Preparation Basis. This report is prepared in accordance with the Global Reporting Initiative (GRI). Standards. It also takes reference to the.
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Luxshare Precision
2020 Sustainability Report
Connecting the future with science and technology Luxshare Precision Industry Co., Ltd
April 2021
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Content
I.About this Report .......................................................................................................3 II. Chairman's Statement ..............................................................................................4 III. About Us ................................................................................................................6
(1) Introduction.....................................................................................................6 (2) Our Honors....................................................................................................10 (3) Sustainability Management .............................................................................11 IV. Economic Responsibility ....................................................................................... 15 (1) Corporate Governance .................................................................................... 17 (2) Business Ethics ..............................................................................................24 (3) Industrial Development..................................................................................28 V. Human and Social Responsibility............................................................................33 (1) Safeguard Labor Rights and Interests..............................................................35 (2) Protect Employees' Health and Safety .............................................................36 (3) Value Employee Diversity and Individual Development.................................. 40 (4) Establish a Responsible Supply Chain.............................................................52 (5) Shoulder Corporate Responsibilities Through Actions ..................................... 57 VI. Environmental Responsibility................................................................................59 (1) Tackle Climate Change.................................................................................... 61 (2) Build Green Factory .......................................................................................66 (3) Safe, Green and Transparent Chemical Management.......................................70 (4) Environmental Performance...........................................................................73 VII. Our Honors & Awards..........................................................................................76 VIII. AppendixGRI Standards Index ........................................................................87 IX. Your Feedback ....................................................................................................104
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I. About this Report
Information about this Report
This report is issued in 2020 by Luxshare Precision Industry Co., Ltd ("Luxshare Precision"). It provides the information on the principles, progress, summaries and future plans of Luxshare Precision and subsidiaries in terms of our sustainability performance.
Preparation Basis
This report is prepared in accordance with the Global Reporting Initiative (GRI) Standards. It also takes reference to the CSR Guideline for Listed Companies issued by Shenzhen Stock Exchange, the UN Global Compact, ISO26000 Guidelines for Social Responsibilities, MSCI and the ESG (Environmental, social and governance) topics that the rating agencies focused in capital markets.
This report is formulated by identifying important stakeholders, analyzing and rating material issues to achieve sustainable development, making decisions on the scope of the report, as well as collecting, summarizing, organizing and reviewing relevant data and materials in the compilation process.
Reporting Scope
Unless otherwise specified, the policies, statements and materials in this report cover the actual business scope of Luxshare Precision and subsidiaries, which is the same as that of the annual report issued by Luxshare Precision.
Unless otherwise specified, RMB is the currency unit used in this report.
Time Span Unless otherwise specified this report covers the period from January 1st, 2020 to December 31st, 2020.
Terms Definition For the convenience of expression and reading, "Luxshare Precision", "the Group", "the Company", "Company" and "We" in this report refer to Luxshare Precision and subsidiaries. Unless otherwise specified, the terms used in this report have the same meanings as those defined in the Company's 2020 Annual Report.
Data Source and Reliability Statement All data used in the report comes from Luxshare Precision and subsidiaries. The Board of Directors of the Company is responsible for the truthfulness, accuracy and completeness of this report.
Confirmation and Approval This report has been approved by the 4th Board of Directors at 31st meeting on April 20th, 2021.
Access to this Report You can access to the online report through the following website: http://www.luxshareict.com/about/sust ainability.html
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II. Chairman's Statement
2020 was a milestone year that marked the ending of the 13th Five-Year Plan. The Year 2020 witnessed a success in building of a moderately prosperous society in an all-round way and realizing China's first centennial goal. The world is entering the era of digitalization and fully connected intelligence, with main features of Perception of Everything, Internet of Everything and Intelligence of Everything. The new generation technologies represented by 5G, big data, Artificial Intelligence have provided new possibilities for our work and life and new momentum for the development worldwide.
2020 was the 10th anniversary of Luxshare Precision's listing. During the year, Luxshare Precision was faced with serious impacts from the unexpected COVID-19 outbreak and the deep recession of the world economy. However, Luxshare Precision rose to the challenges and set a record in operational performance. Against the complex and severe external background, the Company's sales revenue in 2020 reached RMB 92.501 billion, with a year-on-year growth of 47.96%, and the net profit increased by more than 53.28%. The Company's achievements have been recognized by the society.
We are keenly aware that fulfilling ESG responsibilities is of vital importance to the sustainable development of our business while achieving good performance. Luxshare Precision is committed to continuously improving the corporate governance system, practicing the concept of green environmental protection, and promoting the harmonious development of human and society.
Improving corporate governance and striving to create an intelligent future. We improve corporate governance, optimize the company system, and focus on the diversification and effectiveness of the Board of Directors. We have strengthened risk management by improving the three lines of defense for risk management. The first line of defense assumes the responsibility for controlling and mitigating risks, the second line of defense performs due diligence function, and the third line of defense independently plays a supervisory role, so as to comprehensively enhancing risk management capabilities. We have consolidated the construction of business ethics standards, strengthened integrity risk management, and developed a corporate culture of "integrity and honesty, openness and fairness, reliability and compliance, incorruptibility and self-discipline".We continuously improve the intellectual property protection system, follow the principle of fair market competition, eliminate unfair competition behavior to further promote ethics in business. As a technology-based company, Luxshare Precision has always focused on precision manufacturing, attached great importance to product quality, and prioritized R&D and innovation. We constantly explore and strive forward on the road o f intelligent manufacturing to make contribution to the "intelligent manufacturing in China".
Safeguarding the rights and interests of employees and promoting the harmonious development of society. Employees are the core asset of the Company. Being people-oriented, we fully respect and safeguard the rights and interests of every employee, strive to establish a diversified and inclusive organization to eliminate any behavior that infringes on employees' rights and interests. Employees' health and safety is essential to business operations. We have an EHS management policy in place and continue to improve the health and safety management system. We fully implement the epidemic prevention and control requirements to ensure the health and safety of employees and resumption of work and production. We also value employees' career development and are committed to investing in employee training to help them realize individual value. We accelerate the development of green supply chain and make constant efforts to ensure the integration of ESG management in supplier management system, so
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as to promote a coordinated and high-quality development of the industryvalue chain. We continue to leverage our resources to help fight against COVID-19, support public benefit programs in communities where the Company operates across the world, and actively carry out voluntary activities for a better society. Practicing green concept and actively responding to climate change. In terms of climate change, we practice the concept of green development in our operations, contribute to the construction of ecological civilization, and in active response to China's commitment of peaking carbon dioxide emissions and reaching carbon neutrality. We are committed to reducing corporate carbon emission intensity by 40% in 2025 compared to that in 2017. To accomplish that objective, we continue to innovate and practice carbon reduction management by improving our management and technology steadily and build "Green Factory", so as to develop a sustainable green ecological environment. In addition, we vigorously promote the use of clean energy by expanding self-built photovoltaic projects and purchasing green power. We have built an energy management system, and invested in high-efficiency equipment to continuously improve energy efficiency. We have also increased investment in R&D and innovation of green products, and applied for green product certification, striving to minimize the adverse impact of products on mankind and nature. The year of 2021 marks the beginning of the 14th Five-Year Plan that has further emphasized "self-reliance and self-improvement in science and technology" as a strategic support for national development and greater efforts will be made to reinvigorate China through science and technology development. In 2021, under the strategic guidance, we will think outside of the box and develop our own strengths to provide connection solutions for people-to-people, people-to-society, people-to-thing, and thing-to-thing. We are committed to making contributions to the connection of everything and the connection of the world. As a Chinese poet goes, "A time will come to ride the wind and cleave the waves, I'll set my cloud-like sail to cross the sea which raves." Let us seize the momentum and embrace changes, to strive for the Company's sustainable development and the highquality development of the "14th Five-Year Plan".
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III. About Us
(1) Introduction 1. General Information
Luxshare Precision Industry Co., Ltd. ("Luxshare Precision") was founded on May 24th, 2004 and listed publicly in the Shenzhen Stock Exchange on September 15th, 2010 (stock code: 002475). Since the listing of the Company, sales revenue has maintained at a high growth rate. Being technology oriented, Luxshare Precision integrates product development and application services to gradually realize the leap from traditional manufacturing to intelligent manufacturing. The Company's headquarter is in Dongguan, Guangdong Province, the People's Republic of China. The manufacturing bases are mainly located in Guangdong Province, Jiangxi Province, Jiangsu Province, Anhui Province, Zhejiang Province, Shanxi Province, Hebei Province, Sichuan Province, Taiwan and other places in China. The overseas bases are mainly located in Germany and Vietnam. There are R&D centers in Dongguan of Guangdong Province, Kunshan of Jiangsu Province, Taiwan and the United States. 2. Main Operations Being committed to providing customers with one-stop procurement services, the Company mainly produces and operates connectors, cables, motors, wireless charges, FPCs, antennas, acoustics and electronic modules, etc. The products are widely used in computers and peripherals, consumer electronics, communications, enterprise applications, automotive, medical and other important fields. The Company has always focused on our main operations and forged ahead with determination and perseverance. Meanwhile,the Company has seized opportunities of the market through vertical integration and horizontal business expansion, and constantly maximized the value created by the intelligent R&D design, digital operation management, refined cost control, and automated manufacturing. Through practice of the top-level design concept of intelligent production, the Company provides a full range of design and manufacturing integration services for consumer electronic products from parts to accessories, from modules to intelligent products; the Company also persists in pursuing technological changes from low-speed to high-speed, from wired to wireless, and from copper to optical, thus forming sustainable and intelligent interconnection solutions. In the future, Luxshare will achieve the transfer from the device-to-device intelligent interaction to the device-to-human intelligent interaction. Relying on a systematic market strategy and a comprehensive technical support network, as well as a professional, youthful and passionate executive team, Luxshare will realize the all-round development
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of "machinery, electricity, sound and light" to be rapidly in line with our optimized industry layout. We are determined to become the pioneer among the peers all over the world while leading the industry in which we are operating under the strategy of "Made in China 2025".
Research & Innovation
Production & Operation
Sales & Marketing
The R&D Intensity reached to 6.21% in 2020;
24 laboratories established globally;
2,139 patents licensed globally;
The carbon emission intensity dropped to 5.92 tons/millions of sales revenue in 2020;
Cumulative investment on health & safety reached to RMB 184.75 million;
22 subsidiaries certified as 9,455 global suppliers; National High-tech
Enterprises;
The sales revenue was RMB 92.501 billion in 2020;
47.96% growth rate of revenue;
The 6th largest connector producer in the world;
Consumer Electronic s
Smartphone modules
PC components
Smart home products
Wearables Audio
solutions Accessories
Medical Service
Surgical cable Wire harness Ultrasound
cable ECG cables
Automobiles
Structural components
Cabling & wire harness
HMI products
HMI products
Complex switches
Sensors
Enterprise Telecom
Highspeed cable
Highspeed connector
Base station antenna
Filter Optical
module AOC
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3. Historical Development
2004 2005 2010
In May, Luxshare Precision was founded.
In November, Xiexun Electronic (Ji'an) Co, Ltd. Was established.
Initial Public Offerings (IPO), Luxshare landed on Shenzhen Stock Exchange SME board
2011
In January, Luxshare acquired ASAP Technology (Jiangxi) Co.,Ltd.;
In May, Luxshare acquired Lanto Electronic Limited; In June, Luxshare acquired ICT-Lanto Limited, and established
a fully-owned subsidiary Luxshare Precision Limited and Luxshare Precision Technology Limited in Hong Kong; In September, Dongguan City Luxshare Precision Industry Co.,Ltd. was established; In October, Kunshan Luxshare Precision Industry Co., Ltd was established.
2012
In January, Luxshare acquired Shenzhen Kertong Industries Co., Ltd.;
In May, Dongguan City Luxshare Precision Industry Co., Ltd. renamed as Dongguan Leader Precision Industry Co., Ltd.;
In June, acquired Dongguan Zhanxu Hardware Co., Ltd, and renamed as Dongguan Xuntao Electronics Co., Ltd., finished acquiring Fujian JK Wiring Systems Co., Ltd.;
In September, invested in Taiwan Speed Tech Co., Ltd, merged and acquired Zhuhai Win-win Flexible Circuit Co., Ltd.;
In November, renamed as Luxshare Precision Industry Co., Ltd.
2013
In October, Luxshare acquired SuK Kunststofftechnik GmbH (Germany).
In December, China Securities Regulatory Commission approved Luxshare's publicly issued corporate bonds plan.
2014 2015
In March, Luxshare acquired Luxshare Electronic Technology (Suzhou) CO., Ltd.;
In August 2013 non-publicly offering of stocks plan approved by China Securities Regulatory Commission.
In November, Dongguan Luxshare Precision Industry Co., Ltd. was established.
2016
In May, Luxshare became a shareholder of Merry Electronics (Suzhou) Co., Ltd.;
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2017 2019 2020
In August 2015, private issuing of stocks plan was approved by China Securities Regulatory Commission;
In December, LUXSHARE-ICT(VIETNAM) LIMITED was established.
In April, Luxshare acquired Merry Electronics (Huizhou) Industry Co., Ltd. and Merry Electronics (Shanghai) Industry Co., Ltd.;
In December, Joint venture Guangdong Luxshare & Merry Electronics Industry Co., Ltd. was established.
In August, LUXSHARE-ICT (NGHE AN) LIMITED was established.
In January and April, increased the capital in Luxshare Intelligent Manufacture Technology (Changshu) Co., Ltd;
In June, increased the capital in LUXSHARE-ICT (VIETNAM) LIMITED, LUXSHARE -ICT (VAN TRUNG) COMPANY LIMITED and LUXSHARE-ICT (NGHE AN) LIMITED);
In October, increased capital in the Luxshare India Private Limited;
In November, increased capital in Lanto Electronic Limited, Luxshare Electronic Technology (Kunshan) Co., Ltd, joint venture Changshu Luxsan Intelligent Manufacture Technology Partnership (Limited Partnership) was established;
In December, participated in shares of Wistron Investment (Jiangsu) Co., Ltd and Wistron InfoComm Manufacturing (Kunshan) Co., Ltd.
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(2) Our Honors
Honors and Awards in 2020
Awarded the "2020 Evergreen Award - Sustainable Development Green Award"
Ranked 21st in the "Top 500 Chinese New Economy Enterprises"
Ranked 121st in the "Top 500 Chinese Private Enterprises"
Ranked 25th in the "Top 100 Chinese Intelligent Product Enterprises"
Ranked 2nd among "2020 (33rd) China Top 100 Electronic Component Enterprises"
Selected as the "Top 50 Valued Companies" Listed at the Small and Medium-sized Enterprises Board
Selected as the "Top 10 Growth Companies" Listed at the Small and Medium-sized Enterprises Board
Received the honorary title of "Nomocracy Culture Construction Demonstration Enterprise" in Guangdong Province in April 2020
Won the title of "The 40 Most Respected Listed Companies" in the 40th Anniversary of Shenzhen Special Economic Zone in August 2020
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(3) Sustainability Management 1. Sustainability Management Framework
Luxshare Precision has established a systematic sustainable development management structure. The Company achieves the goal of sustainable operations through prudent supervision, systematic deployment and implementation. · Supervision: Board of Directors The Board of Directors is responsible for the overall decision-making and comprehensive supervision of the Company's sustainable development-relatedmatters,including internal and external stakeholder communication, importance assessment, risk identification, goal and strategy development, and regularly receives reports from the Sustainable Development Promotion Center on the results of our sustainable development efforts to ensure the implementation of the Company's sustainable development strategy. The Chairman, Mrs. Wang Laichun, as the top leader of the Company, participates in the Company's decision-making of the sustainable development strategy,coordinates, guides, and oversees the related work. · Deployment: Sustainable Development Center The Sustainable Development Center is responsible for formulating work plans for sustainability and deploying sustainability-related matters, including monitoring, evaluation and specific operations of sustainability. The Sustainable Development Center is overseen by the Board of Directors, and report regularly to the Board in accordance to the Company's sustainability performance. The Sustainable Development Center also provides advice to the Board on the appropriateness and effectiveness of Sustainable Development Center's work. · Implementation: Sustainability Execution Team The Sustainability Executive Team is responsible for the planned deployment of the Sustainable Development Center, implementing the corresponding work on sustainable development, and regularly reporting on the progress and effectiveness of the implementation of the sustainable development effort. The Sustainability Executive Team is composed of the Company's various departments. Under the coordination of the Sustainability Development Center, the team promotes the concept of sustainable development to each of the enterprise's business level through detailed communication about the sustainable development issues.
Luxshare Precision Sustainability Management Framework
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2. Sustainability Management Concept Based on the triple bottom line model of economic, environmental, and people and social, Luxshare Precision has built a sustainable development system suitable to our development stage, thereby contributing to the realization of the UN Sustainable Development Goals (SDGs). The Group always hopes to contribute to the construction of a better society through leading science and technology. We have operations all over the world, and it is one of the our important social responsibilities to solve global sustainable development issues. We use our core capabilities and resources to respond the sustainable development goals launched by the United Nations as the Group's sustainable development goals.
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3. Stakeholder Engagement
Trust and support from stakeholders are the foundation for us to survive and develop. It is essential for the sustainable development of Luxshare Precision to identify stakeholders, maintain good communications with stakeholders, timely understand their expectations and demands in terms of sustainable development, and actively listen to their opinions and suggestions. The Company actively communicates with all stakeholders through various channels in a comprehensive and sincere manner, while also responding timely to maximize the common value of the Company and stakeholders to achieve a win-win cooperation and harmonious development. The main stakeholders we identified include government regulators, shareholders/investors, suppliers/partners, customers, employees, communities, etc.
Stakeholders Government regulators Shareholders/Investors
Suppliers/Partners
Customers Employees Communities
Expectations and Demands Compliance operation Tax payment Climate change Carbon emission abatement Emissions management and use of resources Corporate governance Corporate behavior Risk control and compliance Return on investment in sustainability management Business and profit growth
Sustainable supply chain Transparent purchase Supplier management Conflict minerals management
Product quality Product innovation Quality services Carbon emission abatement
Protection of labor rights Health and safety Career development and training Communication and care
Climate change Carbon emission abatement Emissions management and use of resources Chemicals management Environmental protection Social responsibility
Communication Channels
Be supervised Regular disclosure Report from time to time Participate in the seminar
Information disclosure Shareholders General Meeting Investor activities Survey
Public tendering Daily communication with suppliers Supplier inspection and audit Supplier training and empowerment Survey Online communication platform Customer complaint and callback Customer satisfaction survey Participate in the seminar Labor union Safety education and drills Training Communication channels Employee activities Survey Green product design Build Green Factory Develop clean technologies Promote energy conservation and emission reduction Community communication Public welfare and charity activities
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4. Material Issue Identification Based on interactive communication with various stakeholders, we sort out material issues related to the sustainable development of the Company. The Sustainable Development Center is responsible for selecting and discussing those topics. In 2020, on the base of the existing communication channels, we published questionnaires on the sustainable development issues to stakeholders such as the Company's management, employees, key suppliers and some investors. Based on their opinions and suggestions, we explore the best way to carry out sustainable development management. Based on the evaluation results of stakeholders on sustainable development issues, the major issues matrix of the Luxshare Precision's sustainable development is determined.
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Economic Responsibility
We are looking forward to making people enjoy a better life through technology and making contributions to sustainable development globally. Our primary responsibility is to pursue stable operations through standardized governance and technological innovation on the premise of compliance with laws and regulations. We actively respond to challenges of environmental change, and create value for companies, customers, investors and other stakeholders.
98.6% of suppliers have signed integrity agreements
100% of indirect personnel completed the integrity education
The world's first Company to obtain USB4 Type-C Cable and USB4 Type-C Receptacle certification
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We are committed to protecting benefits of all shareholders and assuming economic responsibilities. We have continuously optimized business scope to form a core business in connection devices and systems, with four business segments focusing on consumer electronics, medical services, automobiles, and enterprise telecom, laying a solid foundation for future development. By maintaining a right balance between rapid development and stable operation,we have continued to strengthen corporate governance by improving our governance structure; complied with business ethics and implemented codes of conduct; and increased R&D expenditures, so as to promote the realization of intelligent manufacturing and the development of the industry. We will resolutely and pragmatically forge ahead to create value, and help connect to a beautiful new future.
Corporate Governance
Business Ethics
Industrial Development
Governance System
Integrity Management Quality Management
Shareholders Rights Protection
Intellectual Property Protection
through whole value chains
Investor Relations Management
Anti-unfairness Competition
Promote the Intelligent Manufacturing
Remuneration Disclosure
Continue with R&D investment
Risk Control and
Compliance
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(1) Corporate Governance
Luxshare Precision continues to improve the Company's system, standardize the Company's production and operation, improve the corporate governance structure, and constantly raise the level of corporate governance. Meanwhile, the Company also focuses on protecting the shareholders' rights and interests and the management of investor relations, strengthens corporate governance, prevents the control of insiders and major shareholders, and continuously strengthens risk management. 1. Governance System Luxshare Precision has formulated the Articles of Association in accordance with the requirements of Company Law of the People's Republic of China, Securities Law of the People's Republic of China, Listing Rules of the Shenzhen Stock Exchange, Guidelines on the Articles of Association of Listed Companies, Governance Guidelines for Listed Companies, Guidelines for the Standard Operations of Listed Companies of Shenzhen Stock Exchange, and other laws, regulations, and normative documents. The Company has established a governance system composed of shareholders general meeting, board of directors, board of supervisors and senior management. According to the Articles of Association, Luxshare Precision defined the responsibilities, authorities, procedures and obligations of all levels in decision-making, implementation and supervision, which formed a mechanism of coordination and balance among the authority, decision-making, supervision and management. The Company continuously optimizes organizational structureand continuously enhances the ability of shareholders' meetings, Boards of Directors, supervisory boards and senior management to perform their duties by constructing an organizational structure and system with clear levels, clear responsibilities, checks and balances. On one hand, the improvement of the board's independence and professionalism leads to an enhancement of scientific and reasonable decision-making. On the other hand, the Company consistently promotes the authority of independent directors and supervisory boards to perform their responsibilities on supervising and balancing the management level. The Company provides a transparent platform for independent directors and supervisory boards to supervise and balance the directors' behaviors by improving the system of external supervision and restraints. The market supervision will be introduced timely through the improvement of information disclosure, external audit, etc., the market participants can also play a supervisory role and form a constructive external restraint mechanism.
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Luxshare Precision Governance System 1.1 Board of Directors Directors are elected and appointed in strict accordance with the conditions and procedures as prescribed in the Articles of Association to ensure fair and transparent elections, and independence. The Company attaches great importance to the diversity of Board of Directors and has seven directors, three of whom are independent directors. The Board meets the regulator's requirement that at least one-third of the board members of listed companies are independent directors. With different academic backgrounds in the electronics manufacturing industry, financial management and law, the directors have been deeply involved in the corresponding fields for many years, and have gained rich working experience to ensure that they fully implement the diversity policy and optimize the Company's structure of Board of Directors. The directors have in general a term of office of three years and can be re-elected consecutively. However, independent directors shall not be in office for more than six years. The Company cares about the interests of shareholders, adheres to scientific decisionmaking, and believes that a sound and effective Board of Directors is the foundation of corporate governance. Under this principle, the Company's Board of Directors has established four specialized committees1 - the Audit Committee, the Remuneration and Assessment Committee, the Nomination Committee and the Strategy Committee - to assist the Board of Directors in performing their supervisory duties. In 2020, the Company's Board of Directors held 13 meetings and passed a total of 53 documents and proposals including the Suggestive Notice of the Controlling Shareholder to Reduce the Share Interest, Independent Opinions of Independent Directors on Relevant Matters, First Quarter Report in 2020, Announcement on appointment of chief operating officer Announcement on Progress of Outbound Investment and Related Transactions. The proposal involved the Company's daily operations, financial information and disclosure, capital increase in subsidiaries, and the construction and implementation of internal control systems. All Directors who should be present have attended the meeting. In 2020, in accordance with the "Guidelines for the Sponsorship of Listed Companies on the Shenzhen Stock Exchange" and other provisions, the Company also received continuous
1 The main responsibilities of each specialized committee and the performance of their duties in 2020 are detailed in the sustainable development section of Luxshare's official website.
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supervision and training from the sponsor CITIC Securities Co., Ltd. The training, which was designed for directors, supervisors, senior executives, related personnel in securities affairs office and financial department, includes subjects related to the corporate governance, responsibilitiesfor directors, supervisors and senior executives, prohibition of insider trading, provisions on related party transactions as well as the information disclosure for the listed companies.
1.2 Board of Supervisors
The Board of Supervisors of the Company shall, in accordance with the provisions of relevant laws and regulations such as the Company Law of the People's Republic of China, Guidelines for the Standard Operations of Listed Companies of Shenzhen Stock Exchange and the Guidelines for the Charter of Listed Companies, earnestly perform their duties, carry out work diligently and conscientiously, and supervise the standardized operation of the Company.
To protect the rights and interests of the Company and shareholders, especially public shareholders, in the course of performing the supervisoryduties, the supervisor supervises directors' performance of their duties in the Company, and may make recommendations on the removal of directors who violate laws, administrative regulations, articles of association or resolutions of the shareholders' meeting. On the other hand, the supervisor shall promptly report to the board of directors, the board of supervisors, ask the board of directors and senior management for correction, and report to the CSRC, the Office or other relevant departments for any act that the directors have caused or may cause significant losses to the Company. In addition, the supervisory board will also submit written review opinions on the periodic report, indicating whether the board of directors' preparation and examination procedures for periodic reports comply with laws, administrative regulations and the provisions of the CSRC, and whether the contents of the report can truly, accurately and completely reflect the actual situation of listed companies. In 2020, the Company's Board of Supervisors held 13 meetings, and met the requirement of Guidelines for the Charter of Listed Companies that indicates that Board of Supervisors must hold meeting every 6 months. The Board also passed 48 documents and proposals including The Board of Supervisors' Opinions on the Company's First Quarter Report in 2020, Resolution of the 22nd Meeting of the 4th Board of Supervisors etc. All Supervisors required to present have attended the meeting.
2. Shareholders Rights Protection
According to the Articles of Association, Luxshare Precision has formulated the Rules of Procedures for the Shareholders General Meeting. From the perspective of shareholders' rights and interests, we establish a corporate governance structurethat can ensure that all shareholders fully exercise their rights and enjoy equal status, especially small and medium shareholders. As guided by the Rules of Procedures for the Shareholders General Meeting, before the convening of a Shareholders General Meeting, a written notice specifying the matters for deliberation, date, and venue of the meeting is sent to all registered shareholders. Shareholders (including shareholder agents) exercise theirvoting rights based on the number of voting shares represented, and each share is entitled to one vote. Both on-site voting and online voting are utilized for the Shareholders General Meeting in order to facilitate shareholders participation. The voting results of minority shareholders are separately disclosed in the resolution of the Shareholders General Meeting in order to fully reflect their opinions.
The two proposals including Extending the Validity Period of the Resolutions of the Shareholders General Meeting of the Public Issuance of Convertible Corporate Bonds and
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Submittal to the Shareholders General Meeting on Extending the Effective Period of Authorization to the Board of Directors to Handle the Company's Public Issuance of Convertible Corporate Bonds were approved at the first Extraordinary Shareholders General Meeting held on July 27th, 2020.
To protect the rights and interests of small and medium shareholders, Luxshare Precision follows the regulations and laws of Company Law of the People's Republic of China, Shenzhen Stock Exchange Stock Listing Rules, etc., and regulated and clarified the related party transactions in the Article of Association to promote the fair competition in the market. When the general meeting of shareholders considers related transactions, related shareholders shall not participate in the voting, and the number of voting shares represented by them shall not be included in the total number of valid votes. The announcement of the resolutions of the general meeting of shareholders shall fullydisclose the voting status of non-associated shareholders. The Company's related party transactions with a transaction value of more than RMB 30 million and accounting for more than 5% of the absolute value of the Company's most recent audited net assets shall be reviewed by the Company's board of directors and submitted to the Company's general meeting of shareholders for review after approval. The procedures for the withdrawal and voting of related shareholders are:
1) The secretary of the Company's board of directors or related shareholders or other shareholders file an application for the withdrawal of related shareholders in accordance with relevant regulations, and conduct the withdrawal;
2) Related shareholders shall not participate in the review of any related transactions;
3) When the general meeting of shareholders votes on related transactions, after deducting the number of voting shares represented by the related shareholders, the non-related shareholders attending the general meeting shall vote in accordance with the provisions of the Articles of Association.
In 2020, Luxshare Precision has also disclosed the announcements of Announcement on the Estimated Daily Related Party Transactions in 2020, Special Audit Notes on the Occupation of Funds by Controlling Shareholders and Other Related Parties. All shareholders can learn about related transactions, enhance the transparency of transactions, and safeguard the interests of small and medium shareholders.
3. Investor Relations Management
Luxshare Precision has established diversified and effective communication channels for domestic and foreign investors, including online interactive platform, investor hotline, regular email exchanges, online performance briefing, and on-site exchange activities. By maintaining good investor relations, investors can better understand the Company's business operations, development strategies and investment value, and therefore the interests of minority investors can be protected.
The Company is also constantly strengthening internal and external communications on sustainability matters. Internally, the Company has established a Sustainable Development Center, which can help convey information on sustainability matters throughout the Company; externally, the Office of the Secretary to the Chairman has established a communication channel for investors on sustainability matters, and carried out exchange with investors from time to time. Meanwhile, the Company has followed up on internal and external opinions and suggestions regarding sustainability matters in a timely manner, and gradually promoted the establishment of an efficient and transparent
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communication mechanism. In 2020, the Company has carried out investor exchange activities in various forms to promote investor exchange and maintain investor relations.
Investor Activities
Communicate with
investors through phone or email
Questions Answering through Shenzhen Stock Exchange interactive platform
3 500 246 times
Over
times
in total
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4. Remuneration Disclosure
4.1 Decision-making Process
The remuneration of directors, supervisors and senior management is determined under a strict evaluation and decision process. First, the Remuneration and Assessment Committee is responsible for formulating the remuneration plan for directors, supervisors and senior management, and then the plan shall be approved by the Board of Directors and the General Meeting of Shareholders before it can be finalized and implemented. Meanwhile, as supervisory departments, the Supervisory Board and independent directors shall express their views on whether the remuneration plan is conducive to the sustainable development of the Company, and whether there are any circumstances that clearly harm the interests of the Company and all shareholders.
4.2 Basis for Determination
· Basis for Determining Remuneration and Performance
Luxshare Precision advocates a value-oriented performance culture, the directors, supervisors and senior managers will be evaluated by the performance appraisal and their income is conducted in a way of "fixed salary plus short-term incentive plus long-term incentive".
· Basis for Determining Stock Option Incentives
In addition to paying performance-based compensation and benefits, the shareholders general meeting has also reviewed and approved the stock option incentive plan to improve the long-term effective incentive and restraint mechanism, also further improve the Company's compensation appraisal system. The Company established a stock option incentive plan for directors, senior managers, middle managers and core technology (business) backbones. In order to stimulate the employees' enthusiasm and creativity, the incentive plan grants stock options to the participants, and the exercise of stock options is based on employees' performance results.
4.3 Assessment Management
An effective performance appraisal mechanism is an important assurance to improve the compensation system. The Company has formulated a systematic and scientific appraisal management method to provide evaluation basis for the remuneration of directors, supervisors and senior managers. Under the delegated authority of the Board of Directors, the Remuneration and Assessment Committee is responsible for remuneration assessment and conducting the appraisal on the basis of the performance indicators set by the Company. The Committee also needs to ensure that the performance appraisal and evaluation results fully reflect employees' true performance and ability level, and ensure the transparency of the appraisal.
· Remuneration and Performance Management
Luxshare Precision also conducts year-end appraisals of directors, supervisors and senior management according to the Company's operating conditions and personal performance, and determines individual total annual income in accordance with the appraisal.
· Stock Option Incentives2 Management
2 Detail s for Luxshare Precision Stock Options Plan is available on the Shenzhen Stock Exchange website
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The appraisal content of stock option incentive plan is divided into two parts: Company performance is the first consideration. The completion of the Company's performance is the basic condition of whether the exercise of power, but also the premise of the follow-up individual performance appraisal, followed by individual performance. Each year, the Company formulates and revises the performance appraisal indicators of each position and determines weight and target value according to the importance of each performance appraisal index. On this basis, the Company conducts statistics annually for the completion of performance index and finalizes individual performance. The results of the assessment are divided into five levels, which are A+/ A/B/C/D, corresponding to different proportions of feasible rights.
For details of the Company's directors and supervisors' high salary system and equity incentives this year, please refer to the chapter on economic responsibility in the sustainable development section of the official website.
5. Risk Control and Compliance
Facing the uncertain external environment, effectively identifying internal risks and perfecting corporate governance are vital for enterprises to prevent and defuse risks and continue to operate steadily. The Company continues to enhance the risk control, compliance management and internal audit to achieve the Company's sustainable development.
5.1 Risk Control
In accordance with the Basic Standards for Enterprise Internal Control formulated by the Ministry of Finance in conjunction with China Securities Regulatory Commission, China Audit Commission, China Banking Regulatory Commission and China Insurance Regulatory Commission and our internal control policies, the Company methodically conducts comprehensive risk monitoring and prompt risk evaluation against key risks according to applicable guidelines. We ensure effective risk control through accurate risk identification and assessment, and sound risk responses. Control objectives are defined to spot internal and external risks. Qualitative and quantitative assessments are conducted to determine risk prioritybased on the occurrence likelihood,impact scale, risk tolerances, and pros and cons. Risk responses are thus defined to avoid, reduce, mitigate risks. The Company will further improve risk evaluation mechanisms to adapt to the business environment and development needs.
5.2 Compliance Management
Compliance operation is the precondition for the long-term stable development of an enterprise, thus Luxshare Precision adheres to the governance philosophy of legal compliance, striving to create a standardized, transparent and healthy development pattern. In accordance with relevant regulatory requirements on internal control of listed companies, such as the Basic Standards for Enterprise Internal Control, the Company continuously improves internal management to ensure the normal and orderly operation of business activities.
· In terms of procurement, Luxshare Precision strictly regulates procurement contracts to avoid legal and commercial risks. At the same time, the Company attaches importance to supplier management as it establishes a sound mechanism for supplier development, certification, evaluation and exit, which properly ensures the stability and efficiency of the supply chain; besides, the Company checks and evaluates the weak links in the procurement process on a regular basis,
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and takes effective control measures to ensure that the materials purchased can meet the needs of the Company's production and operation. · With regard to production, the Company strictly enforces relevant quality control standards based on customer demands, stringently supervises and inspects on the whole process from products development to production, so as to effectively ensure the production of high-quality products, and avoid major quality and violation risks. · As for sales, Luxshare Precision has established a sound management system for sales and collection, as well as a standard operating procedure to regulate sales behaviors and prevent sales risks.
Moreover, we also optimized the management of the entire process covering financial activities, asset management, R&D, budget management, etc., so as to ensure that the Company operates within a legal and compliant framework, from external operations to internal information communication.
5.3 Internal Audit
In order to assure the comprehensive and correct implementation of corresponding management measures and procedures, Luxshare Precision is highly attentive to internal supervision. We established and improved the internal audit system with "exclusive responsibility, extensive coverage and prominent focus".
· Specialized responsibility: To further standardize internal audit and improve quality, Luxshare Precision has set up an Internal Audit Office, which is a special internal audit agency in charge of the regular supervision and inspection of the establishment and implementation of the Company's internal control system, and the authenticity and integrity of the financial information.
· Extensive coverage: The internal audit covers all business activities relating to financial reporting and information disclosure. Apart from R&D, procurement, sales, and asset management, it also includes those flexible activities such as organizational structure, development strategy, social responsibility, and corporate culture. Meanwhile, the Internal Audit Office can also make adjustment to the businesses that are internally audited according to the changes in the Company's operating conditions.
· Prominent focus: Based on our businesses, the Company conducts regular or irregular special audits on high-risk areas and matters, such as fund raising, provision of guarantees and related party transactions. Luxshare Precision attaches great importance to special audits on anti-corruption and anti-fraud. The Internal Audit Office is assigned to support the establishment and improvement of the anti-fraud mechanism, determine the key areas, key links and main contents of anti-fraud, detect and examine the possible corruption and fraud behaviors in the internal audit process.
(2) Business Ethics
1. Integrity Management
Luxshare Precision pursues the business philosophy of honesty, trustworthiness and legal compliance, and regards it as the cornerstone of our sound and long-term development. Anti-bribery and anti-corruption are not only the basic principles for building a clean and transparent commercial community, but also the internal requirements of Luxshare Precision's values and corporate culture, which also reflect the commitment of the Company's management to operate on an ethical, honest, and trustworthy basis. Luxshare
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Precision is utterly opposed to bribery and corruption. We regulate the behaviors of employees and partners by formulating a series of rules and regulations such as the Luxshare Precision Employee Manual, the Code of Ethical Operating Procedures, and the Global Code of Business Conduct and Ethics, and it has constructed a corporateculture of "integrity and honesty, openness and fairness, reliability and compliance, probity and self-discipline".
In order to effectively promote "acting in good faith, advocating integrity and punishing corruption", the Company has set up a Discipline Committee under the Board of Directors. In accordance with relevant laws and regulations and the Company's policies, the Committee is in charge of the supervision and acceptance of complaints and whistleblower reporting relating to the violations of laws, disciplines and professional ethics, as well as the acts against the Company's interests by employees or units in Luxshare Group. The Discipline Committee directly reports to the Chairman and has the authority to conduct independent investigations and management. The Disciplinary Committee continues to strengthen the Company's anti-corruption supervision, and construct the ideological of "unwilling to corrupt, dare not to corrupt".
Disciplinary Committee
Inspection /Monitoring
Group
Legal Group
Audit Group
Finance Group
Publicity Group
Note: As for the main responsibilities of each department in the Figure above, please refer to the below we b si te :
h ttp s://www.l u xsh ar e -i ct.com/sustain ab ility/Cor p or ateGov er n an ce.h tml
For internal employees, the Company clearly stipulates that employees shall abide by laws and regulations and business ethics to deal with commercial gifts and hospitality when connect with customers, suppliers and partners, and shall not offer or accept any commercial gifts and hospitality beyond reasonable standards or contrary to the Company's policies. At the same time, all new hires are required to sign the Anticorruption Statement and the Employee Code of Conduct Statement, so that they can have a clear awareness of integrity and honesty, and better understand the corporate culture. The Company has provided courses on anti-corruption for all employees; they arerequired to complete related courses via the internal learning platform on a quarterly basis. Those who fail to do so may be denied pay raise or promotion.
The Company has signed a Manufacturer's Anti-corruption Statement with all suppliers / partners, who are required to make a promise to not provide any form of corruption, bribery or other illegitimate beneficial interests transfer to Luxshare. The Company regularly releases the Luxshare Precision Anti-corruption Notice to representatives of partnering manufacturers and internal sales representatives, and jointly builds an honest and a clean business relationship with suppliers and partners, so as to construct a
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corporate culture of honesty and integrity on a long-term basis.Meanwhile, during Annual Supplier Conference, anti-corruption is communicated to ensure that no commercial bribery occurs in our business activities in any form. As of December 31st, 2020, the number of suppliers who have signed the Manufacturer's Anti-corruption Statement was 9,320, accounting for 98.6% of all suppliers, which covered all core suppliers. The Company provides special complaint reporting channels for employees, customers or suppliers, and encourages persons to whistleblower reporting of any unethical violations or behaviors. The employees who have been proved to have violated the rules will be severely punished in accordance with laws and the Company's policies; and for the partners who have been proved to have violated the rules, the Company will terminate the cooperative relationship with them, and may also investigate their corresponding legal liabilities; If a Director, Supervisor or Senior Manager has a violation of laws and regulations while performing their official duties, the shareholders can file appeals to the People's Court when their rights and interests are infringed. If it causes any loss to the Company, they shall be liable for compensation. The Company constantly improves the internal and external whistleblower protection mechanisms, all whistleblower reports are confidentially handled and investigated by the Company's disciplinary committee, to protect relevant source of the reporting. This requirement is also explicitly required in the Code of Ethics Operating Procedures to ensure that employees or stakeholders are not being retaliated for whistleblowing reporting or refusal to involve in bribery and corruption. Reporting Channel
Declare RegularlyThe Company regularly conducts formal declarations. The form of declaration includes "Supplier's Voluntary Declaration", "Employee Voluntary Declaration" etc.
Reporting Emailjustice@luxshare-ict.com
Special Line0769-38800880
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Case
Dongguan Luxshare: "Special Training on Anti-corruption" In 2020, Dongguan Luxshare launched "Special Training on Anti-corruption" for all managers and external contacts. The training was led by the Anti-corruption Discipline Committee. By combining regulations and numerous real cases, we explained common corruption cases to employees, e.g., suppliers' illegal operations, taking "kickbacks" by taking advantage of their positions, and contracting out construction projects privately, which could make employees fully aware of the harmfulness and seriousness of duty crimes. Such practices had raised employees' attention to anti-corruption and enhanced their self-discipline, and also served as a wake-up call for them.
The Company organizes a variety of training to shape the corporate culture of integrity. We have developed special administrative measures on integrity training and assessment, and new employees shall abide by the business ethics and receive the anti-corruption training upon their joining. During the reporting period, employees including the Board of Directors, senior management, intermediate management and ordinary employees participated in the special training on business ethics and anti-corruption held by the Company, and all indirect employees3 are required to complete online training on anticorruption via the "i-school". The online training is carried out in the form of "online course plus examination", and employees are requiredto pass the examination with all the questions answered correctly. The year-end assessment is connected with the training results, which will directly affect their salary, benefits and promotion. In 2020, t he Company carries out integrity education, covering 100% of indirect employees. The Company will continue to launch integrity training, and is committed to more business ethics and anti-corruption training at all levels.
3 Direct employees are those who are engaged in production and manufacturing line operations and are directly linked to production capacity; indirect employees are those who are not directly involved in production and manufacturing, such as those who are engaged in engineering research and development, quality, project management, IT, sales, management, etc.
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2. Intellectual Property Protection
While stringently abiding by the Patent Law of the People's Republic of China, the Trademark Law of the People's Republic of China, the Copyright Law of the People's Republic of China and other relevant laws and regulations in the countries and regions where the Company operates, Luxshare Precision formulated the Intellectual Property Management Manual based on our characteristics and actual conditions. We continuously enhance the intellectual property protection and the management system, so as to constantly improve intellectual property from quantity to quality and to efficiency.
The Company fully respects others' intellectual property rights and monitors the intellectual property risks of products at regular or irregular intervals. The Company will designate relevant departments to conduct patent investigations on the whole process from product R&D, project approval, design, procurement to sales, so as to effectively check and control potential risks of intellectual property infringement in the Company's operating activities; where necessary, the Company will employ external professional consultants to determine intellectual property rights risks, provide patent invalidity analysis or suggestions on design around/business model. At the same time, we highly value the self-protection of intellectual property rights. Wewill do our utmost and take the initiative to safeguard our rights when we encounter IPR infringements that damage the Company's legitimate rights and interests, such as counterfeit or substandard products produced, trademark infringement and malicious competition.
In order to further promote the development and implementation of intellectual property management, the Company has also set up a series of patent management knowledge courses and organized relevant training to fully enhance the intellectual property awareness of employees. In addition to course training, the Company also made full use of the form of propaganda. In the excellent case sharing meeting of R&D projects in East China plant area held this year, the Company specially assigned personnel from the intellectual property department to share the knowledge of patent management, so that the employees could better understand the importance of patents and intellectual property rights. In 2020, the Company had 225 new patents, and 2,139 valid patents in total.
3. Anti-unfair Competition
Luxshare Precision has strictly observed the Advertising Law of the People's Republic of China, the Anti-unfair Competition Law of the People's Republic of China, the Several Provisions on Prohibiting Infringements upon Trade Secrets and other relevant laws and regulations in local countries and regions. On this basis, the Company improved the Code of Ethical Operating Procedures, which clearly stipulated that no illegal means shall be used to collect competitors' trade secrets or other confidential information, and unlawful invasion, theft, wiretapping, bribery and stealing were also prohibited. In addition, the Company attaches great importance to customer value and rights, explicitly forbidding illegal acts like publishing false or misleading advertising information or colluding with peers in pricing to disrupt market order.
(3) Industrial Development
As a leading technological manufacturer, Luxshare Precision is convinced that technological innovation is the driving force for enterprise development. As a result, since listing, the Company has always regarded R&D and innovation as the top priority of corporate strategy, maintained vigorous investment in technology R&D, striven to revolutionize traditional manufacturing processes, and continuously increased automated production, so as to achieve the platform building of all precision manufacturing technologies.
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The related industry organization joined by Luxshare Precision 1. Quality Management Through Whole Value Chains The Company's value and dignity are underpinned by quality. Since we established, Luxshare Precision has regarded "Quality First" as core corporate value. In addition to continuously developing a sound quality management system through scientific and effective quality management measures, we have incorporated quality assurance into the entire chain process from product design, manufacturing to inspection. With great emphasis on product quality, the Company has created a complete and advanced NPI (New Product Introduction) management process. This process controls quality from the beginning (product development and design) and adopts the highest mass production requirement as the approval standard to move on to the next stage, thus laying a solid foundation for the smooth mass production. Over the years, the Company's steadfast insistence and meticulous work has not only achieved the sustained and rapid growth of performance, but also established the Company's core competitive advantages in quality assurance. At present, Luxshare Precision has established the systems of ISO9001, ISO14001, and ISO45001, and all major production bases have completed or are in progress of obtaining the certification of these systems. Based on customer requirements and internal requirements, all production bases have passed certification for SONY GP (Green Partner), QC080000, the ISO50001 Energy Management System, the ISO14064 Greenhouse Gas Emission System, the IATF16949 International Standard for Automotive Quality Management Systems, and the ISO13485 Quality Management Systems for Medical Devices.
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Case
"Quality Month" Special Event In order to enhance employees' quality awareness in a larger scope and increase the Company's quality competitiveness, Luxshare Precision heeded the country's call positively by carrying out the "Quality Month" special event. Since the launch, each factory had performed the "Quality Month" activity in various ways, aiming for building "Quality Luxshare" brand and providing customers with quality products. Various "Quality Month" activities were like the following: Kunshan Factory held the "Quality Management Knowledge Contest" to stimulate employees' quality-mindset; Chuzhou Factory carried out the "Quality in Your Heart" hand-copied poster competition to boost employees' innovative vitality; Jiangxi Factory conducted theoretic training on "Quality, Environment, Hazardous Substances" to improve standardization and normalization of the staff by integrating theoretical study with simulation exercises. Apart from a series of special events, publications on quality could be found everywhere; each factory hung up the slogans for "Quality Month" and displayed quality knowledge and skills on the glass-fronted billboard, thus creating a favorable atmosphere where all employees would have the consciousness to improve the quality.
2. Promote the Intelligent Manufacturing In Luxshare Precision, the Intelligent Manufacturing Design Center is responsible for the introduction and optimization of technologies related to intelligent manufacturing. The center currently has 800 employees working in functions, such as software development, visual development, organizational design, machining, and equipment manufacturing. High-precision design techniques, visual navigation, visual measurement, defect detection techniques, automatic data collection, cloud computing, and intelligent analysis technology have been extensively applied to develop and implement intelligent systems and high-precision equipment like big data product manufacturing analysis systems, lifecycle equipment management systems, intelligent warehousing, intelligent workshops, automated production equipment and production lines, and high-precision assembly and
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machining equipment. Services are provided to industries including those of the cables, intelligent wearables, communication products, wireless charging, camera modules, acoustics, SMTs, automobiles, medical, and radio frequency, supporting the diversified and advanced development of the Group in the fields of product manufacturing and R&D. In terms of product automation technology, the Company connects product design with automatic process design seamlessly. Based on ensuring the process capability of key stations to stay ahead in the industry, the Company introduces visual robots in all aspects for AOI automatic optical inspection, so as to realize the active and mutual cooperation and positioning between parts and fixtures. As for product quality control, the Company makes use of big data, AI technology and self-developed algorithms to feedback measurement data in real time, so that products can be provided with a reliable quality assurance and a full traceability. The Company has also introduced intelligent logistics and storage to help the factories to develop an automatic logistics production system from warehousing raw material to storing final products, and automatically connecting different production processes, so as to finally build an unmanned and intelligent factory.
Case
Intelligent Manufacturing System of High-Speed Cable Luxshare Precision continues to push forward the Company's intelligent transformation, and aims to become an advocator, leader and enabler of China's intelligent transformation. This year, Luxshare placed the emphasis on building an intelligent manufacturing system of high-speed cables, which had functions like automatic dispatching tracking, real-time feedback and tracking for process production information,models and fixtures monitoring and management, equipment operation/maintenance monitoring and management, process quality monitoring and management, etc. The system can help achieve automation in intelligent scheduling, quality tracking, quality information management, terminal interaction, equipment management, data management, warehousing and logistics management, etc. To date, the system has been put into use and is constantly optimized.
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3. Continue to R&D investment "Innovation" is one of the eight core values of Luxshare Precision's corporate culture. The impressive achievements are inseparable from the Company's continuous practice with the spirit of innovation. Since we established, Luxshare Precision has always been technology-oriented because we firmly believe that the implementation of all far-sighted strategies is inseparably intertwined with the mastery and application of core technologies. For the years to come, Luxshare will continue to invest very heavily in technology R&D and innovation, and strive to revolutionize traditional manufacturing processes, so as to gradually transform from Made in China to Intelligent Manufacturing in China. At present, the Company's R&D investment mainly includes two types, i.e., prior-period investment and product iterative investment. The prior-period investment mainly focuses more on the medium and long-term product and business planning of the Company, including the Company's investment in new future products and areas as well as the research expenses on underlying technologies; the product iterative investment, on the other side, is mainly about R&D investment in the process from forming concepts of new solutions and new products to transforming them to NPI. At the same time, the Company is highly attentive to the long-term efforts in underlying materials and innovative production technology. By studying in the countries and regions with advanced technologies, the R&D team learns from and explores advanced precision manufacturing technology and product applications, works together with core customers to jointly set up several advanced techniques development laboratories and develop cutting-edge technologies, such as new dispensing technology, AOI appearance inspection and laser welding. Continuous and stable investment in R&D not only enables the Company to keep ahead in the industry, but also improves ability to withstand risks in this changing macro environment, thereby laying a solid foundation for the Company's sustained and rapid development in the future. In addition, we have invested extensive funding and resources in laboratory construction. To date, the Company has built 24 laboratories, which are mainly located in South China, East China, and Taiwan. Four laboratories have been ISO17025-certified. Case: Research Results Achieved the World's Top Professional Certification In 2020, Luxshare Precision made many breakthroughs in innovation and R&D, and achieved good research results once again. This can be proved by worldwide recognition and numerous global No.1 honors: in September and December 2020,Luxshare Precision was certified by the "USB Type-C Connectors and Cable Assemblies Compliance Document Revision 2.0" (newly released by the USB-IF), and obtained the test result of Global Pass, which was subsequently published on the website of Integrator List. Luxshare Precision was the first manufacturer certified by the Full-Featured USB-C Cable (USB4 Gen3) and the USB-C Receptacle Connectors (USB4TM Gen3) 40Gbps.
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Human and Social Responsibility
Talent is the core resource of Luxshare Precision. We respect employees, adhere to labor standards, and protect their legal rights and interests; we value talents, increase talents recruitment, provide diversified training opportunities, and create a broad promotion and development platform for employees; we care about employees, share the value of sustainable development with employees through a healthy and safe working environment and comprehensive welfare and care measures. We always believe that human capital development is an important cornerstone of the Company's sustainable development. Luxshare Precision has always insisted on building an organization that can attract talents and is suitable for talents growth.
The total training time for employees is 1,323,332 hours
Over RMB 184.75 million has been invested in employees' health and safety
The response rate of the Conflict
Minerals
questionnaire was 96.6%
Donated antiepidemic materials and cash to all sectors of the society with a total of over RMB 17.8 million
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Luxshare Precision is making every effort to create a global working environment that truly attracts global talents. We also constantly develop new products and innovate our services, thus making a positive contribution to the whole society. Upholding core values of the Company - "Pragmatism, Enterprise, Innovation, Collaboration, Integration, Gratitude and Rewards", we highly respect our employees, adhere to labor standards, and protect their legitimate rights and interests. We care for our people and share the value of sustainable development with them through establishing a healthy, safe working environment, providing a comprehensive welfare system, and carrying out differentcaring initiatives. We also provide various training for employees with more pro motion opportunities and a broad development platform.
We deeply understand that the sustainable development of enterprises is not only to achieve their own strategic goals, but also to realize the important value of enterprise behavior to the development of partners and communities where they operate. As a responsible corporate, the compliance and sustainability of the supply chain are highly valued in Luxshare Precision. We identify and manage the impact of the supply chain on the environment and society, support the sustainable development of the communities in each operation factory, and positively fulfil our social responsibility.
We conduct internal and external audits on labor rights in accordance with the requirements of the Responsible Business Alliance (RBA), including labor rights and interests, occupational health and safety, business ethnics and other CSR risks, so that we can implement corrective action plans in a timely and effective manner. In 2020, a total of 130 Social Responsibility internal and external audits were carried out in each factory within the Group.
Safeguard Labor Rights and Interests
Protection of Employees' Health and
Safety
Valuing Employee Diversity and Individual
Development
Establishing a Responsible Supply Chain
Shouldering Corporate
Responsibilities
Through Actions
Prohibition of Occupational
Child Labor
Health and
Prohibition of
Safety
Discrimination, Chemical
Harassment
Safety
and Abuse
Management
Prohibition of Employees in
Forced Labor
Pandemic
Advocation of Freedom of Association and Collective Bargaining
Diversity
Social
Contributing to
Career Development and Trainings
Responsibility Requirements for Suppliers
the Community with Our Responsibilities
Employee Communication and Care
Supplier Responsibility Management Practice
Dedicated to Environmental Protection
Steadily Promoting Conflict Mineral Management
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(1) Safeguard Labor Rights and Interests
Luxshare Precision continuously improves the labor management system by strictly abiding by the Labor Law of the People's Republic of China, the Labor Contract Law of the People's Republic of China, the Social Insurance Law of the People's Republic of China, the Law of the People's Republic of China on the Protection of Women's Rights and Interests, the Special Provisions on Labor Protection for Female Employees and other laws and regulations related to employment in the local country , while making reference to the Universal Declaration of Human Rights, the International Covenant on Economic, Social and Cultural Rights, the International Labor Organization (ILO) Declaration on Fundamental Principles and Rights at Work, the United Nations Global Compact (UNGC) and other global related initiatives.
Each employee is the crucial cornerstone of the Company's sustainable development. We are committed to creating an organization that attract and retain talents and is suitable for their growth. We have formulated internal policies, including the Employee Manual, the Global Code of Business Conduct and Ethics, the Code of Ethical Operating Procedures, and the Human Resource Management Operating Procedures to fully respect and safeguard the labor rights and interests of every employee, forbid any discrimination in employment, and refrain from engaging in any act or practice that ignores or infringes labor rights. Each policy and document have been translated into different languages to ensure every employee is able to accurately understand the Company's requirements for labor rights protection, no matter which country o r region he/she comes from.
1. Prohibition of Employing Child Labor
Child labor is strictly prohibited, and the employment of minor workers is restricted in Luxshare Precision. We have formulated the Recruitment Management Measures. The valid identity of applicants is reviewed and confirmed in a variety of ways during recruitment, onboarding approval, and onboarding registration to ensure that no child labor is recruited. If any child labor is found in Luxshare Precision, we will take immediately remedial measures, including immediate ceasing their work, accompanying with them to hospital for physical examinations to ensure their health, and sending them to home safety. The cost and expense shall be spent by the Company. For minor workers, we has drawn up the Measures for the Management of Labor Assignment, Measures for the Management of Student Internship, Measures for the Management of Assignment to Various Regions, and the Child Laborer and Minor Worker Management Operating Procedures, to ensure their basic rights and interests in working hours, working environment, and safety training. Minor workers are not allowed to be assigned to overtime work, night work, dangerous jobs, etc.
2. Prohibition of Discrimination, Harassment and Abuse
We firmly prohibit discrimination, harassment and abuse in the workplace, as well as intimidation or coercion of employees by harsh or inhuman treatment, including but not limited to verbal abuse and harassment, psychological harassment, and mental and physical coercion. We strive to ensure that all individuals will receive honest, fair, and polite treatment in the workplace. We have zero tolerance for discrimination or harassment based on race, skin color, religious belief, gender, age, ethnicity, birthplace/residence, citizenship, physical or mental disability, medical conditions, sexual orientation, veteran status, marital status, or any other feature protected by law. Furthermore, we cherish employee diversity and provide fair employment opportunities for all applicants and promotion opportunities for employees.
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3. Prohibition of Forced Labor
In compliance with the relevant laws and regulations on working hours in the local countries and regions, we have clear restrictions on overtime hours. Employees are encouraged to fully enjoy a rest on non-working days, but they can also apply for overtime voluntarily if their rest can be ensured. To better control overtime work, each factory has set up an overtime warning mechanism and automatic notification mechanism to regulate employees' working hours. The overtime hours are distinguished and remarked in different colors in the application system, and the approval level will be raised if statutory overtime hours are exceeded. Moreover, for different working hours, departments and factories will receive different management reports as a reference for managing working hours. We set up a working hours inquiry system for the person in charge of working hours in each factory to check the working hours of their people, so that they can arrange the overtime reasonably. Once we find that the employee's working ho urs are falsified, the factory will be ordered to conduct self-inspection and reform immediately. We will conduct a comprehensive review on the working hours management system until the root cause is found. We also require the factory to propose an improvement plan, which must be implemented thereafter, so as to prevent violations from happening again.
4. Advocation of Freedom of Association and Collective Bargaining
Luxshare Precision respects the freedom of association and protects labor rights. On the basis of observing laws and regulations in local countries and regions, the Company establishes management policy documents such as the Measures for the Management of Employee Representative Election, the Measures for the Management of Employee Relations, and Freedom of Association and Collective Bargaining Management Procedure. Each factory of Luxshare Precision has set up a Trade Union or a Congress of Workers and Staff. As clearly stipulated in the relevant administrative regulations, the union or organization shall have an equal and sincere dialogue with employees or employee representatives to ensure that workers can exercise their rights in an environment that is free from violence, pressure, fear, intimidation and threats, so that they can establish a sound, harmonious labor relationship and constructively deal with employees' point of view. The rights and interests of workers are protected at all times. They have the freedom to make friends, form and join various employee organizations (unions) without prior approval. Besides, no discrimination or retaliation shall be taken against workers who have signed contract with (or are about to sign) or joined (or are about to join) organizations similar to the Trade Union. If a breach of commitment is found, the Company shall take appropriate correctiveactions promptlyin accordance with the Labor Dispute Case Operating Procedures. We enhance employees' satisfaction at work, ensure labor security, provide professional psychological guidance, and facilitate complaint filing with the help of the Trade Union or the Congress of Workers and Staff.
(2) Protect Employees' Health and Safety
We always take employee health and safety as an important issue in our operation. In accordance with national laws and regulations as well as the requirements set by the local authorities, the Group's factories have established regulations to safeguard employees' health and safety and prevent safety incidents. Besides, they also formulate the Measures for the Management of Emergency Prevention and the Emergency Response Plan to improve health and safety in the workplace. By organizing regular physical examinations and holding employee health and safety training and lectures, the awareness and concept of health and safety are rooted in employees' minds.
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1. Occupational Health and Safety
Upholding our health and safety management policy of "Disaster Prevention, Responsible Care, Legal Compliance, and Continuous Improvement", we have established a welldesigned health and safety management system, and formulated a series of management policy documents to practically protect employee health and safety, such as the EHS Management Manual, the Emergency Preparedness and Response Procedure, the Hazard Identification, Risk Assessment and Control Procedure, the Measures for the Management of Production Safety Responsibility, the Safety Protection Operating Procedures, the Measures for the Management of Special Operations, the Measures for the Management of Emergency Responses to Chemical Accidents, the Measures for the Management of Emergency Fire Responses, and the Measures for the Management of Emergency Responses to Accidental Injury. In order to prevent occupational accidents and ensure the safety and health of our people, each factory of the Group has a responsible department taking charge of employees' health and safety management. The top executive of each department is responsible for carrying out EHS related work and conducting EHS training and publicity work for the staff in the department. As of December 31th, 2020, 65.22% of Luxshare Precision Group's factories were certified by the ISO45001 Occupational Health and Safety Management Systems, with a total of 138 ISO45001 internal and external audits being carried out. The audit remediation rate reached 100%, and we will continue to promote the system in other factories.
Employees' Health and Safety Performance
2020 2019
Certified by the ISO45001 Occupational Health and Safety Management Systems (%)
Number of Employees Taking Occupational Health Examinations (person)
Total Number of Work-related Incidents (time)
65.22 54.76
20,844 11,949
197
232
Number of Employees Suffering Work-related Injuries (person)
198
231
Based on the relevant laws the ISO45001 and Occupational Health and Safety Management Systems, the Group has formulated the Medical Health and Occupational Disease Prevention Operational Procedures and EHS Operational Procedures, etc. The third-party evaluations of occupational hazard risks have been conducted on a regular basis. The Group has also informed the factors that may cause occupational hazard to employees before signing contract or on the production factory, and provided relevant protection equipment. Employees in positions vulnerable to occupational diseases have been provided with regular occupational disease examinations. In 2020, there is no occupational disease cases occurred in Luxshare Precision.
To promptly respond to work-related injuries, the Company has introduced the Medical Health and Occupational Disease Prevention Operational Procedures and Accident Report Investigation and Handling Procedures. Work-related injury incidents are required to be immediately reported to the factory's work-related injury principal, and injured employees should be given medical care. Within 24 hours after the event, the factory, time, and description of the injuries should be given in a report to the factory's work-related injury principal. The Employee Care Center should apply for work injury
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. certificate and medical expense reimbursement from the local labor bureau and medical insurance bureau according to the contents of the report, with follow up actions. In 2020, Luxshare Precision underwent no major work safety incidents, and the number of employees suffering work-related fatalities was zero. To raise awareness of occupational health and safety, Luxshare Precision promoted safety culture and implemented safety programs at each factory. In 2020, the Company continuously urged production bases to launch regular fire safety drills, chemical leakage drills, and emergency food poisoning drills according to the relevant standards. In addition, various targeted trainings on occupational health and safety were provided to convey safety culture to employees, such as occupational health and safety system training, occupational disease prevention training, workshop production safety system training, operational procedure training, work safety month, chemical and hazardo us material training, and labor protection equipment training.
Fire Drills at Factories
Work-related Injuries Prevention Trainings and Health Lectures at Factories
Fire Knowledge Popularization in Fire Safety Month 38
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2. Chemical Safety Management Hazardous chemicals are one of the major sources that may potentially cause corporate safety incidents as well as personnel health and safety risks. To take control of the full process and ensure operation safety, we have introduced Chemical Control Operating Procedures. We conduct a thorough assessment of harmless alternatives when selecting new chemical products. All newly purchased hazardous chemicals are subject to an additional chemical assessment process such as reviewing compliance of Chemical Substance Safety Information Sheet, internal labor protection supplies and emergency facilities to ensure that chemicals in contact with employees are controlled at the source and that use of hazardous chemicals are avoided. All chemicals are stored and used in accordance with Material Safety Data Sheet (MSDS) and occupational health and safety protection requirements, MSDS and occupational hazard notification and safety instructions are posted, chemical management requirements are specially trained for relevant personnel, and occupational disease medical examinations are organized for those who have close contact with chemicals. Meanwhile, the factories have developed a sound chemical emergency management system, provided corresponding emergency facilities, and regularly organized chemical leakage drills. The Company had no occurrences of any chemical leakage accidents, work-related injuries and occupational disease caused by using hazardous chemicals in the year of 2020.
Chemical Leakage Drills at Factories 3. Employee Management in Pandemic When COVID-19 swept over the world, Luxshare Precision made timely responses according to the Protocol on Prevention and Control of Novel Coronavirus Pneumonia and Guidelines for the Prevention and Control of Novel Coronavirus Pneumonia during the Resumption of Work and Production for Public Institutions by immediately setting up emergency prevention and control center and carrying out anti-epidemic work. We promptly made decisions in response to the epidemic and provided detailed action plans for each factory, of which emergency teams acted in line with the Group and local government's guidance, safeguarding our employees' health. To manage work resumption, the Group formulated a series of strict epidemic prevention policies and related measures, specifying comprehensive epidemic prevention and control process for employees at home and at work. We require employees to report and monitor their personal health status timely, and provide them with sufficient anti-epidemic supplies. Personnel visiting the factory is under strict monitoring and is required to accept temperature checks and register personal information. For work and production at factories, we require employees to wear masks when entering the factories; disinfect and sterilize factories timely; and promote online meetings instead of offline meetings. We
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keep track of the real-time development of COVID-19, release up-to-date notices to inform employees of real-time epidemic information and anti-epidemic knowledge for their daily life. Further, we showed our care for employees who stayed in the factories during the Spring Festival due to COVID-19.
Luxshare Precision Implements Comprehensive Anti-Epidemic Measures
(3) Value Employee Diversity and Individual Development
Luxshare Precision is always devoted to improving the talentmanagement system, pooling diversified talents and enhancing employees team building. We also pay great attention to the career development of employees, continue to lead all employees to improve their professional abilities, and provide employees with a variety of value realization channels.
1. Employee Diversity
We strive to create a harmonious and inclusive working environment where each employee is provided with sufficient development space and create an efficient and relaxing working atmosphere, allowing employees to freely live up to their best potential in the organizations. As of December 31th, 2020, Luxshare Precision has a total of 172,410 employees from 20 countries and regions worldwide. In overseas locations, we insist on giving priority to local employees, and continue to build a diverse workforce, including 47,736 overseas employees.
By gender (Person)
Male
Female
2020
2019 By age (Person) 2020
2019
93,730 77,017 Aged 30 or below 104,029 81,904
78,680 60,267 Aged 31 to 50
54,110 39,971
Aged above 50
14,271 15,409
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By educational background
(Person)
Bachelor's and above
College degree holders
High school, technical secondary school, and below
2020 9,190 16,034
147,186
2019
By employee category
(Person)
7,152 Production staff 14,127 Marketing staff
116,005 Technical staff
Functional staff
2020
2019
143,902 113,918
2,300
2,279
15,154
12,809
11,054
8,287
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2. Career Development and Trainings
Luxshare Precision attracts talents through clear career development path and competitive remuneration package. We fully encourage our employees to use their expertise, help them to realize personal value, and implement monetary and nonmonetary incentive plans to enhance their sense of well-being.
2.1 Rational Career Development Path
Through continuous optimization of career development path, Luxshare Precision is able to fuel the mutual growth of employees and the Company and help employees to realize personal value. In accordance with the Promotion Management Measures, the Group evaluates employees' personal abilities and annual performance, and incorporates individual overall qualities into performance dimension for comprehensive evaluation. To ensure employees are promoted in a fair and just manner, we also set up a Human Resource Appraisal Committee, a platform to deal with complaints regarding promotion decisions and discuss major disputes over employees' evaluation results.
We regularly conduct staff performance reviews each year and establish a dualchannel career development path (Management Path and Specialization Path). We grant employees the autonomy to choose single-channel vertical promotion or cross-channel horizontal development, so as to fully explore their strengths and expand their career development space. By the end of 2020, the promotion ratio in the management channel reached 43.8%, and totaling 7,962 in-service managers; the promotion ratio in the profession channel reached 29.1%, and totaling 31,862 inservice professions.
Dual-channels Career Development in Luxshare Precision
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Management Trainee Program During the year, we launched a management trainee program for newly recruited college graduates, helping them better adapt to the job and fit in the Company. We make overall evaluation on the management trainees from capacity model building, retention system, executive coaching system, organizational incentive system and team integration mechanism.
College Graduates in Management Trainee Program
2.2 Sound Remuneration Management System Strictly following relevant laws and regulations, Luxshare Precision formulates remuneration management measures forsalary, performance bonus, year-end bonus,etc., providing employees with competitive remuneration guarantee in a rational and reasonable manner. We have a sound remuneration management system in place that provides "social insurances and housing fund" for employees and pays their salaries on time. In order to help employees better understand how their job responsibilities match with capabilities, we set up a multi-dimensional performance evaluation system (including employee self-evaluation and superior evaluation) to objectively and comprehensively evaluate employees' annual performance. Every year, the Group holds annual performance communication with employees to ensure that every one of them can obtain sufficient resources and support for his/her career development in Luxshare Precision, so as to improve and optimize their work experience. Our rich remuneration packages include year-end bonus, project bonus, equity incentive for core management, outstanding employee bonus, etc. 2.3 All-round Employee Training Luxshare Precision attaches great importance to employee career planning and is committed to talent development. We have established a sound talent training system to attract and motivate more talented people, and promote the growth of employees and the Group. We have built a learning platform that combines online and offline trainings, with multidimensional training for different types of employees and new projects. Relying on the platform, we provide all staff with tiered targeted training, focusing on different Groups of people, different needs launched a different training series. For example, for high, middle and junior level managers and key high-potential reserve talent, we focus on "Star-Making series" training to create an efficient and dynamic team of employees. For talent in production and manufacturing, research and developmenttechnology, marketing, supply chain and other key areas, focus on the "Shaped Series" training, and continuously
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improve the professional ability of employees in different positions. We also carry out school-enterprise cooperation projects to encourage employees to obtain professional qualifications of the company and the community, thereby improving the production level and social recognition of the whole Group. Meanwhile, we also strive to create a "Gathering series", set up a "Luxshare classroom" "executive forum" and other learning and exchange platforms, for excellent Luxshare people to provide a stage for selfexpression, in order to create a good learning atmosphere, promote the integration and exchange of all staff. In addition, to complement the implementation of key strategies and changes in a given period of the Group, we conduct "Fusion Series" training based on business needs.
Senior, mid, junior level managers
Graduates
Production Manufacturing
Internal Training R&D
Marketing
StarMaking Series
Shaped Series
Talent Training
System
Employees Management
Gathering Series
Fusion Series
New Project Employees
To regulate employee training management, the Measures for Management of Educational Training, the Educational Training Operating Procedures, and the Measures for the Management of Internal Lecturers have been formulated and updated on a regular basis, specifying training procedures during each career stage including orientation, job preparation, on-the-job training, job transfer, and promotion. Each factory has introduced the Educational Training Management Procedures and relevant management measures according to the Group's management norms, and factories have also released annual training plans for their factories and respective departments according to their annual development plans. The core competitiveness of employees and the Company has been enhanced to achieve the goal of mutual growth.
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Diversified Training Program This year, we launched a variety of employee training programs, covering different employee groups, including but not limited to: group management cadres, internal lecturers, non HR department heads, production line leaders, etc. the training program aims to comprehensively improve the technical and management capabilities of trainees.
Internal Lecturers Orientation: Facing the Group of internal lecturers, excellent students and excellent teams have been set up in the courses, and excellent lecturers have been set up in the Group's annual evaluation. At present, it has trained nearly 150 certified internal trainers for the entire group, laying a foundation for internal curriculum development and organizational experience accumulation.
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Line Leader Training: In 2020, to promote the improvement of the skills of the Group's front-line managers, the East China factory has launched a special line team leader training. The training covered a total of 409 people. The front-line managers' working mindset and methods have been improved, and the working performances have been further promoted after the training.
Advanced Management Training: To comprehensively improve the capabilities of the core management team, the Company continues to carry out the "Management Promotion" training program. Based on the leadership portrait design, starting from the three dimensions of management business, team building, and selfgrowth, the program aims to accelerate the growth of Luxshare managers, strengthens the corporate culture of organizational talent learning and growth, and creates an echelon of high-performance management cadre.
New Employee Orientation: As the fresh blood of Luxshare, the Company piloted a variety of learning forms such as online learning, offline integration, scene-based video teaching, and gamification teaching to help new employees quickly understand Luxshare's culture, rules and regulations, and provide quick integration into the new environment. The platform helps newcomers to smoothly transition to the trial phase.
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In order to ensure that every employee has a clear understanding of labor rights and our requirements, we provide education opportunities for employees among factories, and placing employee rights at the heart of training, familiarize them with requirements on issues like sustainable procurement, safe and environmentally friendly chemicals promotion. 3. Employee Communication and Care Luxshare Precision highly values our employees' sense of happiness and satisfaction, striving to build harmonious labor-capital relations. We listen to feedback and opinions on employees' daily life and labor rights through various channels, take timely actions to address employees' demands, trying to create a communication environment of equality and mutual trust. To create a relaxing and warm working atmosphere, we promote worklife balance through various cultural and sports activities, care for employees' children, and support for needy employees. 3.1 Building a Smooth Communication Channel We have formulated the Measures for the Administration of Employee Relations, the Employee Complaints and Whistleblowers Operating Procedures, the Employees Complaints Operating Procedures and made it clear to department managers that it is the responsibility of every manager to create a harmonious employee relationship, and that any employee who is unlawful, unreasonable, or unfairly treated or finds any violation of the law or company policy may voluntarily choose to complain and communicate in real name or anonymously. In order to create a variety of employee communication and complaint channels, the Company opened an official WeChat public number, opinion box, mail, telephone and text messages, face-to-face communication and staff unions and other channels of communication and complaints. If the employee is not satisfied with the communication and the outcome of the complaint, he or she may appeal directly to the Group leadership for reconsidering of the complaint. We strictly protect our complaints employees, require departments or personnel that receive reporting information not to disclose whistle-blower information, and prohibit any form of retaliation against whistleblowers. In 2020, there had been no human rights-related complaints and incidents of child labor and forced labor.
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Case Bridge the Gap among Employees Luxshare Precision has set up an Employee Care Center and Care Hotline for employees to call when encountering work and life troubles, allowing them to work more positively once the issue is promptly solved. During the epidemic, we responded to and resolved a large number of employees' inquiries on anti-epidemic measures and work resumption policies through a 24-7 Care Hotline and Company WeChat, offering immediate assistance and greatly easing employees' anxiety.
Employee Care Center of Jiashan Factory Employee Care Center Solving Issues Our Support to Employee Complaints (pic)
Luxshare Precision Employee Communication Process
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3.2 Conveying Warmth and Showing Care for People
We attach great importance to the physical and mental health of our employees, and take a number of measures to relieve their stress at work. To enrich employees' leisure life, the Group establishes employee activity center and organizes a wide range of cultural and sports activities under the premise of complying with the relevant regulations of local governments on pandemic prevention and control, such as basketball games, football matches, game contests, and singing contests. We also hold regular activities in various forms, including employee birthday parties and activities for employees' children. Mental health lectures are provided to help employees handle pressures during life and work. Through such employee activities, we show our care for employees in enriching their leisure life and enhancing their sense of belonging and team cohesion.
Case Sport Events at Factories
To encourage our employees to enrich their spare time by taking an active part in physical exercises, we held several sport events such as basketball games, football matches and tug-of-war. By participating in such events, employees not only strengthened their physical fitness, but also enhanced the cohesion among them.
Basketball Game at Jiangxi Factory
Football Match at Vietnam Factory
Tug-of-war at Shanxi Factory
Case
Luxshare Precision Year-end Party Entertainment Activities In order to color up employees' life, various entertainment activities were held at all factories, including singing contests, year-end party, performing arts festivals, providing platforms for employees to show talents, and facilitating a richer cultural life for employees in their spare time.
Singing Competition Held by Suzhou Meite Factory
Singing and Dancing Activities Held by Labor Union of Vietnam Factory
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Case Welfare Activities for Employees' Children To enhance employees' sense of belonging, the Group organized various welfare activities for employees' children of each factory, and operated a kindergarten for employee families with special needs, thus reduced the burden on employees' lives and families.
Welfare Activities for Employees' Children
We are always committed to promoting the protection of women's rights and interests, so that they can be respected and treated fairly in the workplace. In 2020, we carried out different forms of celebrations in all factories to thank women employees for their contribution to the Company and to give them more spiritual support and encouragement.
Case Lady-Goddess Day Event
On International Women's day, Luxshare precision Kunshan factory and Jinxi town Federation jointly launched the "love you like this" goddess Festival. Kunshan factory's women employees were sent with festival flowers with great warmth.
Factory "Goddesses" Receiving Flowers
To integrate employee diversity into the corporate culture, Luxshare Precision has been devoting to creating a workplace where all employees are valued and respected. This year, considering the customs and traditions of the locations where we operate, we organized caring activities of all forms to sincerely show our care for employees.
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Case Festival Care for Overseas Employees In 2020, the Group launched employees caring activities for Women's Day and Mid-Autumn Festival at the Vietnam Factory, not only sending warmth and festive care to employees in overseas operating locations, butalso integrating Chinese and Vietnamese culture to form a diversified and harmonious culture.
Caring Activity for Women's Day at Vietnam Factory
Caring Activity for Mid-Autumn Festival Case Support to Impoverished Employees We have been caring about the living conditions of our employees, especially those in poverty. During the year, we sent supplies to impoverished employees, to help improve their life conditions and alleviate their burdens. Acting up to show care for families of impoverished employees, Jiangxi Factory paid visits to 61 families to learn about their living conditions, and sent supplies and cash amounting to RMB 122,000 in total.
Jiangxi Factory Supports Impoverished Employees
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(4) Establish a Responsible Supply Chain
The core of Luxshare Precision supply chain management lies in urging suppliers to manage social responsibility risks and fulfill their social responsibility. Striving to maintain mutually beneficial and win-win partnerships with our suppliers, Luxshare works together with suppliers to strengthen and improve the social responsibility management system of the supply chain, so as to ensure that the production is conducted in a socially responsible manner and achieve sustainable development of the supply chain.
1. Social Responsibility Requirements for Suppliers
As one of the world's leading electronic devices manufacturers, Luxshare Precision has established close relationships with quality suppliers worldwide. Our global network of supply chain requires us to take responsibilities worldwide. Luxshare treats domestic and foreign partners fairly. As for laws and regulations, all suppliers are required to abide by laws, regulations, and relevant industry standards of the countries and regions in which they operate.
Luxshare Precision strictly abides the rules and standards of RBA. Combining with corporate's situation of development, the Company has established Code of Conduct Guarantee of the Responsible Business Alliance, and asked all suppliers to sign on a commitment to monitor and supervise suppliers' behaviors on social responsibilities as follows:
Labor
· Prohibit child labor, and provide labor protection for underage workers and female employees;
· Allow employees to freely choose their profession and association;
· Prohibit discrimination against applicants or employees regarding race, ethnicities, skin color, gender, disability, pregnancy, political views, religious belief, union member and marital status;
· Treat all employees with respect and dignity, and ensure they are not subject to physical, sexual, psychological or verbal harassment; uphold the humane principle, and prohibit any insult, physical punishment, assault, illegal confiscation and imprisonment;
· Comply with laws, regulations and RBA requirements relating to the working time and break time. And allow employees to choose to work overtime voluntarily;
· Ensure that employees are paid no lower than the local minimum pay standard, calculate and pay salaries as stipulated by the law and make no punitive deduction; provide employees with paid-leave, statutory holidays, sick leave, maternity leave and social insurance as required by the law.
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Code of Ethics
· Prohibit all employees and management from taking or receiving kickbacks, bribes, commissions or other illegal remunerations;
· Disclose information on business activities, structure, financial position and performance in accordance with applicable laws and regulations;
· Protect intellectual property of the Company and our customers;
· Prohibit false or misleading advertisements, and comply with laws and regulations on fair business and advertisements;
· Provide channels for employees to report suspected ethical misconduct and keep information of whistle-blowers confidential.
Environment
· Comply with policies and standards of national and regional government laws/regulations regarding identification, evaluation, declaration, storage, and discharge permits of wastewater, gas, solid waste, hazardous waste, noise and other substance affecting the environment;
· Reduce consumption and emission of water, electricity, paper, materials, fuel and other resources by adopting systematic methods;
· Ensure that no hazardous substance prohibited or controlled by laws, regulations, industries and customers is used in goods or services of the Company.
Occupational Safety and Health
·
· ·
·
Provide a safe and healthy working environment for employees through effective identification, evaluation and control of hidden safety hazards; Provide safe, clean food and drinking water foremployees; Provide sufficient and qualified sanitary and social facilities for employees; Provide suitable accommodation for employees to come and go as they please.
Conflict Mines
· Guarantee the sourcing of gold (Au), tantalum (Ta), tungsten (W) and tin (Sn) are from lawful mines.
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2. Supplier Responsibility Management Practice
Luxshare Precision actively pushes the building and improving of social responsibility management system of supply chains, and controls each phase from supplier development, qualification evaluation, performance appraisal to subsequent development, so as to ensure that suppliers act in line with our social responsibility requirements. Pursuant to the Suppliers Management Operating Procedures formed by the Company, social responsibility management process of suppliersis divided into fourphases, i.e. basic entry, risk assessment, audit and inspection and continuous improvement, in order to ensure effective practice of responsible supply chain management.
2.1 Basic Entry
Quality is the fundamental requirement for us to choose partners. To secure the quality of our products and services and effectively safeguard customers' legitimate rights and interests, we require suppliers to obtain a quality certification such as the ISO9001, IATF16949, ISO13485, TL9000, QC080000, SONYGP, or other equivalent third-party quality system certificate. As a responsible Company, Luxshare fully considers social responsibility and environmental benefits, and gives priorities to suppliers that actively undertake social responsibilities so that our products and services can achieve a balanced economic and environmental benefits. As such, suppliers with certification of the ISO14001, OHSAS18001, SA8000, RBA-VAP, or other third-party SER would be our preferred partners.
2.2 Risk Assessment
Risk assessment on new suppliers is an important step in our supplier management system. Identifying the production capacity and social responsibility risks of new suppliers is conducive for us to develop long-term and efficient partnerships and ensure effective practice of sustainable management of the supply chain. Suppliers that meet the threshold criteria must provide a completed Supplier Information Survey Form, Materials and Finished Products Restricted Substance Management Specification, Environmental Statement, Social Responsibility Code of Conduct Statement, Quality Contract and Supplementary Agreement, Terrorism Prevention Agreement, Non-Disclosure Agreement, Manufacturer's Letter of Commitment of Honesty and Integrity, Statement of Non-Infringement, and other sealed documents to make sure that new suppliers are aware of, and actually follow our responsible suppliermanagement standards. In addition, new suppliers shall also fill out self-assessment forms such as the New Supplier Audit Report and SER Comprehensive Audit Checklist for subsequent risk assessment. Based on the basic information and self-assessment forms submitted by suppliers, our specialized audit team then conduct a comprehensive social and environmental responsibility risk assessment on suppliers' quality, services, environmental protection, and the SER to ensure that new suppliers meet the compliance requirements of supply chains operation.
2.3 Audit and Inspection
To ensure the sustainable development of supply chains, Luxshare will keep track of qualified suppliers to evaluate whether they always meet our compliance requirements. The Company regularly releases the Quarterly Supplier Evaluation Form for departments of Quality Control, Strategic Buying, Business Buying and Component Engineering to jointly conduct performance evaluations on qualified suppliers regarding their quality, delivery, price, technology, social environmental responsibility, etc. Suppliers are graded into four classes: Class A, B, C, and D, in descending order of scores. We have zero tolerance for environmental pollution and lack of integrity, suppliers identified with
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environmental abnormalities or integrity issues will be directly rated as D and are required to rectify and solve such environmental protection issues within 3 months.
In 2020, the Company conducted sustainability assessments on 2,608 core suppliers. The details are as follows:
Audit forms
Number of audits
Audit coverage rate
Document audits
Once per year
100%
Field or online audits
Once per year
78%
2.4 Continuous Improvement
Based on the audit results of suppliers' performance, Luxshare analyses the direction for suppliers to make continuous improvement, and helps to enhance suppliers' social responsibility awareness and management capabilities, working together to establish responsible supply chains. For high-performing suppliers in the evaluation, we will consider increasing purchase orders, offering priority orders or long-term contracts, granting preferential payment terms or reducing future costs and other performance incentives; for low-performing suppliers in the evaluation, we will urge them to make improvements by a series of measures including: offering system improvementreport and inviting senior management of suppliers to the Company for reviews. Meanwhile, the Company provides suppliers with guidance in many forms to help them meet the requirements of Luxshare and customers. If the supplier refuses to cooperate or fails to meet our requirements within the specified time, we will consider reducing orders or even terminating the partnership.
As of December 31th, 2020, the total number of qualified suppliers was 9,4554.
Regional distribution of suppliers
11%
T ype distribution of supplier
9%
89%
91%
Overseas suppliers Chinese suppliers
Service suppliers Raw material suppliers
The Company adheres to the joint development with suppliers, besides annual evaluation of suppliers and performance appraisal, we also strive to work with suppliers to carry out capacity-building, improve supplier quality, social responsibility and other aspects of management capabilities, to create a high-quality supply chain. In 2020, the Company
4 The statistical caliber of suppliers in 2020 has changed . The raw and auxiliary materials and packaging materials are merged into raw and auxiliary materials. Meanwhile we have a systematic updated to eliminate long-term non cooperative suppliers and one -time procurement suppliers.
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organized 3 training orientations for the suppliers and there were total of 1,662 suppliers participated in these orientations.
3. Steadily Promoting Conflict Mineral Management
As human rights and environmental issues in mineral procurement are drawing increasing attention from society, Luxshare Precision, a responsibleCompany, firmly responds to the call of international community, actively assumes corporate social responsibilities and promotes responsible mineral procurement.
3.1 Management Policies
Luxshare Precision follows the RMI, the United Nations and OECD's Guidelines for Responsible Supply Chain Responsibility for Minerals in Conflict-Affected and High-Risk Areas. The Company and all suppliers and outsourcers only purchase from the RMI, LBMA or the Responsible JewelryCommitteeapproved orcertified smelters and refineries. We do not purchase and support areas affected by armed conflict, and ensure all suppliers adopts responsible practices in purchasing minerals, respecting the human rights and environment in conflict areas.
3.2 Management System
In accordance with the requirements of the Responsible Business Alliance (RBA), Luxshare Precision has formulated the Measures for the Management of Conflict Minerals, and established a sound management system for conflict minerals. Through the management process of "commitments, due diligence, risk control and internal training", we conduct supply chain investigations to effectively enhance risk control capabilities and strengthen the management of conflict minerals.
(1) Commitments
All suppliers must sign the Social Responsibility Code of Conduct Statement (including conflict minerals policies) when entering into partnership agreement with us. Suppliers are required to purchase raw materials only from environmentallyand socially responsible suppliers, and to purchase metals from smelters and refineries certified and confirmed by the RMI, LBMA or Responsible Jewelry Committee. Smelters and refineries that are not certified by the RMAP or are not compliant with customer requirements must be removed from the supply chain, in order to ensure that these minerals will not directly or indirectly provide funds or bring benefits to armed groups violating human rights in Congo and other politically unstable areas.
(2) Due Diligence
Luxshare conducts a survey on suppliers' conflict minerals at least once a year, and has set a target reply rate of no less than 90%. Class A & B suppliers must reply to the survey to maintain their standing. Suppliers must complete the conflict mineral survey sheet to confirm the country of origin for the tin, tantalum, tungsten, gold, and cobalt used by their smelters and refineries, and suppliers. The Company will verify and confirm the conflict mineral survey sheet submitted by suppliers to evaluate whether origins of raw materials meet requirements, and compile the results into the Luxshare Precision CMRT Survey which will be provided to customers upon request. Luxshare will follow up on suppliers that have not made responses. If the suppliers fail to give a reply or sign the Guarantee of Non-Use of Conflict Minerals, they will be graded as Class C & D suppliers, and any new collaboration will cease. In 2020, we sent out questionnaires on conflict minerals to 2,756 suppliers, with 2,662 replies, representing a reply rate of 96.6%.
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(5) Shoulder Corporate Responsibilities Through Actions
As a responsible listed Company, Luxshare Precision has been proactively fulfilling corporate responsibilities. Through continuous cooperation with stakeho lders and diversified public welfare activities, we support the development of local community where we operate, and build a harmonious and mutual-trust relationship.
1. Contributing to the Community with Our Responsibilities
We actively organize volunteer activities to help fight the epidemic and contribute positively to building a better society. In 2020, the Group donated about RMB 17.8 million to the Red Cross and the government's epidemic prevention and control departments, including cash, masks, medical equipment and other related epidemic prevention materials and living materials, and actively participated in the fight against the epidemic. The factories in Vietnam donated about RMB 910 thousand to the Bac Giang province's authority in Vietnam, including masks, medical equipment and other related epidemic prevention materials, to help people who live around our oversea operation location fight the epidemic.
Case
Fulfilling Corporate Responsibilities
Luxshare Precision has been implementing social responsibilities and carrying out public welfare activities to contribute to the community. In 2020, we carried out numerous corporate responsibility activities such as the Care for the Senior on the Double Ninth Festival and the Voluntary Blood Donation, delivering our care to the local community while enriching employees' spare-time life.
Fulfilment of corporate responsibilities in overseas locations where we operate is also our concerns. This year, our donations of cash and medical devices to fight against the epidemic and donations for flood relief and poverty alleviation were successively awarded by the People's Committee and the Fatherland Front Committee of Tnh Bc Giang, Vietnam, in recognition of our outstanding contributions to the local community.
Kunshan Lanto Electronic's Care for the Senior on the Double Ninth Festival
Dongguan Xuntao's Voluntary Blood Donation
Enshi Luxshare's Sympathies for Our Contributions to the Epidemic Prevention
Underprivileged Rural Families
and Control in Tnh Bc Giang, Vietnam
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Case
Assisting Farmers
On March 17th, knowing that sales of vegetables grown by farmers were restricted during the lockdowns and that Kunshan Factory was in need of a mass of vegetables for daily meals for employees, the Factory, together with the Jinxi Trade Union, launched the activity of "Assisting Farmers" and purchased about 100 tons of vegetables, effectively solving the problem of vegetable overstock and staff dining.
2. Dedicated to Community Environmental Protection Through cooperation with local governments and regional organizations, we exert positive and lasting impact on the local community where we operate. This year, we took the lead to proactively participate in community environmental protection.
Case
"Village-Corporate Cooperation" in Environmental Improvement
On December 3rd, 2020, in order to build a beautiful village and favorable residential environment, Luxshare Precision Kunshan Factory worked together with Weixing Village of Jinxi Town to launch the activity of "Village-Corporate Cooperation" in Environmental Improvement - "Joint Efforts in Environmental Improvement", with 20 participants involved. Through the activity, local environment was improved and so was our employees' sense of social responsibility.
Factory Greening In 2020, in order to maintain a green environment and enhance employees' senses of belonging and responsibility, Huizhou Merry Factory conducted greening. All departments of the Factory, based on the designated responsible area for greening, carried out multiple tree care and weeding activities around the Factory.
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Environmental Responsibility
We fully aware that while designing and manufacturing products, we also shoulder the great responsibility of protecting the Earth and responding to climate change. As a responsible Company, we adhere to the corporate environmental management policy of "full participation, prevention of pollution, and provision of green products that meet environmental protection requirements; clean production, continuous waste reduction, and operation of a green enterprise that meets regulatory requirements", and formulate an environmental management system that meets the requirements of local environmental protection. Together with industry partners, we will continue to improve the level of chemical management, provide customers with green and environmental friendly products through technological innovation, and help the development of lowcarbon economy.
5 national or provincial green factories 1 selected as a national green product
Carbon emission density 5.92 tons/million sales revenue
Investment in energy saving and emission reduction exceeded RMB 12 million
190 restricted
substances identified
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It is a shared goal for China and beyond to respond to challenges arising from climate change and accelerate the shift to a low-carbon economy. In 2020, President Xi Jinping stated at the General Debate of the 75th Session of the United Nations General Assembly that by adopting more vigorous policies and measures China would scale up Intended Nationally Determined Contributions. China also aimed to have CO2 emissions peak before 2030 and achieve carbon neutrality before 2060. We are fully aware of our great responsibility in response to climate change in product design and manufacturing. As a responsible Company, we adhere to the corporate environmental management policy of "Total Involvement, Pollution Control, and Supply of Environmentally-Compliant Products, Clean Production, Keeping Waste Reduction, and Environmentally-Compliant Operation", to effectively integrate environmental protection and climate change into our production and operations.
Luxshare Precision is committed to the "30·60" Carbon Neutrality Target. Following the four concepts of actively respond to the climate change, create " green factories", consist a safe, environment-friendly and transparent chemical management, as well as taking the initiative to practice environmental protection, we promote positively to develop and manufacture environment-friendly products and implement various environmental protection measures to prevent hazardous substances from our value chains and seek for safer chemical substitutes to effectively reduce the environmental load. By means of environmental management technical renovation and product life cycle management, we reduce our impact on the environment, and contribute to the green development with actions.
Tackling Climate Change
Green Operationof Factory
Safe, Green and Transparent Chemical
Management
Empowering Green
Valuing Water Resources Strict Identification and
Products with the Lowcarbon Concept
Conducting Waste Management above the
Testing Responsible
Promoting Green Energy
Bottom Line
Manufacturing and
Practices
Minimizing the Impact
Delivery
Improving Energy
of Waste Gas,
Efficiency
Wastewater and Noise
Reducing Factories' Carbon Emissions
on the Mankind and the Environment
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(1) Tackle Climate Change
Today, the unsustainable manufacturing and lifestyle have imposed negative impacts on the environment, such as worsening climate change, accelerating exhaustion of resources and energy and increasingly frequent occurrence of extreme weather. However, we are deeply aware that corporate development shall not come at the cost of destroying the natural environment, instead we should assume environmental responsibilities to protect the global sustainable future. The Group has set the carbon reduction target: we are committed to reducing carbon intensity by 40% in 2025 compared to that in 2017. For this purpose, we will take effective measures to reduce factories' carbon emissions, promote green energy practices, improve energy efficiency, and explore low-carbon green products in active response to the impact of climate change.
1. Empowering Green Products with The Low-carbon Concept
As an important bridge between raw materials and finished products, we are deeply aware that more low-carbon, recyclable and efficient products are conducive to "cooling down" the planet. Starting from the product life cycle such as raw material procurement, product research and development, manufacturing, transportation, usage and disposal, we are dedicated to minimizing negative impacts of our products on the mankind and the environment, improving product efficiency, and enhancing the product recyclability. In the future, the Group will apply for more green product certifications and put more efforts in green product research, development and innovation.
In accordance with the General Principles and Requirements of Eco-Design for Products (GB/T 24256-2009), the General Principles for Eco-Design Product Assessment (GB/T 32161-2015), the Technical Specifications for Green-Design Product Assessment, the Environmental Management - Life Cycle Assessment - Principles and Frameworks (GB/T 24040-2008), the Environmental Management -- Life Cycle Assessment -- Principles and Framework (ISO 14040:2006) and other relevant standards, the Group has formulated the General Principles of Eco-Design for Products and the Assessment Indicator System of Eco-Design for Products, to guide product research and development and evaluate product information such as the natural resource usage, energy consumption and chemical content in a more scientific manner.
Case
High-Speed VR Cables
In 2020, Huzhou Factory independently designed and developed a green product High-Speed VR Cables. The factory has fully taken into account the independence and recyclability of the cables as an accessory during the product design. Recyclable materials are used for the cables as much as possible. Copper is the main raw material, as it has relatively high recyclability and renewability rates - more than 95% (inclusive) and 80% (inclusive) respectively. In product manufacturing, carbon emissions mainly derive from energy usage, manufacturing processes and waste disposal (including wastewater, solid wastes and waste gas). Packaging materials used from production to delivery include cartons + PE bags, with the recyclability and renewability rates of the cartons more than 80% (inclusive) and 70% (inclusive) respectively. Throughout the product life cycle including obtaining raw materials, manufacturing, logistics, usage and waste disposal, our carbon emissions are calculated as about 220kg CO2/km of the cable.
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Case 65W GaN Chargers In order to integrate the concept of green manufacturing into product research and development, the Company has self-developed 65W GaN chargers based on the design concept of light weight, high efficiency and low energy consumption. Compared with traditional chargers, our chargers use 41.8% fewer plastics, being more compact and lightweight. Meanwhile, the efficiency of our chargers is 1.4% higher than that of traditional ones. On the assumption that they are used for 8 hours a day, our chargers could save 2.9 million KWh each year, equivalent to CO2 emissions reduction by 2,900 tons.
Case Smart Loopback Series Products In response to low efficiency and heavy weight of traditional exchanges, a core device in data centers, during the data communication testing before delivery, we have designed and developed Smart Loopback series products-a more lightweight and efficient access exchanger for data centers, with a lower cost. As our products cover most of terminal devices, one of our products is sufficient for the testing which previously requires coordination among multiple traditional exchangers, greatly reducing the use of metal materials such as copper cables and optical modules, compared with traditional ones.
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2. Promoting Green Energy Practices
We have been putting more effortsin renewable energy sources, to provide the community with green energy sources by further expanding self-built photovoltaic projects and purchasing green electric power. We are endeavoring to resolve environmental problems by shifting from fossil fuels to renewable energy sources.
2.1 Integrating Solar Energy into Daily Operations
In order to accelerate the adoption of renewable energy sources, we strive to spread solar photovoltaic panels throughout our factories, ensuring a continuous and stable clean power for daily operations. Meanwhile, we have been committed to improving the generating efficiency of the photovoltaic systems, making photovoltaic power as the main power source. Luxshare Kunshan Lanto and Luxshare Electronic independently introduced photovoltaic power stations, which were connected to the state grid in July 2019 and June 2020. Luxshare Electronic Technology (Kunshan) Co., Ltd Photovoltaic Project has reached an annual generating capacity of 4,300 MWh, equivalent to CO2 emissions reduction by approximately 2,535.07 tons. Lanto Electronic Limited Photovoltaic Project has reached an annual generating capacity of 1,200 MWh, equivalent to CO2 emissions reduction by approximately 707.46 tons. In the future, the Group will further invest and expand the installation of photovoltaic projects in multiple plants in China and overseas.
Lanto Electronic Limited Photovoltaic Project
Project power generation: 4,300MW Exchanging to the carbon reduction: 2,535.07
tons
Lanto Electronic Photovoltaic Project Project power generation: 1,200 MW Exchanging to the carbon reduction: 707.46
tons
2.2 Purchasing Green Power
Luxshare Precision proactively purchases green power as a substitute for traditional energy sources, speeding up the transformation to a green and low-carbon economy, and moving towards carbon neutrality. In 2020, Luxshare Precision Kunshan Factory, Baoding Factory and Huzhou Factory purchased a total of 152,415.51 MWh of green power, equivalent to CO2 emissions reduction by approximately 90,038.42 tons. In the future, the Group will further actively seek green power purchase.
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Kunshan Factory's I-REC Certificate upon the Procurement of Wind Power of 150,000 MWh
3. Improving Energy Efficiency Through a series of means such as equipment optimization, investment in high-efficiency equipment, construction of energy management system, implementation of energy-saving technical transformation, we made the increase of greenhouse gas emissions controllable. In 2020, the Group invested more than RMB 12 million in energy-saving technical renovation projects, saving 26,150 MWh in energy consumption. Furthermore, for the better management of all factories' energy efficiency, we have formulated a series of management regulations such as the Control Procedures for Energy Management and Planning, the Measures for the Management of Energy Conservation and Emission Reduction, the Control Procedures for Energy Conservation and Consumption Reduction and the Control Procedures for Energy Assessment. Under the guidance of the Control Procedures for Reward and Punishment of Energy Conservation Assessment, we encourage and urge all factories to work on energy conservation and emission reduction and improve energy efficiency. Vigorously Conducting Energy-Saving Technical Renovation In order to implement the green concept of energy conservation and emission reduction, the Company actively supports the equipment upgrade and renovation in all factories. This year, the hot water system in the living area was upgraded in East China Factory. Through recovering the excess heat from air compressors during production and storing it in an insulation box for heating water in the living area, instead of using air source heat pumps only for heating, we saved energy sources and improved energy efficiency to a great extent. In addition, technical optimization was carried out for the air handling unit (AHU) of the 1000-class dust free room. We connected the pipeline of waste heat recovery tanks of air compressors to the AHU, thus getting rid of power consumption-based heating. After the optimization, the Factory can reduce annual power consumption by 30.7 MWh or 65.08%.
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. Meanwhile, in order to ensure the effective implementation of energy management and energy conservation and emission reduction policies, the Group's factories have actively participated in the certification for ISO50001 Energy Management System. In the future, other factories will also be included.
Optimization of 1000 Class Clean Room Air Conditioning (AHU) System 4. Reducing Factories' Carbon Emissions We have embraced the green sustainable development philosophy, continuously innovating and practicing carbon reduction in terms of management and technologies to realize green and low-carbon operations. Furthermore, we have been focusing on carbon emissions reduction in our daily operations, including facilities, research and development labs, manufacturing processes and other aspects, to practice a highefficiency and low-emission business model and build a sustainable and green ecosystem. In 2020, the total Greenhouse gas emissions from Luxshare Precision's factories are 547,715.32 tons, a year-on-year increase of 22.25%. Meanwhile, the Greenhouse gas emission density was 5.92 tons per million sale revenue, which has decreased by 17.43% compared to that in 2019. The Scope 3 carbon emissions were also identified to control carbon emissions from logistics by adjusting logistics routes in all factories and improving the transportation efficiency. In the future, we will continue to integrate energy-saving technical renovation with clean production, and consider introducing internal carbon pricing to further support factories' carbon emissions reduction.
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In order to conduct a clearer and more transparent environmental data communication with the shareholders, we have voluntarily submitted the CDP Climate Change Questionnaire and achieved good scores. Besides, we will also consider introducing a third-party review or other best practice to ensure efficient implementation of information transparency and disclosure.
(2) Build Green Factory
Luxshare Precision makes every effort to construct green factories centering on "valuing water resources", "conducting waste management above the bottom line", and "minimizing the impact of waste gas, wastewater and noise on the man-kind and the environment". For this purpose, Luxshare Precision conducts daily operations in a sustainable manner, actively improves all factories' water efficiency, seeks for alternative water resources and discloses water footprint. Meanwhile, the Company takes the compliant waste management as the bottom line, and works towards zero-landfill. Furthermore, we conduct strict assessment for and control over the negative impact of waste gas, wastewater and noise. In 2020, 63.04% of the Group's factories passed the certification for ISO14001 Environmental Management System and 172 internal and external audits were carried out, with the audit improvement rate of 100%, and we will continue to promote the system in other factories. As at December 31st, 2020, five factories of the Group were awarded as a "Green Factory" at the national or provincial levels. In the future, we will work to empower more factories of the Group to apply for the "Green Factory" award.
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Luxshare Precision's Green Factory Awards: Factory
Award
Bozhou Lanto Electronic Limited
National Green Factory
Bosuo Technology (Jiangxi) Co., Green Factory of Jiangxi Province Ltd.
Luxshare Electronic Technology Green Factory of Jiangsu Province (Kunshan) Co., Ltd.
Jiangxi Luxshare Intelligent Manufacture Co., Ltd.
Green Factory of Jiangxi Province
Huzhou Jiuding Electronic Co., Green Factory of Zhejiang Province Ltd.
Awarded Year 2018
2019
2020
2020
2020
Jiangxi Luxshare Intelligent Manufacture Co., Ltd. Selected as The Provincial Green Factory
Jiangxi Luxshare Intelligent Manufacture Co., Ltd. established a cross-department green
factory structure, organized a Green Committee and a Green Factory Management Office
and specified system construction, implementation methods, and management
assessment policies regarding green factory. In addition, it carried out multi-level
management aiming at the construction of a green factory, including infrastructures, management systems, energy and resource inputs, environment and emissions, products
and green procurement.
For instance, in order to reduce the use of
raw materials, it recycled PVC from
secondary materials in the emission
reductions renovation project; it recycled
waste heat from air compressors in the
energy-saving technical renovation project; and suppliers are required to make
commitments that the hazardous substances
they supply are up to relevant standards.
Meanwhile, employees' awareness and
knowledge of green manufacturing were raised through the training program for
green factory construction.
Jiangxi Luxshare Intelligent Manufacture Co., Ltd.
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1. Valuing Water Resources Luxshare Precision not only highlights water resources in daily production and operations, but has also been committed to identifying, managing and monitoring enterprise-level water crisis. In 2020, water consumption of the Group's factories is 5,049,275.65 tons. Whether it is for refrigeration equipment in the manufacturing process, or for production and domestic purposes, the water used in our daily operations are always provided from safe and reliable sources. The Group knows that every drop of water is precious. As such, we focus on our water footprint and assess the potential impact on the locations where we operate, especially in the areas in shortage of water resources, committed to improving all factories' water efficiency. For manufacturing water, we strive to improve water efficiency and reduce water consumption through various measures such as reusing cooling water, recycling steam condensate, and procuring reclaimed water for all factories' cleaning and greening. For daily domestic waste, we post water-saving signs in all factories, adopt water-saving faucets, encourage and advocate water conservation among employees to cultivate their awareness in this regard.
Case Dongguan Factory Introduced Advanced Wastewater Treatment Systems for Plant Area Greening Luxshare Dongguan Factory introduced advanced MVR wastewater treatment systems, which boiled wastewater into steam, temporarily stored distilled water in a special bucket and automatically transported to the greening pool. As 97% of the recycled water can be directly used for greening, about 10,000 tons of greening water can be saved each year.
Schematic diagram of smart MVR system
Not content with merely complying with water resource regulations, the Group has been optimizing management of water resources, so as to use water resources in a more responsible manner that is beneficial to society, environment-friendly and sustainable, and transparently disclose water footprint. In 2020, we actively respond to CDP water questionnaire and conduct disclosure. We also actively identify and evaluate the water pressure in the operating location by using WRI Aqueduct Water Risk Atlas.
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2. Conducting Waste Management above the Bottom Line In accordance with the Law of the People's Republic of China on the Prevention and Control of Solid Waste Pollution, the Law of the People's Republic of China on Environmental Impact Assessment, the National Catalogue of Hazardous Wastes and other national and local laws and regulations, Luxshare Precision has formulated many management policies such as the Operating Procedures for Waste Control, to reduce environmental impact and prevent pollution. We strictly stick to the principle of "Classified Recycle, Centralized Storage, Unified Disposal" for comprehensive waste management. The Group has established a waste management department in all factories, responsible for coordinating the daily management and statistics of various wastes, and assisting all units to promote waste reduction and recycle. We require all factories to define general wastes and hazardous wastes, and based on the actual production, wastes are classified into three categories: A/B/C, and a waste list is made specifying the monthly waste quantity, waste category, waste disposal/recycle/transportation methods, and name of waste recyclers. In case of any changes in processes or manufacturing, the waste list will be timely updated. We have specific storage areas for hazardous wastes to be sealed and prevent second leakage. To ensure proper disposal of hazardous wastes, each factory signs hazardous waste treatment contracts, rubber shafts and cartons recycling agreements, etc. with professional third-party disposal agencies that possess legal qualifications. Also, we regularly review third-party disposal agencies to ensure the disposal is in compliance with regulations. In 2020, Luxshare Precision generated non-hazardous wastes of 12,519.255 tons, and transferred hazardous wastes of 856.99 tons. Luxshare Precision is actively exploring zero-waste to landfill, and thoroughly recycling electronic wastes for complete reuse. In order to reasonably use resources and ease environmental impacts, Luxshare Precision's factories have vigorously promoted the concept of recycling, and formulated the Guidelines for Product Decomposition and Recycle to guide all employees to correctly dismantle waste products for recycle and improve recyclability as well as to achieve the corporate value of recycling economy.
Luxshare Precision's Whole-Process Waste Management
5 In 2020, the Group's non-hazardous wastes included office wastes, domestic wastes and kitchen wastes.
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Case
Kunshan Factory Awarded UL's Top-level Wastes Zero-landfill Validation In 2020, Lianto Electronic Limited successfully passed the UL 2799 Top-level Wastes Zero-landfill Validation, achieving "100% waste conversion rate (including 4% heat treatment energy recovery) ". This award revealed Luxshare Precision's resolution in waste reduction and management. Through practical actions, we have improved the resource recyclability and improved the waste management system through the validation.
3. Minimizing the Impact of Waste Gas, Wastewater and Noise on the Mankind and the Environment
Luxshare Precision strictly complies with the Law of the People's Republic of China on the Prevention and Control of Atmospheric Pollution, the Law of the People's Republic of China on Prevention and Control of Water Pollution, the Law of the People's Republic of China on Environmental Impact Assessment, the Integrated Wastewater Discharge Standard (GB8978-1996), the Discharge Standard of Pollutants for Municipal Wastewater Treatment Plant (GB18918-2002) and other local laws and regulations. For waste gas, wastewater and noise, Luxshare Precision follows the management process of "Precise Identification-Effective Control-Regular Inspection" to minimize the impact of waste gas, wastewater and noise on the mankind and the environment.
We have established a sound management system for waste gas, wastewater and noise. The EHS Management Department is responsible foridentifying equipment,facilities and procedures regarding waste gas, wastewater and noise and summarizing such information into the EHS Monitoring List for annual assessment and review. Timely responses and modification will be made in case of any changes in manufacturing equipment, operating procedures or working time for precise identification of emission sources. In addition, relevant departments are responsible for installing and maintaining pollutant control equipment for the purpose of effective control over emissions, ensuring compliant discharge. The Company arranges a special responsible management department to inspect pollutant discharge to avoid abnormalities. Meanwhile, a qualified monitoring agency is hired for regular monitoring at least once a year to ensure the compliant discharge of waste gas, wastewater and noise.
(3) Safe, Green and Transparent Chemical Management
As a bridge between suppliers and customers, Luxshare Precision is not only responsible for providing customers with green products, but is obliged to specify raw material requirements for suppliers.The Group aims to minimizes the use of hazardous substances in product design and development, raw material certification and procurement, manufacturing, and delivery management and further innovate quality green products, providing green channels for customers who are contributing to the low-carbon economy. The Group sets a target in chemical usage - to promote the substitutes for hazardous chemicals in global factories, reduce the use of hazardous chemicals, ease the negative impact of chemicals on our employees and the environment and maintaining 100 %
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compliance with relevant laws and regulations as well as customer specifications for products free of hazardous substances in future operations.
Luxshare Precision has been practicing the proper management of chemicals. In 2005, we revised our Regulations for the Management of Restricted Substances in Materials and Finished Products ("the Regulations") for the first time. Additionally,we have kept abreast of the updates of international, local and national laws and regulations as well as customer requirements for environmental protection, including the Registration, Evaluation, Authorization and Restriction of Chemicals ("REACH"), the Restriction of Hazardous Substances ("RoHS", 2011/65/EU) and subsequent amendments ((EU) 2015/863), the Waste Electrical and Electronic Equipment ("WEEE", 2002/96/EC), and the IECQHSPM QC080000-2017. According to the latest specification of the 32nd edition, the chemical hazardous substances are classified and controlled. The applicable objects include materials, components, semi-finished products, packaging materials, auxiliary materials used in the process and finished products. Different control requirements are formulated, including 190 kinds of restricted substances, 59 kinds of declared substances and 74 kinds of exempted substances.
In 2020, 32.61% of the Group's factories passed the certification for the QC 080000 Management System and 174 internal and external audits were carried out, with the audit remediation rate of 100%, and we will continue to promote the system in other factories.
Luxshare Products' Whole-Process Management and Control over Hazardous Chemicals
Development
Procurement
Manufacturing
Delivery
A compliance
Only the
assessment for
components that
hazardous
are attached with
substances is
material
carried out during composition
product design, to information and
prevent non-
the hazardous
comp l i a n t
substance testing
hazardous
report provided by
su b sta n ce s.
suppl iers and that
pass our
certification can be
1. Strict Identification apnurdchTaseesdt.ing
Regular testing is conducted for products and auxiliary materials during manufacturing, to prevent hazardous substances from this process.
Hazardous substance testing for finished products is carried out, to prevent noncompliant products from reaching customers.
In order to ensure compliant procurement of restricted chemicals, Luxshare Precision requires raw material suppliers to sign the Hazardous Substance Commitment, stipulating that no restricted chemicals, parts and packaging materials shall be supplied to Luxshare. In accordance with the Supplier Audit List, the RBA and the Green Product Audit List, we conduct strict audits on chemicals supplied, committed to reducing and forbidding substances in materials and finished products that cause the environmental burden and preventing non-green materials, components and products from our product chains.
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Luxshare Precision has established a whole-process management for hazardous chemicals. All labs are equipped with hazardous substance detectors, including the X-ray fluorescence spectrometer, inductively coupled plasma emission spectrometer, ion chromatograph, gas chromatograph-mass spectrometer, ultraviolet-visible spectrophotometer and TVOC detector, a total of 50 units. International testing standards are adopted for qualitative and quantitative testing of hazardous substances such as ROHS2.0, halogen and phthalates, to prevent environmental risks of materials to the greatest extent. The labs in Dongguan, Jiangxi, Kunshan, and Taiwan have passed the ISO/IEC17025 Certification.
Meanwhile, all labs have established a testing management system that manage and control the whole process of testing, result and feedback. The person in charge of the testing will be auto alerted on any abnormality of testing through the system, for remediation and follow up. Abnormal materials will be immediately checked, recovered, marked and isolated in a special area or scrapped for non-compliant products.
2. Responsible Manufacturing and Delivery
We always require all factories' HSF6 employees to conduct strict assessments and update the Hazardous Substances Reduction Plan at regular intervals, and implement strict management and control of chemicals based on the Operating Procedures for Chemicals Control. For chemicals storage and transportation, we strictly follow the Regulations on the Safety Management of Hazardous Chemicals. Meanwhile, we have formulated the Operating Procedures for Chemicals Control, requiring the management and control of hazardous chemicals to avoid chemical pollution and damage to the environment and people, prevent safety accidents, and ensure the safe use of hazardous chemicals.
The Group completely prevents restricted chemicals from production factories such as manufacturing processes, storage areas, warehouses and avoid misuse, mix and pollution of such chemicals. Detailed management measures include identification and management, isolation, establishment of testing procedures and benchmarks, the first-in and first-out method, warehousing management, etc.
Our electronic products are not only delivered to customers in the electrical and electronic equipment sectors which are subject to RoHS, but also to those in the automobile and medical device sectors. In order to prevent the mis-delivery due to human errors, the Group has input RoHS-related information of all products into the sales management system. Through the unified management of the system, verification can be carried out when we accept orders or issue delivery instructions. Any unverified products shall not be delivered.
By eliminating prohibited chemicals in our products, we have improved the disclosure system of the chemical information of our products, including: the sustainability reports, supplier conferences, supplier audits, customer enquiries and customer audits. In response to customer enquiries about chemicals in our products, we have, through the Group's chemical management system, established a rapid and accurate feedback system, for the purpose of whole-process management of customer enquiries from acceptance to response feedback.
6 HSF, the abbreviation of "Hazardous substances free", refers to the control, reduction and elimination of hazardous substances in products.
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(4) Environmental Performance
Greenhouse Emissions
Indicator12
2020
2019
2018
2017
Total greenhouse emissions (Scope 1 and Scope 2) (tons)
547,715.32 448,015.14 265,847.72 197,645.46
Sales revenue (million RMB)
92,501.26 62,516.31 35,849.96 22,826.10
Greenhouse gas emission intensity (Scope 1 and 2) (tons/million sale revenue )
5.92
7.17
7.42
8.66
Direct greenhouse gas emissions (Scope 1) (tons)
6,511.42
5,301.50
3,126.08
3,762.23
Indirect greenhouse gas emissions (Scope 2) (tons)
541,203.90 442,713.64
262,721.64 193,883.23
Outsourced power (tons)4 541,203.90 442,713.64 262,721.64 193,883.23
Notes:
1. Except for special instructions, the statistical scope of environmental performance data includes the Group and subsidiaries
2. When calculating the emission, energy consumption and waste intensity, the revenue is the annual income per million sales revenue.
3. Based on the nature of the Group's business, greenhouse gas emissions are mainly from purchased electricity and fossil combustion. The greenhouse gas includes carbon dioxide, methane and nitrous oxide. The greenhouse gas emission data are presented according to carbon dioxide equivalent, and the 2020 greenhouse gas is calculated according to the emission factors of China regional grid reference line of emission reduction projects in 2019 issued by the Ministry of ecological environment of the people's Republic of China and the guideline for the list of gases in national temperature room of IPCC 2006 published b y the Intergovernmental Panel on cl imate change (IPCC)
4. In 2020, we comprehensively combed the past greenhouse gas emission data and further improved the data quality. The carbon dioxide equivalent is calculated based on the latest emission factor currently in force in the year. The relevant data are subject to the disclosure of th is annual report
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Resource Consumption Indicator
Total energy consumption (MWh) 1 Annual energy consumption per revenue (MWh / million RMB) Direct energy consumption (MWh)2
Petrol (MWh) Diesel (MWh) Natural gas (MWh) Liquefied petroleum gas (MWh) Indirect energy consumption (MWh) Outsourced power (MWh) Clean energy (MWh) Emissions (tons) 3 Annual emissions per revenue (tons / million RMB) Industrial sewage (tons) Boiler waste gas (tons) Kitchen fume (tons) Total hazardous waste (tons) 4 Annual hazardous waste per revenue (tons / million RMB) Total non-hazard waste (tons) 5
2020 1,042,308.66
11.27
30,606.44 3,206.19 3,657.40
19,082.63 4,660.22 1,011,702.22 1,006,326.76 5,375.46
76.93 0.00083
0.50 12.65 63.78 856.99 0.009
12,519.25
2019 664,726.16
10.63
22,641.58 3,298.92 8,161.04 10,462.53
719.09 642,084.58 640,421.77
1,662.81 41.59
0.00067
0.00 30.77 10.82 658.62 0.010
9,299.84
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Annual non-hazardous waste per revenue (tons / million RMB)
Office waste (tons)
0.14 813.88
0.15 811.14
Household waste (tons)
8,676.76
7,111.75
Kitchen waste (tons)
3,028.61
1,376.95
Total water consumption (tons)
5,049,275.65
2,587,716.88
Annual water consumption per revenue (tons / million RMB)
Industrial wastewater (tons)
54.59 44.27
41.39 70.00
Notes
1. The main energy consumption sources of the Company are natural gas, petrol, diesel oil, liquefied petroleum gas, cl ean energy and purchased electric power
2. Energy consumption is calculated based on the consumption of electricity and fuel, and the co nversion factors provided in the General Principles for Calculation of Total Production Energy Consumption (GB/T 2589-2008).
3. Based on the nature of the Group's business, exhaust gas emissions mainly include boiler exhaust gas, kitchen fume and industrial exhaust gas
4. Hazardous waste includes waste mineral oil, waste chemical containers, etc. The weight of hazardous waste is summarized according to the data in the hazardous waste transfer form of each factory
5. Non-hazard waste includes office waste, household waste and kitchen waste
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VII. Our Honors & Awards
Company Name Luxshare Precision Industry
Company Limited
Dongguan Xuntao Electronic Co.,Ltd. Dongguan Leader Precision Industry
Co., Ltd. Shenzhen Luxshare Acoustics
Technology Ltd.
Provincial-Level and Above Honors
National High-tech Enterprise
China Top 500 Enterprise
Top 100 National Enterprise in
Electronic Components
CNAS-Certified National Laboratory
National
Pilot
Enterprise
Implementing IT Application-
Industrialization
Integration
Management Systems
Pilot Enterprise Implementing IT
Application-Industrialization
Integration Management Systems in
Guangdong Province
Engineering Technology Research
Center of Guangdong Province
Intelligent Manufacturing Model
Enterprise of Guangdong Province
Caijing Evergreen Award for
Sustainable Development Green
Award
Demonstration Enterprises for the
Construction of The Rule Culture in
Guangdong Province
National High-Tech Enterprise
Engineering Technology Research
Center of Guangdong Province
Contract-Abiding and Trustworthy Enterprise of Guangdong Province National Intellectual Property Standard Pilot Enterprise
High-Tech Enterprise of Guangdong Province Engineering Technology Center of Guangdong Province National High-Tech Enterprise Demonstration Enterprises for the Construction of The Rule of Law Culture in Guangdong Province May 1st Labor Award of Guangdong
Province
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Company Name Shenzhen Luxshare Acoustics
Technology Ltd. Merry Electronics (Huizhou) Co.,Ltd.
Asap Technology (Jiangxi) Co.,Ltd.
Provincial-Level and Above Honors
Model Workers' Home of the Worker Union in Guangdong Province National High-Tech Enterprise Engineering Technology Center of Guangdong Province High-growth Small and Medium-sized Enterprises in Guangdong Province National Postdoctoral Research Station National High-Tech Enterprise Provincial Science and Technology Innovation Model Enterprise of the Year of Jiangxi Province Top 100 Private Enterprise of Jiangxi Province Top 100 Private Manufacturing Enterprise of Jiangxi Province Intelligent Manufacturing Pilot Model Enterprise of Jiangxi Province Famous Brand Award of Jiangxi Province Advanced Quality Management Enterprise of Jiangxi Province New Product Development Award of Jiangxi Province Postdoctoral Innovation Practice Base of Jiangxi Province HF Cable Connection Component Engineering Research Center of Jiangxi Province High-Tech Enterprise of Jiangxi Province Gazelle Enterprise of Jiangxi Province Famous Brand Product of Jiangxi Province May 1st Labor Award of Jiangxi Province Large-Scale Enterprise of the All-China Federation of Industry and Commerce in Jiangxi Province Top 100 Parks Non-Public Trade Union of Jiangxi Province
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Company Name Asap Technology (Jiangxi) Co.,Ltd.
Xiexun Electronic (Ji'an) Co.,Ltd.
Jiangxi Luxshare Intelligent Manufacture Co., Ltd.
Provincial-Level and Above Honors
Industrial Design Center of Jiangxi Province Green Factory of Jiangxi Province Best Social Responsibility Award of Jiangxi Province Advanced Enterprises for Foreign Trade Exports in Jiangxi Province Top 100 Enterprise in Jiangxi Province Certificate of Excellent New Products in Jiangxi Province National High-Tech Enterprise National Computer Software Copyright Registration Certificate Excellent Enterprise of the Year of Jiangxi Province Key New Product Certificate of Jiangxi Province Outstanding New Product Certificate of Jiangxi Province Top 100 Private Enterprise of Jiangxi Province Top 100 Private Manufacturing Enterprise of Jiangxi Province Postdoctoral Innovation Practice Base of Jiangxi Province Top 100 Enterprise in Jiangxi Province National High-Tech Enterprise National Employment and Social Security Advanced Private Enterprises National Industrial Internet Platform and New Model Pilot Demonstration Project Excellent Enterprises in Jiangxi Province Enterprise Technology Center of Jiangxi Province Gazelle Enterprise of Jiangxi Province IT Application-Industrialization Integration Demonstration Enterprise of Jiangxi Province
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Company Name Jiangxi Luxshare Intelligent
Manufacture Co., Ltd.
ASAP Electronics (Jiangxi) Co., Limited.
Provincial-Level and Above Honors
Tax Payment Contribution Award of
Jiangxi Province
Green Factory of Jiangxi Province
Jiangxi
Province
Intelligent
Manufacturing Benchmark Enterprise
"Three
Products"
Strategic
Demonstration Enterprise of Jiangxi
Provincial Consumer Goods Industry
Outstanding Contribution Enterprises
in Prevention and Control of the Covid-
19 Epidemic
Jiangxi Province Meritorious
Enterprise of the Year
Top 100 Private Manufacturing
Enterprise of Jiangxi Province
Top 100 Private Enterprise of Jiangxi
Province
Top 100 Enterprise of Jiangxi Province
Advanced Enterprises for Foreign
Trade Exports in Jiangxi
Intelligent Bluetooth Headset and
Wearable
Terminal
Device
Engineering Research Center in
Jiangxi Province
Pilot Enterprises for the Integration of
Advanced Manufacturing and Service
Industries in Jiangxi Province
Manufacturing Single Champion
Demonstration Enterprise in Jiangxi
Province
New Product Certificate in Jiangxi
Province
Certificate of Excellent New Products
in Jiangxi Province
National High-Tech Enterprise
National Computer Software
Copyright Registration Certificate
New Product Certificate in Jiangxi
Province
Certificate of Excellent New Products
in Jiangxi Province
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Company Name Lanto Electronic Limited
Luxshare Electronic Technology (Kunshan) Co.,Ltd.
Provincial-Level and Above Honors
National High-Tech Enterprise
Technical Renovation Special Fund for
Electronic Information Industry of
National Development and Reform
Commission
National Top 100 Electronic
Information Enterprises
Postdoctoral Research Station of
Jiangsu Province
Engineering Technology Research
Center of Jiangsu Province
Enterprise Technology Center of
Jiangsu Province
Key Enterprise R&D Institute of
Jiangsu Province
Credit Management Model Enterprise
of Jiangsu Province
Management Innovation Model
Enterprise of Jiangsu Province
Science and Technology Private
Enterprise of Jiangsu Province
Model Intelligent Workshop of Jiangsu
Province
Industrial Internet Development
Model Enterprise of Jiangsu Province
(4-Star Enterprise of ShangYun)
Enterprise with Global Influence and
Internationally-leading R&D Institute
of Jiangsu Province
Business Startups and Innovation
Team in Jiangsu Province
Intelligent
Manufacturing
Demonstration Factory in Jiangsu
Province
Industrial Internet Benchmark Factory
in Jiangsu Province
Industrial Design Center in Jiangsu
Province
National High-Tech Enterprise
National Top 100 Electronic
Information Enterprise
80
.
Company Name Luxshare Electronic Technology
(Kunshan) Co.,Ltd.
Kunshan Luxshare Precision Industry Co., Ltd.
Provincial-Level and Above Honors
Pilot Enterprise Implementing IT Application-Industrialization Integration Management Systems in Jiangsu Province Medium or Large-sized Enterprise of the Internet Upgrade Project Funded by the Special Fund for Industrial and Information Industry Transformation and Upgrading of Jiangsu Province Science and Technology Private Enterprise of Jiangsu Province Enterprise Technology Center of Jiangsu Province Industrial Internet Development Model Enterprise of Jiangsu Province (5-Star Enterprise on the Cloud) Engineering Technology Research Center of Jiangsu Province Model Intelligent Workshop of Jiangsu Province Intelligent Factory of Jiangsu Province Green Factory of Jiangsu Province 5G Application Collection Competition Industrial Internet Special 3rd Prize National High-Tech Enterprise Industrial Internet Benchmark Factory of Jiangsu Province Enterprise with Global Influence and Internationally leading R&D Institute of Jiangsu Province Engineering Technology Research Center of Jiangsu Province Enterprise Technology Center of Jiangsu Province Key Enterprise R&D Institute of Jiangsu Province Science and Technology Private Enterprise of Jiangsu Province Model Intelligent Workshop of Jiangsu Province
81
.
Company Name Kunshan Luxshare Precision Industry
Co., Ltd.
Kunshan Luxshare RF Technology Co., Ltd.
Luxshare Precision Components (Kunshan) Co., Ltd.
Luxshare Automation (Jiangsu) Ltd.
Luxshare Precision Industry (Suzhou) Co., Ltd.
Merry Electronics (Suzhou) Co., Ltd.
Provincial-Level and Above Honors
Enterprise Supported by the Professional, Lean, Characteristic and Original Special Fund of Jiangsu Province National High-Tech Enterprise National Industrial Foundation Strengthening Project Medium or Large-sized Enterprise Internet Upgrading Project Funded by the Special Fund in Jiangsu Province National High-Tech Enterprise Science and Technology Private Enterprise of Jiangsu Province National High-Tech Enterprise Enterprise Technology Center of Jiangsu Province Science and Technology Private Enterprise of Jiangsu Province Science and Technology Private Enterprise of Jiangsu Province National High-Tech Enterprise National Postdoctoral Research Station Gazelle Enterprise of Southern Jiangsu Province Science and Technology Private Enterprise of Jiangsu Province Small or Medium-Sized Science and Technology Enterprise of Jiangsu Province Pilot Enterprise for the IT Application-Industrialization Integration of Jiangsu Province Enterprise Engineering Technology Center of Jiangsu Province Ultra-Thin Micro Receiver Workshop of Jiangsu Province Intelligent Speaker Assembly Workshop of Jiangsu Province Foreign-Funded R&D Institute of Jiangsu Province
82
.
Company Name Merry Electronics (Suzhou) Co., Ltd. Huzhou Jiuding Electronic Co.,Ltd.
Fujian JK Wiring Systems Co., Ltd.
Bozhou Lanto Electronic Limited
Shanxi Luxshare Precision Industry,Ltd.
Luxshare iTech(Zhejiang) Co.,Ltd.
Provincial-Level and Above Honors
Suzhou Industrial Design Center Award National High-Tech Enterprise Postdoctoral Research Station of Zhejiang Province Patent Model Enterprise of Zhejiang Province Top 50 Characteristic Electronic Information Growth Enterprise of Zhejiang Province Small or Medium-sized Science and Technology Enterprise of Zhejiang Province High-Tech Enterprise R&D Center of Zhejiang Province Enterprise Research Institute of Zhejiang Province Enterprise Technology Center of Zhejiang Province National High-Tech Enterprise Enterprise of Small or Medium-sized Professional, Lean, Characteristic, and Original (Characteristic) in Fujian Province Enterprise Technology Center of Fujian Province Advanced Intellectual Property Rights Enterprise of Fujian Province National High-Tech Enterprise Green Factory of Anhui Province Enterprise Technology Center of Anhui Province National-level integration management system standard pilot enterprises Certificate of New Products in Anhui Province National High-Tech Enterprise Demonstration Enterprise of Intelligent Workshop in Shanxi Province National High-Tech Enterprise Intelligent Factory of Zhejiang Province
83
.
Company Name Xuancheng Luxshare Precision
Industry Co.,Ltd
LUXSHAR-ICT(VIETNAM) LIMITED Wuxi Huihong Electronic Co.,Ltd
Kunshan Luxshare Precision Mould Co., Ltd
Suining Luxshare Precision Industry CO., Ltd
YongXin County Boshuo Electronics Co., Ltd
Luxshare Precision Industry (Baoding) Co., Ltd.
Wan'an Xiexun Electronic Co,.Ltd
Provincial-Level and Above Honors
Newly
Identified
High-level
Cultivation Enterprises in Anhui
Province
Small or Medium-Sized Science and
Technology Enterprise in Anhui
Province
Contribution Award for Poverty and
Social Security Activities in Bac Giang
Province, Vietnam
High-Tech Enterprise in Jiangsu
Province
Private Science and Technology
Enterprises in Jiangsu Province
Pilot Enterprise for the IT
Application-Industrialization
Integration of Jiangsu Province
Credit Standard Enterprise in Jiangsu
Province
Certificate of Sichuan Enterprise
Technology Center
High-tech Enterprises in Sichuan
Province
The Trade Union of Non-Public
Enterprises in the Top 100 Parks of
Jiangxi Province"
Specializes in special new small and
medium-sized enterprises in Jiangxi
Province
National High-Tech Enterprise
Small or Medium-Sized Science and
Technology Enterprise in Hebei
Province
Specializes in special new small and
medium-sized enterprises in Hebei
Province
Little Giant of Science and Technology
in Hebei Province
National High-Tech Enterprise
Harmonious Enterprise of Labor
Relations in Jiangxi Province
Advanced Units for the Disclosure of
Factory Affairs in Jiangxi Province
84
.
Company Name Luxshare Precision Industry
(Chuzhou), Ltd.
Huzhou Jiuding Electronic Co., Ltd.
Provincial-Level and Above Honors
National Pilot Enterprise for the
Integration of Management System of
Industrialization and Industrialization
National Import and Export Enterprise
with Outstanding Contributions
National Top Ten Large-scale
Enterprises
Price Monitoring Units in Anhui
Province
Safety Production Standardization
Secondary Enterprise Certificate in
Anhui Province
Top
100
Manufacturing
Comprehensive Private Enterprise in
Anhui Province
Provincial High-tech Enterprises
"Branded Products" in Anhui Province
Top 100 Private Enterprise in Anhui
Province
Top 100 Enterprise in Anhui Province
Identification Enterprise Technology
Center in Anhui Province
Top 100 import and export enterprises
of famous enterprises in Anhui
Province (top 10 enterprises)
Industrial Design Center in Anhui
Province
Member Unit of the 6th Council of the
Quality Management Association in
Anhui Province
Quality Award in Anhui Province
Private Technology Enterprise in
Anhui Province
National High-Tech Enterprise
National Green-Design Product
Postdoctoral Workstation in Zhejiang
Province
Zhejiang Patent Demonstration
Enterprise
50 Growth Characteristic Enterprises
of Electronic Information in Zhejiang
Province
85
.
Company Name Huzhou Jiuding Electronic Co., Ltd.
SmaPllroovrinMceiadliu-Lme-vSeizleadndScAiebnoceveand Technology EHntoernporirsse in Zhejiang PCreortviifniccaete of Small or Medium-Sized Science and Technology Enterprise in Zhejiang Province
High-tech Enterprise Research and Development Center in Zhejiang Province
Zhejiang Enterprise Research Institute
Zhejiang Enterprise Technology Center
ShangYun Benchmark Enterprise in Zhejiang Province
Intelligent Factory of Zhejiang Province
Green Factory of Zhejiang Province
Top 50 Characteristic Growth Enterprises in Zhejiang Province
Zhejiang Manufacturing and Internet Integration Demonstration Enterprise
Zhejiang Talent Engineering
86
.
. AppendixGRI Standard Index
Aspect
Number and Description
SDGs
1. Company Overview
102-1 Name of the organization 102-2 Activities, brands, products and services
102-3 Location of headquarters 102-4 Location of operations 102-5 Ownership and legal form 102-6 Markets served 102-7 Scale of the organization 102-8 Information on employees and other workers
102-9 Supply chain
Section/ Declaration
Company Profile
Company Profile
Company Profile
Company Profile
Company Profile
Company Profile
Company Profile Safeguard Labor Rights and Interests /Protection of Employees' Health and Safety /Focus on Employee Diversity and Individual Development
Building a Responsible Supply Chain
102-10 Significant changes to the organization and our supply chain
102-11 Precautionary principle or approach 102-12 External initiatives
2. Strategy
102-13 Membership of the association
102-14 Statement from senior decision-maker
Company Profile/Building a Responsible Supply Chain Corporate Governance Industrial Development
Industrial Development
Message from the Chairman
87
.
3. Ethics and Integrity
4. Governance
102-15 Key impacts, risks, and opportunities
102-16 Values, principles, standards, and norms of behavior
102-17 Mechanisms for advice and concerns about ethics
102-18 Governance structure
102-19 Delegating authority
102-20 Executive-level responsibility for economic, environmental, and social topics 102-21 Counselling stakeholders on environmental, and social topics 102-22 Composition of the high governance body and its committees
102-23 Chair of the highest governance
102-24 Nomination and selecting the highest governance body
102-25 Conflicts of interest
102-26 Role of the highest governance body in setting purpose, values, and strategy
102-27 Collective knowledge of highest governance body
102-28 Evaluating of the highest governance body's performance
102-29 Identifying and managing environmental and, social impacts
102-30 Effectiveness of risk management processes
Message from the Chairman Business Ethics
Stakeholder communication
Corporate Governance
Corporate Governance Sustainability Management
Stakeholder communication
Corporate Governance
Corporate Governance Corporate Governance
Protection of Shareholders' Rights Sustainability Management
Sustainability Management
Stakeholder communication
88
.
102-31 Review of economic, environmental, and social themes 102-32 Highest governance body's role in sustainability reporting 102-33 Communicating critical concerns 102-34 Nature and total number of major concerns
102-35 Remuneration policies
102-36 Process for determining remuneration
5.
Stakeholder participation
102-37 Stakeholders' involvement in remuneration 102-38 Annual total compensation ratio 102-39 Annual total salary growth rate 102-40 Stakeholder groups
102-41 Group agreements
6. Reporting practice
102-42 Identifying and selecting stakeholders
102-43 Approach to communicating with stakeholders with stakeholders
102-44 Key topics and concerns raised
102-45 Entities included in the consolidated financial statements
102-46 Defining report content and topic boundaries
102-47 List of material topics
Sustainability Management
Stakeholder communication Stakeholder communication
Disclosure of Remuneration /Focus on Employee Diversity and Individual Development Disclosure of Remuneration
Disclosure of Remuneration
Stakeholder communication Safeguard Labor Rights and Interests Stakeholder communication Stakeholder communication
Sustainability Management About this Report About this Report Sustainability Management
89
.
102-48 Restatements of information
102-49 Changes in reporting
102-50 Reporting period
102-51 Date of most recent report
102-52 Reporting cycle
102-53 Contact point for questions regarding the report
102-54 Claims of reporting in accordance with the GRI Standards
102-55 GRI content index
7. Management methods
GRI 201 Economic performance
102-56 External assurance
103-1 Explanation of the material topics and its boundaries
103-2 Management approach and its components
103-3 Evaluation of management methods
GRI103: Disclosure of management methods
Economic performance management methods
Special disclosure of topics
201-1 Direct economic value and
distributed
201-2 Financial implications and other risks and opportunities due to climate change
201-3 Defining benefit plan obligations and
Environmental Performance Table About this Report About this Report About this Report About this Report Your Feedback About this Report Appendix: GRI Standard Index
Sustainability Management Sustainability Management Sustainability Management Stakeholder communication
Company Profile
90
.
GRI 202
Market performance
GRI103:
Disclosure of management methods
Special disclosure of topics
other retirement plans
201-4 Government subsidies
Market performance management methods
202-1 The ratio of standard starting w local minimum wage by gender
GRI 203 Indirect economic impacts
GRI 204 Purchasing practice
GRI 205 Anti-bribery
GRI103: Disclosure of management methods Special disclosure of topics
GRI103: Disclosure of management methods Special disclosure of topics
GRI103: Disclosure of management methods Special disclosure of topics
202-2 Proportion of employees hired from local communities
Indirect economic impact management methods
203-1 Infrastructure investment and services supported
203-2 Significant indirect economic impacts
Purchasing practice management methods
204-1 Proportion of purchase expenditure from local suppliers
Anti-corruption management methods
205-1 Operations assessed risks related to corruption
Stakeholder communication Focus on Employee Diversity and Individual Development
Building a Responsible Supply Chain
Integrity Management
91
.
GRI 206 Unfair competition
GRI 207 Taxation
GRI 301 Materials
GRI103: Disclosure of management methods Special disclosure of topics
GRI103: Disclosure of management methods Special disclosure of topics
GRI103: Disclosure of management methods Special disclosure of topics
205-2 Communication and training about bribery policies and procedures
205-3 Confirmed incidents corruption and actions taken
Improper competition management methods
206-1 Legal proceedings against unfair competition and antitrust practices
Tax management methods
207-1 Approach to tax
207-2 Tax Governance, control and risk management
207-3 Stakeholder participation and tax related issues management
207-4 Country-bycountry reporting
Materials management methods
301-1 Materials used by weight or volume
Integrity Management Anti-unfair Competition
92
.
GRI 302 Energy
GRI103:
Disclosure of management methods
301-2 Recycled input materials used
301-3 Reclaimed products and their packaging
materials
Energy management methods
Special disclosure of
topics
302-1 Energy consumption within the organization
302-2 Energy consume of the organization
302-3 Energy intensity
302-4 Reduction of energy consumption
302-5 Reductions in energy requirements of products and services
Tackling Climate Change
Environmental Performance Table
Environmental Performance Table
Environmental Performance Table
Environmental Performance Table
Tackling Climate Change
93
.
GRI 303
Water resources and sewage
GRI103:
Disclosure of management methods
Water resources management
methods
Special disclosure of topics
303-1 Interaction between organization and water (as a shared resource)
303-2inage related impacts management
303-3 Water intake
303-4 Drainage
303-5 Consume water
GRI 304 Biodiversity
GRI103: Disclosure of management methods
Special disclosure of topics
Biodiversity management methods
304-1 The organization owns, leases, and manages its operation sites in or near the protected areas and biodiversity areas outside the protected areas
304-2 Significant impact of activities, products and services on Biodiversity
3 Protected or restored habitats
304-4 The habitats in the affected areas have been listed in IUCN list and
Green Operation of Factory Green Operation of Factory Green Operation of Factory Environmental Performance Table
94
.
GRI 305: Emissions
GRI103: Disclosure of management methods
Special disclosure of topics
national protection list
Emissions management methods
305-1 Direct (Scope 1) GHG emissions
305-2 Energy indirect (Scope 2) GHG emissions
305-3 Other indirect (Scope 3) GHG emissions
GRI 306
Effluents and waste
GRI103:
Disclosure of management methods
305-4 GHG emissions intensity
305-5 Reduction of GHG emissions
305-6 Emissions of ozonedepleting substances
(ODS)
305-7 Nitrogen Oxides (NOx), Sulfur Oxides
(SOx), and Other significant air emissions
Effluents and waste management methods
Special disclosure of topics
306-1 Waste by water quality and discharge destination
Tackling Climate Change
Environmental Performance Table Environmental Performance Table Environmental Performance Table Environmental Performance Table Environmental Performance Table
Green Operation of Factory
95
.
306-2 Waste by type and disposal method
306-3 Major leakage
306-4 Transport of waste
GRI 307
Environmental compliance
GRI103: Disclosure of management methods
Special disclosure of topics
GRI 308 Supplier environmental assessment
GRI103:
Disclosure of management methods
Special disclosure of topics
306-5 Water bodies affected by drainage / or runoff
Environmental compliance management methods
307-1 Violation of environmental regulations
Supplier environmental Assessment management methods
308-1 New suppliers that were screened using environmental criteria
308-2 Negative environmental impacts in the supply chain and actions taken
Environmental Performance Table Green Operation of Factory
Green Operation of Factory
Green Operation of Factory Green Operation of Factory Building a Responsible Supply Chain
96
.
GRI 401 Employment
GRI103:
Disclosure of management methods
Employment management
methods
Special disclosure of
topics
401-1 New employee hires and employee
turnover
401-2 Benefits provided to fulltime employees (excluding temporary or part-time employees)
401-3 Parental leave
GRI 402
GRI103:
Labor relations Disclosure of
management
methods
Special disclosure of
topics
GRI 403 Occupational safety
and health
GRI103: Disclosure of management methods
Special disclosure of topics
Labor relations management methods
402-1 Minimum notice period for operational change
Occupational health and safety management methods
403-1 Occupational health and safety management system
403-2 Hazard identification, risk assessment and incident investigation
Safeguard Labor Rights and Interests/Focus on Employee Diversity and Individual Development
Focus on Employee Diversity and Individual Development
Focus on Employee Diversity and Individual Development
Safeguard Labor Rights and Interests
Safeguard Labor Rights and Interests
Protection of Employees' Health and Safety Protection of Employees' Health and Safety
Protection of Employees' Health and Safety
97
.
403-3 Occupational health services
403-4 Occupational health and safety affairs: Workers' participation, consultation and communication
403-5 Occupational health and safety training for workers
403-6 Workers' health promotion
403-7 Prevention and mitigation of occupational health and safety impacts directly related to business relationships
403-8 Applicable workers of occupational and safety management system
403-9 Injury onthe-Job
403-10 Work related health
problems
GRI 404 Training and education
GRI103: Disclosure of management methods
Training and education management methods
Protection of Employees' Health and Safety Protection of Employees' Health and Safety
Protection of Employees' Health and Safety
Protection of Employees' Health and Safety Protection of Employees' Health and Safety
Protection of Employees' Health and Safety
Protection of Employees' Health and Safety Protection of Employees' Health and Safety Focus on Employee Diversity and Individual Development
98
.
Special disclosure of
topics
404-1 Average hours of training per year per
employee
GRI 405 Diversity and equal opportunity
GRI103: Disclosure of management methods
404-2 Programs for upgrading employee skills transition assistance programs
404-3 Percentage of employees receiving regular performance and career development reviews
Diversification and equal opportunity management methods
Special disclosure of
topics
405-1 Diversity of governance bodies and employees
405-2 Ratio of basic salary and remuneration of women to men
GRI 406
Non-discrimination
GRI103:
Disclosure of management methods
Nondiscriminatio n management methods
Special disclosure of topics
406-1 Incidents of discrimination and corrective actions taken
Focus on Employee Diversity and Individual Development
Focus on Employee Diversity and Individual Development
Focus on Employee Diversity and Individual Development
Focus on Employee Diversity and Individual Development Focus on Employee Diversity and Individual Development Safeguard Labor Rights and Interests
Safeguard Labor Rights and Interests
99
.
GRI 407 Freedom of association and collective bargaining
GRI 408 Child labor
GRI 409 Forced or compulsory labor
GRI 410 Security practice
GRI 411 Aboriginal rights
GRI103: Disclosure of management methods
Special disclosure of topics
GRI103: Disclosure of management methods Special disclosure of topics
GRI103: Disclosure of management methods Special disclosure of topics
GRI103: Disclosure of management methods Special disclosure of topics
GRI103: Disclosure of management methods
Freedom of association and collective bargaining management methods
407-1 Operation sites and suppliers where freedom of association and collective bargaining rights may face risks
Child labor management methods
408-1 Operation sites and suppliers with significant risk of child labor incidents
Forced or compulsory labor management methods
409-1 Operations and suppliers at significant risk for forced or compulsory labor
Security practice management methods
410-1 Security personnel trained inn rights policies or procedures
Aboriginal rights management methods
Safeguard Labor Rights and Interests
Safeguard Labor Rights and Interests
Safeguard Labor Rights and Interests
100
.
GRI 412 Human rights assessment
Special disclosure of topics
GRI103: Disclosure of management methods
411-1 Incidents involving violations of aboriginal rights
Human rights assessment management methods
GRI 413 Local community
Special disclosure of
topics
412-1 Operation sites subject to human rights review or impact assessment
412-2 Staff training in human rights policies or procedures
GRI103: Disclosure of management methods
Special disclosure of topics
412-3 Important investment agreements and contracts involving human rights provisions
Local community management methods
413-1 Operations sites with local community involvement, impact assessment and development plans
413-2 Operations sites with actual or potential significant negative impacts on local communities
Safeguard Labor Rights and Interests
Safeguard Labor Rights and Interests Safeguard Labor Rights and Interests
Shouldering Corporate Responsibilities Through Actions
101
.
GRI 414 Supplier social assessment
GRI 415 Public policy
GRI 416 Customer health and safety
GRI103: Disclosure of management methods Special disclosure of topics
GRI103: Disclosure of management methods Special disclosure of topics GRI103: Disclosure of management methods
Supplier social assessment management methods
414-1 New suppliers that were screened using social criteria
414-2 Negative social impacts in the supply chain and actions taken
Public policy management methods
415-1 Political donation
Customer health and safety management methods
GRI 417
Marketing and logo
Special disclosure of topics
GRI103: Disclosure of management methods Special disclosure of topics
416-1 Assessment of health and safety impacts of products and services
416-2 Incidents of noncompliance concerning the health and safety impacts of products and services
Marketing and logo management methods
417-1 Requirements for product and se
Building a Responsible Supply Chain
Safe, Green and Transparent Chemical Management Safe, Green and Transparent Chemical Management Safe, Green and Transparent Chemical Management
Business Ethics
Business Ethics
102
.
GRI 418 Customer privacy
GRI 419 Socio economic compliance
GRI103: Disclosure of management methods Special disclosure of topics
GRI103: Disclosure of management methods Special disclosure of topics
information and identification
417-2 Violations involving product and se information and identification
417-3 Violations involving marketing
Customer privacy management methods
418-1 Substantiated complaints concerning breaches of customer privacy and losses of customer data
Socio economic compliance management methods
419-1 Violation of laws and regulations in social and economic fields
Business Ethics
103
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. Your Feedback
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