ESG Report
ESG Report
Making People Physically and
Mentally Healthier
ESG Report
ContentAbout the ReportAbout UsMessage from theChairmanSustainableDevelopmentManagement
Appendix:
Report Index Table
Achieving Win-WinResults andRealizing the Value of Talents
Executing Dutieswith Full Commitment toStrengthen Governance Foundations
| Corporate Governance | 13 |
Compliance Operation
| Compliance Operation | 16 |
Information Security and CustomerPrivacy
Information Security and CustomerPrivacy
Health Sustainability Framework24
Guaranteeing Quality and Efficacy
Guaranteeing Quality and EfficacyRegulating Channels for Medicines
Regulating Channels for MedicinesProviding Health Services
Smooth Medical Network
Providing Health Services
Deepening Digital IntelligenceEmpowerment
Enhancing People’s Well-Being
Compliance Employment
| Compliance Employment | 50 |
Employees’ Rights and Interests andDiversity
Employees’ Rights and Interests andDiversity
Talent Development
| Talent Development | 52 |
Employee Communication and Care
| Employee Communication and Care | 56 |
Occupational Health and Safety
| Occupational Health and Safety | 57 |
Energy and Climate Actions
Energy and Climate ActionsMaterial Use and Waste Management
Material Use and Waste ManagementWater Efficiency and WastewaterManagement
PharmaceuticalCare for All:
Safeguarding National Health
Enhancing Benefitsand Efficiency forImproved Medication Accessibility
Co-Creating GreenandSustainable Horizons
ESG ReportAbout the ReportYifeng Pharmacy‘s 2024 Environmental, Social and Governance (ESG) Report (hereinafter referred to as the “Report”) is the second ESG report independently published by Yifeng Pharmacy Chain Co., Ltd. and all thebranches and subsidiaries (hereinafter referred "Yifeng Pharmacy", "the Company" or "we"). The Report aims to comprehensively present our ESG goals, management strategies, practices and achievements in 2024 to ourstakeholders.
Access to the ReportThe Report is prepared in both Simplified Chinese and English and ispublished in electronic form. In the event of any discrepancy betweenthe two versions, the Chinese version shall prevail. The electronicversion of the Report can be accessed and downloaded from our officialwebsite （https://www.yfdyf.cn）and the website of the Shanghai Stock
Exchange website（http://www.sse.com.cn）.
Feedback
If you have any comments or suggestions about the Report, pleaseemail us at ir@yfdyf.com. Your feedback is important in helping us to
continually improve our sustainable development management andpractice.
Scope of the ReportThe time scope covered by the Report is consistent with that of the 2024 Annual Report, namely from January 1, 2024, to December 31, 2024 (hereinafterreferred to as "2024" or the "Reporting Period").Unless otherwise specified, the disclosure scope of the Report is the same as that of the Annual Report, covering all subsidiaries and affiliated companieswithin the listed entity of Yifeng Pharmacy. The environmental performance data covers the self-owned drugstores operated by Yifeng Pharmacythroughout 2024, Hengxiutang Pharmaceutical Co., Ltd. (hereinafter referred to as "Hengxiutang"), logistics centers over which it has operational controlrights, staff canteens, and offices. To enhance the integrity of the Report content, some content or descriptions may extend beyond the above-mentioneddisclosure or time scope.
Basis of Preparation
The Report is prepared in accordance with the Shanghai Stock Exchange of Issuing the Rules Governing the Listing of Stocks on Shanghai Stock Exchangeand Guidelines No. 14 of Shanghai Stock Exchange for Self-Regulation of Listed Companies—Sustainability Report (Trial) (hereinafter referred to asthe"Guidelines for Sustainability Report"), and with reference to the Global Reporting Initiatives Sustainability Reporting Standards (hereinafter referred to asthe "GRI Standards") issued by the Global Sustainability Standards Board.
Information of the Report
The information used in the Report has been obtained from official documents, internal statistics and public information of Yifeng Pharmacy. The Boardof Directors of Yifeng Pharmacy commits that there are no false records, misleading statements or material omissions and they are responsible for theauthenticity, accuracy and completeness of the Report. The Report was approved by the Board of Directors of the Company on April 28, 2025.
ESG Report
About UsCompany Profile
Yifeng Pharmacy (stock code: 603939) was founded in June 2001. For 24 years, we have been dedicated to thepharmaceutical retail industry and are the first large-scale pharmaceutical retailer listed on the Shanghai StockExchange. As a leader in China's healthcare industry, Yifeng Pharmacy has successively developed healthcarerelated business models such as pharmaceutical retail and wholesale, production and sales of Chinese herbalmedicine, chronic disease management, Internet hospital, medical project investment and medical technologydevelopment. We continuously optimize our commodity supply chain and category structure, improve the newpharmaceutical retail system, actively promote digital transformation, and build an efficient logistics anddistribution system to provide high-quality services to a large number customers and ensure their health andsafety.
Corporate missionMaking people physically andmentally healthier
Corporate visionBecoming the preferredpharmacy worthy of trust
and entrustment
ValuesPrioritizing our customers, to beresults-oriented, innovative andlean, diligent and pragmatic,responsible and collaborative,caring for growthSince establishment, adhering to the concept of "affordability and professionalism" and "orienting everythingtowards customer value", we have been committed to innovating and transforming our business model with acustomer-centric approach, and continuously providing health solutions for customers' well-being. In the future,we will continue to enhance our core competitiveness, practice the concept of corporate sustainabledevelopment, and build a leading brand of chain pharmacies that is trusted by customers and respected bysociety, to make contributions to social development.
Main business scopeHunanShanghai
JiangxiGuangdongBeijing
HubeiJiangsuZhejiang
HebeiTianjin
14,684 drugstores(including 3,812franchise stores)
104 millionserviced members
40,018employees
70,000+drug SKU
ESG Report
Development Milestones
2001?Yifeng Pharmacy Changde Binhu Road Store was
opened, pioneering the "affordable medicinesupermarket model" in the five provinces of theCentral South China.
2002?Hunan Yifeng Pharmacy Chain Co., Ltd. wasestablished, laying the foundation for cross-regionaland cross-provincial operations.
2003
?The supply chain was reformed to create a business
model that seeks win-win results for "customers,pharmaceutical factories and Yifeng Pharmacy" as apioneer in the industry.
2011?The restructuring into Yifeng Pharmacy Chain Co.,
Ltd. was completed.?The investment in large-scale information andlogistics management system marks the first step intechnology-driven empowerment.?The acquisition of full ownership of Shanghai Kaixin
Pharmacy marks the beginning of mergers and
acquisitions for expansion.
2012
?Yifeng Pharmaceutical Logistics Park was
inaugurated.
2019?Sales of Yifeng Pharmacy exceeded RMB 10 billion.?The subsidiary, Heng Xiu Tang Pharmaceutical Co.,
Ltd., was established.
2018?Xinxing Pharmacy, the leading chain pharmacy in
Hebei Province, was acquired for RMB 1.384 billion,making it the largest merger & acquisition deal ofdomestic retail pharmacy chains in the history.
2015?Yifeng Pharmacy was officially listed, becoming
Chinese first retail chain pharmacy listed on themainboard of the Shanghai Stock Exchange.
2014?Yifeng Pharmacy was awarded "Champion of
China's Pharmaceutical Retail Operation".
2013?Yifeng Pharmacy's e-commerce platform wassuccessfully launched and put into operation.?The reconstruction project of the store managementsystem began.
2020?Yifeng Pharmacy has reached its 20th anniversary.?It has been ranked among the top 100 Chinese listed
companies for three consecutive years.?Following the approval of the licence for Yifeng InternetHospital in Hainan, a remote diagnosis and treatment centrewas established.
2022?Over 10,000 Yifeng Pharmacy stores opened nationwide.?Selected into the "Top 100 Most Valuable Main Board
Listed Companies in China" list.
2023
?"Strategy Innovation and Organizational
Transformation "campaign was launched.?First selected in Focus Media · Hurun Most Valuable
China Brands 2023.?Became the enterprise with the highest brand value
in the national drug retail industry.
2024
?MSCI ESG rating has reached A.?It was selected into the "Top 500 Most Valuable
Chinese Brands 2024" list released by GYBrand.?It successfully issued 1.797 billion yuan worth of
convertible bonds.
ESG ReportHonors and Recognition
Retail Branch of the China Association
of Pharmaceutical CommerceVice President Unit
Hunan PharmaceuticalProfession AssociationExecutive VicePresident Unit
Hunan PharmaceuticalDistribution Industry Association
Executive VicePresident Unit
Association Qualification Honors of the Year
China Medical Pharmaceutical
Material Association
Executive VicePresident Unit
Ranked second in the “2024 Top 100 List ofComprehensive Competitiveness in PharmaceuticalRetail”, and honored as the “PharmaceuticalRetail Profitability Champion 2024”The 17th China Health EcologyOrganization (2024 CPEO)
2024Hurun China 500Hurun China
Changxing Gold Award - 2024China Pharmacy Gathering Award
China Drugstore AllPartners Show (CDAPS)
Ranked third in the “Top 100 Ranking ofChina's Pharmacy Value Listin 2023 - 2024”China Drug Store
2023 Top 10 Chinese Drug Retailers in Total Sales, Demonstrative DTP Specific DrugStore, Outstanding Pharmacy Service Cases of Drug Retailers, and Outstanding Cases
of Benefiting AgricultureThe 20th Annual Conference of China Retail Pharmacy andthe 5th China Specialty Pharmacy Development Forum
Pharmaceutical Retail DigitalizationLeader, National DTP
Excellent Unit2024 Wuzhen Health Conference andthe 3rd China OTC Conference
Ranked third in the “Top 100Comprehensive Strength Ranking of China's
Pharmacy Chain Stores in 2023 - 2024”Medical and Health Industry Symbiosis
Conference (MHS)Ranked third in the “2023-2024 ChinaDrug Retail Chain Enterprises withExcellent Performance”
2024 PHCF(China Pharma & Healthcare Conference and Fair)
Pharmaceutical Retail Profitability
Champion 2024
Ranked second in the “2024 Top 100 List of
Comprehensive Competitiveness in
Pharmaceutical Retail”
ESG Report
Message from the Chairman
As a key pillar of public well-being, the pharmaceutical retail industry should unite all efforts and work relentlessly to support the “Dream of Health”. With the acceleration of China’s ageing society and the deepening of public healthawareness, the health consumption landscape has become increasingly diverse and fragmented, placing higher expectations on the product structure and service models of retail pharmacies. Looking back at 2024, all our employeesremained true to our original aspiration. With more determined efforts, a stronger belief, and a more proactive service attitude, we have explored innovative paths that align with the development of the times. Through diverse socialresponsibility practices, we have led industry contributions, shaping a blueprint for societal health with a sustainable development approach. We march forward through transformation and is determined to become a benchmarkenterprise that is responsible for public health, social welfare, the nation’s future, and the natural environment.
“Building a solid defense with compliance practices.”Compliance management is not only the fundamental guarantee for a company’s stable operation but also a vital tool for maintaining market order anda solemn commitment to public safety. We maintain reasonable decision-making througha clear governance structure, standardize pharmaceuticalprocurement channels.We ensure suppliers have complete qualifications, regulate drug storage and maintenance, and medications in strict accordancewith regulations. We also adhere to the business ethics bottom line in advertising, financial regulations, and employee conduct. Our strict internalregulatory system ensures the precise implementation of medical insurance policies, enhancing customers’ understanding of these policies throughconvenient services and knowledge dissemination. We actively communicate with medical insurance departments to support the safe use and rationalallocation of insurance funds. Additionally, we have established a robust data security and customer privacy protection management system,strengthened digital consumption technology safeguards, promoted industry self-regulation, and built public trust.
“Offering reliable medicine for shared health”Contributing to the protection of customers’ rights and interests and health education is our inescapable corporate mission. Providing more accessibleand inclusive medical services to our customers is the solid foundation of our development. Having deeply integrated the “strategy of controllable high-quality medicines” into our development blueprint, we have established a quality system with standardized sources and excellent therapeutic efficacy.We are striving to become the most trusted and preferred pharmacy in the hearts of the public.At the same time, we emphasize community contributionsby offering professional, warm services and organizing community health seminars and public welfare activities to impart health knowledge and lifewisdom. Committed to ongoing public welfare, we aim to improve people’s knowledge about health. To ensure stable medication supply, we focus onsupply chain management and safety. We conduct rigorous on-site inspections, random checks, and tiered management to ensure the safety and controlof each step, collectively contributing to the healthy and sustainable development of the industry.
“Caring for employees to build Yifeng monument”
Optimizing employment practices, creating a warm work environment for every employee, establishing a sound incentive mechanism, and offeringextensive training and development platforms are our promises and responsibilities toward employees. These practices are also key to build a talent hubwithin the Company. We have implemented an employee care program, conducted a “2024 Growth and Care/Stress Relief Survey,” and established the“Yi” Fund for employee care. By doing so, we encourage employees to engage in diverse community activities to enhance their sense of belonging andwell-being. At the same time, we deepen our commitment to humanistic care by promoting corporate culture, optimizing officefacilities and taskallocation, and strengthening workplace mental health management. Attuned to industry trends and individual aspirations, we implement customizedtraining plans and promote a “management + professional” career path, uncovering and cultivating the potential of our employees.
“Painting a blue sky through green actions”We are deeply concerned with the balance and harmony of the naturalecosystem, proactively embracing environmental challenges, andsteadily pushing for a profound transformation toward a green, low-carbon enterprise. We are implementing green initiatives, includingbuilding solar photovoltaic systems in logistics parks and installingsmart energy meters in stores, fulfilling our commitment to naturalresources. We continuously deepen the green pharmaceutical conceptand collaborate with suppliers to advance packaging optimization anddrug recycling, contributing to the circular economy.We closely align with the trends of the times, actively embrace sustainabledevelopment strategies, and explore the deeper logic of ESG valuecreation. We are fully committed to integrating sustainabledevelopment principles into our business management and expansion,reshaping our long-term competitiveness. Looking to the future, we willcontinue to demonstrate our corporate responsibility with concreteactions, striving for new peaks and contributing to the creation of ahealthier, greener, and more harmonious society.
Chairman, Yifeng Pharmacy Co., Ltd.
Gao Yi
ESG ReportSustainable Development ManagementYifeng Pharmacy actively practices the concept of sustainable development, continue to strengthen the involvement of the Board of Directors and are committed to improving ESG governance. In addition, we actively communicate withstakeholders to jointly explore the planning of sustainable development strategies, promoting the deep integration of business decisions, sustainable development concepts and the needs of all parties. In this way, we aim to realize thelong-term value of the business.Sustainability Governance Structure
With a clear organizational structure and standardized institutional requirements, Yifeng Pharmacy ensures the strategic leader role and deep involvement of Board of Directors in sustainability issues. We explicitly stipulate that theBoard of Directors is responsible for overseeing the impacts, risks and opportunities related to the Company’s sustainable development. We have also established a Strategy and Sustainability Committee under the Board of Directors,which is responsible for deliberating and making decisions on major sustainability issues. The composition, scope of responsibilities and tasks have been defined in accordance with the Rules of Procedure for the Strategy andSustainability Committee of the Board of Directors. In order to support the work of the Strategy and Sustainability Committee, we have established an ESGManagement Group that includes senior management, to ensure the effectiveimplementation of our sustainability efforts.
We attach great importance to the professional skills of alllevels in overseeing and executing sustainability-related work.Therefore, through the organization of special training andone-on-one communication with external experts, we conveythe concept of sustainability, compliance requirements andoutstanding peer-to-peer developments to the relevantpersonnel to ensure that they are able to keenly capture thedynamics of the industry, and effectively respond to theCompany’s potential sustainability opportunities and risks.
LevelStructureCompositionResponsibilities
Reporting andSupervision
DecisionMaking
Board members
As the highest body responsible for sustainabilitymatters, the Board has overall responsibility for ESGstrategies and reporting.
At least once ayearBoard of Directors
Three directors
Under the authority of the Board of Directors, thecommittee deliberates on the Company’ssustainability development strategies and work plans,reviews the Company’s sustainability managementmeasures, management objectives as well assustainability-related impacts, risks, opportunities andother matters.
At least once ayearStrategy andSustainability Committee
Execution
Representatives ofBusiness andFunctionalDepartments, andSubsidiaries
Be responsible for implementing specific ESG-relatedwork on ESG issues.
Regular reportingto ESGManagementGroup
Business and Functional
Departments, andSubsidiaries
Consists of the headsof the Company’sSecurities InvestmentDepartment, businessand functionaldepartments
Be responsible for implementing the Company’ssustainability strategies and work plans, assessing theprogress against sustainability targets, related impacts,risks and opportunities, and reporting to the Strategyand Sustainability Committee in a timely manner.
At least once aquarterESG Management Group
Management
ESG Governance Structure
ESG ReportStakeholder Communication
Yifeng Pharmacy is committed to building long-term relationships of mutual trust with all stakeholders. Based on a normalized communication mechanism, we are able to understand and sort out the real needs of all stakeholders andtheir real expectations of the Company. This serves as the cornerstone for practicing sustainable development responsibilities.
KeyStakeholder
Groups
CommunicationChannels
?Medicines safety andquality?Medical accessibility?Protection ofconsumers’ rightsand interests?Customers privacy
protection?Responsible marketing
Shareholders and InvestorsCustomersSuppliersEmployeesCommunitiesGovernment and Regulators
?Communication with
stores?Consumers service
hotline?Customer satisfaction
survey
?Protection ofemployees’ rightsand interests?Employees
development andtraining?Occupational health
and safety?Employees care andbenefits?Employeescommunication andfeedback platform?Employees satisfactionsurvey?Employees meeting?Employees activity
?Return on investment?Information disclosure?Corporate governance?ESG management
?General meeting ofshareholders?Announcement andcircular letter?Research roadshow?Investor relations
website
?Compliance operation?Tax compliance
?Regulatory assessment?Voluntary tax payment?Seminar?Written response to
public queries
?Responsible
procurement?Integrity and honesty?Win-win cooperation
?Suppliers conference?Suppliers visit?Industry
communication
?Public welfare andcharity?Communitydevelopment and well-being
?Providing job
opportunities?Voluntary service?Public welfare activity
Expectationsand Demands
ESG Report
Double Materiality AssessmentAs a key step in the management of sustainability matters and disclosure preparation, Yifeng Pharmacy conducted double materiality assessment of ESG issues in 2024. We have developed an assessment process, scoring methodologyand ranking model based on the Guidelines for Sustainability Report, as well as methodological interpretation and coaching from experts, to assess our environmental and social impacts and our exposure to sustainability-relatedfinancial risks and opportunities.
Assessment Method and AssumptionsBased on our materiality assessment results from previous years and considering the complexity of quantifying the sustainability-related impacts, risks and opportunities in our business, our double materiality assessment this year wasbased on qualitative considerations, supplemented by quantitative assessment where practicable. In the future, we will continue to pay attention to the updates of the SSE Guidelines for Sustainability Report, improve our doublemateriality assessment process and methodology, and continue to prudently apply quantitative assessment tools to reasonably obtain the concerns and views of our stakeholders, so as to provide a scientific basis for our sustainabilityplanning and even business decisions
?ScoreWhen evaluating the “severity” of impacts, we assessand score based on the scale and scope of impacts, i.e.,we comprehensively assess the extent of impacts onhuman beings or the environment, the breadth of impactcoverage, and the time and economic costs ofremediating the damages, etc. When evaluating the“likelihood of occurrence” of impacts, we scoreaccording to the probability of potential impactsoccurring within five years. The weight of impact“severity” and “likelihood of occurrence” is 1:1.In assessing the scale of financial impact, we use apercentage of FY2023 pre-tax profit as a threshold. Inassessing the “likelihood of occurrence” of a financialrisk or opportunity, we score it based on its probability ofoccurrence within five years. The weight of financialimpact “scale” and “likelihood of occurrence” is 1:1.
?ScopeIn relation to our own operations, weassess the impact on the environment andsociety, as well as sustainability risks andopportunities for our business. In ourassessment of impact materiality, we takeinto account positive and negative impacts,actual and potential impacts related toESG issues. In our assessment of financialmateriality, we assess positive andnegative impacts, actual and potentialrisks and opportunities for our business.
?Stakeholder EngagementDue to the far-reaching impact of theapplication of the double materialityprinciple on our management anddisclosure matters, the numerous ESGissues involved, and the fact that someparts of the assessment require accessorsto have a certain level of industryunderstanding, we invited a wide range ofinternal and external stakeholders toparticipate in the impact materialityassessment, while restricting thestakeholders for the financial materialityassessment to a limited number of internalsenior management and externalsustainability experts.
?ThresholdWe set the materiality threshold at“material”, meaning that impacts, risksand opportunities and their associatedESG issues that are ultimately assessed asmaterial.
ESG Report
Assessment ProcessWe conduct materiality assessments of ESG issues through stakeholder research, industry analysis and expert consultation, and further analyze theimpact, risks and opportunities through interviews with senior management and experts.
Materiality Assessment Process of ESG Issues
Based on the 21 issues set out in the Guidelines for Sustainability Report and taking intoaccount the GRI criteria, ESG rating concerns, national policies, as well as YifengPharmacy’s geographic location, industry background, business activities, businessrelationships and strategic development direction, 29 issues in the three areas, namelythe Environment, Society, and Economy and Governance, have been identified andpreliminarily analyzed for their related impacts, risks and opportunities.
Issue Identification
We send questionnaires developed by third party agencies to government and regulators,shareholders and investors, customers, employees, and suppliers to understand theimpacts of different issues, and set thresholds around the severity and likelihood ofimpact to identify ESG issues of impact materiality.Impact Materiality
Assessment
Through one-on-one interviews and questionnaires developed by third-party agencies,we collect opinions from senior management on the scale and likelihood of the financialimpact of the issue on the business, and invite external experts to assess the financialmateriality of the issue in the context of current policy analysis and industry insights.Financial Materiality
Assessment
The materiality assessment results have been reviewed by the Strategy and SustainabilityCommittee and approved by the Board of Directors. Based on the assessment results, wehave reviewed the Company’s sustainability strategy and goal-setting, and reviewedour management mechanisms for material sustainability-related impacts, risks andopportunities to ensure the effectiveness of our internal mechanisms. We have also madetargeted disclosures in accordance with the priority of the assessment results to ensurethat we respond to the concerns of various parties appropriately.Confirmation and
application
ESG Report
MaterialRelevantLess relevant
Less relevantRelevantMaterial
Financial Materiality
Impact Materiality
?Anti-commercial bribery anti-corruption?Innovation-driven
development?Anti-unfair competition
?Corporate governance?Stakeholder communication?Procurement practices?Franchisee management?Compliance management
?Medical accessibility and
inclusion?Data security and customerprivacy protection?Supply chain management andsecurity
?Energy utilization?Addressing climate change?Equal treatment to small andmedium-sized enterprises?Due diligence?Pollutant discharge?Ecosystem and biodiversityprotection
?Occupational health and safety?Community contribution?Diversity, equity and inclusion?Rural revitalization?Waste treatment?Circular economy?Environmental compliancemanagement?Water resources utilisation
?Protection of consumers’ rights
and interests & health education?Employment practices?Training and development
Customer health and safety
Assessment Results
The double materiality assessment results showed that customer healthand safety, medical accessibility and inclusion, data security andcustomer privacy protection, supply chain management and security,franchisee management, compliance management, protection ofconsumers’ rights and interests & health education, employmentpractices, and training and development are our most materialsustainability issues. Among them, customer health and safety is of bothimpact materiality and financial materiality. Currently, we face customerhealth risks in terms of drug quality and medication accuracy, whichmay lead to a crisis of customer trust and regulatory penalties, etc., andin turn affect the Company’s financial position, operations results andcash flows, and therefore customer health and safety is at the core ofour business operations. In the future, as drug quality requirementstighten andmedication accuracy increases, customer health and safetywill have a significant impact on our revenues, costs and long-termstrategy.As a retail pharmacy chain, we must place customer health and safety atthe core of our strategy and decision-making to ensure the stability ofdrug quality and supply. Shouldering the responsibility and vision ofnational health, we are committed to enhancing the medicalaccessibility and inclusion, optimizing supply chain management toensure the continuity of medicine supply while meeting differentcustomer needs through reasonable pricing and diversified choices. Weensure the consistency of service in stores through standardizedprocesses and quality control, and focus on the protection of consumers’rights and interests & health education to enhance the public’s healthawareness through consultation with pharmacists, and health lectures.Compliance management is the cornerstone of sound development ofthe enterprise. We strictly abide by laws and regulations related to drugs,maintain the safety of the medical insurance fund, and protectcustomer information. At the same time, employees are the vehiclethrough which we achieve our strategic goals. In terms of employmentpractices and employee development, we create a fair workplace,safeguard employees’ rights and interests, anduse training and careerplanning to help our employees’ personal growth and serviceprofessionalism. In terms of community contribution and nationalwelfare, we advocate medicine for the benefit of the people, andpromote community health awareness through community activitiesand health education.
102024 Environmental, Social and Governance Report|
ESG Report
Impacts, risks, and opportunitiesActionsCustomer health and safetyImpact: Customer health and safety is the lifeline of the pharmaceutical industry. With the rising
transparency of drug information, increasing supervision by the FDA, and escalating customer demand forthe efficacy of drugs and the safety of the purchasing process, store pharmaceutical services have shiftedfrom basic retail service competition to exclusive health brand value, and high-value-added healthcustomization services have become the key to reshaping the market.
PharmaceuticalCare for All:
SafeguardingNational Health
Risk: Quality issues of goods or services directly threaten the health and safety of customers, which maylead to large-scale recalls of goods, lawsuits or regulatory penalties, seriously damage brand reputation,lead to loss of customers, plummet of sales, or even trigger a cash flow crisis.Opportunity: Strict quality control (e.g., third-party testing) is the benchmark for companies to establish asafe brand image. By developing additional customized services such as health monitoring services (e.g.,medication reminder, side effect warning), we can effectively enhance customer stickiness and promotethe long-term sustainable development of our business.Medical accessibility and inclusion
Impact: As the concept and demand for medication becomes more and morepopular, accessibility andinclusion are reshaping the landscape of the pharmaceutical retail industry. Guaranteed efficacy ofmedicines is no longer a single requirement, and people are beginning to pursue convenience, functionalityand economic value.
PharmaceuticalCare for All:
SafeguardingNational Health
Opportunity: Based on years of industry foundation, we can improve the accessibility of medicines and
win a higher market share through policy support, broadening retail channels and market sinking forreducing the difficulty of purchasing medicines. At the same time, we can meet the market’s expectationof inclusion by restructuring supply chain efficiency and introducing AI consultation.Data security and customer privacy protectionImpact: Digital technology plays an important role in the pharmaceutical retail industry, and potential data
security and privacy protection will directly affect the Company’s operational risk prevention and controland customer trust base.
ExecutingDuties with FullCommitmentto StrengthenGovernanceFoundations
Risk: Privacy protection in the pharmaceutical retail industry has evolved from a “compliance burden” toa “trust asset”. While the risk of information leakage can be reduced by building a full-life cycle datasecurity system and participating in the development of industry standards, with the evolution of big data,industries with personal information will inevitably face increased vulnerability and the riskof privacyleakage.
Opportunity: Data security and privacy protection can be transformed into a competitive advantage
through systematic management initiatives from the inside out, such as certification of data security andprotection systems and internal personnel operation management, thereby building a trust economy andconsolidating core competitive barriers in the digital health market.Protection of consumers’ rights and interests & Health education
Impact: Protection of consumers’ rights and interests & health education is becoming a key driver of
industry transformation and upgrading. Health education promotes the transition from “selling drugs” to“health management”. Strengthening health education and enhancing consumers’ health literacy canpromote the proper use of medicines and enhance brand loyalty.
PharmaceuticalCare for All:
SafeguardingNational Health
Risk: There are certain professionalism and compliance risks in protecting consumers’ rights andinterests, such as misrepresentation of health popularization content, sales clerks misleading customers topurchase healthcare products instead of medicines may violate laws and regulations as well as medicalethics, which will in turn affect corporate reputation. Meanwhile, the establishment of a 24-hourpharmacist consultation hotline and the development of an AI medication assistant system requirecontinuous technical and economic investment, which will increase operating costs.
Considering the industry in which Yifeng Pharmacy operates, its strategic planning and operational realities, we definetime horizons as: short-term (0-1 year); medium-term (1-5 years); and long-term (more than 5 years).
Impacts, risks, and opportunitiesActionsOpportunity: The Company needs to find a balance between “depth of expertise” and “temperature of
service”, and enhance consumer comfort and brand loyalty by strengthening the traceabilitymanagement of medicines (e.g., the “one item, one code” system) and providing guidance onmedication by licensed pharmacists. The Internet hospital platform accesses e-prescription services tosolve the pain point of purchasing medication for chronic diseases.Supply chain management and securityImpact: With the globalization and network development of the supply chain, the complexity of supply
chain management is increasing. The stability of the entire supply chain network can be enhanced andsystemic risks can be reduced through risk management. The establishment of cooperative relationshipsbased on trust and win-win situation and the promotion of synergy between upstream and downstreamenterprises in the supply chain can promote mutual development.
PharmaceuticalCare for All:
SafeguardingNational Health
Risk: Problems with the quality of goods may lead to production stagnation and a decline in sales. Naturaldisasters, such as earthquakes and floods, may lead to transportation disruptions, affecting logistics andtransportation, causing delays in the supply chain and untimely supply of medicines to stores.Opportunity: By optimizing supplychain management, cost reduction and efficiency improvement canenhance the competitiveness of enterprises. Guaranteed security promotes cooperation among supplychain members in business models, technological innovation and other aspects, and enhances overallcompetitiveness.Employment practices
Risk: For the retail industry, there is instability in the labor market. Illegal employment practices and
unequal treatment by enterprises may lead to employee turnover and legal disputes, which directly affectbusiness operation. As competition in the talent market intensifies, companies need to invest moreresources to attract and retain outstanding talent.
Achieving Win-Win Resultsand Realizingthe Value ofTalents
Opportunity: By establishing long-term and stable employment relationships, companies can enhance
employee loyalty and engagement, and promote talent development. A stable workforce not onlyimproves management efficiency, but also reduces labor costs. At the same time, good employmentpractices can enhance the company’s social image and brand value, attracting more talented people tojoin, forming a closed loop and laying a solid foundation for the company’s sustainable development.Training and developmentImpact: Employee training and development have a far-reaching impact on enterprises. Employees’
professional skills and knowledge can be updated through training, so that they can adapt to jobrequirements more efficiently and achieve personalvalue. At the same time, enterprise-led training canfurther promote the development of services towards high quality and standardization, further iterating theindustry’s pharmaceutical service standards.
Achieving Win-Win Resultsand Realizingthe Value ofTalents
Opportunity: Investment in training and development strengthens organizational effectiveness. By
developing employees with a high degree of professionalism and flexibility, enterprises can better adapt tomarket changes and seize new business opportunities. At the same time, training contributes to theimplementation of corporate strategies and the realization of long-term goals, and provides a pool oftalent for the company’s sustainable development.
时间周期
: 长期The following table shows the impacts, risks and opportunities of material issues, and the measures and actions taken to monitor, prevent, manage and control them are detailed in subsequent chapters:
Time horizon
: Long-term
Time horizon: Medium-term
Time horizon: Short-term
Time horizon: Long-term
Time horizon: Medium-term
Time horizon: Short-term
Time horizon: Medium-term
ESG Report
Yifeng Pharmacy considers corporate governance and compliance operations as the central pillars of theCompany’s sustainable development. We continuously refine our corporate governance framework to maintaincompetitiveness in complex and evolving business environment. At the same time, we are committed toeliminating unfair competition practices including false advertising and trade secret infringement, to safeguard ouroperational resilience, sustainability and compliance throughout our business operation. By strictly adhering tolaws and regulations, we continue to strengthen our internal control mechanisms and uphold the baseline ofcompliant operations, thereby laying a solid foundation for the Company’s enduring prosperity and success.
Executing Duties withFull Commitment toStrengthen Governance
Foundations
ESG ReportExecuting Duties with Full Commitment to Strengthen Governance FoundationsCorporate Governance
Yifeng Pharmacy strictly complies with the Company Law of thePeople’s Republic of China, the Securities Law of the People’sRepublic of China, and other relevant laws and regulations, as well asthe Articles of Association, the Rules of Procedure for the GeneralMeeting of Shareholders, the Rules of Procedure for the Board ofDirectors, the Rules of Procedure for the Board of Supervisors and otherinternal policies. We continue to improve the governance structure andenhance the governance performance in accordance with these lawsand policies. Meanwhile, Yifeng Pharmacy maintains proactive investorengagement and communication and ensures timely disclosures ofoperational updates, effectively safeguarding investor rights andinterests.Governance Structure
The Company has established a governance structure consisting of theGeneral Meeting of Shareholders, the Board of Directors, the Board ofSupervisors and management, and has defined their responsibilitiesand authorities, to achieve the balance and coordination of authorityand improve the efficiency of corporate governance.The General Meeting of Shareholders is the supreme authority anddetermines the strategic business and investment plans of the Company.The Board of Directors reports to the General Meeting of Shareholdersand is the ultimate responsible body for the Company’s businessandmanagement performance. The Board of Supervisors is composed ofshareholder representatives and employee representatives. It monitorsdirectors’ and executives’ duty performance and safeguardscollective shareholder interests. The management executes businessoperations under the Board directives and maintains strict compliancewith statutory obligations.
In 2024
general meetingsof shareholders
meetings of theBoard of Directors
meetings of theBoard of Supervisors.
Strategy and SustainabilityCommitteeRemuneration andAppraisal Committee
Audit CommitteeNomination Committee
The General Meeting ofShareholders
Board Secretary
The Board ofSupervisors
Audit and InspectionDepartment
Strategic Implementation Office
Finance Center
Human Resource Center
Product Center
Digitalization CenterExpansion CenterOperation Center
Franchise DepartmentSupply Chain and Non-Pharmacy DepartmentLogistics ManagementDepartment
Engineering Department
New Retail Department
Quality Control DepartmentOrganizational ManagementDepartment
Non Operating PurchasingDepartment
Public Affairs DepartmentAdministration Department
The Board of Directors Office
The Boardof DirectorsChief ExecutiveOfficerChief Operating
OfficerManaging VicePresidentVice President
Organizational Structure
ESG ReportExecuting Duties with Full Commitment to Strengthen Governance Foundations
The Board of Directors has a Strategy and Sustainability Committee, a Remuneration and Appraisal Committee,an Audit Committee and a Nomination Committee. The Board of Directors actively fulfills its responsibilities,operates in a standardized manner and makes scientific decisions, earnestly safeguarding the overall interests ofthe Company and the interests of its shareholders. The members of the specialized committees of the Board ofDirectors scrupulously carry out their work under the aegis of the Board of Directors in strict compliance with therespective rules of procedure of each specialized committee. They are committed to jointly upholding theinterests of the company and all its shareholders.In 2024The Board of Directors
Composition of the Board of Directors
Committed to building a professional team of directors., the Company fully considers the director candidates’educational background, work experience, professional quality and other factors when electing or replacingdirectors. And the Company confirms that the candidates comply with the Articles of Association, the Measuresfor the Administration of Independent Directors of Listed Companies and relevant laws and regulations, and thecandidates should have the qualifications and ability to serve as our directors and independent directors.As at the reporting datethe Board of Directors had 9 directors, including 3 independent directors from the management,accounting and legal functions respectively.
Information Disclosure
Yifeng Pharmacy actively take the responsibility of information disclosure of a listed company, ensures that theinformation disclosed is true, accurate and timely, to protect the legitimate rights and interests of stakeholders.In accordance with the Company Law of the People’s Republic of China, the Securities Law of the People’sRepublic of China, the Regulations on Information Disclosure of Listed Companies, the Rules Governing theListing of Stocks on Shanghai Stock Exchange and other relevant laws and regulations, we have formulated theInformation Disclosure Affairs Management Policy and the Yifeng Pharmacy Registration and Management Policyfor Informants of Insider Information, to clarify the duties of information disclosure obligors and fulfillinformation disclosure obligations.During the Reporting Period:
178 interim reports and 4 periodic reports were issued
Our information disclosure performance received an A rating from theShanghai Stock Exchange foreighth consecutive years
deliberated on andapproved a total of
68 proposals
heard orreviewed14 reports
The four committees of the Board of Directorshelda total of11 meetings
reviewed andapproved
27 proposals
heard orreviewed
15 reports
ESG ReportExecuting Duties with Full Commitment to Strengthen Governance Foundations
Investor Communication
We have formulated the Investor Relations Management Policy to standardize the Company’s investor relationsmanagement, and effectively protect the legitimate rights and interests of investors. We follow the four basicprinciples of compliance, equality, initiative, and honesty and trustworthiness, and carry out investor relationsmanagement by employing diverse channels, platforms, and methods.We organize shareholder meetings, investor briefings, roadshows, analyst meetings, receptions, discussions andexchanges through our website, new media, hotline, fax, emails, and investor education bases. Those activitieshelp us to actively communicate with investors on our production, operation, finance and other relatedinformation.
On December 9, 2024, we invited investors fromdifferent investment backgrounds to participate in the“I Am a Shareholder: Investors Visiting ListedCompanies” Investor Education Event, which wasorganized by the Shanghai Stock Exchange, theGuotai Junan Securities Investor Education Base andthe Guotai Junan Securities Hunan Investor EducationBase. At the site, we introduced ourselves and theindustry to investors in detail, and conducted directand in-depth exchanges with them, outlining a clearblueprint for the development of the Company forinvestors.The Event Scene
Investor Reception Day Event
In 2024
we participated in more than 30 brokerage strategy meetings, held 3 large-scale investor telephoneexchanges, and attended3 online investor performance presentations by the exchange. And we receivedmore than150 investor surveys online and offline, receiving more than 1,000 investors throughout
the year, carrying out long-term, stable and frequent communication with all kinds of investors.
“I Am a Shareholder”: Investors Visiting Listed Companies
ESG ReportExecuting Duties with Full Commitment to Strengthen Governance Foundations
Compliance Operation
Yifeng Pharmacy has fully fulfilled its compliance obligations, and has formulated the Measures for the Identification of Administrative Penalty Responsibility of Yifeng Pharmacy and other polices, aiming at building a sound compliancesystem, clearly defining the compliance responsibilities of employees at all levels, strengthening internal supervision and risk control capabilities, and abiding by business ethics. In this way, we can ensure the legitimacy andstandardization of our business, so as to lay a solid foundation for the sustainable development of the Company.
Compliance Responsibility Structure
Integrity and Anti-CorruptionYifeng Pharmacy adheres to the strict code of business conduct and ethics, and continuously optimizes andimproves its integrity management system. We have formulated a series of rules and regulations, including butnot limited to anti-corruption, anti-unfair competition and whistleblower protection policies, to ensure thetransparency and impartiality of the Company’s operations. We actively advocate and promote the fostering ofthe integrity and anti-corruption culture, and work together with our employees and partners to create an honestand clean business environment. In 2024, we have not received any major commercial bribery or embezzlementpenalties, nor have we been involved in any major related litigation cases.
Integrity Management SystemWe have developed the Yifeng Pharmacy Employees’ Integrity and Self-Discipline Management Regulations, theYifeng Pharmacy Code of Conduct for the Ten “Red Line” Behaviors and the Whistleblower RewardManagement Measures of Yifeng Pharmacy. These regulations detail the requirements for integrity and self-discipline, as well as penalties for violations, and apply to all our employees and suppliers.To promote the effective operation of our integrity management system, and ensure that our business practicesare consistent with the code of ethics and legal requirements, we have established a supervision structure forintegrity, consisting of the Board of Directors, the Audit and Supervision Department and the branches andsubsidiaries. The Chairman of the Board is in charge of maintaining the Company’s business ethics and anti-corruption efforts. Furthermore, we establish an Integrity and Self-Discipline Supervision Committee, chaired bythe Chairman.
Integrity and Self-Discipline Supervision CommitteeMembers: General assistant of audit and supervision, and heads of theAudit and Supervision Departments of the branches (subsidiaries)
Team leader: ChairmanDeputy team leader: Head of Audit and Supervision Department
Compliance ManagementWe have established a compliance responsibility structure to comprehensively monitor and guide ouroperational activities and ensure that all business processes comply with legal and regulatory requirements.
Committed todeveloping andimplementing storeoperation standardsand procedures toensure compliance.
Operation Center
Responsible forlifecycle productquality control toensure that ourproducts fully comply
with the qualitystandards and
regulatoryrequirements.
Quality Control
Department
Provide necessary legal
advice and isresponsible forcontract review andexecution supervisionto prevent potential
legal risks.
Public Affairs
Department
Focus on compliancein the management of
listed companies,covering information
disclosure, equity
management, and
interaction with
investors.
Securities Investment
Department
The Board of Directors
Responsible for organizing and conductingpre-event, concurrent, or post-event auditsof the operational management businessactivities of management institutions acrossthe country, various departments ofsubsidiaries and branches, and all stores,aiming to identify and fill gaps in systemsand processes.
Audit and SupervisionDepartment
ESG ReportExecuting Duties with Full Commitment to Strengthen Governance Foundations
Audit and Inspection
We continue to improve the internal control system and enhance the Company’s risk control ability. Through audit and special inspection, we auditperiodic financial reports and operational data of the Company every year, aiming at ensuring the truth, completeness and accuracy of the data. And werequire regular rectification of identified and potential risk points to ensure the effective operation of the Company’s internal control system.In terms of the overall audit of the Company, we carry out audits ondifferent focuses and key tasks of all business operations every monthaccording to the annual audit plan. We have included the routineoperation norms and anti-fraud activities of the stores in the scope ofthe monthly routine audit, ensuring 100% stores have received audition.In 2024, we developed a detailed monthly audit plan and we conducteda comprehensive audit of violations and fraud in various fields such asmanpower, procurement, commodities, and quality managementstarting from the audit process and daily operations.
In terms of special audits, we also conduct regular audits of theCompany’s business ethical standards and anti-corruption policies toensure full compliance with relevant requirements by all employees. Forour business, we conduct audits and assessments of donations andsponsorships to prevent corruption risks. Specifically, for materialdonations, we require advance declaration and assessment, and includerelevant information such as donation agreements and vouchers in thenecessary items for approval. In terms of employees in key positions, weconduct sampling audits on relevant work processes of employees inkey positions such as cost control and financial control withpotentialcorruption risks. We require all employees in such positions to signintegrity agreements to avoid corruption incidents as much as possible.
We also pay attention to the business practices of our partners. In 2024,we actively carried out due diligence activities and in-depth visits to keypartners including customers and suppliers. And we conductedcomprehensive assessments of potential cooperation risks on multipledimensions such as business status, market reputation and financialsoundness to help us make more informed decisions about futurebusiness partnerships and ensure more sustainable businessdevelopment.
In 2024, we developed a detailed monthly audit plan
In 2024we conducted a comprehensive corruption risk assessments ofstores in 10 provinces, with a coverage rate of100%.
Audit process
Comprehensive
audit ofviolations andfraud
Daily operations
…
…
Commodities
QualitymanagementProcurement
Manpower
ESG ReportExecuting Duties with Full Commitment to Strengthen Governance Foundations
Anti-Corruption InitiativeWe attach great importance to anti-corruption management, report to the Board of Directors on anti-corruption work from time to time, and activelypromote anti-corruption activities to create a clean workplace atmosphere. As a member of the Sunshine Integrity Alliance, we not only activelyparticipate in the various anti-corruption actions initiated by the Alliance, but also strictly implement the blacklist system of the Alliance in therecruitment process. We refuse to hire any individuals who are on the violation list, in order to jointly maintain a clean and self-disciplined businessenvironment with the Alliance. In 2024, we participated in the professional training “From Experts to Masters: Advanced Class of Corporate Anti-FraudInvestigation Practices” organized by the Sunshine Integrity Alliance, aiming at further improving our anti-corruption management and response,ensuring that our business operations are more transparent and compliant, and that we lay a solid foundation of integrity for the long-term developmentof the Company. At the same time, we reported to the Board of Directors on anti-corruption work results, and conducted anti-corruption training andseminars, and other forms of anti-corruption activities for all employees (Thecompany does not involve contractors.) and business partners. Thesetraining sessions cover anti-corruption policies and analyze relevant judicial cases.
Whistleblowing ManagementIn order to standardize our complaint and whistleblowing processes,guidelines and management regulations, we have issued theWhistleblower Reward Management Measures of Yifeng Pharmacy toencourage employees and stakeholders to expose any misconduct thatmay harm the Company’s interests. To protect the privacy and safetyof whistleblowers and avoid any form of retaliation or adverse impactfrom whistleblowing, the Yifeng Pharmacy Employees’ Integrity andSelf-Discipline Management Regulations stipulate that whistleblowerscan report and expose any violations anonymously, to jointly create afair, transparent and clean working environment.
Whistleblowing ChannelsHotline: 0731-89953931Email: sjb@yfdyf.com
In addition, to further strengthen the code of business ethics, we require procurement employees to use the mobile phones distributed by the Company,and ban any form of bribery, commercial violations and other acts with any suppliers, service providers and contractors that have business and economicexchanges with the Company. We require all newly introduced suppliers to sign the Integrity and Self-Discipline Letter which includes the code of businessethics in the necessary conditions for supplier access, fully guaranteeing compliance and stability of the supply source. Also, we have always adhered tothe basic anti-corruption principle and made it clear that all partners must strictly comply with anti-corruption requirements.
All employees (including directors) have participated in ethical standards training, reaching 100% of training coverage.In 2024
100% of our suppliers signed Integrity and Self-Discipline Letter .
In 2024
ESG ReportExecuting Duties with Full Commitment to Strengthen Governance FoundationsMedical Insurance ComplianceYifeng Pharmacy always regards basic medical insurance (BMI) compliance as an important basis for running long-term and stable business. We strictlyfollow the requirements of national and local medical security policies, and have established a sound medical insurance compliance managementsystem. Specifically, we have set up a Medical Insurance Risk Control Department and formulated the Yifeng Pharmacy Medical Insurance DesignatedRetail Pharmacy Management Policy. From pharmacist management, medicine procurement, sales and inventory management to medical insurancesettlement information management, we comprehensively standardize all operational processes to ensure the efficient operation and standardizeddevelopment of medical insurance services.
Management of Medicine Procurementand Supply Covered by MedicalInsurance
We procure medicines in strict accordance with the catalog ofmedicines covered by national medical insurance system to implementcompliance in medicine selection. We enhance collaborations withrelevant manufacturers,actively incorporate pharmaceuticals coveredunder the government BMI scheme, and improve the "dual-channel"medicine use management mechanism. To improve the ability toguarantee medicine supply, we have established a daily monitoringmechanism for the provision of medicines covered by medical insurance,aiming to strengthen the detailed management of the provision and useof such medicines and ensure that medicine supply is adequate and fullprocess compliant.
Benefiting the People with MedicalInsurance, and Price Governance
We keep a close eye on the price adjustments of medicines covered bymedical insurance to keep our online and offline medicine prices in linewith these changes and actively promote the effective connectionbetween commercial medical insurance (such as the Huimin Insurance)and basic medical insurance, so as to provide more comprehensiveprotection for patients and effectively reduce the burden of medicalexpenses.
Prescribing Compliance ManagementIn terms of Internet hospital prescribing management, as at the end ofthe Reporting Period, we had 8 self-built Internet hospitals, 110 self-owned clinics, and co-operated with more than 30 other Internethospitals (including 5 tertiary grade-A public hospitals ), with more than1,000 multi-site co-operative medical practitioners, to safeguardprescribing professionalism from the source. Meanwhile, we haveestablished a prescription evaluation and assessment mechanism forprescribing doctors to ensure their compliance in prescribing. On thepharmacist's review of prescriptions, our system configures a rationalmedicine use rule database in accordance with the medical insurancepolicy, and we also purchase and call the Tencent Medical Rational DrugUse System for third-party judgement of weekly prescriptions.
Digital Management of Medical InsuranceRisk Control
We have established a digital early warning system for medicalinsurance risk control, enabling real-time monitoring through the ruledatabase to detect excessive medicine use, medicine use beyond limits,medicine use beyond price restriction, medicine use beyond agerestriction and repeated or unreasonable medicine use. In addition, wecontinue to promote the construction of the product traceability systemby integrating medicine traceability codes, and ensure that all codedmedicines should be scanned, only medicines with traceability codescan be procured, accepted and settled, and medicines with repeatedtraceability codes can not be settled. This has effectively preventedillegal acts such as reselling returned medicines and medicine swapping,and ensured medicine sources and flows are clear, and the responsibilitycan be traced.
Medical Insurance Risk Prevention andFund Security
We attach great importance to the prevention and control of medicalinsurance risks and have established and improved the risk preventionand control system and the self-inspecting and self-correctingassessment system. We prohibit illegal medicine circulation andmedical insurance card fraud, to effectively safeguard the security ofmedical insurance funds. For ethnomedicines, medical institutionpreparations and traditional Chinese medicine decoction pieces, wecontinue to strengthen standardized management, optimize access
rules, refine the standards and procedures for including them in thescope of medical insurance payment, and strictly control access tosafeguard the rational and efficient use of medical insurance funds. Atthe same time, we strictly abide by the medical insurance paymentstandards and standardize the medical insurance card swiping process,to reduce disputes caused by improper operation while improvingservice efficiency. In the medical insurance reimbursement process, weskillfully use the medical insurance information system to ensure theaccuracy of data. We also actively promote medical insurance policiesto enhance customers’ awareness of safe use of medical insurance. Inaddition, we maintain close communication with the national medicalinsurance departments and actively cooperate with their inspectionsand oversight to guarantee that the internal management meets theregulatory requirements.
ESG ReportExecuting Duties with Full Commitment to Strengthen Governance FoundationsMedical Insurance Compliance TrainingIn order to adapt to the ever-changing medical security policy, we regularly organize employee training to learn relevant laws and regulations such as theRegulation on the Supervision and Administration of the Use of Medical Security Funds. We also carry out specific medical insurance system operationtraining such as traceability code collection training to enhance the compliance awareness of all employees.
Going forward, we will continue to deepen medical insurance compliance management and actively adapt to the dynamic changes in medical insurancepolicies. We will optimize digital monitoring tools, strengthen intelligent monitoring and early warning, and realize real-time monitoring of the entireprocess. Meanwhile, we will expand cooperation with high-quality medical institutions, improve the compliance and professionalism of prescriptionsources, and continue to improve the medicine use rule database and prescription review mechanism to safeguard scientific and standardized medicineuse. Additionally, we will further strengthen the medical insurance policy and practice management training for all employees to enhance theircompliance awareness and professional skills. We will also maintain close communication with regulators and actively cooperate with their inspectionsand oversight to ensure that internal management meets the requirements of the compliancepolicy. Through high-standard management and theapplication of advanced technology, we are committed to promoting the development of the medical insurance compliance system and maintaining thesecurity of medical insurance funds to provide patients with higher-quality and more efficient medical insurance services.
Special training on “Compliant Operations for Medical Insurance Protection”On June 12, 2024, Yifeng Pharmacy held a special training on“Compliant Operations for Medical Insurance Protection” at itsheadquarters. The management of the headquarters and branchesstudied two documents: Letter on Taking Special Actions of“Selling in Online Stores, Checking Drug Prices, Comparing Data,and Ensuring Governance” and Letter on Verifying and Dealing withDrug Price Risks Facing Retail Pharmacies Designated for MedicalInsurance (2024 Q1). The focus was on the interpretation of themedical insurance policies in the documents. They also studied theupcoming unannounced inspection matters of the NationalHealthcare Security Administration, focusing on the inspectioncontent and data extraction content for designated retailpharmacies. This training increased management’s awareness ofmedical insurance compliance and further enhanced theirsupervisory capabilities, ensuring that our entire system remainscommitted to standardized operations while actively conductingself-inspection and rectification. In this way, we are able to maintaina high level of vigilance and long-term attention to the security ofmedical insurance funds.
Special Training on “Compliant Operations for Medical Insurance
Protection”
ESG ReportExecuting Duties with Full Commitment to Strengthen Governance FoundationsInformation Security and Customer Privacy
To properly evaluate employees’ contributions to information security and motivate them to protect information security, we use the targetmanagement, 360-degree evaluation, and results-oriented evaluation methods for personnel evaluation, considering into workload, efficiency, securityincident handling ability, and technical and management skills. We regularly evaluate the contribution of relevant employees to achieve overallsupervision of information security work and effective progress of information security work.
The Information Security Management Structure
Information SecurityCommittee
?Formulating the Company’s overall information security strategy and policy?Drafting data management policies and security classification standards and requirements at the Companylevel?Supervising the data security status and management effectiveness across the Company, and coordinatingcross-departmental data security management?Driving the establishment of data security management team and fostering a culture of strong awareness ofdata security in the Company
Information SecurityManager
?Determining the strategy and focus of data security management according to the respective business?Reviewing and confirming the compliance of data security policies and process standards?Leading the implementation of important measures for data security management, and inspecting andsupervising the data security status and management effectiveness of business
Information SecurityExecutive Office
?Assisting the Information Security Committee in implementing information security strategy, includingproposing annual plans and implementation schemes?Carrying out regular inspection, assessment, and evaluation on data security management situation across theCompany, and providing improvement requirements and recommendations for rewards and punishment?Coordinating emergency response to and treatment of major data security risks and incidents across theCompany
We strictly adhere to laws and regulations such as the Cybersecurity Lawof the People’s Republic of China, the Data Security Law of thePeople’s Republic of China, and the Personal Information ProtectionLaw of the People’s Republic of China. Furthermore, we haveformulated internal policies applicable to all our business lines andsubsidiaries, including the Measures for Yifeng Pharmacy Data SecurityManagement, the Yifeng Pharmacy Service Agreement, the Guidelinesfor the Safe Usage of Data of Yifeng Pharmacy Members, and theMeasures for Yifeng Pharmacy Project Information SecurityManagement, aiming at creating a secure and reliable data environment.In order to better adapt to the latest legal requirements and marketchanges, we updated the Yifeng Pharmacy Personal InformationProtection Policy during the Reporting Period, to help us furtherimprove our privacy standards and better protect each customer’spersonal information.In addition, we are actively applying for information security systemcertifications to further strengthen the information security guarantee.In 2024, our Equal Protection 3.0 Certification remains in effectcontinuously. And we are currently planning to engage an externalauditing firm to conduct a comprehensive and independent informationsecurity audit of our Internet Hospital, and optimizing our hardwareandsoftware systems based on audit recommendations to improve theirconfidentiality and usability. By the end of the Reporting Period, wehave not experienced any data breaches.
Information SecurityManagement Structure
We have built a three-tier information security management structureconsisting of the Information Security Committee, the InformationSecurity Executive Office, and the Information Security Manager and theBoard of Directors has ultimate responsibility for the Company’sinformation security. Among them, the Information Security Committeeis mainly responsible for the Company’s privacy and data securityrelated work. The Information Security Executive Office implements theannual information security plan and program. And the InformationSecurity Manager leads the information security management of all ourdepartments.
ESG ReportExecuting Duties with Full Commitment to Strengthen Governance Foundations
Information Security AuditTo better identify and prevent internal and external data security risks, and to strengthen data securitymanagement, we have issued security management measures for internal and external data and clarifiedinformation security audit work. Internally, we conduct an information security audit every two years and haveformulated the Software Information Security Function Standard requiring our software testing departments totest whether the software meets the information security design standard and whether has an informationsecurity function. The standard also requires us to check whether the software is capable of informationencryption and desensitization. At the same time, we published the Measures for Yifeng Pharmacy ProjectInformation Security Management, and require a comprehensive assessment of suppliers’ information securitycapabilities. The assessment covers whether suppliers have conducted the following activities: providinginformation security awareness training for employees, signing confi. dentiality agreements, and passing systempenetration tests, to verify the compliance of outsourced data and strengthen the data security management ofthe outsourced system.
Information Security Emergency ResponseMechanism
To improve our ability to prevent and respond to information security emergencies, we have formulated theEmergency Management Policy for Computer System of Yifeng Pharmacy and the Emergency Plan for Computerand NetworkInformation Security of Yifeng Pharmacy. Both proactive and reactive measures are in place. Wehave taken measures to prevent information security incidents, standardized and improved the securityawareness and emergency response skills of our employees, and enhanced the data security protection ofcustomers and the Company. At the same time, we have established measures for responding to informationsecurity incidents such as data leaks, to ensure that we have the ability to passively respond to similaremergencies and the stability of the Company’s business and maintain customer confidence.
Information Security Training
We have provided popular and customized information security training to increase our employees’ datasecurity awareness and skills. While providing basic information security knowledge for all employees (TheCompany does not involve contractors.) to strengthen their information security awareness, we conductprofessional information security training for employees in positions such as R&D personnel. The goal is toimprove their professional skills and strengthen the Company’s information security management capability.We also have information security exams for various types of training, and have expanded the scope of thequarterly corporate culture exam to include information security content, thereby deepening employees’understanding of information security to improvetheir information security skills. In 2024, we conducted seveninformation security training sessions for new employees.
Privacy ProtectionFully understanding the need for and importance of protecting our customers’ personal information, we havemade protecting our customers’ privacy a top priority in our business operations. Our access control andencryption techniques are in place. We have developed security management processes and control measuresfor information technology systems, employees, and suppliers, and have implemented privacy measures inproduct development, technology development, and customer serving, to ensure the confidentiality andintegrity of our information systems and to better protect the privacy of our customers.We strictly regulate the process of collecting customers’ personal information, including strictly controllingaccess rights, encrypting the transmission and storage of customers’ private information, and logging all accessand operations. We undertake not to rent, sell or provide personal data to any third party except for the purposeof providing specific customer services. We commit to deleting data after a defined amount of time and does notcollect personal data from third parties. We also never unlawfully collect personal information from third parties.At the same time, we clearly inform customers about the reasons for collecting their personal information, thepurpose of use, how the information will be processed, etc., toensure that we obtain customers’ consent andauthorization during the information collection process. We also provide customers with the right of access,rectification and deletion of individuals' data . In addition, we require all employees and data vendors to sign aConfidentiality Agreement and require vendors to comply with our privacy policies and conduct data complianceinspections of vendors to further strengthen customer privacy.We have also built a complete set of information security technology library, which includes firewall, VPN, fortressmachine, log audit system, anti-virus system, network audit system, terminal management system, dataencryption system, and other key technologies. The information security technology library can ensure thesecurity of customers’ personal information to the greatest extent when we provide services. By the end of theReporting Period, we did not receive any complaints related to breaches of customer privacy or loss of customerdata.
ESG Report
Yifeng Pharmacy consistently prioritizes the provision of safe, effective, andaccessible medicines as the cornerstone of our high-quality development.Guided by our philosophy of “Pharmaceutical Care for All”，we haveestablished an efficient medicine management system complemented bypremium pharmaceutical services, ensuring that every operational aspect isprecisely aligned with the health needs of people.
Pharmaceutical
Care for All:
SafeguardingNational Health
ESG ReportPharmaceutical Care for All: Safeguarding National Health
GovernanceTo ensure transparent decision-making, efficient execution, and robustoversight, we have established a scientific quality governanceframework. The Board of Directors bears ultimate responsibility for thecompliance and effectiveness of product and service quality. TheQuality Management Department, as a dedicated functional unit,oversees the operation of the Quality Management System. Through athree-tier linear management structure spanning headquarters, branchoffices, and retail outlets, quality management standards are uniformlyimplemented across all retail terminals. Concurrently, we have formed aQuality Management Leadership Group composed of department headsfrom headquarters. This Group ensures full-process quality control inprocurement, storage, and sales operations. Every tablet and everybottle of medicine strictly complies with national quality standards.Additionally, we provide customers with professional, reasonable, andprecise pharmaceutical services through this integrated managementapproach.Team competence serves as the critical foundation for ensuringeffective Quality Management System (QMS) operations. We mandaterigorous professional qualifications for quality management personnel:
Department heads at both headquarters and branches must holdlicensed pharmacist certifications with minimum 3 years’ experiencein pharmaceutical quality management; All quality management staffrequire college-level diplomas or higher in pharmacy, traditionalChinese medicine, or relateddisciplines. This qualification frameworkensures the team possesses comprehensive expertise and practicalcapabilities to proactively address quality and safety risks throughoutoperations.We have established a mechanism integrating training withperformance evaluation to ensure the efficacy of quality managementoperations. Annual systematic training sessions encompassing allemployees are conducted, covering Good Supply Practices forPharmaceutical Products (GSP), pharmaceutical expertise, QualityManagement System documentation and other specialized technicaltopics. To drive continuous professional development, we incorporatecritical quality metrics, including quality incident resolution, productquality evaluation, and expiration management into qualitypersonnel’s performance appraisals. Accountability tracingmechanisms are clearly defined, with a merit-based incentive systemimplemented to holistically strengthen the team’s oversightresponsibilities and operational capabilities.
Strategy
We have integrated the Controllable Premium Strategy into our organizational framework, continuously refining and developing premiumpharmaceutical portfolios including proprietary brands, exclusive formulations, and co-developed products with manufacturers. Building upon ourpharmaceutical foundations in both Western and traditional Chinese medicine, we are expanding into herbal wellness products, nutraceuticals, healthmonitoring devices, personal care items and health-oriented consumer goods. This strategic expansion delivers carefully curated products characterizedby reliable quality assurance, clinically validated efficacy, cost-performance optimization and controlleddistribution channels. Our holistic healthsolutions prioritize three core commitments quality and safety compliance, specialized professional expertise and compassionate service delivery.
Our Quality Management System (QMS) spans the entire operational chain, including supplier qualificationaudits, pharmaceutical procurement verification, in-storage maintenance, outbound rechecks, store-levelacceptance, display inspections, and post-sales services. A three-tier quality evaluation system ensures optimalselection through rigorous screening, with multi-layered safeguards guaranteeing medicines safety and efficacy.Advanced technologies enable real-time quality tracking of products, while automated systems enforceprocurement and sales restrictions on high-risk items.Quality and
safetycompliance
Specializedprofessional
expertise
Our team comprises over 10,000 licensed pharmacists and 25,000 pharmaceutical specialists,supported by 800+ disease-specific training modules and 1,600+ medicine composition analysisprograms. Through our intelligent member service platform, we deliver comprehensive healthmanagement for chronic disease patients, covering medication therapy, dietary guidance, behavioralinterventions, and exercise regimens.
Compassionate servicedelivery
Serving 100 million+ members across 11 specialized health programs, we provide systematic solutions spanningdisease treatment to health enhancement. Our one-stop pharmaceutical services include 24/7 access tolicensed doctors and pharmacists, doorstep medication delivery and a service improvement mechanism drivenby customer feedback analytics.For details on our Controllable Premium Strategy, refer to sections “Quality and Efficacy Assurance”, “Regulated Pharmaceutical Channels” and“Professional Service Delivery” in this chapter.
Health Sustainability Framework
Yifeng Pharmacy steadfastly upholds the “family-trusted medicines” standard, establishing confidence through scientific governance, clear strategies, robust risk controls, and defined operational goals. We implement comprehensivesafeguards for Chinese pharmaceutical safety and consumer rights and are committed to becoming a trusted health partner worthy of national reliance.
Pharmaceutical Care for All: Safeguarding National HealthESG Report
2024 Environmental, Social and Governance Report|24
ESG ReportPharmaceutical Care for All: Safeguarding National Health
Impacts, Risks and Opportunities ManagementQuality Risk Mitigation serves as the cornerstone of our governance framework for managing health and safety impacts, risks, and opportunities. We haveestablished a Quality Risk Management (QRM) Framework aligned with stringent standards, supported by the Yifeng Pharmacy Quality Risk ManagementProtocol, which systematically evaluates, communicates, controls, and reviews quality and safety risks throughout the product/service lifecycle. TheQuality Assurance Department retains unilateral veto authority during audits to reject products failing quality inspections or violating packagingcompliance standards.
Metrics and Targets
In accordance with the Yifeng Pharmacy Quality Policy and ObjectiveManagement System, we establish annual quality policies andmanagement objectives, breaking down objectives into departmentaland role-specific targets through a tiered implementation plan to fulfillresponsibilities for customer health and safety. For critical qualitymanagement goals, the Quality Management Department conductscomprehensive monitoring of implementation progress via internalaudits. Meanwhile, to fully achieve quality objectives, we strictly monitorand evaluate employee compliance with the Quality ManagementSystem. Through annual departmental evaluations and quarterly storeassessments, quality management practices are integrated into dailyworkflows, ensuring effective operation and continuous improvement ofthe system. This drives steady enhancements in safeguarding customerhealth andsafety. In 2024, all annual quality management objectiveswere successfully attained.
Annual RiskManagement Plan
The Quality Management Department formulates the quality risk management plan and distributes it todepartment heads for confirmation.
Risk Identification
Pharmaceutical quality control personnel conduct risk identification, analysis, and categorization across allproduct lifecycle stages using proactive or retrospective approaches. the Quality Management Departmentthen performs risk rating analysis and secondary verification.
Risk Assessment
Based on the assessed quality risks, the Quality Management Department devises control and preventivemeasures, mandates effective implementation of risk mitigation actions by relevant departments, andperiodically evaluates the effectiveness of these measures to ensure risks are reduced to acceptable levels.
Risk Review
The Quality Management Leading Group conducts at least one annual review of risk managementoutcomes and the acceptability of residual risks.
Product Quality Risk Control Mechanism
We are concurrently advancing digital quality risk management through an intelligent monitoring system that oversees risks across the entire supply chain,including procurement, storage, sales, and returns. The system automates the identification, monitoring, and control of quality-related risks such asblocking transactions beyond authorized business scopes, alerting for nearing-expiry products, prohibiting procurement and sales of expired items andrestricting distribution and sales of non-compliant goods. This technology enables real-time risk monitoring and automated intervention to ensureoperational compliance and quality safety.
Quality Management Objectives in 2024?All online and offline businesses were operated in
compliance with laws and regulations?All distributed pharmaceutical products met quality
standards, with a100% compliance rate in market
inspections.?The Measures for Quality Supervision and Management of
Medicine Distribution and Use was strictly implemented to
ensure the effective operation and continuous improvement
of our Quality Management System.
Pharmaceutical Care for All: Safeguarding National HealthESG Report
2024 Environmental, Social and Governance Report|25
ESG ReportPharmaceutical Care for All: Safeguarding National HealthGuaranteeing Qualityand EfficacyYifeng Pharmacy adheres to the principle that “Quality is thefoundation of Yifeng”, placing the highest priority on medicine qualityand safety. We strictly comply with laws and regulations such as theDrug Administration Law of the People’s Republic of China, the GoodSupply Practice for Pharmaceutical Products, and the Measures forQuality Supervision and Management of Medicine Operation and Use, aswell as regulatory requirements in the jurisdictions where our directlymanaged and franchise stores operate. We have established andimplemented internal policies and standards covering all operationalprocesses, proactively fulfilling our social responsibilities and mission asa leading enterprise in the pharmaceutical retail industry. In 2024, werevised internal policies including the Yifeng Pharmacy Internal AuditPolicy on Quality Management System, the Yifeng Pharmacy Inspectionand Evaluation Policy on Implementation of Quality ManagementSystem, the Yifeng Pharmacy Medicine Acceptance Management Policy,the Yifeng Pharmacy Medicine Storage and Maintenance ManagementPolicy and the Yifeng Pharmacy Medicine Delivery Review andManagement Policy, further advancing the standardization, refinement,and specialization of quality management.Medicine Quality ManagementSystemWe have established a comprehensive quality management systemcovering the entire medicine lifecycle, spanning procurement,acceptance and warehousing, storage, outbound logistics, in-storedisplay,after-sales services, and product recalls. This system rigorouslyenforces regulatory requirements to ensure compliance, safety, andefficiency across production, distribution, and sales, thereby deliveringreliable medicines. We conduct in-house testing for all of Heng XiuTang's own-produced medicines by batch, and for products from othersuppliers, we screen key varieties for sampling and then commission athird-party organization to test them. For items with potential risks, weimplement timely measures including sampling verification, qualityinvestigations, and recalls to safeguard the medicine quality and safetyall round.In 2024, no major quality or safety incidents related to products orservices occurred.
Medicine ProcurementWe have established and implemented the Yifeng Pharmacy Supplier Quality Assurance System Evaluation Criteria, Yifeng Pharmacy'sSupply Units and Sales Personnel, First Purchased Variety Review Management Policy and other relevant regulations, consistentlyadhering to the principle of prioritizing qualification verification. Comprehensive qualification reviews are conducted for suppliers,product categories, and supplier sales personnel. Through on-site inspections and document verification, we rigorously evaluatesuppliers’ production quality systems and sustainable supply capabilities, strictly controlling product quality at the source.Cooperation is initiated only after ensuring compliance with our high standards.We apply the approach of “centralized procurement at headquarter and local procurement at subsidiaries” for medicineprocurement, and adopt different procurement modes according to the attributes of the medicines, taking the reliability of theprocurement channel, the competitiveness of the price and the satisfaction rate of the products in the stores as the core indexes, so asto ensure that the quality of the medicines is guaranteed, the channel can be traced, and the price is affordable.
Acceptance and InspectionWe strictly implement the Yifeng Pharmacy MedicineAcceptance Management Policy and Yifeng PharmacyAcceptance Procedure and other regulations to inspectthe appearance, packaging, labelling, instructions andother contents of the medicines in accordance with thesampling standards, and scan and check the traceabilitycodes of medicines. And we will directly return to thesupplier, if any medicines do not meet the samplingstandards or have quality issues, so as to ensure thequality of the products.
Medicine StorageWe strictly implement the Yifeng Pharmacy MedicineStorage and Maintenance Management Policy andoperating procedures to ensure that medicines are storedin the appropriate warehouses according to theirpackaging and storage requirements. Additionally, weconduct monthly maintenance inspections, maintainmaintenance records, and utilize a computerized systemto automatically track and control the expiration dates ofinventory medicines. Measures such as near-expiry alertsand automatic sales suspension for expired products areimplemented to ensure in-stock medicine quality.
ESG ReportPharmaceutical Care for All: Safeguarding National Health
Medicine DeliveryWe strictly implement the Yifeng Pharmacy Medicine DeliveryReview and Management System and relevant operatingprocedures, follow the principles of “first-produced productsto be sold first and products with closer expiration date to besold first”, manage the delivery order according to the batchnumbers and required that outbound medicines must beaccompanied by supporting documents such as medicineinspection reports and registration certificates of importedmedicines. Through comprehensive verification of outboundmedicines and their packaging, we ensure that all dispatchedmedicines meet the criteria, including accurate quantity,quality compliance and clear labeling to ensure the qualityand compliance of outbound medicines.
In-store Acceptance
Medicines at the stores are uniformly distributed by theheadquarter warehouse. When the medicines aredelivered, each store performs the quality acceptanceprocess in strict accordance with the relevant provisionsof the Yifeng Pharmacy Store Medicine AcceptanceManagement Policy and the operating procedures toensure that the packaging and quality of the medicinesreceived meet the requirements, so as to ensure thequality of medicines sold at retail stores.
In-store DisplayAll directly managed and franchise stores are required todisplay medicines in accordance with the relevant provisionsof the Yifeng Pharmacy Store Medicine Display ManagementPolicy to classify medicines according to their physical andchemical properties and the storage requirements. Besides,the stores shall carry out regular maintenance and inspectionof the quality the medicines strictly in accordance with theYifeng Pharmacy Store Medicine Maintenance and InspectionManagement Policy and the Yifeng Pharmacy MedicineExpiration Date Management Policy, so as to ensure that anyquality problems can be discovered and properly handled in atimely manner.
Medicine RecallWe have established the Yifeng Pharmacy Unqualified Products Management Policy and the YifengPharmacy Medicine Recall Management Policy against medicines that have been sold and foundto have serious quality problems, and set up a sound quality management system for productsrecall, recovery and return. Meanwhile, we have implemented control measures on prohibition ofmedicine distribution and sales in computer systems, requiring stores to strictly comply withregulations to remove medicines with quality issues from shelves, thereby preventing anypharmaceuticals with questionable quality from entering the market. This ensures thecontainment of unqualified products at the source and comprehensive quality risk management,and effectively safeguards medicine safety of consumers.
After-sales Service
We display signs such as the supervision telephone number of the National Medical ProductsAdministration and the service convention of Yifeng Pharmacy at eye-catching places in each store.Moreover, we have also set up a 24-hour service hotline (4008879908) and a customer opinionbook for customers to express their opinions on our products and services through variouschannels. Pursuant to the Yifeng Pharmacy Quality Complaint Management Policy, we have alsoestablished a customer complaint file and set up a special team with designated personnel, toensure that all feedback and complaints can be properly responded to in an effective and timelymanner.
Medicine Full-life-cycle Quality Management System
We conduct annual audits of our quality management system. Additionally, when significant changes occur in key elements of the system, or when major issues arise with product quality or service standards, we initiate special internalquality audits. These audits enable timely corrective actions and process improvements to ensure all products and services consistently meet our standards.
ESG ReportPharmaceutical Care for All: Safeguarding National Health
Medicine Expiration DateManagement
We have established the Yifeng Pharmacy Medicine Expiration DateManagement Policy, creating a whole-process management systemcovering expiration date monitoring to product disposal. Stores arestrictly prohibited from selling medicines with less than 30 daysremaining in their validity period or expired items. Monthly prioritizedmaintenance is conducted for near-expiration products, with detailedreports submitted for coordination specialists to assess return feasibilityand organize redistribution. For products within three months ofexpiration, redistribution is discontinued, and mandatory removal fromshelves and reporting as losses are required one month prior toexpiration to eliminate circulation of expired medicines. Leveraging ourdigital management system, automated expiration monitoring enforcescontrols like sales blocks and alert triggers for near-expiration inventory,ensuring timely resolution of validity-related issues at store level.Under the Yifeng Pharmacy Unqualified Products Management Policyand the Yifeng Pharmacy Store Return Procedures for UnqualifiedProducts, medicines nearing expiration within 30 days and expiredmedicines returned by stores will be consolidated into the unqualifiedproducts inventory. These items are then transferred by the warehouseto contracted environmental service providers for secure destruction asregulated waste.We implement regular expiration date checks through a systematicinspectionprocess for store merchandise. Should expired products(including promotional items) be identified during inspections, bothdirectly involved personnel and supervisory employees will be heldjointly accountable, with responsibility assigned to specific individuals.
Pharmacovigilance Management
We have established a comprehensive pharmacovigilance system with specialists in our offline stores dedicated to pharmacovigilance, assessing andanalyzing adverse medicine reactions, medication errors and medicine damage events in a timely manner, and making records and reports in accordancewith the prescribed procedures. In any situation where a medicine needs to be recalled, the medicine recall procedure shall be immediately initiated, soas to ensure the safety management of medicines.Meanwhile, we proactively conduct medication safety education. Through professional medication guidance, organized patient education lectures andsimilar initiatives, we work to prevent medication-related safety issues. This provides patients with comprehensive professional support in medication use,treatment, and auxiliary medical care, further safeguarding their medication safety and protecting their health rights and interests.Medicine Emergency and Recall
We have developed the Yifeng Pharmacy Medicine Emergency Response Plan, establishing a whole-process emergency management mechanism fromprevention to response and post-event review. We formed a Medicine Safety Emergency Leadership Team led by the CEO, withclearly defineddepartmental responsibilities for monitoring, addressing, and summarizing emergencies. Upon occurrence of an incident, the Team immediatelyactivates the emergency plan, implements urgent control measures including product recalls, consumer notifications, and treatment coordination, whileproviding real-time updates on progress. Following resolution, the Quality Management Department submits a summary report analyzing causes andproposing improvements to enhance the emergency plan and further reduce medicine risks.We strictly regulate the whole process management of medicine recall, formulate and implement the Yifeng Pharmacy Medicine Recall ManagementPolicy and Yifeng Pharmacy Medicine Recovery Management Policy. We classify medicine recalls into three levels according to the severity of the potentialquality and safety risks of the medicines and set different deadlines for the recalls. Also, we require each store to notify purchasers immediately upon thereceipt of recall notification to return the medicines with potential problems, and to stop selling the medicines at all stores. Besides, the stores arerequired to report the situation of the recalled medicines to the National Medical Products Administration or to notify the medicine manufacturer of therecalls within the designated time limits, and to carry out the subsequent treatment of the recalled medicines basedon the different results confirmed bythe National Medical Products Administration. The Quality Management Department shall record the whole process of the recall and establish a recall file,including the cause of the recall, the quantity of suspension and recovery, and the treatment result for inspection. We ensure that we hold individualsaccountable and keep refining the accountability system to prevent the recurrence of such incidents.?Products with anexpiration date of 12months are considered tobe in warning period if theywill expire within less than6 months.?Products with anexpiration date of 18months are considered tobe in warning period if theywill expire within 9 months.
Medicines in Warning Period?Products with an expiration
date of 12 months areconsidered expiringproducts if they will expirewithin less than 4 months.?Products with an expirationdate of 18 months or aboveare considered expiringproducts if they will expirewithin less than 6 months.
Expiring Medicines
Definitions of Medicine Expiration DateMedicine Recall System
An urgent recall must be completed within 24 hours if the use of the medicine may cause a serious health hazard.First-levelRecall
A recall must be completed within 48 hours if the use of the medicine may cause a temporary or reversible health
hazard.Second-levelRecall
A recall must be completed within 72 hours of the receipt of the recall notification if the use of the medicine does
not generally cause health hazards but the medicine needs to be recalled for other reasons.Third-levelRecall
ESG ReportPharmaceutical Care for All: Safeguarding National HealthRegulating Channels for Medicines
Supply Chain Risk Management
We conduct in-depth identification of potential risks within the supply chain and comprehensively assess their latent impacts to proactively formulateresponse strategies, thereby enhancing risk resilience. This approach forges robust safeguards for unimpeded distribution channels and constructs multi-dimensional supply chain architecture with fortified source reliability.
Impacts, Risks and Opportunities of Supply Chain Management
Improving the safety and efficiency of the supply chain helps toimprove the quality of service, ensuring the medicine safety forcustomers and promoting access to medicines.
Supply chain optimization and upgrading requires initialinvestment, which may increase financial costs in a short term.
?Enhancing supply chain security and mutual redundancy has emerged as a critical industry trend. By advancing automation capabilities and
optimizing operational management, we can effectively enhance supply chain efficiency, reduce operational costs and strengthen businesscontinuity.?The establishment of regional warehousing and distribution networks, coupled with multi-warehouse operations and coordinated regionallogistics integration, enables us to improve responsiveness to supply chain disruptions and proactively address market fluctuations anddemand variations, thereby reinforcing corporate competitiveness.?Through targeted supply chain optimization initiatives, we can substantially mitigate inventory overstocking, accelerate inventory turnover
rates, achieving measurable improvements in operational efficiency and financial performance.
ImpactRiskOpportunity
We prioritize stable operation of the pharmaceutical supply chain as ourcore mission and set the transparent, safe and traceable sources ofdrugs as the goal, ensuring the comprehensive integration of deliverytimelines, product quality, and cost control into our suppliermanagement. And we consider explicit contractual requirements suchas quality risks, channel risks, and compliance obligations in supplieragreements. In accordance with the requirements of the DrugAdministration Law of the People’s Republic of China, the GoodSupply Practice for Drugs (GSP), and the Good Manufacturing Practicefor Drugs (GMP),Yifeng Pharmacy has formulated a series of suppliermanagement policies, such as the Yifeng Pharmacy QualityManagement System External Audit Management Policy and the YifengPharmacy Supplier Quality Assurance System Evaluation Criteria, so asto establish a sound and efficient supplier management system andstrengthen the solid defense of public health.
Supply Chain ManagementStructure
Yifeng Pharmacy has established a dedicated Supply ChainManagement Department to holistically address risk managementacross all operational scenarios. This framework integrates secondaryfunctions including procurement, logistics distribution, and warehousemanagement, while maintaining independent yet collaborativeoperational models between merchandise management andpurchasing departments, thereby strengthening organizational supportfor supply chain governance.We mandate that supplychain professionals possess pharmaceuticalexpertise alongside specialized competencies in logistics managementand information technology. Their responsibilities encompassoverseeing category planning, driving category strategies, managingsupplier relationships, advancing cost-reduction innovations, andimplementing digital procurement systems , to ensure medicine safetycompliance and optimized supply chain operations. In Addition, keyperformance metrics such as inventory turnover rates and supply chainefficiency are incorporated into employee evaluations, withcorresponding incentive measures implemented based on performanceassessments to effectively advance management objectives.
ESG ReportPharmaceutical Care for All: Safeguarding National Health
We actively engage in industry exhibition, professional forums, and symposiums, collaborate with peers andpartners to examine supply chain risk landscapes and exchange actionable mitigation strategies, collectivelydriving systematic enhancements in risk governance frameworks across the industry and strengthen industry-wide contingency capabilities, thereby ultimately establishing resilient foundations for the stable andsustainable development of supply chain ecosystems.
Supplier Admission Management
We consistently prioritize source control as a critical component of supply chain governance, and haveformulated internal regulatory frameworks such as the Yifeng Pharmacy’s Supply Units and Sales Personnel,First Purchased Variety Review Management Policy and build up the stringent supplier admission system. Thesemechanisms establish clear procurement evaluation metrics for new suppliers, encompassing corporate scale,quality assurance capabilities, delivery capabilities, and post-sales service competencies.During supplier qualification assessments, we adopt a prudent approach through holistic evaluation of potentialoperational risks, legal disputes, and quality-related complaints. Mandatory submission of industry certificationsensures full compliance with international quality standards and regulatory mandates, thereby enhancing supplychain transparency and traceability.
Assessment and Evaluation of Suppliers
To sustain pharmaceutical quality at premium levels, we established a comprehensive supplier assessment andevaluation framework supported by internal governance policies including Yifeng PharmacySupplier QualityAssurance System Evaluation Criteria and Chinese Medicine Bidding and Quality Assessment Guidelines of YifengPharmacy. These policies standardize vetting procedures, clarify requirements for supplier competencies andcertifications, and ensure timely and accurate maintenance of supplier databases, enabling systematicresolution of quality or supply chain issues and compliant management of regulatory changes, ultimatelyreducing risk of supply chain and enhancing supply chain efficiency and product integrity.We have established a comprehensive supplier evaluation system for all-round and multi-dimensionalassessment and evaluation of supplier capabilities. We evaluate suppliers through on-site audition, qualitycomparison inspection and curative effect and quality perception to evaluate suppliers’ performance, to realizeour philosophy of “”. Under the triple quality evaluation system, we conduct comprehensive preliminaryassessments of suppliers prior to on-site inspections. Evaluations are based on multidimensional criteriaincluding corporate scale, operational history, operational efficacy of quality assurance systems, product qualityreputation, and pricing competitiveness. Following in-depth evaluations through this system, suppliers identifiedwith substantial quality risks will face immediate procurement suspension alongside explicit corrective actionrequirements. Concurrently, we conduct thorough risk assessments on existing products sourced from suchsuppliers and rigorously verify compliance with mandated corrective measures.
To effectively manage supply chain impacts, risks and opportunities and to achievemedicine channels control, we:
?Implement rigorous source control by strictly vetting supplier qualifications and medicine quality to
prevent unqualified products from entering distribution channels;?Define precise supplier admission criteria to methodically identify and select high-quality partners;?Develop an integrated evaluation system with tiered classification protocols, and conduct regular
multidimensional supplier assessments to deploy tailored strategies based on performance metrics;?Promote digital-intelligent transformation across supply chains to enhance operational agility and
responsiveness;?Adopt localized procurement strategies with dual-sourcing protocols to mitigate supply chain
disruption risks;?Coordinate upstream and downstream resources and make every effort to ensure medicines are in
stock, reliable and safe;?Enhance data monitoring of inventory and production capacity through the whole management
process, prioritize critical product delivery, identify proactive risk and address mitigation planning;?Expand the manufacturing sites in a timely manner to ensure production capacity, resolve the supply
issues of raw materials and products in advance, and actively reserve alternative suppliers to enhance
the stability of the supply chain.
ESG ReportPharmaceutical Care for All: Safeguarding National HealthThe Quality Control Management Departmentwill send dedicated personnel to implementunannounced inspections to the potentialsuppliers, and assess and rank the qualitymanagement system of suppliers according tokey inspection points set out in the GMP, so asto understand the actual condition of theenterprise.
On-SiteVisits
We monitor and correlate key indicators,including content, related substances, heavymetals, solubility, content uniformity, friability,and carry out result comparison amongproducts of the same category.
QualityComparison
andInspection
The Quality Control Management Departmentinvites the stores' health advisors to conductpaper questionnaires or online surveys on thperception of product efficacy, appearancequality, package and brand.Reviews onEfficacy and
QualityPerception
Quality Evaluation Mechanism
We implement category-specific quality reviews through regularevaluations and annual quality assessments to maintain an approvedsupplier roster, ensuring stable pharmaceutical supply chains withreliable product efficacy. Our supplier qualification process prioritizespartnerships with suppliers demonstrating both regulatory complianceand proactive sustainability commitments, thereby mitigatingenvironmental risks while advancing green, equitable supply chaindevelopment. In the semi-annual evaluations in July 2024, weterminated contracts with three underperforming suppliers andconducted intensified on-site audits for critical partners.
Class Asuppliers
Class Bsuppliers
Class Csuppliers
?Conduct supplier qualification review and on-site quality audit beforesuppliers’ first delivery
?Conduct supplier qualification reviews?Organize on-site audits when quality issues arise with materials or whensignificant changes occur in the supplier's production conditions, processes,quality standards and other key factors
?Conduct certification audit of suppliers
Supplier categorySupplier Audit Process
Material Supplier Audit ProcessTo further ensure suppliers’ strict adherence to our quality standards system, we conduct annual quality training for all suppliers covering productcompliance resolution and quality specifications, aiming to elevate their operational quality management proficiency.
ESG ReportPharmaceutical Care for All: Safeguarding National Health
Grade A
Grade B1,051Grade C1,197
Grade E
Grade D
Number ofSuppliers
Supplier Classification and TierManagement
To achieve refined management of suppliers, we have implemented ascientific quality risk rating mechanism, annually conducting dynamicmanagement and evaluations of suppliers. According to the ratingsystem, we established evaluation metrics based on the qualitycharacteristics of various medicines and assigned specific weights todifferent quality criteria. Based on these metrics, suppliers aresubsequently stratified into five grades (A, B, C, D, E), with each gradecorresponding to distinct risk levels, thereby visually reflecting theircompliance levels through this stratification framework.We implement differentiated management strategies for suppliersacross grades. Grade A suppliers (Tier 1 suppliers) receive expandedcollaboration opportunities and preferential terms to incentivizesustained quality excellence. For Grades B and C suppliers, we enhancecommunication channels and implement improvement-focusedguidance to drive operational optimization. Grades D and E supplierswith high risks undergo intensified compliance monitoring, withpartnership restrictions or discontinuation protocols activated whennecessary. This tiered management enables targeted performanceinterventions, improving managerial responsiveness while ensuringsupply chain reliability through calibrated quality controls.
Digitalization and Localization of SupplyChain
To enhance supply chain efficiency and advance security objectives, in2024 we focused on digitalization and localization as dual core priorities.Wehave strengthened supply chain digitalization capabilities throughsystem upgrades introducing functions such as delayed deliverytracking reports and inventory turnover analytics, enabling real-timeoperational visibility and data-driven stock management insights forproactive risk mitigation. Simultaneously, optimized supplier contractrenewal alerts with automated escalation protocols has streamlinedworkflows, ensuring uninterrupted operations through timelyadministrative coordination. These coordinated enhancements indigital governance and contractual oversight facilitate agile decision-making while maintaining secure, resilient supply chain ecosystems.Concurrently, we actively implemented localized procurementstrategies by cultivating partnerships with regional high-qualitysuppliers, effectively shortening supply cycles while mitigating risksinherent in transportation and intermediary processes. This approachsignificantly enhanced supply chain reliability, providing robustoperational support for sustained business growth.Grades of Suppliers in 2024
ESG ReportPharmaceutical Care for All: Safeguarding National Health
Our Service Philosophy
Providing Health Services
Yifeng Pharmacy maintains customer-centric operations and is committed to setting up a benchmark for the health services of the society. We adhere to the original intention of "making people physically and mentally healthy", andmeet the diversified needs of our customers through a scenario-based service mode, ranging from pharmacy services, preventive health care, medication tracking, chronic disease management, healthy life consultancy to all-aroundhealth management solutions. With our professional service system, rigorous marketing standards and omnichannel interactive experience, we not only provide our customers with safe, professional and caring services, but alsopromote the continuous improvement of the health level of all people through innovative practices, demonstrating our long-term commitment and responsibility to the health of the society.Professional and Accurate Servicing
We have intensified professional pharmaceutical services by focusing on chronic non-communicable disease (NCD) management. Through customized NCD management plans, we provide customers with professional medicationguidance, medication reminder, disease course management, health check, health education and other services to enhance customers' knowledge of diseases and self-management capabilities, improve medication adherence, andthus effectively promote health for all.
Yifeng Pharmacy adheres to the service philosophyof professionalism and compassions, promotes the"peak-end experience" mode and implements theprinciples of “Three Dos” and “Three Nos”.Guided by the principle of “selflessness andaltruism”, we mandate employees to providecondition-specific medication guidance andpersonalized recommendations according to theirneeds with explicit rationale, providing customerswith attentive and professional guidance onmedication and health management by building acomprehensive service system, so as to win thetrust and recognition of our customers. Ourexpansive network continues expanding throughnew store openings and existing storesoptimizations. Combined with our own stores andonline platform, we have formed an integratedonline and offline health service mode.
Our Service TeamOver 95% of frontline employees across our retail outlets hold degrees in medical orpharmaceutical disciplines. We take “precise medication” as the starting point, requiringfrontline health consultants to accurately recommend medicines that meet the needs ofcustomers according to their illnesses. Meanwhile, leveraging big data analytics to optimizetherapeutic suggestions, we ensure rational medicine taking and optimized purchasingexperiences. To enhance consultation professionalism and accuracy, we have implemented astructured training infrastructure with sustained investment, cultivating grassroots personnel intocertified pharmacists capable of providing specialized medicine guidance and wellnesscounseling. and regularly trains, supervises, and evaluates store employees on relevantstandardized requirements. For core therapeutic medicines targeting prevalent conditions (e.g.,antihypertensives, hypoglycemic medicines), we have developed a professional knowledgerepository that delivers scientifically validated combination therapy examples to employees,enhancing their expertise in promoting rational and safe medicine practices. Complementing this,our Yifeng Pharmacy Store Member Management Incentive Program refines motivationalmechanisms to stimulate the service motivation of the frontline empoyees, driving continuousservice capability improvements for delivering more precise and attentive client care.
Our Membership System
We have established a multi-tiered membershipsystem offering omnichannel, full-scenario, andlifecycle-spanning health management servicescentered around members. We launched the "88"member benefits, including 8 professional memberservices (e.g. tea for members, traditional Chinesemedicine decoction service, etc.) and 8 exclusivebenefits (e.g. member discounts, pointsredemption, health advisor, etc.), and facilitatedigital engagement through the Enterprise WeChatplatform by delivering personalized one-on-onemedicine consultations and professional follow-ups, empowering members to foster robust healthawareness and sustainable habits.
ESG ReportPharmaceutical Care for All: Safeguarding National Health
We implement a tiered management system for all customer complaints, establishing corresponding response andresolution mechanisms based on complaint categories. All investigation and handling procedures strictly adhere tothe Yifeng Pharmacy Customer Complaints and Adverse Reaction Handling Management Procedures, encompassingcustomer communication, on-site inspections, product verification, and medicine quality reassessments. Shouldproduct quality issues be identified, we initiate product recalls to safeguard consumer rights while providing timelyupdates to customers regarding resolution outcomes to ensure satisfaction. Following complaint closure, weconduct internal reviews to analyze complaint patterns, resolution approaches, and data trends. These insights areconsolidated into case studies distributed to all stores, preventing recurrence of similar issues.
Safeguarding Consumer Rights and InterestsCustomer satisfaction remains Yifeng Pharmacy’s unwavering pursuit. We actively listen to customer voicesthrough comprehensive satisfaction surveys while maintaining multi-channel, efficient complaint resolutionmechanisms to ensure prompt issue addressing and satisfactory experiences for all patrons. Through responsiblemarketing practices in daily operations, we guarantee customers access to accurate product information,professional medication guidance, and equitable transaction environments, thereby safeguarding consumers'rights to know, to choose and to health and winning our enduring trust and support from customers.
Customer Satisfaction Survey
We conduct quarterly customer satisfaction surveys across all regional stores, gaining insights into customers’genuine feedback through multiple evaluation dimensions including the Net Promoter Score (NPS), coreoperational indicators (encompassing service attitude, professionalism, in-store environment, checkout service,complimentary customer services, product availability, medicine quality and pricing, etc.), and theimplementation status of key touchpoints in the peak-end experience. Additionally, we incorporate competitivebenchmarking to holistically assess our performance within the local market. Based on the survey results, weanalyze customer opinions thoroughly, compile the quarterly NPS Survey Report, carry out quarter-on-quarterand cross-sectional analysis of each for each evaluation indicator, and summarize common customer concerns.We formulatetargeted improvement programs to continuously improve service quality. In 2024, we collectedbetween 12,000 to 13,000 customer satisfaction survey responses quarterly and achieved an overall customersatisfaction score approaching 80 points.To further enhance customer satisfaction, we continuously refined the Yifeng Pharmacy 100% CustomerSatisfaction Improvement Program. This included introducing an incentive mechanism to motivate employees todeliver services exceeding expectations, thereby creating trusted customer experiences. Simultaneously, weintensified employee training programs across all stores, covering 27 customer dissatisfaction problem scenariosthroughout the year to enhance employees professionalism and service capabilities, driving the transition fromreactive problem-solving to proactive delivery of quality services.
Customer Complaint HandlingWe attach great importance to the management of customers’ complaints and have set up two main channelsfor receiving complaints, namely the “400 Call Center” and “Online Customer Service”, as well as mailbox,official WeChat accounts, media accounts and other channels, through which customers can provide feedbacksconveniently. We have a special responsibility system and designate a special person to deal with complaintsagainst different departments to ensure that each complaint is handled in a timely and effective manner. Whencustomers dial in for complaints or submitcomplaints online, we record basic information in detail including thespecific time, location, content of the incident, claims of the complaint, and customers’ contact information.We then determine the response approach to be taken based on the nature of the complaint, and ensure that afinal solution will be provided within 48 hours.
Responsible MarketingWe strictly comply with relevant laws and regulations including the Advertising Law of the People's Republic ofChina, the Measures for Quality Supervision and Management of Medicine Distribution and Use, and theMeasures for Supervision and Administration of Medicine Circulation. Upholding compliance as the fundamentalprinciple in medicine promotion, we have established a rigorous and systematic compliance review system andapproval processes to ensure truthful and objective promotional content across both directly-operated andfranchise stores. All medicine promotions strictly adhere to package insert information, accurately presentingtherapeutic effects, adverse reactions, contraindications, and precautions, while prohibiting exaggerated efficacyclaims or downplaying potential adverse reactions to ensure that the truthfulness and compliance of thepublicity content is comprehensively safeguarded. A dedicated team centrally produces promotional campaigns,seasonal marketing materials, and advertisements for all directly-operated and franchise stores and all materialsundergo professional vetting before distribution to stores.Additionally, we conduct regular internal audits of responsible marketing practices, performing centralizedreviews of all external promotional materials to guarantee legal and regulatory compliance in our public-facingcontent. To further enhance employees’ marketing capabilities and service proficiency, the Companyimplements responsible marketing training programs for all employees, reinforcing complianceawareness andstandardized service protocols.Throughout 2024, no major violations related to product/service information and labeling or marketing activitiesoccurred within our operations.
2024The average waiting time for customer service calls was 36 seconds (system-prompted the incomingcustomer waiting time), the average response time was5 seconds (when the system prompts an incomingcall, it is answered within 5 seconds on average), and the problem resolution rate was87%.
ESG Report
Yifeng Pharmacy leverages digital means to upgrade its service chain, boosting service responseefficiency and precision. With an intelligent logistics system, we achieve 24-hour provincial deliverywith a near 100% shipping accuracy. Through source-level supply chain optimization, we ensureproduct quality while contributing to rural revitalization. Through these coordinated efforts, weestablish a new paradigm for industrial advancement while building an innovative pharmaceuticalhealth service ecosystem.
Enhancing Benefits
and Efficiency forImproved Medication
Accessibility
ESG ReportEnhancing Benefits and Efficiency for Improved Medication AccessibilitySmooth Medical NetworkAs a leading chain pharmacy in China, Yifeng Pharmacy focuses on providing customers with high-quality, cost-effective and easy-to-buy medicines, aswell as reliable pharmaceutical services. We adhere to the business philosophy of “fair pricing with professional service”, and always put customerneeds first. We continuously explore the diverse healthcare needs of our customers. Based on the conventional form of pharmacy, we have openedtraditional Chinese medicine (TCM) clinics, diagnosis room of TCM practitioner, outpatient departments, in-store clinics, Internet healthcare services andHeng Xiu Tang TCM factory, gradually extending our business to the diagnosis and treatment and upstream industries. In this way, we aim to providecomprehensive healthcare solutions for public well-being.Amidst the increasing chain rate and market concentration in the pharmaceutical retail industry, Yifeng Pharmacy adheres to the development strategy of“holding regional focuses and performing steady expansion”, and continues to improve the breadth and depth of store network through a diversifiedexpansion model of “new store + merger and acquisition + franchise” to meet the real-time needs of customers. Meanwhile, we continuously expandthe online and offline business layout, and expect to enhance consumer experience throughscale effect. We strive to provide customers with moreaccessible and high-quality goods and services that perform well in accessibility, variety, timeliness, reasonable pricing, and supply stability.
Building Our Retailing Network
Yifeng Pharmacy attaches great importance to the construction of theretail network, adopting an online and offline omnichannel layout toaccurately reach all types of customers. On the offline side, we areadvancing a “fleet-type” store layout, focusing on covering 10provinces and cities in Central South China, East China, and North China,with 42 prefecture-level cities and more than 130 county-level citiesincluded. On the online side, we are continuously improving thetraditional and new retail systems, including 4 intelligent retail channelswhich are B2C, O2O, APP + Mini Program, and Construction of PrivateDomain, as well as new retail channels like Internet hospital and e-prescribing. These efforts represent our vision of providing customerswith more cost-effective and convenient goods and services. Meanwhile,to promote the influence of our brand philosophy, operation model andsocial value, we have opened up direct-operated franchiseopportunities. While providing franchisees with stable operationsupports, we ensure that customers enjoy more accessiblegoods andservices.
While expanding our offline stores and establishing a modernized logistics network, we actively promote the development of online stores andInternet hospital to provide customers with one-stop medical service at home.
Accessibility
We have partneredwith leading globalpharmaceuticalenterprises andChina’s top 100pharmaceuticalenterprises, offeringover 70,000 SKUscovering Chinese andWestern proprietarymedicines, TCMs,healthcare products,medical devices,health-related dailyconvenience productsand so on.
Variety
We have establishedlong-term and in-
depth strategicpartnerships with allimportantpharmaceuticalenterprises in China,and have beencontinuouslyupgrading our logisticsnetwork to ensureexpress delivery within
48 hours nationallyand 24 hoursprovincially.
Supplystability
Leveraging our procurement scale of over RMB 10 billion, wemake nationwide price comparisons through non-centralizedprocurement, integrated channels, and repeated pricenegotiations, maximizing the price advantage directly back to ourcustomers.
Reasonable
pricing
We set up 24-hour service stores to meet the needs of medicationpatients at any time of the day or night. Customers can orderonline via mobile phones and receive medicines at home withinan average of 30 minutes.
Timeliness
ESG ReportEnhancing Benefits and Efficiency for Improved Medication Accessibility
As of December 31, 2024:
hospital-adjacent stores
100+traditional Chinese andWestern medicine clinics
3,812franchisestores
14,684
(including franchise stores)Yifeng Pharmacy has atotal of offline stores
flagshipstores
regionalcentral stores
9,728small-sizedcommunity stores
4,600+outpatient integratedmanagement pharmacies
600+24-hourservice stores
DTP specializedpharmacies
1,023medium-sizedcommunity stores
"dual-channel" BMI designated outlets
10,000+
(including franchise stores)
Yifeng Pharmacy has atotal of online stores
Layout of Offline Retailing
We have established an offline retailing network covering many cities and business districts, based on the population structures and customer demandsin different regions. This network forms a “fleet-type” layout centered on flagship stores, regional central stores, medium-sized community stores, andsmall-sized community stores. In flagship and regional central stores, we focus on providing a “one-stop” service with a full range of products. Inmedium- and small-sized community stores, we focus on the accessibility to medicines by offering a variety of medicines in different areas, providingcommunity residents with more accurate goods and services as they needed.Meanwhile, with “thoughtful service + new retail” as the strategic core, we continue to build specialty medicine stores (DTP specialized pharmacies),"dual-channel" BMI designated outlets, special and chronic diseases medical insurance coordinated stores, hospital-side stores, and 24-hour servicestores. We have established a full-course management system that covers pre-medication diagnosis, continuous treatment, rehabilitation managementand follow-up tracking. We assign chronic disease management specialists to DTP specialized pharmacies to provide professional target management,health monitoring, medication guidance, and health education, helping customers with chronic diseases enhance their disease awareness and self-management capabilities. In addition, believing in the principle of prioritizing our customers, our 24-hour service stores provide self-pickup and homedelivery services within a vicinity of 3km, while hospital-adjacent stores are located within 100 meters of hospitals. These stores provide customers withbetter, faster, and more convenient medicine purchase experience.To further promote pharmaceutical accessibility, we have opened township franchise stores in Hunan, Hubei, Jiangsu, Jiangxi and Guangdong provinces,effectively expanding the channels for health services in the grassroots market. Through this multi-level network layout, we ensure that the medicationneeds of different populations are accurately met, while promoting comprehensive regional market coverage.
Specialty Medicine Stores (DTP Specialized Pharmacies)
"Dual-channel" BMI Designated
OutletsSpecial and Chronic Diseases MedicalInsurance Coordinated StoresHospital-adjacent Stores24-hour Service Stores
Flagship StoresRegional Central StoresMedium-sized Community StoresSmall-sized Community Stores
OfflineRetailing
SpecialStoresStoresRetailing
TraditionalChineseMedicineClinics
Franchise
Stores
self-builtInternet hospitals
new cooperationInternet hospitals
Internet hospitalsunder construction
ESG ReportEnhancing Benefits and Efficiency for Improved Medication Accessibility
Online Retailing ChannelsWe continue to innovate in the development of online retail, exploring more new functions and models. Centered on customer relationship management and big data, we are advancing a new ecological medicine retail platform basedon a membership system, Internet-based medical services, and health management. We are actively developing online diagnosis and treatment, chronic disease management, as well as online and offline health steward and familydoctor services. Our online sales model relies on the Company’s logistics distribution center and physical stores. Customers place orders online, and the goods are then delivered by the Company’s logistics or physical stores. This notonly enhances the convenience of purchasing but also expands the range of choices available to customers.
Private Domain CommunityAs for the construction of private domain community, wenot only provide professional medication advice but alsocreate a health exchange platform to facilitate customersto obtain medication information, health knowledge, andwellness tips anytime. Customers can also share theirexperience with others who have similar needs for theirhealth in the communities. At the same time, the systemrecords customers’ test data and carries out chronicdisease management. We provide online healthconsultation through the corporate WeChat platform.Salesmen push health care and medication guidance tocustomers according to their needs, ensuring thatcustomers can obtain personalized services anytime andanywhere. Based on precise recommendations ofmembership data, we effectively improve the efficiency ofmedication reminders and health management.Considering members’ diseases, medication, andbenefits, we customize communication content andfrequency to ensure that the proactive communicationoccurs no more than once a week.
Internet HospitalIn terms of Internet hospital operations, we have already laid out in several provincialcapitals, including Hunan, Jiangxi, Jiangsu, Shijiazhuang, Tianjin, and Guangdong,covering multiple departments such as internal medicine, traditional Chinese medicine,integrated traditional Chinese and Western medicine, surgery, and gynecology andobstetrics.
B2C/O2OIn terms of B2C and O2Oretailing channels, we havesuccessfully enteredmainstream platforms suchas Tmall, JD.com,Pinduoduo, Meituan,Ele.me, and Douyin. Weensure that customersreceive their goods onlineordered within 30 minutes,effectively addressing theissue of “difficulty inpurchasing medicines andurgency in using them”.
APP + Mini ProgramTo enable customers havethe most affordable goodsand benefits whether theyshop online or offline, ourAPP + Mini Programsynchronizes online andoffline goods inventories,ensuring consistency inmembership, pricing, andpromotions on allplatforms. Additionally, wecontinuously enrich ouronline goods offering byincorporating more third-party drop-shipping orimported goods.
Distribution of Departments among Internet Hospital Practitioners
Internal medicineTraditionalChinese medicineIntegratedtraditional Chineseand WesternmedicineGeneral practice
SurgeryGynaecology andobstetricsPaediatricsPsychiatry andpsychologyOthers
OnlineRetailing
ESG ReportEnhancing Benefits and Efficiency for Improved Medication Accessibility
By signing contracts with more than 1,000 multi-site medical practitioners and recruiting professionalpharmacists, we have established a multidisciplinary medical team to offer services such as professional healthconsultations, online consultations, family doctors, and chronic disease management services.Through a variety of management measures, we ensure that the Internet hospitals effectively realize borderlessclosed-loop medical services.
We have established a strict medical compliance system and built a multi-licenseInternet hospital management system and an Internet hospital risk control system.We have realized the connection and regulatory data upload between our self-builtInternet hospital and third-party Internet hospitals, ensuring the compliance ofprescriptions and the pass rate of quality inspection reach 99%.Compliancemanagement
We have launched a consultation and prescription system that supports text andimage/video consultation, doctor management, and integration with online stores,serving over 13,000 stores.Consultationandprescription
By improving the electronic medical record system and the big data analysis platform,we promote the interconnectivity of medical data, provide data support for medicaldecision-making, and ensure data security through telemedicine and encryptiontechnologies.Data support
We have implemented a full-time doctor assessment program and a multi-sitemedical practitioner subsidy program, assessing doctors from multiple dimensionssuch as medical quality and patient satisfaction to motivate them to improve servicequality.Assessmentandmotivation
To enhance the patient experience, we have optimized the diagnosis and treatmentprocess and established a rapid response mechanism. Optimized system hasreduced the proportion of abnormal orders to 1% and the rejection rate to 3.5%.Diagnosis
andtreatmentresponse
ESG ReportEnhancing Benefits and Efficiency for Improved Medication AccessibilityUnified Franchisee ManagementAs a pioneer in pharmaceutical retailing industry, Yifeng Pharmacy is committed to safeguarding the physical and mental well-being of our customers by providing quality pharmaceutical retailing and professional pharmacy services,while conveying the brand value of trustworthiness and the concept of comprehensive health services. The selection of franchisees is crucial. We give priority to franchisees with experience in pharmaceutical retail, a practicingpharmacist’s qualification certificate, and strong financial capabilities. We ensure that they have sufficient start-up capital and financial stability to cover initial investments such as store rent, decoration, and inventory procurement.Franchisees must recognize and practice our brand culture and business philosophy, ensuring that they provide safe and high-quality services to customers and promoting the smooth and long-term cooperative relationship. Thelocation of the franchise store must be in line with our market layout to maximize brand image and market influence. Before opening, a franchise store must pass the preparation review and new employee training to ensure that it meetsour standards.In terms of franchisee management, Yifeng Pharmacy always adheres to high-standard operations and fully implements the “seven unifications” management model to ensure that the franchisee’s operations arehighly consistentwith our brand image. Through big-data-based precise site selection and an intelligent franchising system, we have not only improved the quality of new store expansion but also achieved comprehensive management of goods,members, and operations of franchise stores. In addition, we provide all-round support for franchisees, including opening planning, product planning, operational guidance, professional training, manufacturer support, and financingconsultation. We also continuously optimize the franchisee management through questionnaires, telephone follow-ups, and field research.
Unified standards for pharmaceutical services
To ensure legal and compliant operations and safeguard the quality and safety of goods, allfranchise stores are required to obtain the relevant licenses, including the Drug Business License,the Business License, the Food Distribution License, and the Class II Medical Devices RecordationCertificate, strictly implement quality control in accordance with the Drug Administration Law, theGood Supply Practice for Pharmaceutical Products (GSP), and internal regulations, and acceptirregular inspections and GSP inspections. In addition, we rigorously enforce the “three checksand one severe penalty” system. Through regular inspections and strict control, we ensure thatfranchise stores meet standards in terms of quality, service, and compliance. This, in turn,safeguards customers’ medication safety and upholds the industry’s regulatory order.
To ensure brand consistency, all decoration designs and basicdecoration (renovation) construction of franchise stores arecarried out by companies arranged and designated by us. Allmaterials bearing the “Yifeng Pharmacy” logo used inconstruction should be purchased from designated sites.Meanwhile, we require network cabling and the installation ofthe designated video surveillance system in all franchisestores during decoration, to strengthen the subsequentmanagement and surveillance.
All franchise stores are required to strictly implementthe unified management system, which includesquality management requirements, pricing systems,and promotional policies. This ensures that franchisestores have regulations to follow and standards toadhere to. While continuously expanding saleschannels, the franchise stores can provide consumerswith transparently priced, high-quality medicines andprofessional, convenient health services.
We require all franchise stores toestablish and use a unified computermanagement system to enable theheadquarters to exercise unifieddigital control over the stores.In addition, to strengthen the operation and management of franchisestores, we regularly conduct standardized training programs. These includeannual training for franchisees, training for backup store managers andregional directors, as well as online learning courses for franchise storeemployees and store manager ability improvement training. Theseinitiatives are designed to assist franchisees in optimizing store operations.As the sole supplier of goods, weimplement unified procurement anddistribution management toeffectively control cost and ensurequality.We have established unifiedstandards and processes to regulatethe lifecycle management of businessbills entry, inquiry, review, andarchiving, thereby ensuring financialcompliance for franchisees.
Unified corporate identificationUnified management system
Unified personnel trainingUnified procurement and deliveryUnified bill managementUnified computer system
“Seven Unifications”
“Seven Unifications” Management
2024 Environmental, Social and Governance Report|
ESG ReportEnhancing Benefits and Efficiency for Improved Medication Accessibility
Deepening Digital Intelligence Empowerment
COE Operation Mechanism
Original requirementsL1 clarificationL2 alignmentL3 reviewSystem R&D
The requirements proposed by various business lines are aggregated into a requirementpool, covering different business scenarios such as products, functions, and services.At the COE’s weekly meeting, the requirements are initially clarified to ensure that theyare clearly described and the objectives are well-defined. The necessity, feasibility, andpriority of the requirements is also preliminarily assessed.Monthly requirement alignment meetings are held to conduct an in-depth analysis of therequirements that have been screened through L1 phase. The value impact on businessand the technical implementation difficulty are assessed, and the consistency ofrequirements across departments is ensured.At the project initiation review meeting of the Digital Strategy Committee, therequirements that have been screened through L2 phase are reviewed for approval. Thisensures that the requirements align with the Company’s overall strategic goals anddetermines the resource investment and development plan for the project.Requirements that have passed the final review officially enter the R&D process. Thesystem team proceeds with development, testing, and implementation according to theestablished plan, driving the Company’s digital transformation and providing efficientand stable technical support for business operations.
Meanwhile, we have implemented a “Technical Resource Team” model, dividing the technical team into several smaller teams. Resources are allocatedto these smaller teams according to business needs. This ensures that technical support is closely aligned with business objectives, thereby shaping ourcapabilities in product R&D support. Additionally, we have set up an IT Strategy Committee and a COE (Centre of Excellence) organization. By integratingfront- and back-end collaboration and online and offline business processes, closely linking technology R&D with cross-departmental cooperation, andeffectively evaluating business value to reduce decision-making waste and enhance R&D efficiency, we ensure that innovation outcomes are rapidlytransformed into practical applications, driving digital transformation and optimizes production capacity.
In 2024, we achieved remarkable results in R&D innovation. In terms of customer service, we introduced a precise reception assistant. A billion-levelmember altruistic precise recommendation model was built based on the member tags and computing power of big data models. This increased themedicine matching rate by 8%-10% and the repurchase rate by 10%. In terms of employee empowerment, we developed a system for salesmen thatincludes targets, incentives, tasks, diagnosis, and training. Thissignificantly improved the professional service and execution ability of salesmen, reducingthe service gap between new and experienced employees within 30 days. In terms of compliant operations, we established a medical insurance riskcontrol and supervision system based on big data models, strictly setting risk control and supervision rules in accordance with national medical insurancesupervision requirements, effectively avoiding the risk of medical insurance fund theft. In terms of supply chain management, we built a supply chaincenter to unblock efficiency bottlenecks in each link, effectively improving store turnover, product satisfaction, and traceability transparency.We ensure the execution capability of our innovation business and R&Defficiency through a flexible management model and an efficientorganizational structure. We have established a “Product and BusinessAnalysis Business Partnership Model”. In this model, business analystsconduct in-depth analysis of business requirements to help productmanagers optimize processes and restructure business model.
2024Our expenditure on innovation and R&D amounted to RMB
52.7366 million.
We had a total of323 R&D personnel.
Yifeng Pharmacy drives the transformation of traditional operationswith digital intelligence technologies, comprehensively constructs adigital operation system and an intelligent logistics distribution system,and continuously promotes the improvement of digital businessoperations to ensure both operational efficiency and service quality.Meanwhile, we will continue to pay attention to potential scientific andtechnological ethical risks, ensure that the technology applicationcomplies with ethical standards, and promote the sustainabledevelopment of digital innovation.Innovation-Driven Approach
Yifeng Pharmacy adopts “customer-centric operational services,efficient and agile supply chain capabilities, and efficient and innovativeorganizational talent development mechanism” as its strategy andgoal for scientific and technological innovation. We strive to achieve theleading digital business operations within the industry. To achieve thisgoal, we reasonably allocate financial resources in line with our businessoperations and adopt a diversified financing strategy. Through a robustfinancial management system, we ensure the sustainable investment inscientific and technological innovation and maximum efficiency of fundutilization.
ESG ReportEnhancing Benefits and Efficiency for Improved Medication AccessibilityDigital OperationAt Yifeng Pharmacy, we deeply recognize that digital management methods are the key to effective management of pharmaceutical retailers, and thecrucial supporter to deliver on our promises to customers. To enhance market competitiveness, we comprehensively plan our digital system, steadilypromote the middle- and front-end system R&D, aiming to empower the traditional operation management through digital intelligence technology. Ourdigital system can support stores’ operations, POS payment, medical insurance service, public domain platform, medical products supervision and soon. Internally, it can undertake various functional modules such as personnel, finance and administration of the headquarters, and realize efficientmanagement and process optimization of internal operations while ensuring rapid and steady business development.
We continuously enhance our digital operations capabilities through keymeasures such as the construction of new technology frameworks, sub-health governance of systems, performance improvement of the mainchain, and optimization of approval processes.
MembershipProductSalesman
EventTracking
DatagovernanceMarketingPaymentTransactionQuality
UserProfile
Dataapplication
Task
Cache
Message
queue
Database
Highavailability
HighconcurrencyTracingHumanResources
FinanceOA
Headquarter
Point ofSales(POS)
RetailingStores
PublicDomainPlatform
MedicalInsurance
Medical
ProductsSupervision
Opened Platform
Business Middle
End
Business IntelligentMiddle End
Technical ServiceMiddle End
EmployeesUsers
Framework of Digital System
Upgrade the system framework based on theSpringboot technology architecture, optimize theR&D process, and improve system performance anddevelopment efficiency.Use optimized database, log analysis, network traffic,etc. to reduce system anomaly alerts by 70% andincrease stability by 50%.Establish performance baselines for each systemand conduct module-based system pressure testingto optimize the main chain performance, resolvingover 50 performance issues. This ensures that thesystem successfully withstands peak periods duringmajor promotions and anniversaries, and easilysupports the operations of more than 30,000 stores.Analyze process authorization from the prospectiveof time consumption, value, and pass rate based onthe RAPID model, and reduce and optimize non-essential process nodes to increase the approvalefficiency across the entire system by 26%.
Digital Operation Enhancement Initiatives
ESG ReportEnhancing Benefits and Efficiency for Improved Medication Accessibility
Membership DigitalizationWe conduct refined member operations and precise marketing, and actively drive the development of online diagnosis and chronic disease services, inorder to enhance user repurchase rates and brand loyalty. Through in-depth analysis of user profiles, we strengthen users’ brand recognition andprofessional reliance on Yifeng Pharmacy, effectively improving consumer experience. By the end of the Reporting Period, the number of our onlinemembers has reached over 100 million.
Product DigitalizationWe are dedicated to building an industry-leading efficient and agile goods management system. We have successfully launched systems such as onlinesupplier rebate, intelligent replenishment, intelligent coordination, and intelligent return. The implementation of the national rapid procurement systemfor medically underserved and resource-limited areas has enabled a comprehensive digital and intelligent transformation of our goods business. This hassignificantly increased product satisfaction rate and inventory turnover efficiency, ensuring efficient and accurate goods supply.
Operation Digitalization
By leveraging new technologies and data capabilities to reshape operations, we continuously enhance the customer experience at our stores and improveoperational efficiency. Through our own employees online mini program (Yidianzhang), we empower over 40,000 employees to achieve comprehensiveonline management of store operations, marketing,data, performance and remuneration. With the help of big data for precise site selection, we assistnearly 1,000 new stores each year in improving the quality of their expansion. At the same time, through our digital franchise management system, wesupport franchise stores in achieving comprehensive management of goods, members, and operations. We integrate our digital strategy throughout allbusiness chains by constructing four major digital modules: “Employees Online, Products Online, Customers Online, and Management Online”. Thesemodules are upgraded in alignment with the developmental needs and business scenarios of each department. They comprehensively support theefficient operation of our internal management systems, enabling us to swiftly respond to market demands and enhance overall operational efficiency.
New Retail DigitalizationWe adhere to integrated development and focus on developing digital products tailored to the scenarios of new retail business. We have constructedplatforms such as public domain, private domain, and Internet hospitals to support our “new retail + thoughtful retail” strategic upgrade, fullyfacilitating the transformation of retailing digitization. By the end of the Reporting Period, over 10,000 direct-operated O2O stores have been launchedonline. The efficiency of picking, delivery and labor productivityare all at the industry-leading level.
Human Resources DigitalizationWe deeply advance the digitalization of human resources in line with thestrategy of online, digital and intelligent management strategy, tocomprehensively upgrade management modules such as recruitment,contracting, performance evaluation, compensation, promotion,scheduling attendance, as well as talent review and development. In2024, we formulated and implemented a digital development plan forhuman resources. By coordinating the infrastructure development ofthe HR system, promoting the upgrade of the DHR core main system,optimizing data management applications, and refining the humanresources reporting and dashboard system, we enhanced theintelligence and automation of human resources management andsuccessfully eliminated incremental problem data and completed thegovernance of over 2,000 existing data entries. Meanwhile, we focusedon standardized and online approach to improve the operation andmaintenance management capabilities of the human resources system.We implemented strategies such as daily learning for the operation andmaintenance group robot, operation and maintenance duty, and rootcause resolution of operation and maintenance issues, therebyestablishing a more flexible and efficient management system.
Financial Digitalization
We continue to refine the integration of business and finance operations.Through the implementation of intelligentand automatedmanagement across multiple aspects including budgeting, cost control,and reimbursement, we have significantly enhanced the efficiency offinancial control. This supports the Company in providing high-qualityfinancial services and maintaining robust financial management duringrapid expansion.
Logistics DigitizationWe have developed the Yifeng Transportation Management System(TMS), which covers functions such as dispatch management, freightcalculation, temperature and humidity monitoring and turnover boxmanagement. We have successfully implemented end-to-endmanagement of logistics information, ensuring both efficient logisticsdistribution and stable product quality.
ESG ReportEnhancing Benefits and Efficiency for Improved Medication Accessibility
Efficient Logistics Distribution
With a strong digital intelligence technology R&D and application teamand in line with the Company’s actual operational needs, YifengPharmacy has developed a digital logistics system covering warehouseoperation management, logistics transportation management andlogistics operation management. We identify logistics systemimprovement points based on the 3C principles (Cost, Close,Convenient), to effectively enhance end-to-end service capabilities inlogistics system, and live up to our commitment to customers to“deliver with care, efficiency, timeliness and perfection”.
The automation of our logistics network is highly aligned with our business needs. When planning logistics centers in various locations, we fully take intoaccount the varying medicines demand and return quantities of each retailing store to ensure effective improvements of work efficiency in goodsacceptance inspection, shelving, depalletizing and picking, checking, collecting and loading, returns and other reverse logistics processes. We continue topromote the visualization and intelligent management of warehousing and logistics distribution. By introducing advanced equipment and technologiessuch as automatic conveyors, automatic sorting system, Automatic Guided Vehicle (AGV) goods-to-person picking system, Minload intelligent automaticreplenishment system, electronic labelling, wireless radio frequency (RF) picking, acceptance system, intelligent goods collection system,full-processvisualization system, and Yidatong timely delivery system, we have further enhanced operational efficiency and system integration capabilities.
3C Principle of Logistics System Development
Warehousingmanagement
It is an advanced system integrating logistics and information and automationtechnologies. It maximizes space utilization and increases storage density throughstereoscopic design, while reducing manual storage and retrieval operations withautomation technologies.Automated stereoscopicwarehousing system
It guides palletizers to automatically replenish depalletized locations. Combinedwith one-to-one electronic labels and picking mode settings, it achieves automaticreplenishment and enhances the efficiency of warehouse replenishment.Minload intelligent automaticreplenishment system
Picking andsorting
It intelligently transports goods from the corresponding shelves in the warehouse tothe picking stations based on demand and completes the picking operations. Eachworkstation can serve up to 40 stores simultaneously. Combined with the optimizedgoods layout in the 3.0 warehouse, it significantly improves picking efficiency andaccuracy.
AGV goods-to-person picking
system
Electronic labels assist pickers in quickly locating goods. It also optimizes pickingstrategies and routes, thereby improving manual picking efficiency and accuracy.Picking system with electronic
labels
Integrated with the Warehouse Control System (WCS), Programmable LogicController (PLC), and Warehouse Management System (WMS), it automatically sortsstore packages and transmits goods collection data to the Transport ManagementSystem (TMS), improving the efficiency of goods collection.Multi-shuttle automatedgoods collection system
By the end of the Reporting Period, we have established seven modernprovincial logistics centers in Hunan, Hubei, Jiangsu, Shanghai, Jiangxi,Guangdong and Hebei, as well as ten urban delivery centers in Wuxi andHuai’an, and other major cities and realized online management ofproduction, retailing, e-commerce, and other businesses for 20warehouses, to ensure timely and accurate delivery to all customers.
To become moreadvantageous in terms of costCost
To be closer tostores/usersClose
To be more convenientConvenient
ESG ReportEnhancing Benefits and Efficiency for Improved Medication Accessibility
Suqian Warehouse AGV Handling Robot
Modernized Warehouse - Suqian Warehouse Sets SailOn December 27, 2024, Suqian Distribution Center, which coversan area of about 51.6 acres with a total construction area ofabout 38,000 square meters, officially opened its warehouse tosend goods. The warehouse is equipped with modern equipmentsuch as conveyors, AGV picking systems, and gravity flow goodscollection systems in order to achieve a 50% increase inmanpower efficiency and a 30% reduction in the handlingintensity of the dispatch team, comprehensively improving thedistribution efficiency and service quality of the stores in thenorth of Jiangsu Province.
In the future, Yifeng Pharmacy will continue to adopt the most suitablemanagement mode, equipment technologies, and operationalprocesses tailored to own characteristics, operational stages, andbusiness scenarios to build a more efficient and cost-effective supplychain logistics system. By these efforts, we further enhance theCompany’s core competitiveness and achieve healthy and sustainabledevelopment.
Transportationand distribution
Equipmentoperation
andmaintenance
With intelligent scheduling and route planning, it visualizes vehicle management,online tracking, navigation and positioning, and national transportation capacitymap. This achieves transparent management across the entire supply chain andenhances delivery efficiency and controllability.Full-process visualization oflogistics distribution
The night delivery mode optimizes order fulfillment timeliness. Combined withdigital intelligence goods handover and system monitoring, it reduces the handlingrequirements for store personnel.Digital intelligence handoverand monitoring
By automating goods transportation, implementing intelligent scheduling, andoptimizing cross-zone goods transfer, it streamlines the logistics process. Thisreduces manual operations and warehouse inspection procedures, achieving moreefficient, precise, and cost-effective store replenishment and delivery.
Yidatong timely delivery
We comprehensively implement the development of a logistics equipmentmanagement system by shifting from a “firefighting-style repair” approach to a“preventive maintenance” strategy. This enhances the versatility of warehouseequipment, reduces downtime caused by automated equipment failures, andimproves the stability of warehousing operations.Automated equipment
management
We continuously introduce automated equipment and innovate on-site tools,integrating standardized management requirements and processes to improve theefficiency of logistics operations and overall operational coordination.On-site tool innovation
In 2024, we initiated five new warehouse construction projects and gradually introduced automated equipment based on actual needs to enhance theefficiency of warehousing operations. Among them, Suqian and Hengyang warehouses have installed automated equipment such as AGVs, conveyors,and gravity flow goods collection, and have been put into operation. The automated systems in the new Wuhan warehouse, such as stereoscopicwarehouse, conveyors, halved belts, and AGVs, have been basically installed and are now in the commissioning phase. Once operational, these systemsare expected to significantly increase warehouse operation efficiency and further optimize supply chain operations.
ESG ReportEnhancing Benefits and Efficiency for Improved Medication Accessibility
Enhancing People’s Well-Being
As a pioneer in the greater health field, Yifeng Pharmacy prioritizes responsibility and fulfills its commitment to improving people’s livelihood and safeguarding health through concrete actions. By providing targeted assistance andorganizing a wide range of public welfare and community activities, we continuously inject momentum into public health.
Targeted Assistance Rural Revitalization Project inFenghuang County, Hunan Province
From 2022 to 2024, we carried out targeted assistance inFenghuang County, Hunan Province. By signing a Siraitiagrosvenorii purchase cooperation agreement worth RMB 1million with Fenghuang Xingcun Agricultural Development Co.,Ltd., a collective enterprise in Zhangpo Village, FenghuangCounty, Hunan Province, we implemented targeted procurementof Siraitia grosvenorii grown locally, strongly promoting thedevelopment of the rural economy.
Signing Ceremony for Targeted Procurement of Siraitia Grosvenorii
Caring for LivelihoodsOver the years, Yifeng Pharmacy has always fulfilled its social responsibility during its corporate development and has achieved remarkable results inimproving people’s livelihood and well-being. In the future, Yifeng Pharmacy will continue to engage in public welfare practices with a higher standpointand greater intensity, drive the improvement of people’s livelihood with professionalism and warmth, and make every effort to promote healthy andharmonious social development.
Expired Medicines Recycling InitiativeTo popularize the knowledge of rational medicine use, enhance medicine quality and public safety in medicine use, and reduce the environmental impactcaused by disorderly medicine waste, we have continuously engaged in the collection and disposal of expired medicines.In 2024, we partnered with the administrations for market regulation to launch the public welfare activities for the disposal of expired and ineffectivemedicines in family medicine boxes in stores across multiple provinces nationwide. The activities are themed by “Yifeng for Better Health, Cleaning outExpired Medicines”. To encourage active public participation, each participant was given a free eco-friendly bag to celebrate the 9th anniversary of YifengPharmacy’s listing on the stock market. We also offered unconditional coupons to participants based on thetypes and quantities of expired medicinesthey provided. We carefully managed and registered the collected expired medicines before packaging and returning them to the warehouse. The expiredmedicines were then handed over to professional companies responsible for hazardous waste management for safe and eco-friendly disposal. This helpscitizens to dispose of expired medicines in a scientific, safe, and environmentally friendly manner. Through these efforts, we are committed to creating asafe and healthy medication environment, thereby securing both environmental safety and public health.
Driving Regional DevelopmentYifeng Pharmacy has taken concrete actions to closely integrate regionaldevelopment with its own growth. While ensuring the reliable qualityand stable supply of medicines, we prioritize purchasing TCM materialsfrom rural farmers, with a total investment of RMB 93.37 million in 2024.Heng Xiu Tang is a core enterprise under Yifeng Pharmacy focusing onmanufacturing the TCM decoction pieces. More than 70% of its rawmaterials are collected, planted, and processed by farmers. This haseffectively helped farmers to expand sales channels and increaseeconomic income, and stimulated the vitality of rural industrialdevelopment.
ESG ReportEnhancing Benefits and Efficiency for Improved Medication Accessibility
“Yifeng for Better Health” ActivitiesTo enhance the public’s awareness of scientific medication and deepen community residents’ understandingof the importance of safe medication, we launched 26,000“Yifeng for Better Health” public welfare activities in2024 to strengthen the education and guidance of medication among community residents, benefiting morethan 1.1704 million people, providing 820,000 free health tests, and delivering more than 1 million heartwarminggifts.From April to May 2024, we held more than 5,000 activities themed by “Yifeng for Better Health, Spring HealthJourney” in multiple provinces and cities, including Hunan, Hubei, Jiangsu, Jiangxi, Shanghai, Guangdong, andHebei. We distributed spring health and scientific medication promotional materials to residents, answered theirmedication-related questions, and provided free blood pressure and blood glucose testing for people withchronic diseases. In the autumn of the same year, the “Yifeng for Better Health, Osmanthus Fragrans LifeFestival” themed activities were carried out nationwide. A total of more than 20 large store activities and nearly6,000 medium- and small-sized store activities were held. These included free distribution of osmanthus tea bags,public welfare gift-giving for Teachers’ Day, health lectures in autumn and winter,and chronic disease healthtesting services. We also conducted outdoor fun interactive activities, which attracted a large number ofresidents. These activities conveyed the concept of a healthy life, and won widespread praise.
“Yifeng for Better Health” Activities
Health Running Advocacy CampaignWe actively practice the concept of healthy life and promote mass fitness through running. In 2024, we held the“Together for a Healthier Life” healthy running activity in Changsha West Lake Park, which attracted nearly athousand citizens. During the event, we set up supply stations along the route, and provided professionalmedical staff and sufficient emergency medicines to ensure the safety and health of the participants throughoutthe race.In addition, we spread the health concept to a wider population by sponsoring several marathon events. In the2024 Changde Liuye Lake Marathon, we provided the “Yifeng Health Station” service for 15,000 runners from 9countries including Ethiopia and Kenya, and 31 provinces, cities and districts, helping the participants to finishthe race smoothly. In the same year, we donated supplies to 27 medical stations of the 2024 ShijiazhuangMarathon, fully guaranteeing the health needs of more than 30,000 participants. We call on more people to jointhe health running, to convey health, happiness and love through running, and to jointly build a vibrant andcaring society.
Health Running Advocacy Campaign
ESG ReportEnhancing Benefits and Efficiency for Improved Medication Accessibility
Action to Support Flood-Affected AreasIn July 2024, Pingjiang County and Huarong County in Yueyang City, Hunan Province, successively suffered fromsevere flood disasters due to continuous heavy rainfall. After the disaster occurred, we responded quickly bylaunched an emergency relief operation. Through efficient organization and arrangement, we donated morethan 900 bottles of disinfectant and 150 sets of emergency medicines and living supplies to the affected areas.These supplies included Huoxiang Zhengqi water, antiviral oral liquid, Xiasangju granules, Shidishui tincture,compound Banlangen granules, and 84 Disinfectant, which were used for post-disaster disinfection andepidemic prevention as well as the public health protection. In addition, we donated medicines worth over RMB340,000 to severely affected areas such as Anhua, Yuanjiang, and Taojiang, to fully support the frontline floodrescue efforts and help people in disaster areas to get through the difficulties. We demonstrated our corporateresponsibility through concrete actions, stood together with people in disaster areas, and done our best toprotect the health of the people.
Donation of Flood Relief Supplies
Charitable DonationsTo help passengers go home during the Spring Festival travel rush and care for the outdoor workers who protectthe people in spite ofcold weather, we launched the “Warm Journey Home, Safeguarded by Yifeng” charitabledonation activity at the beginning of 2024. In key provinces affected by the cold wave such as Hunan, Hubei,Jiangxi, and Hebei, we organized a series of public welfare activities to send warmth to sanitation workers, busdrivers, expressway traffic police, and returning passengers, contributing our modest efforts to the Spring Festivaltravel. We have coordinated with tens of thousands of stores to successively distribute cold protection medicinesand living supplies worth more than RMB 1.2132 million, including heat patches, ginger tea, masks, hand creams,medicines, and “heart-warming packages”. We provided free collection services for people over 60 years old,children under 2 years old, and returning passengers. We also donated cold protection materials and coldresistance medicines to sanitation workers and expressway traffic police. The beneficiary population reachedmillions of people. These donations delivered warmth to passengers on the Spring Festival journey and outdoorworkers who stick to their posts.In addition, we also worked with Cofoe Medical to donate medical supplies worth RMB 1.3 million to support the“Healthy China Initiative · Mother Action” project of the Hunan Women andChildren Development Foundation.The project aimed to help sanitation female workers and hearing-impaired mothers throughout the province. Wealso donated love materials worth more than RMB 550,000 to the Liuyang Red Cross Society, calling on moreenterprises to actively promote the Red Cross spirit of “humanity, fraternity, and dedication”. In the future, wewill continue to organize such activities to extend care to various groups in society and fulfill our socialresponsibilities through concrete actions.
Charitable Donation Activity
ESG Report
We adhere to the principle of employment compliance and develop a respectfuland fair workplace, to lay a solid foundation for talent attraction and retention.We have a smooth promotion mechanism, helping employees realize careeraspirations by upgrading their skills with diversified training programs. At thesame time, we improve the compensation and benefits system and emphasizeoccupational health and safety, striving to raise employee satisfaction andloyalty. As we forge ahead for progress, Yifeng Pharmacy looks forward toworking side by side with employees to achieve win-win results.
Achieving Win-Win Results and
Realizing theValue of Talents
ESG ReportAchieving Win-Win Results and Realizing the Value of Talents
Compliance Employment
Yifeng Pharmacy strictly follow laws and regulations such as the Labor Law of the People’s Republic of China, the Labor Contract Law of the People’sRepublic of China, the Provisions on the Prohibition of Child Labor, and the Provisions of the State Council on Working Hours of Workers and Staff, and hasalso formulated employment policies to align us with relevant regulations. We conduct recruitment with openness, fairness, and impartiality, avoiding anydiscriminatory words, deeds, or judgements in the selection of talents, including but not limited to discrimination based on ethnicity, race, skin color,gender, religion, and age, to create an equal, fair, diverse and inclusive workplace for employees. Meanwhile, we explicitly prohibit the employment ofchild labor and forced labor and oppose any form of discrimination and harassment. We require the strict verification of the personal information ofapplicants before the official employment. If any incidents of child labor and forced labor are discovered, we will promptly take serious actions against theresponsible person depending on the severity of the situation. In 2024, we had no incidents of child labor, forced labor, discrimination or harassment.As at December 31, 2024, we had a totalof 40,018 employees, all of whom were full-time, permanent and guaranteed hourly employees and were fromChina (including Hong Kong, Macao and Taiwan) with a monthly turnover rate of 1.71%. Details are shown below:
By genderBy age
By job levelBy job position
Female 34,521Male5,497
Senior managers
First-line managers11,422Middle managers
Employees28,175
Under 3111,15741 to 5012,18531 to 4013,86050 and above2,816
Finance
Technology
Production
Administration3,090Distribution1,475Sales34,681
A total of40,018 employees
We devise the talent demand plan annually to define what talents theCompany and key positions seek for, so as to recruit the requiredpersonnel more accurately and efficiently. To attract more talents, webroaden the recruitment channels, including campus recruitment andsocial recruitment.
We continue to implement programs such as the“Reserve Cadres Recruitment”, “Emerging StoreManager” and “Internship” to cultivate freshgraduates and help them integrate into the societymore quickly after graduation.In 2024, we partnered with more than 30 universitiesacross China to develop a three-party talent cultivationmodel, involving “students, universities andenterprises”. As such ,we successfully recruited morethan 1,300 interns.
Campus Recruitment
By publishing recruitment information on the miniprogram of “Yi Recruitment”, external recruitmentwebsites and other channels and by cooperating withgovernment departments, we have expanded the scopeof social recruitment.
Social Recruitment
ESG ReportAchieving Win-Win Results and Realizing the Value of Talents
125 veterans were hired
“Outstanding Enterprise inHuman Resources Digital Transformation”
by Beisen
Employees’ Rights and Interests andDiversityGuaranteeing employees’ rights and interests and respecting their diversity constitute a core driver to creativityand motivation of a corporate. We value the legitimate rights and interests of employees, guarantee theirfreedom of association, and ensure the basic benefits and attentive care for them. At the same time, we embraceequality and diversity, bringing together employees from different backgrounds and cultures and with differentprofessional skills to encourage employees to realize their potentials and occupational achievement.We implement employee management standards with commitment to fairness, equity and transparency, so asto fulfill employees’ rights. During the Reporting Period, we amended the Administrations for the Conclusionand Termination of the Labor Contract, refining internal policies related to employees’ rights and interests,including setting legal working hours, reasonably calculating and paying overtime compensation and banningforced labor, aiming at protecting the legitimate rights and interests of employees. We also revised the EmployeeLeave Management Measures and the Regulations on Five Insurances and Housing Fund Management at YifengPharmacy to ensuring the implementation of employees’ interests on five insurances (pension insurance,medical insurance, unemployment insurance, work-related injury insurance and maternity insurance), housingfund and statutory holidays. In 2024,we paid employees’ five insurances, housing fund and wages in full. Also,there were no significant litigation cases involving labor disputes, nor were there any cases of impairment toemployees’ rights and interests due to significant operational changes.We are committed to building a diverse, equal and inclusive workplace. We have set up positions for ethnicminorities, veterans and the disabled, providing them with flexible work arrangements and a barrier-free workingenvironment. In 2024, we recruited 7,345 new employees, over 80% of whom were female. The number ofveterans and individuals with disabilities reached 125, and more than 200 new hires came from 21 minoritygroups. We also encourage female employees to compete for jobs and enhance their influence in the workplace.In 2024, more than 4,100 female employees were promoted.
15,560 positions were provided by franchise stores
55% of the senior management was hired from the local community
In 2024, we were awarded “2024 King’s ARK - Employer with Commitment to and Excellence in TalentRecruitment” by Boss Zhipin and “Outstanding Enterprise in Human Resources Digital Transformation” byBeisen. Moreover, the Company won the “Leap Award of the Year” by Liepin, the “Brilliance Creation Awardfor 20 Years” by Hunan University, and the “High-Quality Enterprise in Talent Attraction” by the HunanXiangjiang New Area Civil Affairs and Social Security Bureau. These achievements highlighted the recognition ofour talent recruitment initiatives.
“2024 King’s ARK - Employerwith Commitment to andExcellence in Talent Recruitment”by Boss Zhipin
“Leap Award of the Year” by Liepin
“Brilliance Creation Award for20 Years” by Hunan University
“High-Quality Enterprise inTalent Attraction” by the HunanXiangjiang New Area Civil Affairsand Social Security Bureau
ESG ReportAchieving Win-Win Results and Realizing the Value of TalentsTalent DevelopmentInvesting in employees represents an astute commitment to thecompany's success. We have built a complete talent development andmanagement system revolving around employee training, careerprogress, performance evaluation, promotion and other key areas. Itaims to open up a channel of personal growth and career progress forevery employee and to boost the Company’s long-term development.Training and DevelopmentBased on the talent strategy, we identify key positions and talent needsthrough staff inventory, thus forming a talent pipeline consisting ofoutstanding employees. We cultivate excellent personnel for the longrun by customizing training plans for them.
Release the annual talent demand planning and formulatecorresponding recruitment, training, promotion and salary
adjustment plans
Develop the talent pool and pipeline of key positions asreference for the Company’s talent selection and deployment
Facilitate the development of employees for better recognition
in career, clear career direction and continuous careerdevelopment, to achieve their career goals
Talent Inventory Progress
Talent Development and Training ProgramsWith a focus on talent cultivation and business empowerment, we have carried out multi-layer talent development and training programs coveringdifferent managers such as reserve ministers, potential store managers and reserve regional directors, aiming at improving the comprehensive businessability of talents and reserving excellent employees.According to Yifeng Pharmacy’s talent strategy, we have launched the “Reserve Cadre Training Program” to cultivate personnel who align their goalswith the Company’s. We divide the training for reserve cadres into three categories of operations, products as well as central and back officemanagement at headquarters. Through various training cycles and corresponding incentives, we clarify the development requirements of the three kindsof reserve cadres, and motivate them to build up skills.We have formulated a reserve cadre job rotation plan. By inviting outstanding employees to the cross-departmental rotation program and devisingpersonalized rotation and training plans for them, we offer employees with cross-business rotation and front-line and regional opportunities, to helpthem broaden their business perspectives, thus facilitating reasonable mobility and all-around development of talents within the Company. In addition,the Company has set up a “Dual Tutor System”,through which the mentor and the master deliver hands-on instruction to outstanding employees forsecured personal growth.
Job rotation plan“Dual Tutor System”
Growth Path for Reserve Cadres
Training assessmentperiod 1
Training assessmentperiod 2
Training assessmentperiod 3
……Trainingincentives a
Trainingincentives b
Trainingincentives c
……
Now
In thefuture
Growth Path for Reserve Cadres
ESG ReportAchieving Win-Win Results and Realizing the Value of Talents
To contribute to the growth of talents, we have built a complete talent development system for employees ofdifferent levels and fields taking into account the talent review results. By providing various training programsand tools, we work to meet employees’ needs for skill enhancement and encourage personal growth, toachieve the Company’s goals of talent cultivation and strategic development.
Specialized TrainingTo ensure professional enhancement for different positions and to strengthen the teaching skills of internaltutors, we have launched a series of professional expertise training courses and tutor competency enhancementcourses. These training sessions provide employees with a diverse and highly specialized training content, thusmeeting their personalized development needs and intensifying their professional skills and career developmentpotential.
Talent Cultivation Training Program
Skill trainingTutor training
Training System
Specialized training
Employees at
theHeadquarter
Reservecadre
Potentialstoremanagers
Incumbentminister
Seniormanager
Reservecadre Project
Potentialstoremanagerscultivation
program
Managerdevelopment
program
Senior managerdevelopmentprogram
Quality Management Training and Professional Expertise and Knowledge Training in 2024?Conducted156 quality management training sessions for new recruits.?7,435 new employees participated in the quality training examination, and the passing rate
was
98.62%.
?Conducted 2 offline training sessions on knowledge of good supply practices, involving87,898 trainees.
?A total of126,696 person-times participated in the online trainings focused on management
of Medical Devices, regulations on the Traditional Chinese Medicines and so on.?The training covered100% of employees, business partners and franchisees.Pharmacist Cultivation
We encourage all employees to obtain the licensed pharmacistcertificate. And we continuously optimize the tutor qualificationexam and help employees pass the exam by assisting them incompleting the exam registration and participating in thesimulated tests in cooperation with tutoring institutions.
In 2024More than4,000 employeesparticipated in the LicensedPharmacist QualificationExamination.
ESG ReportAchieving Win-Win Results and Realizing the Value of Talents
? 100% senior management participationwith an average training hours per person of
8.12 hours
? 100% middle management participation
with an average training hours per person of
318.10 hours
? 100% frontline management participationwith an average training hours per person of
97.75 hours
? 100% general employees participation
with an average training hours per person of
73.96 hours
Training for New Employees
Training for New Employees
We organize training activities for new employeesto introduce the Company’s human resourcessystems, attendance management systems andother policies. These efforts aim to help themquickly familiarize with and adapt to theCompany’s environment. Moreover, we carry outtraining assessment to ensure employees’understanding of these basic systems.
Training for Management Talents in 2024
Training for Reserve Management Talents
In 2024, we carried out various training activities formanagement talents such as reserve regionaldirectors and potential store managers. We taughtthem management knowledge and practicalmethods, aiming at improving their leadership andcollaboration spirit for the Company’s long-termdevelopment.
During the Reporting Period, we also organizedcorporate culture training to deepen employees’understanding of the corporate culture byexplaining cases and disseminating corporatevalues of Yifeng Pharmacy, striving to consolidatethe team cohesion.Training on Corporate CultureIn 2024, we conducted a total of 4,935 training events, realizing 100% employee participation, with 82.23 traininghours per person and annual training expenses of RMB 4.1938 million.The percentage of employees trained and average training hours by gender
The percentage of employees trained and average training hours by employee category
In 2024
we completed160 training sessions for new
employees, with a total of7,345 newemployees participating.
In 2024we completed228 management talents training,with a total of9,120 person-times participated in.
? 100% male employees participation,
reaching an average training hours per person of
100.83 hours
?100% female employees participation,reaching an average training hours per person of
79.27 hours
ESG ReportAchieving Win-Win Results and Realizing the Value of Talents
Performance Appraisal and Promotion
Senior Management
For existing and new businesses, we integrateperformance assessment mechanisms (such asthe KPI and OKR) with compensation incentives(such as equity incentives). This practiceencourages senior executives to lead otheremployees in completing key tasks and goals andto innovatively implement medium- and long-termdevelopment plans, thus contributing to theCompany’s creative development.
General Employees at StoresBased on a fair and reasonable performanceappraisal system, we have built an effectivecompensation incentive mechanism for generalemployees at stores, to stimulate their motivationand initiative.Compensati
onMechanism
In addition, we have developed a clear and comprehensive employee promotion system and ensure transparency and fairness in promotion by includingthe results of employee performance appraisal and job performance into the promotion system. And we have set up a dual-channel promotionmechanism for management and professional development. In 2024, we cooperated with an international consulting agency to upgrade the promotionchannel, by optimizing the job level setting and clarifying the career ladder and development path for various positions, to strive to push forward a morescientific and reasonable talent planning and cultivation mechanism.
Employee Development
Leadership
Value
Capability
PerformanceAssessmentProfessional ChannelManagement Channel
Employee PromotionGoal
Leadership Model
TalentAssessmentSystem
We continue to improve our talent assessment system, aiming at moreaccurately measuring the performance and contribution of employeesand effectively stimulating their motivation and creativity. In 2024, wecooperated with an international consultancy to develop the“Leadership Competence Model”. We took innovative measures tointroduce the “Leadership” dimension in addition to the original fourmajor assessment dimensions of value, generic ability, businesscompetence and performance, to enable us to pass on the values ofcorporate culture and to effectively evaluate the managerialperformance of high-performing, exceptional leaders. To provideemployees with a clearer understanding of their performance andpotential career ladder, we also offer a detailed guideline on employeeassessment criteria, for the enhancement of their understanding ofassessment indicators and their performance.Yifeng Pharmacy follows the concept of “equal pay for equal work”,making every effort to provide employees with market-competitivesalaries. We have set up a performance-based variable pay policy foremployees at all levels, to enhance business performance and energizeemployees to innovate. By creating a fair, reasonable and motivationalcompensation system, we have developed a reward mechanism foremployees that is closely linked to personal growth. Inthis way, we canmotivate them to make continuous improvement and realize personalcareer goals.To fully motivate our employees, we continue to optimize the long-termincentive system and implement equity incentive plans to attract andretain key talents. We regularly grant restricted stocks to key managersand core technical staff. The registration of pre-established grants toincentive recipients has been completed and the grant has been madeto more than 450 core talents.To effectively promote the Company’s sustainability strategy andgoals, we link sustainability performance indicators such as supplychain sustainability and vehicle operational efficiency to existingemployee compensation incentives, ensuring that all employees areresponsible for the Company’s sustainability goals.
ESG ReportAchieving Win-Win Results and Realizing the Value of TalentsEmployee Communication and CareTo attract and retain talents, Yifeng Pharmacy provides a variety of employee benefits, aiming to deepen their sense of belonging. The Company also sets up various forms of communication channels such as employee satisfactionsurveys to gain timely insight into the core demands of employees. Through flexibly adjust management strategies based on employee feedback, we can continuously optimize employees’ work experience and elevate their jobsatisfaction.
Employee BenefitsWe provide employees with non-statutory benefits, including annual medical checkups, “bring child to work”mechanism, free meals, accommodation, commuter buses, birthday benefits, and holiday benefits. Besides, wehave established the Yifeng Mutual Assistance Foundation (“Yi” Fund), which aims to help employees in needand their families. During the Reporting Period, we subsidized 27 employees in need with an amount of RMB410,000 through the “Yi” Fund.In 2024, we organized a variety of welfare activities for employees with a cultural theme on “care for growth”.These activities included traditional holiday celebrations, birthday parties, team building, and the “Yi WisdomPioneer” knowledge competition, aiming to strengthen employees’ sense of belonging and happiness.
Birthday Party for Employees
We hold monthly birthday celebrations to create a warm andenjoyable memory for the birthday employees. We carefully plan aseries of creative and interesting interactive games, so that everyemployee can play a part in a relaxed and enjoyable atmosphere. Atthe same time, we prepare exquisite birthday cakes and variousdishes, establishing the warm environment in the Company.
Birthday Party for Employees
Employee Communication
We work to build an open and efficient employee communication platform, and actively collect employeefeedback and suggestions via a variety of channels. We regard every piece of feedback as a valuable resource forimproving management and optimizing the workplace environment. We respond quickly to employees’ needsand constantly adjust and refine our management strategies to enhance the employee work experience andcreate an inclusive and supportive workplace.
We organize 4 employee communicationsessions for each employee, on the day ofonboarding, 7 days after probation, 30 days afterprobation and before the official transfer, in anaspiration to understand employees’ realfeelings in each key stage.
“Growing with Yifeng Pharmacy”,an Employee Care Application
Employees can put forward their ideas andopinions via the “Employee Express”application. The Company regularly collectsfeedback from employees and directly reports tothe CEO, so that the management can listen tothe voice of grass-roots employees.
“Employee Express” Application
In addition, we continue to strengthen the functions of the Human Resources Department, through which weenhance communication and connection with other business units, to help us realize information transmissionamong different departments for higher inter-departmental efficiency. We also organize monthly surveys on thesatisfaction of the Human Resources Department, so as to obtain the needs and ideas of various businessdepartments in a timely manner and facilitate effective communication among departments.Our goal is to create a workplace that is inclusive and compassionate, where everyone is valued. We invite allemployees to participate in the series of employee survey a every year. According to the results of the 2024employee survey, the Net Promoter Score (NPS) satisfaction rate of store employees reached 35.1%, thesatisfaction rate of the cafeteria reached 80%, the satisfaction rate of the dormitory reached 95%, and thesatisfaction rate of vehicle usage reached 99%. We also conducted a“Growth and Care/Stress Relief” survey,which aimed to accurately acquire employees’ perception of stress and the effectiveness of stress reliefinitiatives. And we will take measures to improve employees’ work-life balance in response to the feedbackfrom employee surveys.
Women’s Day Activity of “Shine like Flowers”To celebrate the 114th InternationalWomen’s Day in 2024, we organized a seriesof activities with the theme of “Shine likeFlowers”. We held flower arrangementactivities for female employees, and providethem with flowers, beauty meals and otherbenefits, to encouraged them to give full playto their potential in the workplace.
Women’s Day Activity
ESG ReportAchieving Win-Win Results and Realizing the Value of TalentsOccupational Health and SafetyThe Company prioritizes occupational safety and health in business operations, and strictly abides by the Law ofthe People’s Republic of China on Prevention and Control of Occupational Diseases, the Law of the People’sRepublic of China on Work Safety, and the Measures for the Administration of the Diagnosis and Assessment ofOccupational Diseases. We have also issued internal safety-related policies, such as the Yifeng Pharmacy SafetyManagement Policy and the Yifeng Pharmacy Fire Prevention and Theft Prevention Policy, so as to safeguardemployees’ health and safety. In the meantime, we attach great importance to the mental health of employees.By organizing diversified activities, we help them alleviate work and life pressures and intensify their stressresistance, so that they can devote themselves to work with a more optimistic mindset and achieve a soundwork-life balance.
Safety Management
To strengthen the safety management, we have specified the objectives and responsible departments of safetymanagement in the Safety Management Policy. We also refine the safety management requirements for thewarehouse, stores, office areas and other locations to ensure that every employee can work in a safeenvironment. At the same time, to continuously improvethe Company’s all-round safety management, wehave established a scientific, reasonable, comprehensive and efficient safety hazard investigation system, toprevent accidents and continuously enhance the work safety. In addition, we have purchased work-related injuryinsurance and workplace safety liability insurance for all employees with an amount of RMB 9.6065 million, so asto protect employees’ safety. In 2024, there were no significant safety incidents.
Safety Culture BuildingWe actively build a corporate safety culture and improve employees’ safety awareness and emergencyresponse capabilities by means of regular safety training and education.
Mental Health
We attach great importance to the mental health of employees and help them to manage emotions and stress bylaunching the Employee Assistance Program (EAP), pushing articles via the “Yi Family” app and taking otherinitiatives.
Employee Assistance Program (EAP)Employees can have weekly one-on-oneconsultation and communication withprofessional counselors through online andoffline channels. We also provide professionaland effective mental health seminars foremployees. In 2024, we successfully organized 4mental health lectures covering different topicssuch as stress and emotion management,interpersonal relationship management, andparenting education, with more than 500employees participating.
To foster a team of professional and dedicated“considerate teachers”, we encourageemployees with a strong interest in mentalhealth education to participate. In 2024, weorganized a six-month professional mentalhealth training course for the trainees,providing them with 23 courses aroundtheories, skills and practices. A total of 32employees successfully completed the course.
In addition, through the self-developed “Yi Family” app, we regularly publish articles on mental health everymonth, working to alleviate employees’ mental stress via various channels. Our goal is to enable employees todeal with work and life with an optimistic mindset, to ensure that they can enjoy a healthy and balanced lifewhile pursuing professional fulfillment.
Safety-related Cultural Activities at Hengxiutang
In 2024, Hengxiutang organized 22 training sessions on workshopsafety as well as fire drills, aiming to enhance employees’awareness of safe production and fire safety, thereby achieving 0production accident throughout the year.
Work Safety Training
In August 2024, the Company collaborated with the Workers’ Healthand Safety Education Center of Hunan Province to deliver health andsafety lectures to all employees. The content covered identificationand prevention of basic diseases and malignant tumors,enhancement of personal immunity, CPR first aid knowledge, andprevention of heat stroke in summer.In the same month, we organized the “Learning of the GeneralAdministrative Safety Manual” seminar to introduce safety-relatednorms to employees in detail. We also conducted training tests toenhance their understanding of safety knowledge.
Promotion andEducation on Fire Safety
Promotion and Education Activities on Workers’ Health and Safety
ESG Report
Yifeng Pharmacy prioritizes resource efficiency, emphasizes material circulation, andsystematically advances waste minimization and non-hazardous treatment. We enforcestrict control of emissions (air, water, and solid waste) through effective wastemanagement measures, to minimize the negative impact of the company's operations onthe environment to the greatest extent. As a publicly listed enterprise, we remaincommitted to sustainability-driven corporate responsibilities, contributing to globalecological health and green development. In 2024, the Company faced no majoradministrative penalties from environmental authorities or criminal liabilities due toenvironmental incidents.
Co-Creating Green
and Sustainable
Horizons
ESG ReportCo-Creating Green and Sustainable Horizons
Stores?Gradually install smart energy meters in all stores for real-time energy consumption monitoring and data-driven optimization in the future.?Require stores not in peak business hours to implement lighting duration controls, such as using smart LED lights to improve energyefficiency and reduce unnecessary energy waste.?Develop air conditioning energy-saving plans and upgrade air conditioning management systems with AI-driven temperature regulationbased on indoor temperature to create a comfortable, low-carbon, and healthy environment.Offices?Increase the park's photovoltaic power generation coverage, with cumulative self-generated and self-used electricity hitting 714,489 kWh,equivalent to cutting 383.39 tons of CO? emissions.?The Company's headquarters office area has achieved 100% photovoltaic power generation, not only saving electricity costs but alsoeffectively optimizing energy structure.Logistic centers and warehouses?Install smart meters in warehouses to dynamically monitor power consumption and tap the potential for energy conservation and
consumption reduction;?Retrofit warehouse lighting systems to photovoltaic power generation, reducing environmental pollution and enhancing environmental
benefits;?Post signs for material conservation inside the warehouses to raise the awareness of warehouse staff about conservation.
Energy and Climate Actions
We are committed to enhancing energy efficiency to maximize environmental protection. To this end, we have established comprehensive environmental policies covering energy conservation and carbon emission management,providing clear guidelines for our operations.
Energy targetsIn 2024, we set a target of saving more than one millionkilowatt-hours of electricity consumption in our stores. Throughthe installation of smart energy consumption electric meters,we successfully saved 1.46 million kilowatt-hours of electricity,which is equivalent to a reduction of 784 tons of CO? emissions.
Strengthening Energy Governance
Key measures of energy management:
To validate our environmental performance, we have set the followingmeasurable targets aligned with our business development roadmapand environmental concept:
ESG ReportCo-Creating Green and Sustainable Horizons
In 2024, our energy consumption of each category and the total energy consumption intensity are shown in thetable below:
Energy Consumption
单位2024Total energy consumptiontce26,096.50Energy consumption intensitytce/ten million RMB1.08Non-renewable fuel (direct) consumptiontce511.34Natural gastce211.03Petroltce206.08Dieseltce94.23Renewable fuel (direct) consumptiontce87.81Photovoltaic power generationtce87.81Indirect energy consumptiontce25,497.35Electricitytce25,497.35
The calorific value conversion coefficient for the total fuel consumption refers to the General Rules for Calculation of theComprehensive Energy Consumption (GB/T 2589 - 2020). The denominator of the energy consumption density is theoperating revenue during the Reporting Period.
ESG ReportCo-Creating Green and Sustainable Horizons
Enhancing Climate ResilienceIn recent years, global climate warming has led to frequent extreme weather events, exerting tremendous impacts on natural ecosystems, human societies, and economic activities. In alignment with contemporary priorities and nationalinitiatives, Yifeng Pharmacy actively identifies climate change-related risks and opportunities, integrates climate-related governance and strategies into ESG management, and incorporates associated risks into the Company’s riskmanagement framework.
Type of risksPotential ImpactMeasuresAdaptability
Physicalrisk
Acute
Sudden heavy rainfall or flash floods maycause infrastructure damage
?Develop emergency plans for extreme weather, defining roles and response procedures of each relevant department and
personnel in the event of extreme weather conditions?Purchase property insurance to avoid significant impacts on operations due to potential financial losses?Upgrade and retrofit infrastructure (e.g., stores, warehouses) with enhanced flood control, drainage, and disaster resistance tomaintain operations during extreme weather, to reduce losses and improve risk resilience and market competitiveness.?Optimize supply chain layout with diversified suppliers and flexible logistics to swiftly adapt to disruptions caused by extremeweather, ensuring stable medicine supply and enhancing the resilience and reliability of the supply chain and customer trust.?Utilize digital technologies to implement real-time monitoring and early warning systems for critical facilities in stores andwarehouses to enable timely interventions. Meanwhile, we optimize inventory management and order processing workflowsthrough digital means, reducing inventory backlogs and order delays caused by extreme weather, and enhancing operationalefficiency.
HighChronic
Global warming and sea-level rise mayaffect facilities in coastal stores andwarehouses and reduce employeeproductivity
Transitionrisk
Policy andlaws
Increased regulatory requirements for thedisclosure of greenhouse gas-relatedinformation
?Maintain a high level of attention to newly issued regulatory documents, promptly identify and thoroughly analyze theircompliance obligations, clarify mandatory disclosure requirements for the Company, andensure the effective execution ofthese disclosure tasks
MediumTechnology
Low-carbon technology transition mayincrease operational costs in the short term
?Develop and apply low-carbon and energy-efficient technologies to enhance operational efficiency and product quality, while
creating new growth drivers and competitive advantages
MediumMarket
Shifts in consumer preferences towardmedicines with low-carbon production andeco-friendly packaging may reducedemand for certain products
?Prioritize green production and eco-friendly packaging for medicines, and align suppliers with latest consumption trends and
preferences
Medium
Reputation
Inadequate carbon reduction managementmay negatively impact the climate andenvironment, potentially leading todamage to the Company’s reputation
?Strengthen internal data governance and collection capability and establish robust environmental management systems to
enhance operational management and efficiency
Medium
Climate Change-Related Risks and Response Measures
Adaptability encompasses considerations such as the time horizon of climate-related risks, the alignment with corporate strategic plans and resource allocation, and projections regarding the probability and intensity of extreme weather events.
ESG ReportCo-Creating Green and Sustainable Horizons
Climate Change-Related Opportunities and Response MeasuresType of opportunitiesPotential ImpactMeasuresAdaptabilityMarket opportunities
As global emphasis on the low-carbon economy and green developmentgrows, market and customer demand for sustainable products is rising
?Meet market and customer demands for green products, expand business areas, andincrease market share?Increasing the share of renewable resources utilization in the future when feasible
MediumBrand opportunities
Building a strong corporate image by demonstrating our commitment toenvironmental protection and sustainable development can help enhancebrand value and strengthen trust and support from consumers andinvestors
?Proactively comply with regulatory requirements, voluntarily disclose greenhouse gasemissions data, and implement effective carbon reduction measures
MediumFinancial opportunitiesAccess to low-interest financing through sustainability-linked loans
?Establish sustainability management goals and implement initiatives to qualify for low-interest loans from financial institutions
LowTo mitigate and adapt to climate change impacts at the source, we have also formulated a series of carbon reduction plans covering every stage of our operations, from raw material procurement to product manufacturing,transportation, sales, and waste disposal, to holistically reduce carbon emissions.
?Prioritize suppliers that adopt low-carbon
production practices and demonstrate strongenvironmental records. Encourage suppliers toprovide assessment of carbon emissions, andincorporate carbon emissions as a criticalcriterion in supplier evaluation and selection.?Collaborate with industry peers to promote the
low-carbon transition of raw material suppliers,and collectively elevate the low-carbonstandards of raw material procurement acrossthe industry.
Raw material procurement
?Upgrade production facilities by adopting
energy-efficient equipment and processes, andoptimize production line layouts to minimizeenergy consumption.?Gradually increase the proportion of cleanenergy in our energy mix, such as installingsolar panels on factory rooftops to generatesolar power and supporting the adoption ofrenewable energy sources.
Production operations
?Utilize advanced logistics management
systems to optimize delivery routes, reducetransportation distances and frequencies,lowering carbon emissions during transit.?Improve vehicle load capacity and minimize
empty-load rates.?Gradually transition to new energy vehicles toreduce exhaust emissions duringtransportation.?Implement energy-saving technologies, such as
LED lighting, in warehouses to reduce energy
consumption. Optimize inventory
management to minimize overstocking and
product waste, thereby lowering carbon
emissions in warehousing operations.
Transportation and logistics
?Retrofit most stores and distribution centers
with energy-efficient upgrades, including LEDlighting and high-efficiency air conditioningsystems, to reduce energy consumption.?Promote the use of biodegradable andrecyclable green packaging materials tominimize packaging waste and associatedcarbon emissions.?Enhance energy management by optimizing
store operating hours to avoid unnecessaryenergy use. Deploy smart energy managementsystems to monitor and optimize energyconsumption in real time.?Raise customer awareness of environmentalprotection through promotion and guidance,encouraging eco-friendly behaviors such asbringing reusable bags, reducing single-usepackaging, and choosing low-carbon products,to jointly drive carbon emission reduction.
Store operations
622024 Environmental, Social and Governance Report|
ESG ReportCo-Creating Green and Sustainable HorizonsTo further manage carbon emissions, we have systematically reviewed our product catalogue and established aproduct carbon footprint assessment system that defines the scope of products and production stages requiringevaluation. We also conduct regular product carbon footprint assessments, and implement targeted reductionstrategies. Moving forward, we will gradually expand the scope of product carbon footprint assessments toenhance the depth and breadth of our evaluations.Concurrently, we actively implement energy-saving and emission-reduction initiatives, organize internalcampaigns to promote low-carbon practices among employees, and provide actionable guidance to fostersustainable behaviors in the workplace. Key energy-saving and emission-reduction initiatives in 2024 are asfollows:
Expand deployment of new energy logistics vehicles?Partner with companies with new energy vehicles for urban distribution?Incentivize logistics carriers to adopt new energy vehicles for business operations
Implement intelligent logistics dispatch?Optimize logistics dispatching processes by integrating smart algorithm-driven digital platforms.
These systems enable automated daily route planning and real-time dynamic adjustments toachieve optimal delivery efficiency and maximize on-time store arrivals?Leverage fully intelligent and automated systems that incorporate real-time traffic data, store-
specific requirements, and delivery time to improve transportation fleet and routes, therebyreducing greenhouse gas emissions during transit?Achieve a 2% reduction in delivery costs and improve on-time delivery rates by over 30%
In 2024, our emissions and intensity of greenhouse gases (GHG) by category are shown in the table below.Greenhouse gases emissions
单位2024Total greenhouse gases emissions (Scope 1+ Scope 2)tCO
e112,407.36GHG emissions intensitytCO
e/million RMB
4.67
GHG emissions (Scope 1)
tCO
e1,082.09GHG emissions (Scope 2)
tCO
e111,325.27In the future, we will remain vigilant to physical risks such as frequent extreme weather events and transitionrisks driven by climate-related policy shifts. By establishing robust climate governance frameworks and riskmanagement systems, as well as exploring opportunities for green energy adoption, we aim to comprehensivelyenhance the Company’s resilience to climate change.
The operational control method is adopted for the consolidation of greenhouse gas emissions. The company calculatesthe greenhouse gas emissions generated by its own operations and those of its subsidiaries over which it holdsoperational control. The denominator of the greenhouse gas emission density is the operating revenue during thereporting period.
The assessment of carbon emissions during the transportation and logistics stages has been included in the calculationof Scope 1.The greenhouse gas emissions in Scope 1 mainly come from the direct greenhouse gas emissions generatedby the consumption of fossil fuels in the Company's operation and production processes, including natural gas, gasoline,and diesel. Among them, the emission factors refer to the Environmental Key Performance Indicator ReportingGuidelines of the HKEX and China's Accounting Methods and Reporting Guidelines for Greenhouse Gas Emissions ofPublic Building Operation Enterprises (Trial), and the calorific value coefficients refer to China's Accounting Methods andReporting Guidelines for Greenhouse Gas Emissions of Public Building Operation Enterprises (Trial). The Global WarmingPotential values refer to the IPCC Global Warming Potential Values.
The assessment of carbon emissions from production operations, distribution and store operations has been includedin the calculationof electricity consumption and Scope 2. Scope 2 greenhouse gas emissions mainly result from thepurchased electricity for the Company's production and operation, as well as that used in the distribution centers andpharmacies. Among them, the grid emission factor refers to the value of 0.5366 tons of carbon dioxide equivalent permegawatt - hour in the Announcement on Releasing the Electricity Carbon Dioxide Emission Factors in 2022 of China.
2024 Environmental, Social and Governance Report|
ESG ReportCo-Creating Green and Sustainable Horizons
Material Use and Waste Management
Our key initiatives of waste disposal are outlined below:
Strictly abiding by the Law of the People's Republic of China on the Prevention and Control of Atmospheric Pollution and the Law of the People's Republicof China on Prevention and Control of Water Pollution, we are committed to minimizing the adverse environmental impacts of waste emissions andexhaust emissions through responsible management practices. During the Reporting Period, we did not incur any material administrative penaltiesrelated to exhaust emissions, nor were we subject to criminal liabilities in this regard.In our operational activities, the primary waste generated includes expired medications, domestic wastewater, discarded cardboard boxes from logisticsand transportation.
Expired medication recovery
:
?Conduct internal audit for medication recovery.?Designate dedicated return areas at stores to collect expired
medications for centralized storage in appropriatewarehouses?Engage third-party licensed contractors to retrievemedications from designated warehouses for centralizeddisposal
?Limit monthly food waste to 186 containers?Promote the use of recyclable or biodegradable packagingmaterials?Reduce cardboard box waste?Achieve100% reuse rate for plastic turnover boxesand pallets
Targets for non-hazardous waste
To strengthen waste management awareness and advance progresstoward sustainability goals, we have established the following wastereduction targets:
?Attain a 100% recovery rate for expired medications
Targets for hazardous waste:
Cardboard box recycling:
?All the discarded cardboard boxes are handed over to a third-
party recycling agency for disposal, and the proper disposalrate reaches 100%.Food waste?The kitchen waste is disposed of by an external third-party
professional entity.?Office waste is thrown into the domestic waste bins and is
uniformly collected and disposed of by the sanitation
department.
The drug recycling refers to the process that Yifeng Pharmacy collects the drugs and entrusts them to a third-party company with professional qualifications or drugcompanies for unified and specialized disposal.
ESG ReportCo-Creating Green and Sustainable Horizons
Water Efficiency and WastewaterManagementWe implement science-based water management practices, and actively enforce corporate water conservationregulations, to systematically improve water use efficiency. All of our sites are supplied with water from themunicipal network, so there are no difficulties in obtaining water supply. In addition, while setting the targets forsaving water fees in offices and stores, we also conduct meticulous monitoring and in-depth analysis of waterusage on a regular basis, so as to optimize the water usage structure and processes and further reduce the waterusage costs.Key initiatives for 2024 water resource management include:
The total water consumption and intensity in 2024 are shown in the table below:
Water Consumption
Unit2024Total water consumptionTonne4,086,346.68Water consumption intensityTonne/million RMB169.82
The materials usage in 2024 is shown in the table below:
Materials usage
Unit2024Materials usageTonne2,720.50Materials usage intensityTonne/million RMB0.11Package boxTonne438.21Plastic containersTonne42.27Plastic turnover boxes Tonne485.88Plastic palletTonne1,754.14The exhaust emissions and intensity in 2024 are shown in the table below:
Exhaust emissions
Unit2024Total exhaust emissionsKilogram1,184.78Exhaust emission intensityKilogram/million RMB0.05Nitrogen oxides (NOx)Kilogram1,101.37Sulfur oxides (SOx)Kilogram4.01Particular matters (PM)Kilogram79.40The solid waste discharge and intensity in 2024 are shown in the table below:
Solid waste discharge
8、9
Unit2024
Hazardous wasteTonne35,637.00Hazardous waste intensityTonne/million RMB1.48Non-hazardous wasteTonne6,755.42Non-hazardous waste intensityTonne/million RMB0.28
Install water-saving faucets to reduce waterflow and effectively minimize water waste
Put up water-saving signs in each water usingarea to raise employee awareness
Optimize water usageprocesses, and schedulecleaning activities reasonably,avoiding large-scale cleaningduring peak demand periods
Implement real-time watermeter monitoring to promptlydetect any anomalies in water
usage
Reuse vegetable-washingwater from kitchens for floorcleaning to enhance recycling
efficiency
The denominators for the density of materials used, the density of exhaust gas emissions, the density of hazardouswaste, the density of non-hazardous waste, and the density of water resource consumption are all the operating revenueduring the Reporting Period.
Hazardous waste mainly includes expired drugs and pharmaceuticals. Non-hazardous waste mainly includes generaloffice waste, discarded traditional Chinese medicine dregs (without toxic substances), and discarded cardboard boxes.
ESG ReportAppendix: Report Index Table
Guidelines forSustainability Report
GRI StandardsResponse
Chapter I General ProvisionsArticle 1、Article 2、Article 3、Article 4、Article 5、Article 6、Article 7、Article 8、Article 9、Article 10
GRI 1: Foundation 2021GRI 2: General Disclosures 2021GRI 3: Material Topics 2021
This Report has been prepared in strictaccordance with the Guidelines forSustainability Report to comprehensivelydemonstrate Yifeng Pharmacy’simpacts across economic, social, andenvironmental dimensions.Methodological transparency is ensuredthrough explicit annotations of datasources, calculation methods andreferences, facilitating stakeholderunderstanding and cross-yearcomparability. In addition, we strictlyfollow the materiality principle in thepreparation of this Report. For details,please refer to the “Management ofMaterial Issues” section.Chapter II Disclosure Framework for Sustainability InformationArticle 11、Article 12、Article 13、Article 14、Article 15、Article 16、Article 17、Article 18、Article 19
GRI 2: General Disclosures 2021GRI 3: Material Topics 2021
Based on our industry and businessnature, we identify sustainability-relatedimpacts, risks and opportunities throughstakeholder surveys and prioritize them.We disclose the issues of dual materialityin accordance with the four aspectsspecified in the Guidelines forSustainability Report. For details, pleaserefer to the “Management of MaterialIssues” section. We have established anESG governance framework. For details,please refer to the “ESG Governance”section.Chapter III Environmental DisclosureSection 1 Climate ResponseArticle 20Article 21Article 22Article 23Article 24Article 25Article 26
GRI 201: Economic Performance2016201-2 Financial implications andother risks and opportunities due toclimate changeGRI 302: Energy 2016302-1 Energy consumption withinthe organization
Energy and Climate Actions
Guidelines forSustainability Report
GRI StandardsResponseArticle 27Article 28
302-2 Energy consumption outside
of the organization
302-3 Energy intensity
302-4 Reduction of energy
consumption
302-5 Reductions in energy
requirements of products and
services
GRI 305: Emissions 2016
305-1 Direct (Scope 1) GHG
emissions
305-2 Energy indirect (Scope 2) GHG
emissions
305-3 Other indirect (Scope 3) GHG
emissions
305-4 GHG emissions intensity
305-5 Reduction of GHG emissions
305-6 Emissions of ozone-depleting
substances (ODS)
305-7 Nitrogen oxides (NOx), sulfur
oxides (SOx), and other significant
air emissionsSection 2 Pollution Control and Ecosystem ProtectionArticle 29Article 30Article 31Article 32Articles 33
2-27 Compliance with laws and
regulations
GRI 303: Water and Effluents 2018
GRI 304: Biodiversity 2016
304-1 Operational sites owned,
leased, managed in, or adjacent to,
protected areas and areas of high
biodiversity value outside protected
areas
304-2 Significant impacts of
activities, products and services on
biodiversity
304-3 Habitats protected or restored
304-4 IUCN Red List species and
national conservation list species
with habitats in areas affected by
operations
GRI 305: Emissions 2016
GRI 306: Waste 2020
Material Use and Waste ManagementWater Efficiency and WastewaterManagementYifeng Pharmacy consistently monitorsenvironmental protection practices andrecorded no significant environmentalviolations during the Reporting Period.Concurrently, we prioritize biodiversityconservation and ecosystem protection.None of our operations, whether owned,leased, or managed, are located in ornear protected areas or biodiversity-richregions outside of protected areas. Allour stores and logistics centers arestrategically located in commercial areasand industrial parks. This deliberatesitting approach ensures no materialadverse impacts on local biodiversity orecosystems
ESG Report
Guidelines forSustainability Report
GRI StandardsResponse
Section 2 Innovation-Driven Development and Ethics of Science and TechnologyArticle 41Article 42Article 43
Not involvedDeepening Digital Intelligence
EmpowermentGiven our industry and businessnature, the issue of technologyethics is not applicable.Section 3 Suppliers and ClientsArticle 44GRI 204: Procurement Practices 2016
GRI 308: Supplier EnvironmentalAssessment 2016308-1 New suppliers that were screenedusing environmental criteria308-2 Negative environmental impacts inthe supply chain and actions takenGRI 414: Supplier Social Assessment (2016)414-1 New suppliers that were screenedusing social criteria414-2 Negative social impacts in the supplychain and actions taken
Strengthening ChannelCollaboration
Article 45Not involvedYifeng Pharmacy is fully aware of
the importance of treating smalland medium-sized enterprises(SMEs) fairly. There is nosituation where the balance ofaccounts payable (includingnotes payable) at the end of theReporting Period exceeds RMB 30billion or represents more than50% of the total assets.Article 46GRI 416: Customer Health and Safety 2016
416-1 Assessment of the health and safetyimpacts of product and service categories416-2 Incidents of non-complianceconcerning the health and safety impacts ofproducts and servicesGRI 417: Marketing and Labeling 2016417-1 Requirements for product and serviceinformation and labeling417-2 Incidents of non-complianceconcerning product and service informationand labeling
Quality and Efficacy AssuranceProviding Quality ServicesThe safety and quality ofpharmaceutical products areYifeng Pharmacy’s top priority.During the Reporting Period,there were no significantviolations involving the healthand safety impact of productsand services, as well asinformation and labeling.
Guidelines forSustainability Report
GRI StandardsResponse306-3 Waste generated306-4 Waste diverted from disposal306-5 Waste directed to disposalSection 3 Resource Utilization and Circular EconomyArticle 34Article 35Article 36Article 37
GRI 301: Materials 2016301-1 Materials used by weight or volume301-2 Recycled input materials used301-3 Reclaimed products and theirpackaging materialsGRI 302: Energy 2016302-1 Energy consumption within theorganization302-2 Energy consumption outside of theorganization302-3 Energy intensity302-4 Reduction of energy consumptionGRI 303：Water and Effluents 2018303-1 Interactions with water as a sharedresource303-2 Management of water discharge-related impacts303-3 Water withdrawal303-4 Water discharge303-5 Water consumptionGRI 306: Waste 2020306-1 Waste generation and significantwaste-related impacts306-2 Management of significant waste-related impacts
Energy and Climate ActionsMaterial Use and WasteManagement
Chapter IV Social DisclosureSection 1 Rural Revitalization and Social ContributionsArticle 38Article 39Article 40
GRI 203: Indirect Economic Impacts 2016203-1 Infrastructure investments andservices supported
Providing Quality ServicesDriving Regional Development
ESG Report
Guidelines forSustainability Report
GRI StandardsResponse
Chapter V Corporate Governance Information Related to Sustainable Development DisclosureSection 1 Sustainability-Related Governance MechanismsArticle 50GRI 2: General Disclosures 2021
2-29 Approach to stakeholder engagementGRI 3: Material Topics 20213-1 Process to determine material topics
Stakeholder CommunicationManagement of Material IssuesRegarding due diligence, YifengPharmacy has establisheddifferent functions to conductinvestigations on environmentalcompliance, labor rights, anti-corruption, and other aspectsconcerning the Company, oursubsidiaries and businesspartners. Therefore, the contentinvolved in this issue will becovered in other issues, such assupply chain management andsecurity.Section 2 Commercial BehaviorsArticle 51Article 52Article 53
GRI 205: Anti-corruption 2016205-1 Operations assessed for risks relatedto corruption205-2 Communication and training aboutanti-corruption policies and procedures205-3 Confirmed incidents of corruptionand actions takenGRI 206: Anti-competitive Behavior 2016206-1 Legal actions for anti-competitivebehavior, anti-trust, and monopolypractices
Compliant Operation
Chapter VI Supplementary Provisions and Interpretation
Article 54Article 55Article 56Article 57Article 58
GRI 1: Foundation 2021The Report has been prepared in
strict accordance with theGuidelines for SustainabilityReport, including the index ofindicators.In 2024, we did not have anylitigation or administrativepenalties resulting from unfaircompetition practices.
Guidelines forSustainability Report
GRI StandardsResponseArticle 47GRI 418: Customer Privacy 2016
418-1 Substantiated complaints concerning
breaches of customer privacy and losses of
customer data
Information Security andCustomer PrivacySection 4 EmployeesArticle 48Article 49
GRI 401: Employment 2016
401-1 New employee hires and employee
turnover
401-2 Benefits provided to full-time
employees that are not provided to
temporary or part-time employees
401-3 Parental leave
GRI 403: Occupational Health and Safety
2018
403-3 Occupational health services
403-5 Worker training on occupational
health and safety
403-6 Promotion of worker health
403-9 Work-related injuries
403-10 Work-related ill health
GRI 404: Training and Education 2016
404-1 Average hours of training per year per
employee
404-2 Programs for upgrading employee
skills and transition assistance programs
404-3 Percentage of employees receiving
regular performance and career
development reviews
GRI 405: Diversity and Equal Opportunity
2016
405-1 Diversity of governance bodies and
employees
405-2 Ratio of basic salary and
remuneration of women to men
GRI 406: Non-discrimination 2016
406-1 Incidents of discrimination and
corrective actions taken
Compliant EmploymentEmployees’ Rights andInterests and DiversityTalent DevelopmentEmployee Communication andCareOccupational Health and Safety
ESG Report
Yifeng Pharmacy Chain Co., Ltd.
Address: Yifeng Pharmaceutical Park, No. 68 JinzhouAvenue, Lugu Hi-Tech Zone, Changsha, Hunan, ChinaInvestorEmail:ir@yfdyf.comCompanyWebsite:https://www.yfdyf.cn