I. Company Overview

1 Company Profile

Zhejiang Shunhao New Materials Co., Ltd. was formerly Hangzhou Shunhao Rubber Engineering Co., Ltd., a key high-tech enterprise of the National Torch Plan. Hangzhou Dongqing Rubber Co., Ltd. was separated from Shunhao's rubber mixing and molding workshops. Dongqing specializes in the production of various rubber-lined plates and mixed rubber, while Shunhao specializes in the manufacturing of rubber corrosion-resistant linings and lined rubber plates. Both companies share the same legal representative and leadership team.

The company is located in the beautiful Cangqian Industrial Park in Yuhang District, beside Provincial Highway 02, with convenient transportation and a superior geographical location. The company has total assets of 71.24 million yuan, covers an area of 26.2 mu (approximately 17,467 square meters), and has a building area of 17,500 square meters. Dongqing occupies 10 mu (approximately 6,667 square meters) and has a building area of 6,000 square meters. There are 50 and 30 employees respectively, including one senior technician, 12 junior and intermediate technicians, and a group of professional personnel with anti-corrosion skills.

The company is a designated manufacturer of various rubber linings by the former Ministry of Chemical Industry's China Chemical Equipment Corporation, providing rubber linings suitable for different corrosive media. Shunhao products are known for their high temperature resistance, corrosion resistance, wear resistance, easy construction, energy efficiency, and reliability, capable of withstanding the most demanding environments. Zhejiang Shunhao New Materials Co., Ltd. is the drafting and writing unit of the national standards "Rubber Lining," "Construction Specifications for Industrial Equipment and Pipeline Corrosion Protection Engineering," "Flue Gas Desulfurization Lining," and "Corrosion Protection Engineering Training Course," and has obtained Class A qualification for corrosion protection construction.

The company has more than 20 varieties of QH series rubber anti-corrosion linings. Among them, the QH-90 room temperature self-vulcanizing butyl rubber lining has obtained a national invention patent, filling a national gap and achieving internationally leading technology, meeting the anti-corrosion requirements of various equipment for different customers.

The FB series of high-performance waterproof sealing tapes produced by our company has reached a domestically leading level, completely replacing the traditional waterproof membrane sealing system. Our company can also supply other high-performance rubber products and provide rubber formula design and consultation to meet the different requirements of different customers.

The company implements a general manager responsibility system with internal organizational structure: Safety and Environmental Protection Department, Production Department, Quality and Technology Department, Business Department, Administration Department, Finance Department, Engineering Department, Mixing Workshop, Molding Workshop, and Lining Workshop.

The company passed ISO9001 quality management system certification in May 2018 and continues to operate effectively.

In July 2020, the company passed ISO14001:2015 Environmental Management System and ISO45001:2018 Occupational Health and Safety Management System certifications and continues to operate effectively.

2 Core Values and Development Philosophy

     The company was founded in 1999 Over the years, as the company grew from small to large and capital grew rapidly, Shunhao's corporate culture gradually took shape along with the company's growth. Looking back at the company's growth over the past decade, it has been a continuous process of self-innovation, assuming social responsibility, and undergoing transformation.

Chart 3 Corporate Culture Philosophy System

3. Top Management's Social Responsibility Commitment

Social Responsibility Commitment Letter

We promise:

We will spare no effort in fulfilling our commitments to all stakeholders, from product R&D, raw material procurement, and manufacturing to energy resource utilization and waste management, always committed to practicing sustainable development throughout the entire product life cycle.

Compliance with Laws and Regulations: Comply with national and local laws and regulations, and relevant social responsibility standards at the national, local, and industry levels.

Occupational Health: Provide employees with a healthy and safe working and living environment, care for employees, prohibit child labor, anti-discrimination, anti-forced labor, punishment of employees, respect the rights of all employees to voluntarily organize and join trade unions and engage in collective bargaining, comply with working hour requirements, and strive to provide employees with growth opportunities. Organize employee physical examinations and carry out occupational disease prevention and control work.

Safety and Environmental Protection: Follow the principle of safety first and establish a safety management system; follow the concept of green and low carbon, prevent and control pollution, save energy and reduce emissions, implement clean production audits, and provide safe and environmentally friendly products and services to society.

Voluntary Acceptance of Evaluation: We voluntarily accept third-party social responsibility assessment activities. If the company violates the above commitments, the company is willing to take corrective measures in accordance with the law, gradually improve the system, and communicate with suppliers and subcontractors.

4. Social Responsibility Strategy

The company actively fulfills its public responsibilities, civic duties, and adheres to ethical norms. In terms of public responsibility, the company prioritizes environmental protection and energy conservation, actively innovates, continuously improves, and achieves significant results; in terms of moral behavior, the company effectively balances and takes into account the interests of customers, employees, and the government; in terms of public welfare support, senior leaders lead by example, employees actively participate, and actively give back to society.

5. Stakeholder Identification and Communication

The company is a community of interests, and every employee inside and external suppliers, customers, and society are beneficiaries of the community of interests. The company establishes relationships with stakeholders that are in line with the company's strategic planning and development direction by fully implementing stakeholder interest protection measures and effectively meeting the needs and expectations of stakeholders. Adhering to the principle of meeting stakeholder expectations and demands, estimating the impact of stakeholder interests on economic, social, and environmental performance, and planning appropriate communication channels with stakeholders in the company's daily operations, conducting two-way communication, timely communication, striving to create value for stakeholders, and gradually forming a community of interests in cooperation.

Chart 4 Communication Channels with Stakeholders

II. Social Responsibility Performance

1. Social Responsibility Performance

Since its establishment, Zhejiang Shunhao New Materials Co., Ltd. has always taken "energy saving and emission reduction, environmental protection" as its mission. In recent years, the company has actively built resource-saving and environmentally friendly enterprises, through product structure adjustment, optimization of production processes and technologies, and improvement of production technology equipment, achieving product upgrades and adjustments, while pollutant emissions have been effectively reduced. Shunhao New Materials fully implements the scientific development concept, insists on balancing economic benefits and social benefits in development, and creates value for shareholders, employees, customers, suppliers, partners, and society in practice, promoting harmonious and sustainable economic, environmental, and social development.

Chart 5 Stakeholder Interest Protection Measures

2. Investor Rights Protection

(1) Scientific and standardized corporate governance

In accordance with relevant laws and regulations such as the Company Law and the company's Articles of Association, the company has established a standardized corporate governance structure, clarified the responsibilities and powers of decision-making, execution, and supervision, and formed a scientific and effective division of responsibilities and checks and balances mechanism.

Investors, namely the general manager, enjoy the legal rights stipulated by laws, regulations, and the company's articles of association, exercising the right to vote on major matters such as the company's business policies and profit distribution; exercising the company's business decision-making power; supervising other senior management personnel in the lawful performance of their duties; and presiding over the company's production and operation management.

(2) Investor Communication

The company follows the principles of "fairness, justice, and openness," using operational meetings, telephone calls, and other measures to ensure smooth communication channels, facilitating communication and interaction between investors and the company.

(3) Creating Value and Rewarding Investors

The company has a clear development strategy, focusing on its main business and achieving steady expansion. The company's articles of association clearly define the conditions, proportions, and decision-making mechanisms for cash dividend distribution, actively protecting investor rights. While ensuring sufficient investment in the development of its main business, the company actively implements profit distribution plans based on Shunhao New Materials' performance.

3 Employee Rights Protection

The company upholds the mission of "customer focus, providing customers with satisfactory products and services," respecting the value creation of employees and creating a good work platform and development environment for them. At the same time, it actively promotes platform talent introduction and intellectual borrowing development policies, scientifically and systematically forming a complete set of standardized, flexible, and practical personnel mechanisms suitable for Shunhao New Materials, fully mobilizing and consolidating morale for common development.

The company strictly abides by the Labor Contract Law, protecting the legitimate rights and interests of employees. It has established a salary and welfare system, including a salary system, incentive mechanisms, social insurance, and employee medical subsidy funds, to protect the legitimate rights and interests of employees; it has established a sound labor protection system, providing employees with work clothes and necessary labor protection supplies according to job characteristics; and increases employee salaries based on regional characteristics, price indexes, and other actual situations, providing employees with a good working environment.

3.1 Salary and Welfare

The company has established a reasonable salary and welfare system and a scientific and perfect performance management system. The Human Resources Department, in conjunction with the company's business development status, market conditions, and corporate strategy, formulates or revises the company's salary system or salary levels to ensure that the company's salaries are sufficiently competitive in the market; under the basic framework of "equal pay for equal work," employees in the same position will have different actual salaries based on differences in performance results. By combining monthly and annual performance appraisals, on the one hand, the appraisal results and suggestions for improvement are promptly fed back to employees to help them improve their work, and on the other hand, the appraisal results are linked to employees' salaries, job adjustments, training and development, and annual awards, establishing a mechanism for personnel to be promoted or demoted, optimizing the allocation of talent within the company, and promoting the construction of a high-quality, lean, and efficient workforce.

The company protects the legitimate rights and interests of employees, arranging employee leave and paid annual leave in accordance with the provisions of relevant national statutory holidays. It pays "five insurances," striving to provide employees with a healthy and safe production and living environment, and effectively safeguarding the personal and legitimate interests of employees.

Welfare is a certain guarantee provided in addition to basic wages and performance wages to address the concerns of employees.

Chart 6 Employee Welfare Status

3.2 Employee Learning and Development

The company is committed to building a learning-oriented and knowledge-based enterprise, paying great attention to employee training and career development, improving employees' personal qualities and comprehensive abilities, providing employees with more development opportunities and a broad stage, and achieving a win-win situation for both the enterprise and individuals.

3.2.1 Employee Training

The company has formulated "Training Management Regulations" and established a training management system to ensure the effective implementation of various stages, including "training needs investigation, training plan formulation, training activity implementation, training effect evaluation, and training improvement," promoting the realization of the company's talent cultivation strategic goals.

The company organizes training on quality, environment, and occupational health and safety management systems according to the training plan, ensuring that employees establish quality awareness, environmental awareness, and occupational health and safety awareness, and that relevant policies, objectives, and strategies are communicated and understood. It is responsible for the on-the-job and transfer training of personnel in positions that affect quality, manages and issues work permits, ensuring that the capabilities and qualifications of operators are met; it cooperates in managing the qualification certificates of special equipment operators; and promotes the sharing and communication of knowledge related to the company's operation and management, product technology, processing technology, and equipment operation within the company.

The company frequently invites external training institutions and lecturers to provide training for our employees. Employees receive targeted training from the company at various stages, from entry, on-the-job training, to promotion: new employee training, general knowledge training, professional skills training, transfer training, promotion training, etc.; for middle and senior management personnel, through participation in high-end forums and summits for entrepreneurs, visits to successful companies at home and abroad, etc., to improve business philosophy, enhance scientific decision-making ability, and improve management capabilities; for grassroots employees, organize internal training related to business and skills, using the "passing on, helping, and leading" approach to improve the business capabilities of employees with weak skills.

While conducting training, the company uses a variety of evaluation methods to evaluate the training effectiveness, understanding the trainees' evaluations and suggestions on course content, teaching methods, training gains, and the application of training knowledge and skills, providing sufficient basis for continuously improving the training process and effectiveness 。

Chart 8 Training Effectiveness Evaluation Methods

3.2.2 Employee Career Development

To meet the needs of enterprise development, the company provides career development training opportunities for employees who are willing to develop through constraint and supervision mechanisms, traction mechanisms, incentive mechanisms, and competitive elimination mechanisms.

Junior talents: The "old (employee) brings new (employee)" system, mandatory rotation learning, versatile skills, one person, multiple machines, one person, multiple positions training system, entrusted training, skills tutoring classes. Promotion channels include: 1. Management channel: Employee - Team leader - Workshop director - Higher positions; 2. Skills channel: Employee - Technician - Senior employee.

Middle and senior talents: Reserve talent training system, specialized management/skills training; the promotion channel is mainly the management channel.

By establishing multiple career development channels such as management channels and job qualification channels, opening up professional promotion channels, and setting up administrative and professional dual promotion channels, the career development model promotes multi-channel development for employees. By opening up multiple career channels, strengthening employee motivation, retaining talent, and fully tapping employee potential, a career ladder is formed.

3.3 Occupational Health and Safety

1. Guarantee employees' occupational health and safety

The company strictly implements national laws and regulations on labor, safety production, such as the "People's Republic of China Labor Law", "People's Republic of China Safety Production Law", and "People's Republic of China Occupational Disease Prevention and Control Law", etc. By establishing and improving the occupational health case management system, establishing systems such as the "Environmental and Occupational Health and Safety Operation Control Procedure", continuously adopting governance measures and personal protective measures to improve occupational health and safety working conditions, regularly measuring and controlling influencing factors in key workplaces, and actively creating a safe working environment for employees; through training, employees understand safety knowledge and personal health care knowledge, enhancing their personal protection capabilities.

The company attaches importance to safety production and labor protection. The general manager is the first person responsible for safety production. A strict safety production inspection system and safety production management network have been established, emphasizing "safety production, people-oriented". When production and safety conflict, production gives way to safety if safety is not in place. In addition, the company has established a safety committee to formulate the company's safety regulations and rules, and supervise the implementation of safety regulations; safety officers or company executives designated safety inspectors conduct irregular inspections in the workshops to deal with unsafe behaviors and individuals on-site; the company, departments, departments and workshops, and workshops and teams have signed safety production responsibility letters to ensure that safety responsibilities are clear and responsibilities are implemented; heads of various departments are the first responsible persons in their respective regions, equipped with technically competent and responsible cadres as full-time safety officers, workshops are equipped with part-time safety officers, and safety management accounts are established to be able to promptly discover and solve problems; each workshop establishes a monthly safety activity and hidden danger investigation and rectification system, and makes detailed records while promptly eliminating accident hidden dangers; the company provides labor protection supplies to employees in positions with occupational hazards according to the prescribed frequency and standards, and strengthens the protection of special occupations.

The company adheres to the principle of people-oriented and pays attention to the physical health of employees. The company strictly operates the ISO45001 occupational health and safety management system. In order to prevent, control, and eliminate occupational hazards, strengthen the management of occupational disease prevention and control, improve the level of occupational disease prevention and control, and protect the health of workers, the company organizes annual physical examinations for employees in special positions, and also conducts annual special physical examinations for special occupations, and establishes employee health records. Summer heatstroke prevention and cooling measures are implemented, free anti-heatstroke medicines and cold drinks are provided, and high-temperature subsidies are provided. The care and humane management of employees create a harmonious labor relationship enterprise. Every year, the company entrusts the detection of harmful factors at the work site, and the report results show that they are qualified. Ensuring a healthy working environment for workshop employees, and through the planning and implementation of various occupational health and safety work, effectively controlling and eliminating various occupational hazards, ensuring employee occupational health and safety, the occupational disease and suspected occupational disease incidence rate was 0% in 2021, and the occupational health examination rate for employees in hazardous occupational positions was 100%.

2. Prevention first, formulate various emergency plans

Based on the company's "List of Important Hazardous Sources", "List of Important Environmental Factors", and "Environmental Factors and Hazard Identification, Evaluation, and Control Procedures", each department identifies potential emergency situations where environmental, occupational health, and safety accidents may occur, and identifies potential hazards that may have a significant impact on the environment, occupational health, and safety in emergency situations. Determine what emergency situations will occur once potential emergencies occur, and then formulate corresponding emergency plans based on these emergency situations for prevention.

The company has established an emergency management system and established an emergency management team. Once a year, relevant personnel from various departments, as well as security and fire personnel, are organized to conduct training and fire drills on emergency response handling in the event of potential emergencies. Improve the ability of emergency personnel to properly handle accidents in emergency situations, check for problems in the plan, improve the scientific nature, practicality, and operability of the plan, and strive to minimize the risk of loss of life and property of employees. The Environmental and Safety Department regularly inspects the fire facilities of the company's factory buildings and the main electricity and water facilities and equipment to ensure their effectiveness and sufficiency.

The company strictly implements national laws and regulations on labor, safety production, such as the "People's Republic of China Labor Law", "People's Republic of China Safety Production Law", and "People's Republic of China Occupational Disease Prevention and Control Law", etc. By establishing and improving the occupational health case management system, continuously adopting governance measures and personal protective measures to improve occupational health and safety working conditions, regularly measuring and controlling influencing factors in key workplaces, and actively creating a safe working environment for employees; through training, employees understand safety knowledge and personal health care knowledge, enhancing their personal protection capabilities. The new factory area has greatly improved the working conditions of front-line employees and improved employee work safety.

The company attaches importance to safety production and labor protection. The general manager is the first person responsible for safety production. A strict safety production inspection system and safety production management network have been established, emphasizing "safety production, people-oriented". When production and safety conflict, production gives way to safety if safety is not in place. In addition, the company has established a safety committee to formulate the company's safety regulations and rules, and supervise the implementation of safety regulations; safety officers or company executives designated safety inspectors conduct irregular inspections in the workshops to deal with unsafe behaviors and individuals on-site; the company, departments, departments and workshops, and workshops and teams have signed safety production responsibility letters to ensure that safety responsibilities are clear and responsibilities are implemented; heads of various departments are the first responsible persons in their respective regions, equipped with technically competent and responsible cadres as full-time safety officers, workshops are equipped with part-time safety officers, and safety management accounts are established to be able to promptly discover and solve problems; each workshop establishes a monthly safety activity and hidden danger investigation and rectification system, and makes detailed records while promptly eliminating accident hidden dangers; the company provides labor protection supplies to employees in positions with occupational hazards according to the prescribed frequency and standards, and strengthens the protection of special occupations.

3.4 Employee Rights and Care

Since its establishment, the company has relied on the cultural accumulation of the employee family and combined it with the company's actual situation to strive to provide employees with support for different levels of personalized needs.

Chart 9 Employee Personalized Needs, Support or Improvement Measures

To attract and retain talent, the company provides a comfortable living environment, adds air conditioning and television, lays network and telephone lines, and organizes activities to enrich employees' leisure lives, allowing them to quickly integrate into the Shunhao New Materials family; in addition to weekends and national holidays, a paid annual leave system is implemented; excellent employees are evaluated and rewarded annually; regular physical examinations are organized for employees annually, festival welfare funds and goods are distributed, and economic assistance is provided to those in need; various sports facilities are provided, and table tennis competitions are held annually to enrich employees' leisure lives; all these efforts make employees deeply feel the warmth of the Shunhao New Materials family, enhance cohesion, and make Shunhao New Materials a truly positive and united team. 。

Company leaders pay close attention to employee opinions, conduct employee satisfaction surveys through questionnaires and employee forums, promptly collect and understand employee opinions, and respond actively. Establish a scientific employee satisfaction evaluation model to evaluate key factors affecting employee rights and satisfaction, such as teamwork, work itself, enterprise management, leadership behavior, enterprise policies, training and development, and remuneration and benefits, and through systematic statistical analysis, quantify the employee satisfaction score, forming the company's annual satisfaction survey report.

2020 Year Company Employee Satisfaction Score is 85 ， In response to the strong employee feedback on the limited variety of dishes in the canteen, special follow-up rectification is ordered.

4. Protection of the Rights and Interests of Stakeholders such as Creditors, Suppliers, and Customers

Shunhao New Materials always respects the legitimate rights and interests of creditors, customers, suppliers, and other stakeholders, pursues mutual equality, and adheres to the principle of "integrity as the foundation" in its business operations, establishing good cooperative relationships with creditors, customers, suppliers, and other relevant stakeholders. The company is a community of interests, and every employee inside and suppliers, customers, and society outside are beneficiaries of the community of interests. The company, through the full implementation of stakeholder interest protection measures, effectively meets the needs and expectations of stakeholders, and establishes stakeholder relationships that are in line with the company's strategic planning and development direction. Adhering to the principle of meeting stakeholder expectations and demands, predicting the impact of stakeholder interests on economic, social, and environmental performance, and planning appropriate communication channels with stakeholders in the company's daily operations, conducting two-way communication, timely communication, striving to create value for stakeholders, and gradually forming a community of interests in cooperation and coexistence.

I. Relationship with Suppliers—Resource Integration, Based on Win-Win

The company adheres to the principles of fairness, justice, equality, and mutual benefit, and signs relevant agreements with suppliers: annual cooperation agreements, procurement agreements, and clearly defines the responsibilities and obligations of both buyers and sellers in the form of contracts or agreements. We focus on establishing good strategic partnerships with suppliers to meet the needs of the company's development strategy and achieve mutual benefit, win-win, and common development.

1 Supplier Classification

Based on rubber and its auxiliaries as raw and auxiliary materials for rubber products, the company classifies suppliers into types A and B based on the degree of influence on the performance of the company's services and products. According to different types, the company sets different procurement positions, procurement methods, and sets different inspection methods and assessment methods.

Chart 10   Relationship with Suppliers

2 Supplier Management

The company selects suppliers in accordance with the "Procurement Control Procedure" and manages them. Suppliers are evaluated monthly and annually, and scored based on the evaluation results. Suppliers are classified according to the scores and handled accordingly. The company maintains a stable list of suppliers.

Strengthen interaction and communication to improve collaboration efficiency

The business department uses the "Procurement Application Form" from each department as the basis for procurement. Before and after procurement, the purchaser should verify the validity of the technical requirements and obtain confirmation from the business department before proceeding with the procurement. If any changes occur during the procurement process, the relevant department should submit a "Procurement Change Application Form" to the business department for approval, and reach a consensus with the supplier. Each procurement should be recorded in the "Procurement Task and Supply Record".

The company holds annual dealer and supplier meetings. At these meetings, the company's top leader introduces industry trends, reports on the company's development strategy, procurement, quality, and technical management, as well as the supplier's annual goals, and recognizes outstanding suppliers. The company also regularly sends leaders and technical personnel to visit suppliers for technical exchanges, allowing both parties to continuously improve and develop together.

II. Relationship with Customers—Long-term Cooperation, Mutual Promotion

The company's relationship with customers is not merely a buyer-seller relationship, but a strategic partnership of long-term cooperation and mutual promotion. The company actively provides advice and assistance to customers, jointly seeking business growth points and helping them achieve their goals. Some customers also promote and publicize the company's success stories and excellent solutions among their peers, bringing the company more market share.

III. Relationship with Shareholders—Strategic Support, Substantial Returns

Returning value to investors (shareholders) means preserving and increasing the company's assets, enabling shareholders to obtain the highest possible investment returns and profits. The wishes of investors determine the direction of the company's development, and the decisions of investors determine the company's development status. The preservation and appreciation of company assets is the driving force behind investors' continued support for the company, a fundamental indicator of the company's performance, and the fundamental path for the company's continuous development.

IV. Relationship with Employees—Interdependence, Common Development

Employees are the company's most important resource and wealth. The company's relationship with employees is not merely an employer-employee relationship, but a cooperative relationship of mutual dependence and harmonious development.

V. Relationship Management with Other Relevant Parties

The company also attaches great importance to its relationships with other relevant parties, actively seeking partners and establishing good cooperative relationships with many industry associations, banking institutions, universities, and research institutes to support the company's overall strategy and create conditions for mutual benefit.

The company formulates laws, regulations, and policies, and accepts support and business guidance from government departments at all levels. At the same time, government tax policies and financial support affect the company's development.

Banks provide credit to the company, supporting the company's normal operation and development needs. In recent years, general operating working capital supplements have mainly been prioritized through commercial bank loans. The company maintains a good relationship with banks, ensuring smooth access to bank funds.

4.1 Protection of Creditors' Rights

The company continuously improves its internal control system, effectively leveraging the risk management and internal control evaluation mechanism to ensure the legal and compliant operation and management of Shunhao New Materials and asset security. The company maintains a good credit rating, strictly fulfilling its obligations in accordance with contracts signed with creditors (banks), paying interest and repaying principal on time, promptly reporting major information related to creditors' rights, and maintaining good cooperative relationships with all creditors.

4.2 Protection of Suppliers' Rights

The company focuses on the construction of integrated supply chains, continuously improving procurement processes and mechanisms, and establishing a fair and just evaluation system to create a good competitive environment for suppliers. Strategic partnerships are established with key suppliers to promote improvements in the suppliers' concepts of resource security, quality, price, and service, fostering agreement on Shunhao New Materials' management and procedures, achieving mutual benefit and shared success. The company establishes and implements the "External Provision Process, Product, and Service Control Procedure" to standardize and regulate the procurement process and supplier management, and signs relevant bilateral cooperation agreements and strategic agreements with suppliers. Our company strictly adheres to the agreements in the contracts signed with suppliers, promptly reconciling accounts with suppliers, and completing payment.

The company strictly adheres to and performs contracts, amicably resolving disputes to ensure the reasonable and legitimate rights and interests of suppliers. At the same time, it leverages its own advantages to assist suppliers in solving production and process problems, achieving mutual progress, sharing, and mutual benefit. Open bidding is implemented, promoting transparent procurement and preventing backroom deals, commercial bribery, and improper transactions. The company communicates and exchanges information with suppliers on development strategies, corporate culture, and business information through supplier conferences, high-level mutual visits, supplier audits, telephone communication, email communication, and technical exchange meetings.

4.3 Protection of Customers' Rights

All series of products produced and processed by the company have complete and mature production processes, advanced processing equipment, and experienced professional technical personnel to ensure product quality from the beginning of production. The daily final inspection pass rate of all types of products produced by the company is higher than 99%. During the quality inspection process, non-conforming products are resolutely rejected, not manufactured, and not released. Monthly data on defective products is collected and statistically analyzed to address quality issues at their root causes. Through the implementation of the quality management policy, the company's product defect rate has gradually decreased.

Shunhao New Materials has a professional after-sales service team that provides high-quality after-sales service. The company has established a strict and mature after-sales service system. For quality problems with products leaving the factory and malfunctions during the warranty period, rapid tracing, repair, replacement, and recall measures can be taken to ensure that defective products are smoothly and accurately recalled and effectively handled.

In the product service process, we strictly follow relevant regulations and contracts to fulfill our responsibilities and obligations. The products provided are guaranteed to meet the quantity, quality, specifications, and performance requirements stipulated in the contract. Shunhao New Materials hopes to win the support and recognition of a wide range of customers through professional design, processing, testing, and after-sales service.

The company has always paid attention to customer satisfaction. Every year, it collects customer satisfaction information and listens to customer opinions through questionnaires and meetings, regularly organizes and summarizes relevant information, and promptly feeds it back to various functional departments for use in new product development and improvements in quality and service.

4.4 Protection of Government Rights

Since its establishment, the company has strictly adhered to national tax laws and regulations, formulated relevant financial systems and procedures for the declaration, approval, and reimbursement of various company expenses, and continuously standardized tax management work and improved financial management levels. Taxes are paid in accordance with the law and in full and on time. Tax work is managed by a dedicated person, and financial personnel are trained to enhance tax awareness, business skills, and management levels, ensuring that tax work is carried out legally and orderly.

5. Environmental Protection and Sustainable Development

The company strictly implements national environmental protection and occupational health and safety regulations, and strictly enforces the "three-in-one" system standards. The company actively cooperates with environmental monitoring departments in the detection of emissions of waste gas, wastewater, noise, solid waste, and hazardous waste.

To prevent environmental and occupational health and safety issues, the company has established a complete set of environmental protection and safety facilities, and installed online monitoring devices throughout the factory area. For special equipment such as boilers, elevators, pressure vessels, and forklifts, the safety and environmental protection department organizes annual inspections in accordance with special equipment regulations, conducts regular internal safety inspections and maintenance, and equips them with professional certified personnel for operation and management. The three wastes generated during the production process are strictly implemented in accordance with national standards, and regular inspections are entrusted to the environmental protection department. The company strictly implements the "Occupational Disease Prevention and Control Law," provides employees with labor protection supplies as stipulated, organizes regular annual physical examinations for employees at hospitals, and has not experienced any health problems or serious casualties among employees due to dust, noise, or other factors.

5.1 Wastewater

During production, strict separation of rainwater and sewage is implemented, and after treatment to meet standards, it is discharged into the municipal sewage network.

5.2 Waste Gas

Dust removal devices are installed in processes such as lining and vulcanization to treat waste gas, ensuring the normal operation of environmental protection equipment, and promptly addressing any problems found.

5.3 Noise

The main noise sources of the project are the noises generated during the operation of equipment in the rubber processing workshop. Noise-reducing equipment is selected for production equipment, and reinforcement and shock absorption measures are taken during equipment installation to prevent vibration and reduce noise; trees are planted within the factory area.

5.4 Solid Waste

The main solid waste of the project includes metal scraps, waste emulsion, waste mechanical lubricating oil, raw material packaging waste, and domestic garbage.

The company has signed an agreement with a hazardous waste disposal company, conducted internal education, and disposed of waste according to requirements.

5.5 Other Environmental Protection Facilities

1. Environmental Risk Prevention Facilities

The company has already set up an accident emergency pool and an initial rainwater collection pool (serving as an accident emergency pool in case of accidents), which meets the requirements for accident emergency pools set by the environmental impact assessment. Rainwater is discharged into the industrial area rainwater network through pipelines.

2. Protective Distance Setting

The protective distance for unorganized emissions is: a 50m radius from the boundary of the machinery processing workshop; a 50m radius from the boundary of the post-processing workshop. There are no environmentally sensitive points within 100m of the project boundary, and the nearest community is 500m southeast of the project, meeting the requirements for protective distance setting.

In terms of legal compliance, we strictly implement safety management in accordance with relevant national and local laws, regulations, and industry standards, fulfill our responsibilities, establish and maintain the effectiveness of the quality, environment, and occupational health and safety three-system operation, and adhere to systematic construction.

6 Ethical Conduct

6.1 Adherence to the Principles of Integrity and Building a Credit System

The company's senior management has clearly defined the business principles of "observing laws and regulations," the principles of treating people with "fairness and integrity," the principles of handling matters with "impartiality and objectivity," the behavioral requirements of "diligence and meticulousness," and the management principles of "strictness and humanity." It follows national laws and regulations, fulfills its obligations to employees, and promotes a positive corporate culture. In addition, the company actively strengthens employees' awareness of ethical conduct through its corporate culture and institutional building.

The company has always adhered to ethical norms such as upholding contracts, paying taxes according to law, and observing laws and regulations, believing that morality is the foundation of a person's life, and business ethics is the foundation of a company's survival. To ensure the healthy and normal development of business operations, it emphasizes the establishment of a good atmosphere of integrity and dedication. Based on the principle of being responsible to customers and products, the company's actions strictly adhere to the principles of integrity and ethical norms. The specific manifestations of ethical conduct are mainly: the company is responsible to customers, employees, suppliers, and partners. For customers, it ensures quality and abides by contracts. For employees, it creates a good work and living environment, ensuring employee safety in production and comfortable living. For suppliers and partners, it adheres to the principle of honest cooperation and mutual benefit.

The company complies with laws and regulations such as the "Product Quality Law," organizes production in accordance with national laws and regulations, and earnestly accepts the supervision and management of various levels of supervisory departments and testing institutions on the company's production and product quality. When cooperating with suppliers and sales agents, it complies with the "Contract Law" and fulfills its legal obligations. It complies with the "Company Law" and relevant company regulations, safeguards the interests of all shareholders, and complies with relevant environmental protection laws and regulations.

The senior management of the company attaches great importance to the company's business ethics and employees' ethical conduct. Employees are required to thoroughly learn and familiarize themselves with business ethics, understand them thoroughly, and strictly abide by them in their work; every manager in the company must understand the ethical conduct of their subordinates and be responsible for it; correctly handle relationships with relevant parties, and shape the concept of "unity of personal character, enterprise character, and product quality."

6.2 Key Processes and Performance Indicators of the Ethical Conduct Monitoring System

The monitoring process, measurement methods, and indicators of the company's ethical conduct are shown in the table below.

Chart 11 Ethical Conduct Supervision

6.3 Performance Results in Ethical Conduct

The company has always adhered to the principle of integrity, operated in accordance with the law, upheld professional ethics, and established a good business credit and moral image. It has received widespread praise from customers, suppliers, government, quality inspection, industry and commerce, taxation, and banking sectors, and has won high recognition from all sectors of society.

7 Public Welfare Support

While creating business performance, the company is committed to integrating the fulfillment of corporate social responsibility into corporate brand building and cultural creation, enhancing the company's cohesion, influence, and brand value, and forming a belief in and practicing gratitude to society. We provide excellent and efficient services to our customers, take responsibility for customer satisfaction, and maintain candid and fair dealings with our partners for harmonious win-win cooperation.

In implementing public welfare activities, the company first determines the methods of public welfare support based on its strategic development direction, such as charitable relief, educational assistance, and cultural and sports activities. Then, it determines the annual funding support amount, followed by the specific public welfare activities for each year. Finally, it develops a detailed public welfare support plan.

Actively participate in various social public welfare activities, such as: public welfare activities for autistic children, and donation events for masks during the COVID-19 epidemic. The company's leadership takes the lead in participating in various public welfare activities, while encouraging various departments and all levels of charitable organizations to actively participate in various types of charitable and public welfare activities, establishing a good social image for Sanlishi.

Chart 12 Public Welfare Support in the Past Three Years

Three Summary and Outlook

In 2021, the company strictly followed relevant laws, regulations, and provisions to effectively protect the rights and interests of shareholders and employees. While pursuing economic benefits, the company abided by social and business ethics, advocated for green environmental protection, and actively participated in public welfare and charitable undertakings, fulfilling its social responsibilities.

Although the company has done some work in fulfilling its social responsibilities, there are still shortcomings. The awareness of social responsibility has not yet penetrated the hearts of every cadre and employee. Practicing social responsibility is the duty of every enterprise, and every cadre and employee of the company should regard social responsibility as part of their daily work. However, at Shunhao New Materials, this has not yet been achieved by everyone, especially among ordinary employees, where awareness is insufficient.

Insufficient innovation in social responsibility activities. In recent years, the company has done a lot of substantial work to reward shareholders, society, and employees, and continues to maintain these good practices every year. However, as various work progresses further, we lack innovation in social responsibility and have not continued to carry out more activities with greater influence.

Insufficient publicity of the company's fulfillment of social responsibilities. As a socially responsible enterprise, society should always be the focus of all the company's work. However, the company's publicity in this area is insufficient, especially its impact on employees is not deep enough, and there is no further external publicity to influence and encourage more people to consciously participate, achieving the optimal harmonious state between the enterprise and society.

This year is a crucial year for Shunhao New Materials to grow stronger and achieve another leap forward. Shunhao New Materials will deeply implement the scientific development concept, vigorously promote the spirit of hard work, establish a new starting point, cultivate new advantages, solidly advance energy conservation and emission reduction, strive to improve economic efficiency, serve the prosperity of the local economy, ensure safer, more efficient, cleaner, and sustainable energy supply, pay attention to employee needs, pay attention to vulnerable groups in society, pursue the maximization of comprehensive environmental, economic, and social benefits, and continue to demonstrate the good image of a harmonious, trustworthy, and responsible company.