-site training and examination for employees who clicked on phishing links;
Information Security Management System
The Company emphasizes the construction of security management. In order to meet the requirements of the parties related Complete the analysis of the test results and inform 11 employees of the training and test results by email.
to the information security management system (customers, employees and suppliers) on strengthening the attention to the
confidentiality of the personal information, the Company establishes and implements a documented management system in
accordance with the standards of the management system, and the basic structure has been completed. The ISO/IEC 27001 :2022
management system established by the Company meets the requirements of ISO/IEC 27001 :2022 standards and relevant laws and
regulations, which operates normally and effectively.
In 2023, the Company upgraded its information security management system, with 18 new systems added during the year, including
office terminals, network security, third-party security, data backup and recovery, security compliance, business continuity, system
security and human resources security.
Protecting Information Security in all Respects
The Company has an all-round coverage of network security, and has set up the Information Security Division and Infrastructure
Department to guide the network security management work of each industrial unit of the Company, as well as to coordinate
the planning of the Company's overall network architecture planning; the ITBP of each industrial unit is responsible for the
implementation of the requirements of the management specification in the respective industrial unit. At the same time,
employees are required to strictly comply with the management requirements of this specification and actively participate in
trainings and activities related to network security management.
The Company carries out standardized management in terms of network structure, access, use, equipment, protection, monitoring
and early warning, supervision and inspection, etc., so as to effectively reduce the risks to the information system or data due
to various reasons. In addition, in order to standardize the management of the Company's network environment, strengthen the
terminal network security management, ensure that third-party communications and operating procedures meet the requirements
of information security protection, the Company formulates the office terminal security management specification and third-
party network security management specification in the light of the company's actual situation, so as to safeguard the Company's
Information security training for new employees
network security in an all-round way.
Flower of Management Blooms for a Better Future
Incorporate Corporate Social Responsibility (CSR) risk analysis items into the scoring items during
Supply Chain Management
new supplier enrolment and annual audits. Evaluate suppliers on environmental or social practices,
Supplier
notify suppliers of relevant official announcements, and organise CTI environmental dynamics training,
responsibility
hazardous substances training, and global environmental regulations training to strengthen the
management capability of suppliers.
As a global manufacturing enterprise, Sanhua Intelligent Controls is committed to building a globally competitive Sign a Conflict Minerals Statement, develop a Conflict Minerals Reporting Template, supplement
Avoid conflict
the Conflict Minerals Policy with supply agreements, and actively engage in responsible mining
product industry chain ecosystem. Adhering to the principle of "Integrity and Shared Value", the Company works mineral
procurement.
hand in hand with its supply chain partners to continuously promote high-quality development and build a safe
and responsible supply chain. We emphasize the relationship with suppliers and customers, and strengthen Eliminate The Company requires suppliers to provide reports on hazardous substances, which are incorporated
communication and cooperation with all parties in the process of operation and management, effectively protecting hazardous into supplier performance management and appraisal. We regularly summarize and share case studies
the legitimate rights and interests of suppliers and customers. substances on the sustainability of suppliers.
The Company conducts eresearcsh into the recycled materials industry, including copper scrap,
As for suppliers, the Company always adheres to the business values of mutual benefit and win-win cooperation, strictly fulfils the aluminium scrap and steel scrap, in its procurement practice, and gradually procures alternative
Carbon
contractual agreements and business rules signed with suppliers. We establish and strictly implement the procurement standards electrolytic copper to reduce carbon emissions at source; explores clean energy such as green power
and evaluation system, carry out stable and effective management of procurement, and guarantee the safety and compliance of reduction in the
to optimize its own energy structure; and exchanges with suppliers with clear plans and progress in the
suppliers' business operations. supply chain
areas of green development and carbon neutrality, in order to learn from advanced carbon management
concepts and measures.
Digital Management of Supply Chain
The Company actively develops digital intelligence of supply chain, and has built a number of digital platforms to continuously
Supplier Access Mechanism
improve the service level and customer experience.
The Company carries out access management for new suppliers in terms of operation status, production, qualification certification,
industry experience, etc., so that suppliers with excellent potential can enter the Company's supply system and provide strong
In January 2023, the platform was formally put on line and applied in Sanhua Automotive, and played protection for the Company's operation and production.
SRM supplier an important role in enhancing cost advantages and efficiency through the online running of supply
management side management, demand management, price management, execution synergy, and financial synergy The Company requires suppliers involved to sign documents such as the Basic Supply Agreement for Suppliers, the Integrity and
platform boards. Meanwhile, in December 2023, the supply side management and inquiry module went online in Self-Discipline Cooperation Agreement, and the Corporate Social Responsibility Agreement, in order to regulate the management
the main business units. of suppliers in the areas of product quality, compliance, working environment and human rights, health and safety, business ethics,
For the shipping business of finished products, in order to solve the problems in the process of and environmental protection.
OTWB supply chain controlling the reverse flow from the ordering to the signing of acceptance by customers and of the
management return of goods, we have built a set of flexible and universal supply chain management platforms Supplier survey
platform (integrated with the warehousing function of PES) to support the control of order management,
transport management, expense management and other aspects of different business segments. the purchasing department is responsible for finding and researching new suppliers that are in line with
the Company's supplier development principles, and registering suppliers who meet the standards.
We improve the efficiency and quality of the supply chain by equipping the entire production line
Logistics
with automated equipment from transport, unloading, receiving, warehousing, storage to the end
Intelligent Project Registration Approval and Audit
production line.
we complete the system registration, audit and approval of new suppliers according to the Regulations for
Sustainable Procurement Supplier Audit Management. For the suppliers who do not pass, they are given an opportunity to review and
listed in the Potential Supplier Audit Report after being approved.
The Company actively develops a sustainable procurement policy by incorporating environmental issues, labour and human rights
(e.g., working hours, wages) into the principles and agreements of supply chain management in the Basic Supply Agreement for Access approvals, potential inclusion/qualified supplier lists
Suppliers and the Letter to Suppliers, which regulates the supplier's code of conduct and ensures that rules are followed to fulfil
social and environmental responsibilities. Corporate purchasing staff undergo specialized training on sustainable procurement suppliers approved for access are first included in the Potential Supplier List and, after approval of key
policies to make themselves aware of social and environmental issues and to integrate themselves into the purchasing function documents, in the Qualified Supplier List, both of which are updated in the first quarter of each year.
management.
Flower of Management Blooms for a Better Future
Gathering Chains for Winning, Creating the Future with Intelligence - Sanhua Automotive Holding
Supplier Risk Management
Case
the Supplier Conference
The Company emphasizes supply chain risks. In the context of the division of labour in global industrial chain, through the
In November 2023, Sanhua Automotive held the annual Partner Conference with the theme of "Partnership & Globalization", construction of line management system and risk prevention initiatives, the Company continues to enhance the industry chain
inviting representatives of more than 150 suppliers from all over the world, totaling about 400 people, to participate in the supply chain resilience and security level. The Company requires approved suppliers to sign documents such as the Confidentiality
conference. This event starts a new journey to improve "partnership" and "build a global ecological supply chain together". Agreement, the Basic Supplier Agreement, the Integrity and Self-discipline Cooperation Agreement, the Corporate Social
Responsibility Agreement, etc. The Company requires suppliers to strictly abide by the Supplier Code of Conduct, and urges suppliers
to standardize their management in terms of product quality, business compliance, working environment and human rights, health
Adhering to the globalization strategy, green and low-carbon concepts, efficient operation and digital management,
and safety, business ethics and environmental protection.
Sanhua Automotive takes a global vision in the areas of purchasing, quality and R&D. During the meeting, Sanhua
Automotive introduced the annual global procurement plan, called on suppliers to establish long-term deep cooperation
with the Company to foster a supply chain ecosystem. The Company introduced the relevant situation from the level of
Supplier risks identification Risk management Risk disposal
quality management, R&D innovation and made an outlook.
Sanhua Automotive also invited experts to form a jury. After rigorous evaluation and comprehensive assessment in terms
of product quality, service capability and technical strength, cost control, etc., the Company awarded 58 suppliers with
titles such as Supplier Excellence, Value Contributor, Technological Innovator, Best Quality, Quality Progress, and other Purchasing department, together with the quality Medium to high- management
awards. department, technical department, conduct due risk items identified is based on risk
diligence on suppliers, identify and assess suppliers’ by the targeted classification
risks, including quality aspects, legal affairs, supplier during the (prioritisation), which
financial situation, and issue the relevant supplier targeting phase is implemented in
risk assessment form. The evaluation method can be need to be listed in accordance with the
used, but not limited to countersigning, mail, meeting the Risky Supplier risk classification
records and other forms of confirmation to reach a Management Form. management defined
unanimous opinion. in the Company's
system.
The Company conducts risk-oriented due diligence investigations on potential suppliers and cooperative suppliers to effectively
assess and grasp their potential operational or compliance-related risks and information, so as to construct line of defence and
control barriers to prevent and effectively control potential risks. In the Analysis of Potential Supplier Audit Report, the Company
requires suppliers to provide detailed information on quality management plan, production process control management, material
resources usage and human resources management.
Supplier Performance Evaluation
The Company actively promotes supplier performance appraisal. Regular supplier appraisal can enhance their work efficiency,
reduce procurement costs, and ensure the quality of suppliers while maintaining good supplier relationships to match the
The photo of Supplier Conference and excellent suppliers Company's procurement strategic objectives.
Flower of Management Blooms for a Better Future
Supplier performance evaluation for the automotive components
Protecting Intellectual
Monthly performance evaluation
Evaluation process: According to the monthly supplier performance table compiled by the Purchasing Department,
Property Rights
the final performance evaluation results are discussed and determined by all relevant departments, countersigned
by the Quality Centre and the Purchasing Department, and approved by the Director of purchasing; and the results are
announced after the approval of the quarterly evaluation results of the suppliers; Sanhua Intelligent Controls issued the Management Measures of Intellectual Property Rewards and Remuneration. It
stipulates the terms and definitions of intellectual property rewards and punishments management, responsibilities,
Monthly performance application: Quality and purchasing departments take action against the single worst performing rewards and remuneration for patent filing, assessment of outstanding patents and the specific amount of rewards,
supplier based on monthly quality and delivery scores.
rewards for filing of technological secrets, integrated circuit layout designs and software copyrights, as well as
intellectual property penalties.
Quarterly performance evaluation
Evaluation process: According to the quarterly supplier performance table compiled by the Purchasing Department, The Company adheres to the principle of "respecting other’s intellectual property rights and
By the end of 2023
the final performance evaluation results are discussed and determined by all relevant departments, countersigned protecting its own intellectual property rights". We protect our own competitive advantages and
brand reputation with perfect intellectual property management, and avoid infringing other people's
by the Quality Centre and the Purchasing Department, and approved by the Director of purchasing; and the results are
announced after the approval of the quarterly evaluation results of the suppliers; intellectual property rights. By the end of 2023, the Company applied 169 valid trademarks. In order to
enhance employees' awareness of intellectual property protection, during the reporting period, the Pcs
Quarterly performance application: A quarterly performance score is obtained from the combined score of the average Company carried out training on "patent application and protection of process equipment", with a Trademark
quality and delivery scores for each month and the quarterly price and service scores, and a Supplier Comprehensive total of 120 participants. The Company emphasizes the protection of intellectual property rights and
Performance Notification Letter is issued based on the results of the rating. carries out group building activities with the theme of intellectual property rights.
Annual performance review Design patent 49.55%
Evaluation process: According to the annual supplier performance table compiled by the Purchasing Department, the Invention patent
final performance evaluation results are discussed and determined by all relevant departments, countersigned by
the Quality Centre and the Purchasing Department, and approved by the Director of purchasing; and the results are
announced after the approval of the annual evaluation results of the suppliers;
Annual performance application: An annual performance score is obtained from the combined score of the average Utility model patents Number of intellectual
quality and delivery scores for each quarter and the quarterly price and service scores, and a Supplier Comprehensive property rights
Performance Notification Letter is issued based on the results of the rating.
Supplier appeals and awards
Suppliers may appeal to the Procurement Centre if they disagree with the results of the performance evaluation. The
Centre shall complete the investigation within 10 working days. If there is no objectionable issue in the investigation
result, the original evaluation result shall be maintained; otherwise, the Procurement Department shall gather all
relevant departments together to revise the evaluation.
The following awards are given on the basis of annual supplier performance ratings: Best Quality Supplier,
Include：
Number of intellectual Utility model patents Invention patent Design patent
Outstanding Supplier and Strategic Supplier.
property rights
Flower of
Technology
Blooms for Green
Development
At present, in the face of pressures from global resources and environmental protection, the initiative to
comply with the scientific and technological revolution and industrial change, accelerate the development
of green industries, and promote comprehensive green transformation of economic and social development
Low-carbon and Innovative Development
has become a broad consensus in all walks of life. With the vision of "Develop smart low-carbon economy,
create eco-friendly environment for mankind", the Company fully responds to the national goal of "dual
carbon", actively grasps the development opportunities brought about by the green transformation, and Strengthening Environmental Protection
takes scientific and technological innovation as the driving force. To achieve that, we focus on expanding
independent innovative green products and technologies, and continue to carry out key actions such as Promoting Green Operations
environmental governance, energy saving and emission reduction, so as to continuously improve the level of
green development and jointly create a sustainable future.
Flower of Technology Blooms for Green Development
Low-carbon and Innovative Green products
Development As a solutions provider in the field of thermal control and thermal management, the Company follows the principle of green and
low-carbon, and carries out a number of key projects during the year in the areas of lead-free, environmental protection and safety,
and endeavors to create greener and more environmentally friendly quality products.
The automotive and refrigeration home appliance industries are
Opportunities from Clean
the key industries for green transformation. Reducing carbon Technology
Lead-free product development by replacing copper with stainless steel
dioxide emissions during the product life cycle and reducing With the accelerated pace of transformation
carbon consumption throughout the life cycle of products and upgrading of economy, energy and
Based on the three principles of "lead-free, reduce carbon emissions and
through technological advances will not only help to promote the industrial structure, the demand for green
increase customer value", the Company has successfully produced many
advancement and application of energy-saving technologies and and low-carbon products and services is
products with stainless steel. Such product process is more environmentally
increasing. The Company insists on promoting
products in the industry as a whole, but also help to promote the friendly, and the product itself is compact, with light weight and small size,
scientific and technological innovation
realization of the "dual carbon" goal. With a deep understanding of high pressure resistance, high strength, good corrosion resistance and other
and green technology. We are committed
green and low-carbon development, Sanhua Intelligent Controls advantages, which has been supplied in large quantities.
to researching green and low-carbon
makes every effort to grasp the opportunities from clean technology,
technologies, advocating the concept of
take green energy-saving technology as the lead, continuously enrich green technology, promoting the strategic
green products and green services, and actively drive the whole transformation from "cost leadership" to Develop environmentally friendly refrigerants Image of stainless steel four-way valve
industrial chain to carry out recycling and carbon reduction practices, "technology leadership", and developing new
so as to jointly provide green energy for the high-quality development products and technologies with independent The Company ploughs into the development of a new generation of green refrigerants. We have developed various types of products
of the economy and society. intellectual property rights in energy-saving, suitable for R32/R290/R454B refrigerants. To meet the market demand for carbon dioxide (CO2) environmentally friendly refrigerant,
environmental protection, material saving and we have developed various products for HVAC&R systems using CO2 as refrigerant, including 4-way valve, electric expansion valve,
consumption reduction. ball valve, check valve, etc. At the same time, during the year, we also completed the development of a full range of solenoid valves
for ammonia systems, which do not contain copper and reduce the environmental pollution caused by lead, and effectively avoid
Focus on low-carbon the risks of explosion and stress corrosion caused by the reaction with ammonia, thus improving the safety of the products.
areasareas
• The Company is deeply committed to developing a new generation of green refrigerants, actively
promoting the substitution process of low GWP (Global Warming Potential) refrigerant products, and
Environmentally
reducing system charge and direct emissions through the development and application of low charge
friendly Develop energy-saving products
components. At the same time, we select new refrigerants in terms of environmental performance,
refrigerants
safety, energy efficiency, cost, applicability and availability, and jointly promote the development and
application of new environmentally friendly refrigerants. The new microchannel products independently developed by the Company
• The Company actively develops energy-efficient products in the areas of refrigeration, air-conditioning
feature high energy efficiency, low refrigerant charge and full recovery, etc.
By replacing the traditional finned tube heat exchanger, it achieves a 30%
and home appliances, and automotive thermal management. We improve energy efficiency through the increase in heat transfer efficiency and can reduce refrigerant charge by up to
development and application of high-efficiency components, system optimisation and other measures, 50%, which significantly reduces the power consumption and carbon emission;
Low-carbon and giving full play to the direct and indirect emission reduction of the relevant products. at the same time, the products are made of aluminum, which is easy to be
• The variable frequency drive developed by Hangzhou Leaderway Electronics Co., Ltd are widely used in
products
recycled and is friendly to the environment.
home appliances, commercial air conditioning and refrigeration, and heat pumps, significantly improving
energy efficiency and reducing power consumption and carbon emissions.
• To meet the needs of thermal management customers, we provide plate heat exchangers, pressure Product Life Cycle Management Micro Channel Heat Exchanger
regulating valves, electronic expansion valves, sight glasses, and variable frequency drive, etc. With the
advantages of technological innovation and product series, we foster a thermal management system The Company emphasizes the environmental impact of the full life cycle of products, especially the practicability of sustainable
of energy storage, and provide good temperature management for the large amount of heat generated development, and takes the initiative to incorporate the concept of ecological and environmental protection into the process of
Energy storage
during the process of charging and discharging of batteries. product development, design and production, etc. Adhering to the concept of sustainable development, we start from the various
field
• As a participant in the drafting of the standard of the Liquid Cooling Radiator for Energy Storage Batteries,
stages of the life cycle of the products, and based on the principles of environmental ethical management, we measure and assess
the impacts of products on the environment during their life cycle, and improve the competitiveness and sustainability of products,
Sanhua Thermal Management Technology (Hangzhou) Co., Ltd actively participates in the formulation of
including cycle carbon footprint tracking and other traceability information.
industrial standards.
Flower of Technology Blooms for Green Development
Eco-Product Design
With innovation at the core, the Company continuously reduces the environmental impact of its products through product risk
assessment and eco-product design to achieve sustainable development. The Company has drafted eco-product design-related
guidance requirements, which explain eco-product design in terms of initiation, compliance, implementation and identification
of the whole process as well as continuous improvement, and require engineers in each business unit to follow the sustainable
product eco-design regulations in product design. Meanwhile, based on the international standards related to the carbon footprints
of products, the Company docks with the international and domestic standardisation organizations and industry associations,
compiles relevant standards, takes concrete actions to formulate international/industry standards. Additionally, we conduct
research on the carbon footprint of the full life cycle of products, remanufacturing and recycling, energy and resource efficiency,
etc., and systematically incorporate environmental factors into the design of products, so as to reduce the impact of products on
the environment during the product life cycle.
Included into eco-design
Information and
Demand definition-
Incorporate recommendations
environment evaluation eco-brief for environmental improvement
Product Life Cycle Management
Monitor indicators 07
Eco-design procedure
Eco-design principles
Environmental impact
follow optimization evaluation The Company pays close attention to product life cycle evaluation methods such as the full life cycle climate performance LCCP
(Life Cycle Climate Performance). We take the initiative to manage the environmental impacts in the entire life cycle from raw
material production, product manufacturing, transport, operation to product elimination, and are committed to measuring the
Eco-product design procedure
contribution of emission reduction of the production end of the full cycle and the whole chain. In March 2023, during the National
The Company fully consider sustainable product eco-design regulations in the requirements definition section, as well as covering People's Congress and Chinese People's Political Consultative Congress, Zhang Yabo, a deputy to the National People's Congress
a wider range of products and requirements, including: product durability, reusability, upgradability and reparability; the presence of and chairman of Sanhua Intelligent Controls, brought the Suggestion on the Establishment of Carbon Emission Evaluation Methods
substances that inhibit recyclability; energy and resource efficiency; recycled content; remanufacturing and recycling; LCA carbon for the Full Life Cycle of Products to offer advice and suggestions for promoting the establishment of a full-cycle carbon emission
footprints; traceability; and other information requirements. In the section on incorporating recommendations for environmental evaluation system for products.
improvement, it is mandatory to consider life cycle impacts from the three sides of the environment, human health, and disposal
of natural resources, and it is encouraged to consider specific environmental impacts such as global warming, use of energy
resources, and ozone depletion.
Sanhua Micro Channel Heat Exchanger Co., Ltd. participated in 2023 AHR Expo in North America Case
Eco-design incorporated into the application of efficient thermal management products for new energy Case
vehicles
In 2023, American AHR Expo was held in Atlanta. As the largest exchange event in the global air-conditioning,
refrigeration and HVAC industry, this year's Expo (AHR EXPO) attracted more than 1,800 exhibitors and more than 200,000
During the R&D process of high-efficiency thermal management products for new energy vehicles, the Company
visitors from more than 30 countries and regions around the world. Sanhua Micro Channel participated in this exhibition
identifies and responds to possible climate change risks based on the principle of risk assessment to ensure the
environmental friendliness and sustainability of product design. Based on the requirements of eco-product design, and displayed several products such as the internal
R&D personnel also conduct carbon footprint analysis of the products and apply the "3R" design concept of reducing, A-Coil heat exchanger for domestic heat pump
reusing and recycling to achieve the improvement of product energy efficiency and low-carbon indicators. For example, system, OPTIFLOWTM evaporator, second-generation
the micro-channel product has introduced new processes and solutions, achieving a 30% increase in heat transfer TCP coated condenser, CO 2 air cooler and so on.
efficiency and a significant reduction in the weight of the heat exchanger and refrigerant charge, greatly contributing to Among them, the domestic heat pump system A-Coil
the promotion of green travelling and low-carbon life while enhancing the performance of new energy vehicles. evaporator and OPTIFLOWTM heat exchanger stood out
from the crowd and became the focus of attention on
the exhibition site with their excellent performance,
innovative design and green concepts such as
Products’ Carbon Footprint Management optimized refrigerant charging.
The Company fully considers the carbon footprint of the product life cycle at the product design stage, and correlates the BOM
materials, manufacturing process and transport process with the carbon emission model of greenhouse gas emissions (Scope 1, 2
and 3). At the same time, it has organized the preparation of product carbon footprint accounting (company standard) to enhance
the standardisation of product carbon footprints.
Flower of Technology Blooms for Green Development
Strengthening Environmental Formulate a series of environmental management system procedure documents
Protection such as the Exhaust Gas Prevention and Control Procedures, the Solid Waste
Control Procedures, the Chemical Hazardous Materials Control Procedures and the
Hazardous Waste Management Measures.
Sanhua Intelligent Controls strictly abides by the laws and regulations related to environmental protection and
resource conservation, ensures that all pollutants are discharged in compliance with the standards, and that Regulate the use of resources and waste discharge of each production base according
to the requirements of ISO14001 system standards, and scientifically monitor and
Institutional
there are no incidents of environmental protection violations or accidents of environmental pollution. In addition,
we encourage enterprises to strengthen the management of energy consumption, stop wastage, effectively and
guarantees prevent the occurrence of environmental risks.
reasonably utilize energy, reduce the cost of production, and improve economic benefits.
Formulate the Environmental Protection Assessment Rules to further strengthen the
environmental management.
Environmental Management System
Organize special environmental protection personnel to carry out monthly
The Company emphasizes environmental protection, adheres The Company actively responds to the concept and
environmental protection inspections for each division and functional department,
to the principle of "prevention as the mainstay, combining requirements and adheres to green development. We strictly
and follow up the completion of the rectification of each problem, and issue
prevention and treatment". We take the initiative to shoulder follow the Environmental Protection Law of the People's
environmental protection on-site checklists for the problems identified on site.
the social responsibility of environmental protection while Republic of China, the Atmospheric Pollution Prevention
seeking our own development, and endeavors to promote the and Control Law of the People's Republic of China, the
The directors of each division and functional department are mainly responsible for
sustainable development of the society and the environment. Water Pollution Prevention and Control Law of the People's
the environmental protection work of their own departments, the implementation
Republic of China, the Law of the People's Republic of China
of environmental protection management, and are directly responsible for the
on the Prevention and Control of Environmental Pollution
environmental protection work of their own departments;
Caused by Solid Wastes and other laws and regulations of
the environment management applicable to the Company. Management
We also continue to improve the environmental protection guarantees The director of the planning department of each division and the person in charge
of the relevant departments are responsible for arranging the implementation of
related policies and system documents, and start from the
the rectification of identified problems, and complete of the rectification within the
multi-dimensional aspects of system, policy, implementation,
specified time and report;
assessment and evaluation to ensure the operation, audit and
continuous improvement of the environmental management
system, improving the level of environmental management.
Each division regularly organises environmental self-inspection of the department
and reports the self-inspection problem points of the month and the rectification
situation of the previous month.
By the end of 2023, all of the Company's 16 subsidiaries
had passed the third-party certification of the ISO14001
Environmental Management System.
According to the Environmental Protection Assessment Rules, all departments and
subsidiaries are required to strictly implement the provisions of the environmental
management system formulated by the Company to eliminate all kinds of violations.
By the end of 2023 Executive
The Company's assessment of the monthly report is reflected in the monthly
guarantees
The certification of the ISO14001 performance appraisal.
subsidiaries
Environmental Management System.
All passed the third-party certification of the
ISO14001 Environmental Management System
Flower of Technology Blooms for Green Development
The Company continues to standardize the management of project construction and production operations. We establish strict
safety and environmental protection rules and regulations, and provides effective guidance to the environmental protection work
of each subsidiary. At the same time, the Company continuously optimizes the production process, carries out maintenance and
overhaul of environmental protection facilities and technological transformation, improves the level of "three wastes" management
Emergency management
and clean production, maintaining the stable operation of various indicators.
The key production departments (pickling, electroplating, sewage treatment stations, hazardous chemical
warehouses) organize at least one emergency rescue drill before November 30 each year.
Investigation, identification and determination of environmental factors
When an accident occurs, it will be handled strictly in accordance with the principle of "four no spares" (no spares
Each department lists the environmental factors that have an impact on the environment based on their activities, until the cause of the accident has been investigated, no spares until the person responsible for the accident has
and then identifies and determines environmental risk factors based on the Environmental Factors Record and been dealt with, no spares until the public have been educated, and no spares until preventive measures have been
Determination Sheet. taken), and not conceal, misrepresent, or delay in the reporting of accidents.
Based on the Environmental Factors Record and Determination Sheet submitted by each department, we send our
personnel to conduct a reasonableness assessment, and then collate and make a company-level Environmental
Factors Record and Determination Sheet.
Nuclear radiation management
Radiation flaw detection equipment is examined through environmental protection records and may not be purchased
without authorization.
Environmental facilities operation and management
The relevant departments should be notified in time for repair and replacement for environmental protection facilities Radiation flaw detection staff need to be licensed.
not in normal use or damaged.
Each division should maintain and record environmental protection facilities.
In order to accelerate the green development of industry, promote energy saving and consumption reduction, reduce costs
and increase efficiency, and increase the effective supply of green products and services, the Company actively carries out the
Waste gas, wastewater and other emissions outlets should be installed in accordance with the requirements of
evaluation of "Green Factory", so as to help the Company achieve the goals of plant intensification, harmlessness of raw materials,
environmental treatment facilities.
cleaner production, resourcefulness of waste, and low-carbon energy. As of the end of 2023, 4 factories have been awarded the title
of "Green Factory" by the Ministry of Industry and Information Technology of the People’s Republic of China.
Environmental monitoring
Environmental Impact Management
The Company should submit implementation reports on the national emissions permit management platform, which
The Company fully recognizes the importance of biodiversity conservation and remains constant
will be made public on government platforms after review by local environmental protection authorities.
attention to the impact of its own activities on biodiversity. We carry out risk factor identification and
hidden danger investigation in compliance with relevant laws, regulations and policies, such as the
The controlled emission points of key emission units are installed with online monitoring facilities in accordance with Opinions on Further Strengthening Biodiversity Conservation, the Soil Pollution Prevention and Control
the requirements, the monitoring data are transmitted in real time to the national and local regulatory platforms, and Law of the People’s Republic of China and the Regulation on Groundwater Management, and other
supervisory monitoring is carried out in co-operation with the regulatory authorities. relevant laws and regulations. When we select sites for project construction, biodiversity conservation
is taken into consideration. Environmental impact assessment is carried out in accordance with the
In accordance with national environmental protection requirements and the requirements of the EIA report, qualified requirements of laws and regulations, and projects are not developed within the ecological protection
third-party agencies are hired to conduct regular testing of environmental pollutants such as waste gas, wastewater red line, so as to fundamentally reduce the impact of project construction and later operation on
and noise, and to issue third-party-certified test reports. biodiversity.
Flower of Technology Blooms for Green Development
Green Intelligent Platform
Building a Green Workplace
The Company responds to the National Plan on IT Application for the 14th Five-Year Plan period (2021-2025), which is "promote green,
intelligent and ecological civilization, and promote the synergistic development of digitalization and greening", and continues to The Company actively advocates low-carbon operation and environmental protection, encourages employees to practice green
promote the construction of digital factories, boost automation levels, and improve production, office and management efficiency, concepts in the production and offices, so as to enhance energy conservation and environmental protection awareness, and jointly
so as to explore new ways of digitalization. carry out actions to save resources and energy.
Case: Smart energy IoT management platform Cas e
Paper management Procurement of environmentally
The Company's products focus on energy-saving and emission reduction. We pursue low-carbon and
friendly office supplies
environmental protection in manufacturing operations and park management. Through the intelligent energy
system, we monitor in real time the status of energy consumption of all divisions, workshops and energy-
consuming equipment in the park, and summarize and analyze the total amount of energy consumption, so as • Promote paperless office, paper documents • Procurement of environmentally friendly
to provide data support for the optimisation of the energy consumption structure and carbon reduction. require double-sided printing office products, e.g. recycled paper, refillable
• Strictly control color printing and stop
ballpoint pens
By the end of 2023, the platform has covered 7 domestic parks, and other domestic parks and overseas parks
are being actively promoted. The platform monitors real-time data on electricity and natural gas consumption unnecessary color printing. • Procurement of recyclable toner cartridges
in the parks and conducts statistical analyzes of energy consumption, which, combined with in-house
• Use e-mail and OA system as much as
for laser printers, pencils, etc.
production, provides early warning of unreasonable energy consumption anomalies in each business unit for
improvement and analysis. possible for the transmission of documents • Procurement of energy-efficient labelled
and information, and reduce the number of office appliances (e.g. photocopiers, printers)
The smart energy IoT management platform can also achieve the following benefits through real-time
• Procurement of office furniture made of
paper documents.
monitoring and data analysis:
environmentally friendly materials
Electricity savings: optimize electricity consumption behavior, improve efficiency of electricity consumption
during off-peak hours and reduce costs.
Basic utility optimisation: Based on the analysis of electricity consumption data, the billing method is
adjusted to reduce the payment of basic utility.
Reduction of equipment costs: energy-saving renovation of energy-consuming equipment to reduce
equipment operating costs. Saving electricity
Energy management
automation: energy metering • Turn off the power of lights, air-conditioners, computers, printers, water dispensers, etc. after work.
and billing services for multi-
• Switch off the video system in time after the video conference, so as to reduce the long-time standby energy
corporate companies in the
park. consumption.
Rapid policy response: the • Avoid prolonged standby time for computers, printers, shredders and other office equipment.
platform's billing model is • In places where central air conditioning is not used, do not open doors and windows when the air conditioner is
synchronized with policy
turned on as well as turning on the air conditioner when there is no one, and control the cooling temperature in
adjustments, helping
summer at 26℃ or above, and heating temperature in winter at 20℃ or below.
enterprises to adjust their
energy management • Use LED energy-saving lamps in the office as much as possible
The schematic map of smart energy IoT management platform in Xiasha
strategies in a timely manner
and reduce energy costs. Park Overview Area, Hangzhou
Flower of Technology Blooms for Green Development
Disposals management Carbon calculation software helps scientific energy saving and carbon reduction Case
• Classified collection of waste toner cartridges, waste lamps, old computers and other office wastes
In order to promote the landing and implementation of the dual-carbon policy, Hangzhou Leaderway Electronics
• Outsourcing qualified third agencies for proper disposal has independently developed a full life cycle carbon emission calculation tool, which is mainly used for parts and
• When recycling, toner cartridges and batteries need to be wrapped, and certain recyclables need special treatment,
components of refrigeration and air-conditioning equipment, including micro-channel heat exchangers, electronic
expansion valves, four-way valves, and inverter controllers. The tool can statistically account for greenhouse gas
such as light tubes need to be put into special recycling boxes.
emissions from raw material collection, production, transport, use and disposal, providing important data support and
• Household waste is collected and transported by the property management and handed over to the city sanitation calculation basis for determining the carbon footprint of related products. By the end of 2023, Hangzhou Leaderway
Electronics has selected two representative products (main control board and driver board) for carbon emission
department for disposal.
calculation and comparison, and will be applied to more products and scenarios in the future.
The Company's greenhouse gas emission primarily from direct greenhouse gas emissions resulting from the use of natural gas,
Other issues
petrol and diesel, and indirect greenhouse gas emissions resulting from purchased electricity.
• Strict management, scientific scheduling and rational use of official vehicles
• Post notices at workplaces to remind employees to save resources. Indicators Unit 2023
• Vigorously promote green travelling and encourage employees to commute by public transport and reduce driving.
Direct (Scope 1) GHG emission7 Tonnes of CO2 equivalent 1,496,347
Direct (Scope 2) GHG emission8 Tonnes of CO2 equivalent 233,439
Promoting Green Operations Total amount of GHG emission Tonnes of CO2 equivalent 1,729,786
GHG emission intensity Tonnes of CO2 equivalent/RMB 10,000revenue 0.7
Sanhua Intelligent Controls actively promotes green and low-carbon development. Relying
won the environmental management system, we incorporate the concepts of resource
Optimize Energy Structure
conservation, protection and improvement of ecology and the environment into the whole
process of operation and management and in all aspects, in order to achieve sustainable
The Company actively tracks the progress of policies and measures to address climate change at home and abroad, continuously
growth, and to bring benefits to environment, society and environment. adjusts and improves its carbon emission management system, and takes targeted emission reduction measures. It has
accelerated the application of photovoltaic and energy storage. In order to achieve the goals of clean energy and higher resource
utilization efficiency, distributed photovoltaics are widely used in industrial areas to replace the original purchased electricity and
adopt waste heat recovery technology. Furthermore, the energy storage system in the production park can comprehensively take
Greenhouse Gas Emission advantage of peak and off-peak electricity, which improves the efficiency of distributed photovoltaic utilization.
Facing the impact of global climate change, the refrigeration industry is accelerating upgrading and transformation. As a pioneer in
the refrigeration industry, the Company always adheres to the corporate philosophy of energy saving and environmental protection, Greenhouse gas emissions (scope I) mainly come from production and vehicles, as well as the primary energy consumption of natural gas. The energy emission
and actively improves the efficiency of its resources and energy utilisation through scientific and technological innovations to coefficient refers to 2006 IPCC Guidelines for National Greenhouse Gas Inventories (Trial), etc.
GHG emissions (Scope 2) are mainly from consumption of purchased electricity and heat. For the GHG emission factor of electricity, refer to the Notice on
reduce carbon emissions in all business segments.
Managing Greenhouse Gas Emission Reporting for Enterprises in the Power Generation Industry in 2023-2025 issued by the Ministry of Ecology and Environment
of the People's Republic of China; and for the emission factor of purchased heat, refer to the Guidelines on Methods of Accounting and Reporting for Greenhouse
Gas Emissions by Enterprises (Trial) issued by the National Development and Reform Commission.
Flower of Technology Blooms for Green Development
•The total installed capacity of Sanhua Household PV system is 11 MW. The energy-saving renovation of
the 5.8 MW facility connected to the grid in the first phase in 2015 was completed in September 2023. The
renovation increases the power generation efficiency of this system by 5%, increases the power generation
capacity by 510 MWh per year, and reaches an average annual power generation capacity of 10,250 MWh.
Photovoltaic •The total installed capacity of the solar photovoltaic (PV) systems on the roofs of Sanhua Commercial
projects Refrigeration's factories in the Damien City Park amounts to 10.76 MW, and PV power generation accounts
for about 34% of the park's total overall electricity consumption by the end of 2023.
•Sanhua Automotive Thermal Management in Shaoxing added a 5.8 MW PV project, which was completed
and connected to the grid in July 2023, bringing the overall installed PV capacity to 16.3 MW by the end of MWh 10,000 standard MWh
Power generation from new energy Natural gas consumption Total amount of purchased green power
The Company has built energy storage power stations in Xiasha, Hangzhou, Xinchang, Shaoxing, Binhai, facilities
Shaoxing etc. The system is used to store the off-peak electricity and release it for use during the peak
Energy storage
electricity period, making full use of the price difference between the peak and off-peak electricity, and
project
accurately calculating and determining the installed capacity of the energy storage to realise the "two Emission Management
charging and two discharging" every day to assist the green transformation of enterprises.
The Company emphasizes the environmental impact of its operations, and has formulated and implemented a number of internal
environmental management procedures, including the Waste Gas Prevention and Control Procedures and the Solid Waste Control
Procedures, to strengthen environmental management and improve environmental performance, ensuring that emissions can be
managed effectively and resources can be conserved.
Waste Gas
The production process of the Company involves electroplating, acid pickling, powder spraying, welding, injection molding and other
processes, and the air pollutants generated are mainly soot, sulphur dioxide and nitrogen oxides. The Company has a waste gas
Sanhua Household PV system Sanhua Household energy storage station management procedure, and the collected waste gas must be filtered and treated to meet the Integrated Emission Standard of Air
Pollutants before being discharged.
The Company carries out regular spot checks on the waste gas and treatment systems to ensure that the systems are functioning
properly. The results are recorded in the "Waste Gas Exhaust System Spot Check Sheet" and the "Waste Gas Treatment System Spot
Check Sheet". At the same time, in accordance with regulatory requirements, a third party is commissioned to regularly monitor and
assess the level of exhaust emissions to ensure compliance with air pollutant emission standards.
Sanhua Commercial Refrigeration solar PV system Sanhua Commercial Refrigeration energy storage station Using aqueous cleaning technology to guard the lucid water and blue sky Case
Taking the "Green Factory" as an opportunity and responding to the national target of preventing and controlling PM2.5,
ozone, volatile organic compounds (VOCs) and other air pollution, the Company invested a total of RMB 13 million to
build an annual production capacity of 200 million sets of refrigeration components equipped with aqueous cleaning and
hydrocarbon cleaning technology transformation projects in households. By investing in a number of aqueous cleaning
line, replacing part of the original trichloroethylene cleaning process, the cleaned products not only significantly
improve the surface color, uniformity, cleanliness, welding quality, but also effectively reduce the emission of volatile
organic compounds (VOCs). This is of great significance to improve the quality of the local air environment, enhancing
the enterprise efficiency and social benefits.
Sanhua Automotive PV system in Binhai Sanhua Automotive energy storage station
Flower of Technology Blooms for Green Development
According to the Work Plan for Building of “Zero-Waste
Cities” during the “14th Five-Year Plan” Period, the Company Hazardous waste collection
emphasizes the prevention and control of solid waste
pollution, combines with the "dual carbon" strategy, and Each hazardous waste generation point must set up hazardous waste management card; set up "hazardous waste
actively promotes the pollution control action, accelerates registration account", and truthfully record the collection and use of hazardous waste; set up a temporary storage
the green and low-carbon development of the enterprise, point for hazardous waste and have a conspicuous danger sign; have a hazardous waste commissioner to collect and
and fully participates in the construction of " Zero-Waste transfer hazardous waste to the company's hazardous waste warehouse for storage procedures in a timely manner, and
Cities ". In 2023, Zhejiang Sanhua Commercial Refrigeration the hazardous waste shall not be stored in the open air.
Co., Ltd. was awarded the certificate of " Zero-Waste
Cities Cell" issued by Shaoxing Pilot Zero-Waste Cities
Construction Leading Group Office.
Hazardous waste storage
Sanhua Commercial Refrigeration Co., Ltd. was
awarded the certificate of " Zero-Waste Cities Cell" each production workshop set up temporary placement points in accordance with the classification of hazardous
waste types, and general solid waste and hazardous waste containers with identification markers. All waste must be
Solid Waste classified; set up storage cofferdam and wastewater conduit to proof wind, rain, seepage, etc., warning signs must
be clear; storage period of no more than one year, extended period of storage must be reported to the environmental
protection department; prohibit hazardous wastes mixed with non-hazardous waste storage.
Waste is classified and managed according to the Company's Solid Waste Control Procedures, and household waste and production
waste are handled separately. 3 bins are set up in the production site as needed, respectively for recyclable waste, non-recyclable
waste and hazardous waste, with uniform and obvious signboards or directly marked on the containers.
Hazardous waste disposal
According to regulations, when collecting waste, each department should fill in the "Solid Waste Classification and Disposal List"
according to the solid waste generated by the department, report it to the Integrated Management Department for the record, and qualified units dispose hazardous waste and sign the "Hazardous Waste Disposal Agreement", strictly implement the
put the waste into the collection points or containers in accordance with the requirements of the List. Except for recycled waste, hazardous waste transfer management methods, establish a hazardous waste management account and make an
all other waste is entrusted to a qualified third party for disposal, and the "Waste Disposal List for Third Party " is filled out to ensure online declaration to the Environmental Protection Bureau; apply for the hazardous waste transfer joint sheet, check
that timely adjustments are made in the event of a change in the third party. the quantity and type of hazardous waste and file information. The information should be properly archived.
Hazardous Waste Management
The Company strictly abides by the relevant provisions of the Law of the People's Republic of China on the Prevention and Control
General solid waste Disposed as general solid waste
of Environment Pollution Caused by Solid Wastes, the State Council's Measures for the Administration of Permit for Operation of Indentified by
features
Dangerous Wastes, and the Ministry of Environmental Protection's Measures for the Transfer of Hazardous Wastes. In addition, the Solid waste
Company formulates the Measures for the Administration of Hazardous Wastes, which monitors the whole process of hazardous mark
Collected with
Hhazardous waste
waste from the generation, collection, storage, packaging and transportation to the treatment and disposal, so as to achieve the specific container
"minimization, resourcefulness and harmlessness" of hazardous waste disposals.
Set up a ledger
The Company’s storage room for Temporaly store
Record ledger hazardous in designated points in
waste-Transferred regularlly workshops
Hazardous waste identification
Transport
Transfer declaration Transfer to qualified third party Apply for transfer Archive
Hazardous waste is identified according to the national hazardous waste list or the national hazardous waste request form
identification standards and identification methods. At the beginning of each year, each production department
identifies, counts and sums up the amount and types of hazardous waste generated and incorporates them into the
hazardous waste management plan for strict management.
The chart of hazardous waste identification, collection, storage and disposal
Flower of Technology Blooms for Green Development
Measures Relevant Measures
Wastewater Management
The Company's wastewater sources are mainly production wastewater and staff domestic
sewage. We carry out sewage diversion, with clear water pipe, sewage pipe and reuse water
pipe, for different wastewater using different collection and treatment methods, to improve
meters
Recyclable folding
packaging
Heat pump integrated Module, Integrated Coolant Module , Accumulator , and many other parts
use polypropylene blow-molding and blister-molding laminates in the overall recyclable folding
packaging, instead of the disposable material-based cardboard boxes and wooden pallets.
Total amount of wastewater
the efficiency of water resources. According to the relevant regulations, the sewage is
regularly monitored once a year, to ensure that the quality of water sewage standards.
Cooperate with third parties in packaging leasing and transport and packaging integration
projects to optimize supply chain management, improve the efficiency and transparency of the
Recycling of recycled
supply chain, reduce intermediate links in the supply chain, lower supply chain costs, promote
packaging
sustainable development, reduce resource wastage and environmental pollution in the process
Treating measures for wastewater
of logistics and packaging, and improve the efficiency of resource utilisation.
Sanhua Household has two wastewater treatment stations in Meizhu Park, which can treat five streams of wastewater:
chromium-containing wastewater, nickel-containing wastewater, copper-containing wastewater, composite wastewater, Increase the protective strength of packaging for components, reduce the use of disposable
Reduce packaging airfreight
and citric acid wastewater, with a total of about 3,110 tonnes of wastewater treated per day. packaging materials, and reduce resource consumption, further reduce the volume of
volume
packaging airfreight, realizing logistics cost reduction and efficiency improvement.
Measures to reduce water pollutants emission
According to the national standard Limits of Volatile Organic Compounds Content in Cleaning
Agents GB38508-2020, trichloroethylene and other substances involved in the traditional
cleaning process are volatile organic compounds (VOCs) exceeding the standard substances,
Hydrocarbon cleaning which cannot meet the new environmental protection requirements. In this regard, the
technique Company spontaneously develops hydrocarbon cleaning technique to help the cleaning agent
can be recycled. This technique does not produce waste liquid and has no need for waste liquid
treatment. In addition, hydrocarbon cleaning agent also has a high flash point, which belongs to
the safety of the general chemicals (flash point higher than 60 ℃ ), easy to store and manage.
Most of the cleaning aids in the market contain phosphate. Though the effect of rust removal
on the surface of steel parts is obvious, the phosphorus-containing substances discharged into
Development of non- the sewage will lead to eutrophication of the water body, which in turn causes environmental
Sanhua Automotive’s Packaging First
phosphorus additives pollution. By optimising the formula of cleaning agent, the Company has successfully
developed non-phosphorus additives, which not only meet the requirements of cleaning and
rust removal, but also effectively reduce the pollutants in the water body.
Packaging Material Management 18.10 million
Number of cardboard boxes
Number of pallets Number of plastic boxes
Number of recyclable packages
In 2023, the Company systematically sorted out its packaging process management and improved RMB
the construction of packaging process standards in all aspects, including system construction,
standardisation management, quality management and supplier technology management. The
reduction and saving of packaging materials was achieved through the adoption of recyclable
folding packaging, recycling of recycled packaging, and the reduction of packaging airfreight
Water Resource Management
Packaging procurement
volume. We also integrated packaging methods, changing the existing plywood pallets and costs saved The Company emphasizes the conservation and comprehensive use of water resources, abides by
plywood pallet covers to honeycomb paperboard pallets and honeycomb paper pallet covers, environmental protection requirements, and strictly complies with relevant regulations. The Company uses
which saved more than RMB 2 million in packaging procurement costs during the year. water resources mainly from municipal tap water.
Flower of Technology Blooms for Green Development
meters
Total amount of water consumption
meters
Total amount of recyclable water
meters
Total amount of waster disposal
Sanhua Commercial Refrigeration collects surface water from the plant and the administrative area into a
stainless steel water tank, and sets up a frequency-controlled water supply system with constant-pressure
beside the tank to ensure uninterrupted water supply to the administrative area and the water pipe network.
consumption
Electronic water replenishment project for circulating pools
Due to the instability of the pool float valves (easy to damage, stuck stones, etc.) resulting in the constant and
uncontrollable replenishment of water, Sanhua Commercial Refrigeration replaces 10 circulating pool float valves
Water conservation measures
with solenoid valves (with sound and light alarm system) to control the replenishment of water.
Water conservation measures
Water conservation signs are posted on bathroom taps in offices and dormitories; The Company closely tracks the water consumption in production, analyzes the room for improvement of water consumption in the
light of the characteristics of water consumption process, and optimizes the production process through the introduction of new
Urinals are flushed by induction;
processes, technologies and equipment to increase the recovery and recycling of water resources.
Daily publicity on water conservation.
Recycling measures Achievements
The copper-containing wastewater treated in the wastewater station of Sanhua Household’s
first phase is filtered by sand filtration device and then reused in the cleaning process
Wastewater reuse
before pickling of the pipe division, which does not require high water quality, with a daily
reuse volume of 320 cubic metres and an annual reuse volume of 96,000 cubic metres.
Through the application of electroplating wastewater reuse and counter-current rinsing
process, Sanhua Household recycles 105 cubic metres per day and 31,500 cubic metres per
year.
Technique wastewater reuse
Sanhua Household recycles welding water through cooling and sedimentation, with a daily
recycling volume of 87,750 cubic metres and an annual recycling volume of 26,325,000 cubic
Post water conservation signs
metres.
Sanhua Automotive utilizes the condensate generated from purchased steam for heat
Wastewater recycling project exchange, then reheating it to reuse in the equipment’s hot water tank.
Wastewater (e.g., steam condensate, welding wastewater, hot water from washing tanks, rinsing water, and water
reused after being treated in wastewater stations) is purified and treated for reuse. The wastewater recycling
project carried out by Sanhua Commercial Refrigeration at the Daming City Park will reduce 33,000 cubic metres
per year.
Steam condensate reuse
Workshop toilet flushing renovation project
The bathroom flushing in Sanhua Commercial Refrigeration production area was originally a direct-flush type.
The flushing valve was frequently damaged and replaced and the flushing water was uncontrollable. Later, the
production area flushing valve is replaced with water storage tank.
Steam condensate reuse device for gold processing workshop
Talents Blooms
for Prosperity
Sanhua Intelligent Controls creates an enabling environment for pooling, motivating and developing
Ensuring Employee Rights
talents, upholding the core values of "people-oriented", and creating a working environment featuring
fairness, respect and harmony for all employees. It emphasizes both personal growth and career
Occupational Health and Safety
development, providing diverse learning opportunities through a comprehensive training system. By
doing so, the Company assists employees in enhancing their personal qualities and comprehensive
Empowering Employee Growth
abilities to realize their self-worth. In addition, it ensures employee rights, empowers employee growth,
creates quality services, and participates in charity and public welfare activities, contributing to the
sustainable development of the enterprise and the harmonious progress of society. Participation in Charity and Public Welfare
Flower of Talents Blooms for Prosperity
Ensuring Employee Rights
Employees’ The Company values employee welfare and ensures the maintenance of daily life,
salariesstatement
guaranteeing that all workers can obtain a living wage that meets their basic needs.
Our remuneration policy stipulates that wage levels shall not be lower than the
Sanhua Intelligent Controls strictly adheres to the laws and regulations concerning labor local minimum wage standards. We maintain close collaboration with labor unions
and organizations, continuously monitor changes in local economic conditions and
contracts and the protection of labor rights and interests in the Labor Contract Law of the
living costs, and timely evaluate and adjust employee remuneration.
People’s Republic of China. It rigorously implements national regulations and standards in
aspects including employment, labor safety and health, and social security. In addition, it
continuously improves the mechanism for safeguarding the rights and interests of employees,
supervises its subsidiaries to standardize labor management, and effectively protects the
legitimate rights and interests of employees. At the same time, it adheres to its commitment
to employee rights, respects and cares for all employees, provides fair compensation,
adequate rest time, and safe and comfortable working conditions, continuously improving their
satisfaction and sense of belonging.
Talent Recruitment and Introduction
The Company adheres to the principle of "openness and fairness", treating all applicants equally and selecting talents based on
merit, without discrimination based on age, disability, ethnicity, gender, marital status, nationality, political affiliation, etc. We strictly
prohibit the employment of child labor and forced labor, and conduct regular internal inspections to ensure legal and compliant
Employee Rights and Interests Protection employment to the maximum extent.
The Company strictly complies with national laws and regulations, and signs and fulfills labor contracts with employees. According In 2023, the Company continued to optimize its talent recruitment strategy, striving to attract and cultivate more outstanding
to the actual situation of the Company, the Employee Handbook and Quota Management Measures for Staff have been formulated talents. Throughout the year, we further implemented a diversified talent strategy, with a total of 2,872 new employees recruited,
to make the rules and regulations transparent. Collective agreements and collective agreements for female employees have been among which 2,058 were recruited through social recruitment. In addition, we conducted over 50 campus recruitment presentations,
formulated to provide employees with various career development channels. The annual evaluation is conducted in accordance with cooperated with more than 20 colleges and universities, and selected 500 outstanding graduates to join us.
the Company's Management Measures for Annual Excellence Evaluation. At the same time, the Company adheres to the principle of
fair competition, provides equal opportunities to all employees, and strictly prohibits any form of employment discrimination. Halal The Company focuses on cultivating outstanding young management talents, continuously carrying out management trainee
canteens are also provided to meet the needs of ethnic minority employees. programs. Within the year, a total of 60 management trainees were contracted, among which 23% were overseas graduates, and
We are committed to creating a working environment featuring respect and equality,
Anti- where employees are not discriminated against or treated unfairly based on race,
discrimination
statement
religion, gender, nationality, age, marital status, disability, or sexual orientation, in
terms of remuneration, training, promotion opportunities, and other aspects. Specific 50+ 500
labor compensation regulations are established for female workers during pregnancy,
childbirth, and breastfeeding, ensuring that there is no discrimination or unjustified 2,872 Campus recruitment presentations Outstanding graduates
reduction in wages. Furthermore, we firmly oppose any form of sexual harassment and
maintain a zero-tolerance policy towards any acts of sexual harassment.
New employees
Colleges and universities cooperated
Management trainees contracted
Flower of Talents Blooms for Prosperity
Employee Remuneration and Benefits
The Company is committed to providing employees with fair working arrangements, aiming to promote a balance between work and
personal life. Adhering to the principles of remuneration according to work and equal remuneration, the Company has established a
system of regular salary increases and strictly complies with timely payment of social insurance to ensure the due legal rights and
benefits of employees.
The Company has established a reasonable human resource management system and a scientific and comprehensive performance
appraisal system. To implement the principles of equality between men and women, equal pay for equal work and distribution
according to work, the Company links the performance appraisal of the management at all levels with the Company's business
goals, and makes the employees and the Company become a community of shared interests through a reasonable remuneration
structure and level. It aims to fully mobilize the employees' motivation, and stimulate the employees' sense of responsibility and
sense of mission.
Protection of Female Employees' Rights and Interests
Globalization and Diversity
The Company actively responds to the Law of the People's
Republic of China on the Protection of Women's Rights and The Company values globalization and diverse development of its employees, and has built an international talent management
Interests and the Special Provisions on Labor Protection system. Through regular training and experience sharing, the Company continues to improve the cross-cultural communication
for Female Employees, protects the leave rights of female skills of its employees, and jointly promotes sustained development and progress with employees, contributing to the Company's
employees such as maternity leave, breastfeeding leave and international development.
childcare leave, and prohibits salary reduction, dismissal,
or the termination of employment or labor contracts due
to pregnancy, childbirth or breastfeeding. The Company International Dispatch Management System
prioritizes and strengthens the labor protection of female
employees during production, continuously improves the
The Company has established a globalized international dispatch management system, and its subsidiaries at home and
working environment and conditions for female employees,
abroad have also formulated international dispatch management methods to provide standardized and consistent guidance for
and protects the physical and mental health of female
international dispatch and to ensure that expatriates work in a safe, compliant and efficient manner worldwide. Meanwhile, to
employees by carrying out health examinations.
improve the experience of international assignment and overseas business trip, the Company has formulated various country
guides, visa guides, guides for overseas employees coming to China, and code of conduct guides for working overseas, to provide
employees with convenience and assistance in international assignment.
China North
America
Dispatch rules
Introduction rules
Europe Other
HQ and BUs have set dispatch rules
European and US platforms have set introduction rules
Flower of Talents Blooms for Prosperity
Cross-cultural Awareness Publicity and Training Foreign Language Learning and Certification
The Company attaches importance to the cultivation of employees' cross-cultural awareness and international vision, and helps Focusing on foreign language improvement, the Company has established a
employees better understand and respect the differences between cultures and promotes the development of cross-cultural management system for foreign language subsidies targeting outstanding
integration by carrying out bi-weekly cross-cultural awareness publicity activities and online/offline cross-cultural training. talents with language proficiency. It encourages employees to learn one or
more languages through various learning methods, to enhance international
cooperation, communication and information processing, and improve work
efficiency. In addition, the Company encourages employees to improve their
English ability through English corners, online English learning APPs and one-
on-one conversations with foreign teachers, creating a positive atmosphere
for foreign language learning.
Globalized Internal Communication Platform
To strengthen communication and collaboration at home and abroad, the Company utilizes the globalized office platform as an
internal communication platform to facilitate communication and collaboration among employees from different countries and
Cross-cultural awareness training for junior managers at Cross-cultural awareness training of the international
regions. The platform features a variety of functions such as community, storyline, leadership, and Q&A. As an online communication
high potential class at Sanhua (Hangzhou) Micro
Sanhua Household Channel Heat Exchanger hub for employees around the world, the platform helps everyone keep abreast of important Company achievements around the
world, interact with colleagues from different countries, and gain access to valuable resources that help support personal career
development and physical and mental health. With the platform, the Company brings together leaders and colleagues across
the organization. Through interactive quizzes and story sharing, it creates a sense of belonging at work and provides a wealth of
information and resources through its official account.
Rich platform content Globalized communication
platform
Chinese work culture training European work culture training
• Sanhua Intelligent Controls History and
Culture
• Corporate Vision, Mission and Values
• Global News and Events
The Viva Engage globalized internal
• Sanhua Intelligent Controls Leadership communication platform
Insight
• Cross-Cultural Awareness and
Inclusiveness
• Employee Recognition and Health
• Best Practices and Knowledge Sharing
Globalized internal communications platform
Flower of Talents Blooms for Prosperity
Occupational Health and Safety
Safeguarding fire safety by actively carrying out fire drills Case
With a sense of dignity, happiness and fulfillment at the core, Sanhua Intelligent Controls is
committed to employee health, occupational disease protection and employee care. To safeguard
In 2023, Sanhua Intelligent Controls conducted regular fire safety activities across all business units. Through extensive
the health of our employees, we not only provide regular and comprehensive annual medical
promotion, training, and emergency drills, employees' understanding and awareness of fire safety were enhanced. The
examinations, but also strength the safety management of the working environment. Effective Company aimed to strengthen fire awareness, improve employees' capabilities of responding to emergencies, and
measures are taken to reduce the risk of occupational injuries and to ensure that employees work in demonstrate the Company's fire safety policy of "putting prevention first, combining prevention with firefighting."
a safe and comfortable environment.
Strengthening Work Safety
The Company continues to promote the construction of dual prevention system for work safety, and has formulated and issued the
Handbook of Dual Prevention System for Work Safety. The handbook combines risk management and control with hidden danger
investigation, curbs the risk of work safety from the source and effectively reduces the occurrence of accidents. The Company has
established a well-improved mechanism for hidden danger investigation and management, identifies all kinds of hidden dangers of
safety, and eliminates these dangers through regular and irregular inspections, special rectification and other methods. Combined
with the relevant reward and punishment mechanism, the Company ensures the effective operation of the dual prevention system Fire drill at Sanhua Household Fire drill at Sanhua Fire Drill by Leaderway Electronics
of work safety, and safeguards the safety of employees' lives and properties. Commercial Refrigeration
Dual prevention mechanism for work safety
Curbing work safety risks at the source, effectively identifying, grading and controlling potential safety hazards
in the plant, dividing the risk level according to ''severe risk, major risk, general risk, low risk'', and strictly
implementing the risk control hierarchy with clear responsibilities and risk points.
Fire drill at Sanhua Automotive Heat Exchanger Fire drill at Sanhua (Hangzhou) Micro Channel
Hidden danger investigation and management for work safety
Organizing regular hidden danger inspection and management for work (fire) safety every month, strictly
implementing the safety inspection plan, and conducting monthly special inspections and weekly random safety
Protecting Employee Health
inspections in the workshop from time to time. Conducting rectification immediately to ensure work safety once
hidden dangers are found. The Company provides comprehensive health protection, occupational disease prevention, and care measures for employees,
creating a working environment filled with respect, care, and opportunities. The Company's injury system and leave system cover
all employees. When an employee is injured at work, the Company will determine and provide corresponding benefits according to
Emergency plan for work accidents national regulations, including leave during the medical treatment.
In conjunction with the emergency plan, forming an emergency management team, and equipping production
To address potential risks concerning occupational diseases, the Company has established a Safety and Occupational Health Office
units at all levels with emergency facilities, equipment and materials; regularly conducting special emergency
and formulated the Occupational Disease Examination Regulations, clarifying the management responsibilities and operating
plans/site disposal drills, fire emergency escape drills and related training, and actively participating in the joint
procedures for occupational disease examinations. For positions involving occupational hazards such as electric welders, gas
drills organized by the local emergency safety and fire departments, to comprehensively improve the prevention
welders, painters, as well as key managers and married female employees, the Company has detailed regulations on examination
of work incidents and the ability to deal with emergencies.
items, conducts regular health examinations, and effectively protects employee health.
Flower of Talents Blooms for Prosperity
Empowering Employee Growth Developing internal lecturer
The establishment of the lecturer and course system presents crucial for talent development. In 2023, we launched
Empowering employee growth is a key objective of Sanhua Intelligent Controls. We continuously
the "Internal Lecturer Training Program - Bright Star Plan," involving 53 business elites from all business units in
improve our training system, providing rich training contents as well as scientific and effective
a six-month professional TTT program. They underwent course development, trial teaching, and course polishing,
training assessments. This effectively enhances employees' knowledge, skills, and overall qualities,
resulting in 30 certified junior lecturers and 30 professional courses, injecting new vitality into our lecturer team.
creating favorable conditions for their continuous growth. Additionally, the Company focuses on
employees' career development planning, continuously optimizing talent promotion channels,
providing diversified career development opportunities, and encouraging employees to grow
actively.
Optimizing Training System
The Company places great importance on talent development. We have built targeted training systems with different levels and
sequences, covering various aspects such as job skills, professional knowledge, and management abilities. These training systems
aim to help employees enhance their abilities and achieve career development.
Improving training system
We have established a comprehensive training system, including basic infrastructure training, leadership training,
professional skill training, international talent training, new employee training, and other open courses, to provide
A group photo of certified internal lecturers at the certification ceremony
employees with channels for comprehensive skill enhancement.
Throughout the year, we conducted various themed training sessions such as the "Navigation Series," "Elite
Procurement Class," "Elite Financial Class," "Management Performance Training," "Management Trainee Program,"
and "TDR Training," providing more systematic and comprehensive training for management personnel, technical
Sanhua Household organized a R&D Project Leader Training Camp Case
and professional talents. Additionally, we optimized employee training plans in line with our development strategies,
increasing efforts in talent development for areas such as international talent cultivation and digital transformation
empowerment. In May 2023, Sanhua Household organized the 2023 R&D Project Leader Training Camp, with over 70 R&D project leaders
participating in the training. For this training camp, the Company developed a series of courses titled "R&D Project
Leader Training Camp," covering modules such as refrigeration systems, reliability, project management, motor design,
and cross-departmental communication. The objective was to help project leaders enhance their knowledge and skills,
improve project management capabilities, and enhance cross-departmental communication skills. During the training,
participants collectively discussed the "Portrait of an Excellent R&D Project Leader," encouraging everyone to strive for
excellence and continuously develop themselves.
Flower of Talents Blooms for Prosperity
Facilitating career pathways
Sending Teacher's Day blessings, and expressing gratitude to internal lecturers Cas e
The Company has established a scientific job qualification system. In conjunction with clear career development paths, we help
employees identify their career coordinates and directions, providing them with broad development opportunities. We divide the
employee development path into two main categories: development for frontline employees and development for professional
During the Teacher's Day in September 2023, the Company and its subsidiaries conducted Teacher's Day activities for
and management personnel. Furthermore, we refine talents into five categories based on skill levels, professional expertise, and
internal lecturers, sending them holiday blessings.
management direction.
• We organized Teacher's Day activities for internal lecturers, gathering more than 30 outstanding lecturers to
participate in this event. The representatives shared their educational mottos and delved into discussions on how to
further enhance teaching quality, striving together to cultivate more outstanding talents. Application of TDR projects Sustainability optimization
Talent inventory + talent pool 2 construction + 2 management
• We carried out activities under the theme of "Not Wasting Good Times, Treading New Heights with Each Step," inviting Identifying key positions and Construction of qualification system
over 10 teachers to embark on an autumn hiking. While enjoying the beautiful autumn scenery, the activity also key talents through talent Construction of talent training system
inventory and building Expert management
symbolized the continuous pursuit of new educational heights and the firm belief in scaling the peak of knowledge. Director management
talent pools
Talent supply
chain
Core values
of talent
development
Excellent performance
Core capabilities
Talent
Talent service
development
chain
chain
Construction of service system of "treating talents as customers"
Integrating common needs and providing one-stop and integrated solutions for
business management, employees, and HR partners, through a systematic and
digital sharing platform.
Core values of talent development
Flower of Talents Blooms for Prosperity
For grades 4 and below, employees submit the
Optimization
"Application Form for Professional Talent Evaluation"
of qualification
system and "Personal Score Sheet". After department
Within the year, qualification standard interviews were conducted, covering 33 position
recommendation and HR review, employees who
categories and 40 participants, to confirm the division of positions, and adjustments
meet the promotion conditions and competency
were made to 22 qualification standards.
requirements specified in the "Promotion Evaluation
Form for Grades 4 and Below" submit to the
Professional Talent Evaluation Committee for
evaluation and approval by the general manager.
For grades 5 and above, promotion requires
Application of meeting point value requirements and passing
qualification Establishing learning maps for all positions, and collecting training learning the professional skills certification defense by the
requirements for necessary knowledge, skills, and professional abilities for promotion evaluation committee.
at each level; based on the professional competence items collected from interviews,
integrating them into the professional competence pool for each position group.
R&D Talent Development
The Company attaches great importance to the cultivation and development of research talents, and has established cooperative
relationships with multiple universities and research institutions. Through the combination of industry, academia, and research, the
Company promotes technological innovation and talent cultivation. Additionally, the Company actively participates in international
Formulating qualification standards for technical positions, position maps for all scientific cooperation projects, providing employees with opportunities for international exchanges and cooperation. Encouraging
Standardizing sequences, career development channels, corresponding relationships of position employees to participate in various technical innovation activities further expands their perspectives and modes of thinking.
management
systems, and simultaneously reviewing learning maps, professional competence
systems To strengthen the construction of the R&D talent team, the Company has formulated the Management Measures for the Cultivation
libraries (competency model construction), Position Management Measures, and
of R&D Talent Production Line, aiming to continuously optimize and improve the research curriculum. This initiative aims to create
Qualification Management Measures.
an efficient and comprehensive R&D talent production line to ensure the continuous output of high-quality research talents.
Setting up a system of qualification standards for employees Furthermore, the Company focuses on the construction of an innovation system and the enhancement of innovation capabilities,
inclining towards innovation capabilities in aspects such as selection, cultivation, appointment, and retention. This approach aims
to enhance the Company's innovative capabilities in leading industry development, thereby promoting continuous innovation and
excellence development.
In 2023, the Company initiated innovation and talent engineering projects in locations such as Hangzhou, as well as Binhai and
Xinchang of Shaoxing. Through the construction of new research buildings and talent apartments, the Company improves the living
Professional Talent Development support facility for R&D personnel, creating a comprehensive and favorable working and living environment for them.
The Company has formulated relevant regulations such as the Management Measures for the Evaluation and Management of Caring for Employee Well-being
Professional Talents, clarifying the responsibilities, evaluation, and application of professional talent evaluation management.
By establishing the Professional Talent Evaluation Committee, the Company conducts specialized assessments and evaluations
The Company is committed to creating a vibrant and diverse working environment for all employees worldwide, fostering a healthy,
of the abilities of applicants, and provides relevant suggestions. The Company's human resources department fully participates
positive, and collaborative atmosphere. Providing convenience and subsidies in areas such as housing, transportation, and meals,
in the certification defense of professional skills, supervises the evaluation process, and engages in the promotion evaluation of
the Company strives to meet the needs of its employees. It also closely monitors employee difficulties and requirements, actively
professional talents.
listens to their voices, and promptly addresses and resolves their issues.
Flower of Talents Blooms for Prosperity
Assisting employees in need Embracing the striving spirit, contributing to the Asian Games Case
The Company extends warmth to employees facing family difficulties or sudden disasters and has established the " Sanhua
Intelligent Controls Family" Employee Assistance Fund to aid those in need. This initiative aims to enhance employees' On September 23, 2023, the 19th Asian Games Hangzhou kicked off, delivering to the world a great event that is distinctly
sense of belonging by providing financial assistance to employees and their families experiencing significant illnesses or Chinese, uniquely Asian and spectacular with over 10,000 athletes from across Asia. In the lead-up to the Asian Games,
accidents that result in financial hardship. The fund covers 100% of the assistance, and since its inception in 2016, it has employees of the Company actively participated in a series of activities to welcome the event. From chess competitions
aided a total of 183 employees. to track and field events, from basketball matches to football games, from intellectual challenges to intense
competitions, and even to the resilience shown on the marathon track, the employees of Sanhua Intelligent Controls
were vibrant and energetic. With wisdom, sweat, and passion, they added a unique charm to the atmosphere of the Asian
Games.
Enriching employee lives
Organizing events such as sports competitions, skills contests, and holiday parties, the Company showcases the sound
spirit of its employees, fostering their identity and integration into the corporate culture. These activities facilitate a
balance between work and life, enhance physical fitness, enrich spiritual well-being, and increase employee happiness
and satisfaction with the Company. They also serve as platforms for employee interaction, effectively boosting sense of
group honor and team cohesion.
Mid-Autumn Festival garden party and cultural Employee birthday celebrations
performance
Employee Communication and Engagement
The Company provides channels for employees to provide feedback, report issues, and lodge complaints. We strictly implement
the Quota Employee Management Measures for Staff and ensure the independence, confidentiality, and safety of the process.
We encourage employees to speak up proactively. Employees can communicate their feedback through channels such as the
"Director's Mailbox," "Employee Complaint Form," and the Sanhua Intelligent Controls Employee Service Platform. Through
democratic participation, employees can fully express their opinions and suggestions, actively exchange ideas with management,
and deliver sound teamwork and common growth.
International Women's Day care activities First basketball league
Flower of Talents Blooms for Prosperity
Employee Communication and
Engagement
Sanhua Intelligent Controls is committed to fulfilling social responsibilities and promoting social harmony
and sustainable development through charity and public welfare projects. In 2023, the Company showed
its dedication to the community by visiting elderly people in nursing homes, providing assistance to
disadvantaged groups in targeted communities, and engaging in various charitable activities in the fields of Conducting voluntary blood
social responsibility and education. Through initiatives like the " Sanhua Intelligent Controls Family" fund, the donation activities
Company also extends support to employees and their children in need, visiting them during the Spring Festival,
and setting a positive example for corporate social responsibility.
We regularly organize voluntary blood donation activities to encourage employees to contribute to society by
donating blood voluntarily, promoting the spirit of caring for life while fulfilling their job responsibilities.
Sanhua Holding Group has established the " Sanhua Intelligent Controls Education Fund" and pledged to donate
RMB 2 million annually from 2022 to 2026. This fund aims to reward outstanding teachers in the education sector
of Xinchang, promoting the high-quality development of the education industry.
Visiting the Hailuo Nursing
Home during the Dragon Boat
Festival, 2023
Since 2019, Sanhua Holding Group has sponsored the Xia Anshi Fund for five consecutive years, rewarding
outstanding professors and students in the Chinese refrigeration and air conditioning industry. In April 2023,
the 27th Xia Anshi Education Foundation Fund － Award Ceremony of the "Sanhua Award" was held at Sanhua
Intelligent Controls Hangzhou Industrial Park. A total of 18 nominees from renowned institutions nationwide
received the award, including one professor, 13 undergraduate students, and 4 graduate students (both master
and PhD students), who were respectively awarded the "Outstanding Professor Award" and the "Excellent Student
Award."
ESG Performance
ESG Performance Environmental Perfeomance
Scope of statistics for the reporting period
Economic Performance The scope of environmental performance data covers the listed main body of Zhejiang Sanhua Intelligent Controls Co., Ltd, except
for overseas parts.
Scope of statistics for the reporting period
The scope of economic statistics is consistent with the scope of the Company's consolidated financial statements. Waste Gas
Indicator Unit 2023
Indicator Unit 2023
Total sulphur dioxide emissions Kg 11,003
Total asset RMB 100 million 318.91
Total nitrogen oxide emissions Kg 15,087
Revenue RMB 100 million 245.58
Total soot emissions Kg 2,029
Net benefit RMB 100 million 29.34
Total tax paid RMB 100 million 12.83
Greenhouse Gas11
Governance Performance Indicator Unit 2023
Scope of statistics for the reporting period Direct (Scope 1) GHG emission Tonnes of CO2 equivalent 1,496,347
The scope of economic statistics is consistent with the scope of the Company's consolidated financial statements. Direct (Scope 2) GHG emission Tonnes of CO2 equivalent 233,439
Total amount of GHG emission Tonnes of CO2 equivalent 1,729,786
Governance of the Board of Directors Tonnes of CO2 equivalent/ RMB
GHG emission intensity 0.7
Indicator Unit 2023
Number of board meetings held throughout the year Time 10 Waste
Average attendance during the year % 100
Indicator Unit 2023
Integrity and Compliance9 Total amount of solid waste disposal Tonne 23,602.55
Disposal of ash Tonne 325.30
Indicator Unit 2023
Disposal of household waste Tonne 8,429.00
Number of anti-corruption and integrity training sessions Time 5
Number of employees covered by anti-corruption and integrity Disposal of kitchen waste Tonne 441.60
Person 493
training
Anti-corruption and integrity training coverage % 100 Disposal of general waste Tonne 14,406.65
Disposal of hazardous waste Tonne 25,255.22
Supplier Management
Disposal of municipal sludge Tonne 22,079.80
Indicator Unit 2023
Disposal of hazardous liquid waste Tonne 351.40
Number of social responsibility training sessions for suppliers Time 2
Supplier review coverage rate10 % 42.20 Disposal of other hazardous solid waste Tonne 2,824.02
ESG Performance
Water Resources
Social Performance
Indicator Unit 2023
Scope of statistics for the reporting period
Total amount of water consumption Cubic meter 3,316,957.40 The scope of social performance data covers the listed body of Zhejiang Sanhua Intelligent Controls Co., Ltd. and includes the
Cubic meter 1,303,787.41
overseas part, but the total number of employees data therein does not include dispatched employees.
Total amount of recyclable water
Percentage of recyclable water in total water use % 39.31
Total amount of water discharge Tonne 1,926,189.85 Number of employees
Total amount of sewage Tonne 1,755,207.44
Indicator Unit 2023
Water pollutant (COD) Tonne 107.41
Total number of employees on duty Person 17,732
Water pollutant (ammonia) 吨 Tonne 23.50
Number of female employees Person 6,551
Number of Male employees Person 11,181
Package
Number of employees aged below 30 Person 6,220
Indicator Unit 2023 Number of employees aged 30 to 50 Person 10,091
Number of cardboard boxes 10,000 1,810.00 Number of employees aged above 50 Person 1,421
Number of pallets 10,000 11.84 Number of employees educated in high school or less Person 7,801
Number of Employees with bachelor's degree and
vocational degree
Number of plastic boxes 10,000 8,972
Number of employees with master's degree or above Person
Number of recyclable packages 10,000 1.90
Number of female employees in middle management Person
Number of female employees in senior management Person
Energy Consumption 28
Indicator Unit 2023 Number of newly recruited employees Person 2,872
Electricity generation from new energy facilities MWh 33,727.60 Number of college graduates Person 740
Comprehensive energy consumption12 MWh 6,257,983.44
Employee training
Total oil used for production Tonne
Total petrol volume Tonne 312,022.87
Indicator Unit 2023
Total diesel volume Tonne 169,964.28
Number of trained employees Person 20,000
Natural gas consumption Number of trained female employees Person 5,000
meters
Total amount of purchased heat power GJ 60,705.88 Number of trained male employees Person 15,000
Total amount of purchased electricity MWh 397,617.65 Number of trained senior management Person 200
Total amount of purchased green power MWh 18,000.00 Number of trained middle management Person 2,000
purchased electricity and heat. For the GHG emission factor of electricity, refer to the Notice on the Management of Greenhouse Gas Emission Reporting for Enterprises in the Power
Generation Industry in 2023-2025 issued by the Ministry of Ecology and Environment of the People's Republic of China; Refer to the National Development and Reform Commission
(NDRC) Guidelines on Accounting Methods and Reporting of Greenhouse Gas Emissions by Enterprises (Trial) for the emission factor of purchased heat; refer to the IPCC 2006
Guidelines for the Preparation of National Greenhouse Gas Inventories (Trial) for the emission factor of other energy sources, and so on..
General Rules for Calculation of Comprehensive Energy Consumption (GB/T2589-2020), the types of energy consumed by the Company include petrol
and diesel consumption for production and vehicle use, purchased heat and natural gas.
ESG Performance
Employee training Product quality managementEmployee training
Indicator Unit 2023 Indicator Unit 2023
Training expenses RMB 10,000 2,000.00 Number of customer factory inspections Time 292
Training expenses per employee RMB 1,000.00
Customer Factory Inspection Pass Rate % 98.00
Training hour per employees Hour 10
Number of participants in quality management training Person 3,797
Training hour per senior management Hour 21
Number of quality management trainings Time 306
Training hour per middle management Hour 15
Training hour per primary employee Hour 15
Training hour per female employee Hour 10 Vehicle use
Training hour per male employee Hour 15
Indicator Unit 2023
Number of trainers (including in-house trainers and externally Person 200
hired faculty) Number of cars / 58
Mileage on cars Km 2,524,637
Employee’ rights and interests Number of trucks / 15
Mileage on trucks Km 498,075.5
Indicator Unit 2023
Number of electric forklifts / 252
Labor contract signing rate % 100.00
Social insurance coverage rate % 100.00
Social welfare14
Employees’ welfare Indicator Unit 2023
Donation expenditure throughout the year RMB 10,000 637.9
Indicator Unit 2023
Amount of targeted support donations (charitable donations) RMB 10,000 343.2
Number of employees on maternity leave during the year Person 21
Donations for rural revitalization RMB 10,000 52
Number of timely returns from maternity leave Person 18
Donations for education RMB 10,000 215
Female post-natal return rate % 96.00
Donations for disaster relief RMB 10,000 27.7
Union building rate % 90.00
Labor union coverage rate % 91.50
Volunteer activity15
Number of employees in difficulty receiving help Person 10
Indicator Unit 2023
Intellectual property right Number of Volunteers15 Person 258
Indicator Unit 2023
Number of intellectual property rights / 3,792 15 The scope of the data on the number of volunteer only covers Sanhua Domestic, Sanhua Commercial Refrigeration and Sanhua Automotive.
Number of utility model patents / 1,495
Number of invention patents / 1,879
Number of design patents / 418
Number of trademarks / 169
Appendix GRI Standards
Governance
Disclosures Location
GRI Content Index 2-13 Delegation of responsibility for managing impacts Corporate Governance Structure
Statement of use Zhejiang Sanhua Intelligent Controls Co., Ltd. has reported the information
Role of the highest governance body in
sustainability reporting
cited in this GRI content index for the period from January 1, 2023, to
December 31, 2023 with reference to the GRI Standards. 2-15 Conflicts of interest Not applicable
GRI 1 used GRI 1: Foundation 2021 2-16 Communication of critical concerns Not applicable
Collective knowledge of the highest governance
GRI Standards Disclosures Location body
Evaluation of the performance of the highest
GRI 1: Foundation 2021 2-18 Not applicable
governance body
etc
GRI 2: General Disclosures 2021 2-20 Process to determine remuneration Not applicable
The organization and its reporting practices
Strategy, policies and practices
Strengthening Environmental
Occupational Health and Safety
Activities and workers Quality Products Creating
Sustainable Value
Supply Chain Management
Strengthening Environmental
Protection
Occupational Health and Safety
Quality Products Creating
Governance
Governance
Structure 2-25 Processes to remediate negative impacts Risk Management System
concerns Operation
Governance 2-26
Structure
Integrity and Compliant
Compliance with laws and regulations
Operation
Governance 2-27
Structure
of impacts Governance
Structure
GRI Standards Disclosures Location GRI Standards Disclosures Location
GRI 206: Anti-competitive Behavior 2016
Approach to stakeholder engagement 206-1 Not applicable
Communication monopoly practices
GRI 3: Material Topics 2021
Stakeholder engagement and management of concerns related to
tax
GRI 201: Economic Performance 2016
ESG Performance GRI 301: Materials 2016
Overview
Packaging Material
Financial implications and other risks and opportunities due to 301-1 Materials used by weight or volume
climate change
Packaging Material
Management
Packaging Material
GRI 202: Market Presence 2016 GRI 302: Energy 2016
minimum wage Structure
Structure
GRI 203: Indirect Economic Impacts 2016 Optimize Energy
Structure
Optimize Energy
Optimize Energy
GRI 204: Procurement Practices 2016 302-5 Reductions in energy requirements of products and services
Structure
GRI 205: Anti-corruption 2016 Water Resource
Management
Management
Integrity and Water Resource
Communication and training about anti-corruption policies and 303-3 Water withdrawal
procedures
Operation
Water Resource
Integrity and Management
Operation 303-5 Water consumption
Management
GRI Standards Disclosures Location GRI Standards Disclosures Location
GRI 304: Biodiversity 2016 GRI 308: Supplier Environmental Assessment 2016
Operational sites owned, leased, managed in, or adjacent to, Supplier Access
Environmental Impact 308-1 New suppliers that were screened using environmental criteria
Management
protected areas
Significant impacts of activities, products and services on Environmental Impact Negative environmental impacts in the supply chain and actions Supplier Risk
biodiversity Management taken Management
GRI 401: Employment 2016
Talent Recruitment
IUCN Red List species and national conservation list species with and Introduction
habitats in areas affected by operations
Employee
Benefits provided to full-time employees that are not provided to
temporary or part-time employees
GRI 305: Emissions 2016 Benefits
Employee
GRI 402: Labor/Management Relations 2016
GRI 403: Occupational Health and Safety 2018
Occupational
Health and Safety
Occupational
Health and Safety
Occupational
Nitrogen oxides (NOx), sulfur oxides (SOx), and other significant air Health and Safety
emissions
Worker participation, consultation, and communication on Occupational
occupational health and safety Health and Safety
GRI 306: Waste 2020
Occupational
Occupational
Health and Safety
Prevention and mitigation of occupational health and safety impacts Occupational
directly linked by business relationships Health and Safety
system Health and Safety
Health and Safety
GRI Standards Disclosures Location GRI Standards Disclosures Location
Occupational
Health and Safety
GRI 404: Training and Education 2016 Supplier Access
Mechanism
Optimizing Training
System 414-2 Negative social impacts in the supply chain and actions taken
Management
Programs for upgrading employee skills and transition assistance Optimizing Training
programs System
GRI 415: Public Policy 2016
Percentage of employees receiving regular performance and career Optimizing Training
development reviews System
GRI 405: Diversity and Equal Opportunity 2016
Talent Recruitment GRI 416: Customer Health and Safety 2016
and Introduction
Assessment of the health and safety impacts of product and Consumer Health and
service categories Safety
GRI 406: Non-discrimination 2016 Incidents of non-compliance concerning the health and safety Consumer Health and
impacts of products and services Safety
Talent Recruitment
and Introduction GRI 417: Marketing and Labeling 2016
GRI 407: Freedom of Association and Collective Bargaining 2016
Product Quality
Management
Operations and suppliers in which the right to freedom of association
and collective bargaining may be at risk
Incidents of non-compliance concerning product and service Product Quality
information and labelling Management
GRI 408: Child Labor 2016
Operations and suppliers at significant risk for incidents of child Talent Recruitment Incidents of non-compliance concerning marketing Product Quality
labor and Introduction communications Management
GRI 409: Forced or Compulsory Labor 2016 GRI 418: Customer Privacy 2016
Operations and suppliers at significant risk for incidents of forced or Talent Recruitment Substantiated complaints concerning breaches of customer
compulsory labor and Introduction privacy and losses of customer data
GRI 410: Security Practices 2016
GRI 411: Rights of Indigenous Peoples 2016
GRI 413: Local Communities 2016
Operations with local community engagement, impact assessments,
and development programs
Operations with significant actual and potential negative impacts on
local communities
Explanation Reader Feedback Form
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