Sustainability Report
ZHENDE MEDICAL CO., LTD.
2024
About This ReportAbout Zhende MedicalMessage from the Chairman:
Afterthirty years of e?orts, embark on the pathof high-quality development throughESG
Performance for Sustainable Devel-opment in 2024
ESG Performance Tables 84Report Benchmarking Index Table 95Assurance Statement 111
Improving Governance System
Corporate Governance System 35Compliance Operation Management 37
Caring for Employee Growth
Protection of Employees' Rights and Interests 41Employee Training and Development 47Occupational Health and Safety 51
Promoting Green Development
Environmental Management System 54Resource Conservation and Utilization 58Climate Change Mitigation and Adaptation 61
Being A Reliable Partner
Innovative solutions 66Safety and Quality of Product and Service 71Data Security and Privacy Protection 76Sustainable Supply Chain 77Community Communication and Development 80Industry Exchange and Cooperation 82
| CONTENTS |
Sustainable DevelopmentManagementWe Care 14Management Structure and Responsibilities ofSustainable Development 14Progress in Sustainable Development Manage-ment 15Stakeholder Engagement 17
Zhende CaresButter?y Baby Care Project — Helping to Enhancethe Quality of Life of EB Patients 23Afya Kesho Project — Innovative Health EducationSolutions for Kenyan Teenagers 24
Topic
Zhende EcologyGreen Supply Chain Construction 27Production Process Optimization 29Use of Clean Energy 30Publicity and Implementation of Carbon Reduc-tion Awareness 31
Topic
5 8
11 13
0102
About This Report
This report is the third Sustainability Report of Zhende Medical Co., Ltd., which discloses to investors, clients,employees, suppliers and other stakeholders the Company’s philosophy, established management methods,implemented work, and achieved results in terms of sustainable development topics in its operations.Report ScopeThe scope of this report covers Zhende Medical Co., Ltd. and its subsidiaries (referred to as “Zhende Medical”, “Zhende”,“the Company” or “we”). Unless otherwise specified, the scope of this report is consistent with that of consolidatedfinancial statements for the same period of Zhende Medical (stock code: 603301.SH).
Report PeriodThis report covers the period from January 1, 2024 to December 31, 2024. Unless otherwise specified, the data in thisreport come from this period.Preparation BasisThis report is based on the Self-Regulatory Guidelines No. 14 for Companies Listed on Shanghai Stock Exchange—Sustainability Report (For Trial Implementation) (2024), and has been prepared with reference to the United NationsSustainable Development Goals (SDGs). The preparation process conforms to the GRI Standards (2021).Report Preparation PrinciplesThis report is prepared in accordance with the principles of materiality, accuracy, balance, clarity, quantification,comparability, completeness, timeliness, and verifiability. It is approved for release by Zhende’s Board of Directors onApril 24, 2025. The Board of Directors guarantees that the content of the report is free from false records, misleadingstatements, or significant omissions. This report is published in Simplified Chinese and English. Any inconsistencybetween the Chinese and English expressions shall be subject to the Chinese version.-MaterialityThe Company has identified operation-related material topics that are of concern to various stakeholders as thefocus of this report. In this report, the Company's industry and business operation characteristics are also taken intoconsideration while material topics are reported. The materiality analysis process of topics and results are detailed inthe "Material Topic Analysis" section of this report.-Accuracy
Efforts have been made to ensure the information in this report is accurate to a maximum extent. Among them, themeasurement of quantitative information has accounted for the data scope, calculation basis and assumed conditionsso as to ensure that the calculation error range will not trigger misleading effects on information users. Quantitativeinformation and annotated information are detailed in the ESG Performance Table section of this report.
-BalanceThis report reflects objective and true facts, and makes objective disclosure of positive and negative informationregarding the Company. No negative events were found during the reporting period that should have been disclosedbut were not disclosed.
-ClarityThis report is released in Simplified Chinese. Information such as tables and models in this report is to helpstakeholders better understand the text of this report.-QuantificationThis report covers key quantitative disclosures and discloses historical data to the maximum extent.-Comparability
The statistics and disclosure methods of the same quantitative disclosure items in various reporting periods shallbe consistent in this report. In the event of any change in the data collection, measurement and calculation methods,the Company shall make retrospective adjustments to relevant data, and present the situations and reasons forsuch adjustments in the notes to the report, so that stakeholders can perform meaningful analysis and evaluate thedevelopment trend of the Company's ESG data.-Completeness
The scope of disclosure in this report is consistent with that of the Company's consolidated financial statements.-TimelinessThis report is an annual report and shall be released by the Company as soon as possible after the end of the reportingyear, aiming to provide timely information for stakeholders to make decisions.-VerifiabilityThe cases and data in this report come from the original records or financial reports of the Company in its actualoperation process. The data source and calculation process disclosed by the Company can be traced to supportexternal assurance and inspection.Data Description
The financial data in the report are all in RMB. If the financial data is inconsistent with the Zhende’s annual financialreport, the annual financial report shall prevail.
关于本报告
0304
About Zhende Medical
Company ProfileZhende Medical, established in 1994, is an A-share listed company in China (stock code: 603301. SH). It isheadquartered in Shaoxing City, Zhejiang Province. The Company has become one of China’s leading manufacturersof medical dressings and infection site control and protection products and one of top 100 medical technologyenterprises, whose scope of businesses and services covers 34 provinces of China, and over 70 countries and regions.Zhende’s products have been certified by the Food and Drug Administration (FDA), the CommunateEuroppene (CE), Medical Device Single Audit Program (MDSAP), ISO 13485 Quality Management forMedical Devices, and the National Medical Products Administration (NMPA) of China. Our product linecovers different usage scenarios such as compression treatment & fixation, traditional wound care,operating room infection control, basic care, isolation protection, pressure therapy and venous thromboembolism (VTE)prevention, stoma care, advanced wound care, personal healthcare, rehabilitation care, and intravenous therapy.
Report AcquisitionThis report is released in electronic form on information disclosure platforms designated by the stock exchange, andcan be viewed on or downloaded from the Company’s official website (http://www.zhende.com).Contact Us
If you have any suggestions for the report, you can reach us through the following ways:
Address: No. 55 Xiangji Road, Gaobu Town, Yuecheng District, Shaoxing City, Zhejiang ProvinceEmail: dsh@zhende.com
About Zhende Medical
Honors in 2024
2024 CPEO Gold Award
The 2024 10th China's Top 100Most Influential PharmaceuticalEnterprises Ranking
2024 Global MedTechTOP100
List of 5G Factories in 2024 bythe Ministry of Industry andInformation Technology
2024 Global Zhejiang Business
ESG Classic 100 Ranking
2024 Top 3 A-share ListedCompanies in the HealthcareIndustry for ESG PerformanceBest Employer Brand Practice
Award
2024 Zhejiang Provincial-level
Industrial Internet Platform
"Green Factory" in Henan Province“Provincial Smart Factory”in Henan
Province
2024 Top 500 ChineseManufacturing Enterprise inCharity and Public Welfare
China Healthcare Growth Ranking
(HGR)-Top 100 Listed MedicalDevice Manufacturers
China Times -Wind ESG
Dandelion 50 Index
Honors and Recognitions
0506
Company Events in 2024
Participation in EcoVadis RatingsEcoVadis ratings have establishedour prominent position in sustainabledevelopment goals and performancein the industry. The Company earneda silver medal in its first participationin the EcoVadis rating. The Companyscored 74 points, ranking in the top 6%of all participants.
Release of the 2030 Carbon Path Plan
Zhende Medical has activelyresponded to the challenge of globalwarming and formulated a climatetransformation strategy in line withthe climate control goals of the ParisAgreement. The Company has joinedthe Science Based Targets initiative(SBTi), and proactively completed thescope III-carbon verification accordingto the SBTi standards after joining,and released a carbon path plan for2030.
Full development of renewableelectricityIn 2024, Anhui Base and Kenya BasePhase I were put into operation,and Xuchang Base was expanded.The Company also planned for theconstruction of Shaoxing Phase II andJiangsu Huaian base photovoltaicprojects. Our objective is to userenewable electricity by more than30% by 2028.
Energy conservation and emissionreductionWe invited a third-party agency tomake an overall energy diagnosis ofeach factory, aiming to achieve theCompany’s goal of a 15% reduction inenergy consumption through energyefficiency inspection, the launch of 33emission reduction projects, energytransformation and energy efficiencyenhancement.
Caring teenagers in KenyaJointly funded by Zhende Medicaland Yi-nergy Minority AssistanceFoundation, and jointly launched byTsinghua University and IHEA, a localNGO. The project aims to enhance thehealth level of Kenyan adolescentsand mitigate health risks throughinnovative educational means.
Full coverage of ISO 14001 and ISO45001 in the factoryAll the production factories ofthe Company have passed ISO14001/45001 system certification,helping the Company to enhance theoverall management and corporateimage.
Low-carbon actionThe Company organized variousforms of low-carbon actions, includingthe procurement of low-carbon officesupplies, low-carbon meals, restrictedand reduced use of plastics, garbagesorting and low-carbon travel,contributing to a positive low-carbonatmosphere in the Company.
Green factoryFollowing Xuchang Zhengde, XuchangZhende upheld the concept of greenand environmental protection, activelypracticed the goal of "carbon peakingand carbon neutrality", and establisheda comprehensive green developmentpath in various aspects such as greendesign, green manufacturing, greenmanagement and green standards. In2024, it won the honorary title of "GreenFactory" in Henan Province again.
Provincial Smart Factory
With digital and intelligentconstruction, Xuchang Zhendeachieved the human-machinecoordination and cooperation, realizedthe new mode of data-driven industrialtransformation and upgrading withnew capacity building as the maincontent, and won the honorary title of"Provincial Smart Factory" in HenanProvince in 2024.
Caring EB babies
Jointly launched by Zhende Medicaland Shanghai Debra Butterfly BabyCare Center, Butterfly Baby Carepublic welfare project of "Touchlife stay caring" provides economicsupports and medical care productsfor EB patients, and is also committedto raising public awareness andunderstanding of EB disease.
0506
%
%
About Zhende Medical
0708
Commitment to Sustainable Development
0708
Commitment to Sustainable Development2024 Sustainability Report
0910
Message from the Chairman
In 2024, Zhende Medical reached an importantmilestone, celebrating its 30th anniversary. This year, wehave embraced change and made significant strides,firmly embarking on a path of compliance managementand high-quality, sustainable development. In theface of multiple challenges, including the deepeningof centralized procurement, pressure from overseasexpansion, and the technological revolution withinthe medical industry, Zhende Medical has focused oninternal growth. We have adhered to innovative businessmodels, accelerated the global supply chain layout,fostered technological innovation, and committed toenergy conservation and emission reduction—all withthe goal of making healthy living more accessible. Bystaying true to our core values and putting in the hardwork, we have driven the comprehensive upgrade ofour ESG management, shifting from risk managementto compliance management, and from non-financialperformance to long-term financial performance.Integrating ESG concept into the strategy and
practising sustainable developmentOver the past year, Zhende Medical has deeplyintegrated the ESG concept into its corporate strategyand operations, continuing to create a positive impacton both the environment and society. As a member ofthe United Nations Global Compact (UNGC), we haveactively fulfilled our responsibilities, fully participatedin the UNGC Global Action Plan, and engagedin discussions and practices on key sustainabledevelopment topics. Guided by our core mission of"Ensure medical safety and reduce healthcare cost." wehave strictly adhered to the ten principles of the UNGC,promoted green and low-carbon production models,strengthened supply chain management, and advancedthe integration of environmental protection and socialresponsibility.Enhancing climate action and implementingthe strategy of "carbon peaking and carbonneutrality"We actively responded to the national strategy of
After thirty years of efforts,embark on the path ofhigh-quality developmentthrough ESG
"carbon peaking and carbon neutrality," developed greendevelopment plans, set carbon reduction targets, andcommitted to the Science-Based Targets initiative (SBTi),demonstrating our strong determination to reduceemissions. Through energy conservation and emissionreduction efforts, the adoption of photovoltaic energy,and the development of low-carbon green materialsand products, we contributed to the green and low-carbon transformation of the industry. Additionally, weempowered upstream and downstream enterprises,driving energy conservation and emission reductionthroughout the entire supply chain, and playing our partin the global fight against climate change.
Establish an outstanding team throughorganizational optimization and culturalempowermentWe continued to focus on organizational optimizationand cultural empowerment, reshaping our organizationalstructures through digital processes and establishing alearning-driven, innovative team. With development planssuch as "Xinying, Qihang, Ruihang, and Linghang," wenurtured a diverse range of talent, including compound,business, and specialized experts. Additionally, welaunched the "5×1" corporate culture project for seniormanagers, creating a vibrant talent hub through multipleinitiatives and at various levels. Upholding the corevalues of "Customer first,Transformation&Innovation,Success-sharing." we fostered leadership, businessacumen, product strength, marketing capabilities, andmanufacturing excellence, all of which contributed toadvancing management excellence.Quality first, intelligent manufacturing paving theway for the future.As the most trusted partner in healthcare, we haveestablished a robust product quality inspection system,adhering to global certifications and Cpk standards toensure that every product withstands the test of timeand meets our clients' needs. Leveraging intelligentmanufacturing and automated production, we haveachieved smart operations, efficient maintenance, andsustainable production in our factories. This enables usto respond swiftly to customer demands while deliveringsafe and effective products for patients and healthcareprofessionals.
Carrying out public welfare activities to fulfillcorporate social responsibilityWe have actively participated in public welfare initiativesand fulfilled our corporate social responsibility. In 2024,we launched the Butterfly Baby and AFYA KESHOprojects, which received widespread praise from usersboth domestically and internationally. We believe thatpublic welfare activities not only serve as a bridge toconvey love and care, but also act as a channel to plantseeds of hope, allowing more people to experiencewarmth and strength.Grateful for your partnership and work togetherto create a brighter futureAs we reflect on this year, we sincerely thank ourpartners, healthcare professionals, and consumers fortheir unwavering support. Zhende Medical will alwaysremain your most reliable partner.Looking ahead, Zhende Medical will join hands withour customers with unwavering confidence anddetermination to create even greater milestones on ournew journey. We are committed to energy conservationand emission reduction, increasing the use of greenenergy, enhancing circular economy efficiency, anddriving technological innovation. We will focus onreducing carbon emissions, deepening our presencein the healthcare sector, strengthening internationalcooperation, and enhancing our core competitiveness. Indoing so, we aim to provide more advanced, high-qualitymedical and healthcare products and services to globalcustomers.
——Lu Jianguo, Chairman of Zhende Medical
Message from the Chairman
1112
Performance for Sustainable Development in 2024
Reform and Innovation
Promoting Green Development
Improvement of processmanagement proposals
Caring for Employee Growth
Being a Reliable Partner
Proposals wereimproved
5,121
Annual R&D investmentwas RMB
135.49
million
Female employeesaccounted for
66.12%
Domestic market customernet promoter score was
84.27
New employeesatisfaction rate reached94%
Foreign market customer netpromoter score was
Zhende participated in the formulation(revision) of 12 group standards
A total of proposalswere collected
The use proportion ofrenewable electricity was20%
Standard formulaswere developed5,650
The annual expenditure onenvironmental protectioninvestment reached RMB
11.778
million
The coverage of employeesreceiving training was
100%
Employee net promoterscore (ENPS) was
75.55
Environmental and social risk surveywas conducted on suppliers
Working days lost due towork-related injuries
days
The total duration of employeevolunteer service was2,004 hours
Scholarships were granted to atotal of employees' children
The average training timeper employee was
64.9
hoursA total of employees weresponsored
The work-related injuryrate per one thousandemployees was
0.38
Employees participated involuntary activities
With a subsidy amount of
196,000 RMB
Intangible gains evaluated RMB
4.71
million
The total amount of wasterecycled was4,237.38 tons
TPI projects werecompleted
The percentage ofrecycled water is
52.05%
Zhende was granted
Class II medicaldevice product registration certi?catesand
patents for invention
People participated inimproving the proposals6,800
RMB of costs were saved
16.475
million
The proportion of environmentallyfriendly packaging materials used in?nished products reached68%
Total greenhouse gas emissions (Scope 1 + Scope 2)was90,458.26 tons of CO
equivalent
Total amount donated RMB
2.30
million
1112
Message from the Chairman
1314
Topic 1:
Zhende Cares
Topic 2:
Zhende Ecology
ImprovingGovernanceSystem
Caring forEmployee
Growth
Promoting Green
Development
Being A Reliable
PartnerSustainableDevelopmentManagement
Integrate ESG concepts into the Company’s strategic operations from risk compliance to value creation;Implement the dual-carbon strategy, commit to SBTi, and release a carbon path plan for 2030;
Sustainable DevelopmentManagement
Care
| Care Employee Growth, Promote Green Development, and To Be a Reliable PartnerCareWe | ||
| 关注员工成长、促进绿色发展、做值得信赖的合作伙伴CareWe | ||
Care
1516
Topic 1:
Zhende Cares
Topic 2:
Zhende Ecology
ImprovingGovernance
System
Caring forEmployee
Growth
Promoting Green
Development
Being A Reliable
PartnerSustainableDevelopmentManagement
Sustainable Development Management Strategy - We CareThe philosophy of sustainable development of Zhende Medical originates from its mission and vision. We believe thatintegrating the philosophy of sustainable development into Zhende’s operations will help us grow steadily and constantlyinto the future. Based on its own business, the SDGs and the global governance philosophy proposed by the Chinesegovernment, Zhende Medical developed an ESG policy that included three major strategies: “Caring for employee growthPromoting green development Being a reliable partner”.
Management Structure and Responsibilities ofSustainable DevelopmentIn order to further boost the integration of ESG policy into the corporate strategy, the Company has set up a top-downESG management organizational structure to further optimize relevant management processes. The constructionof the Company's ESG management system is overseen by the Board of Directors as the top governing body, and iscarried out by the ESG Management Committee. The Company's ESG Office, as a standing office, coordinates relatedmanagement, communication and disclosure, and establishes a long-term management mechanism. The ESG Officeregularly reports to the ESG Management Committee on progress and receives guidance from it.
The top governing body
The Board of Directors
Decision-making
bodyESG Management
CommitteeExecutive office
ESG OfficeExecuting agencyEach department andproduction base
The Board of Directors is a top ESG governing body of the Company; the StrategicCommittee of the Board, on behalf of the Board, is responsible for making ESG managementdecisions, reviewing sustainable development strategic plans, determining ESG risks, andreviewing the information to be disclosed to the public.The ESG Management Committee is chaired by the CEO, participates in the deliberation anddecision-making of major ESG topics, and provides decision-making support for ESG relatedmatters.The ESG Office includes relevant leaders of the Group with the Vice President of the Groupacting as the Executive Director, and is responsible for planning, executing, and monitoringESG work.Implement relevant ESG management measures in accordance with the requirements of theESG Office.
The long-term sustainable development of the Company is closely linked with its social responsibilities. ZhendeMedical profoundly realizes that only by deeply integrating the ESG concept into its corporate strategies and dailyoperations can it achieve both economic and social benefits. During the reporting period, the Company conformed tothe trend of the times, and took initiative in making reforms. Specifically, we developed and issued the ManagementManual for Social Responsibilities for all bases around the world as a profound practice and specific action guideline forthe Company’s commitment to sustainable development, demonstrating our forward-looking vision and managementinitiative as an industry leader, and responding to social expectations with our practical actions.
I’m well aware that sustainable development is not only the responsibility of the Company, but is also thefuture competitiveness. We are actively boosting the transformation from risk operations to complianceoperations, deeply integrating ESG into the corporate strategy and routine operations. Through theestablishment of a sound compliance system, we can proactively identify and respond to potential risks,and enhance the anti-risk capability of enterprises. We are no longer limited to short-term non-financialmetrics, but attach significance to long-term financial value creation. We believe that only throughcombination of social responsibility and economic benefits we can achieve true sustainable developmentand provide lasting value for our shareholders, employees and society.
—— Lu Jianguo, Chairman of Zhende Medical
Care
Care Employee Growth, Promote Green Development,
and To Be a Reliable Partner
CareWe
Caring for employee growth Promoting green development
Being a reliable partner
P
romoting
green
development
B
ei
ng
a
reliable
partnerC
ar
ing
for
employee
growt
h
1718
Topic 1:
Zhende Cares
Topic 2:
Zhende Ecology
ImprovingGovernanceSystem
Caring forEmployee
Growth
Promoting Green
Development
Being A Reliable
Partner
SustainableDevelopmentManagement
Progress in Sustainable Development Management
—Progress in achieving ESG management goals in 2024—
ESG Strategy and
Responses to
SDGs
Key dimensions
2030 GoalsCommitted
Key Actions in 2024
Performance in2023
Progress in
2024
BusinessTrends
Caring forEmployeeGrowth
Health and safety
100% of thefactoriesmaintained ISO45001 systemcertification
Established ISO45001 occupational health andsafety management systemImplemented safety production responsibilitysystem and signed target responsibility statementsat every levelMade comprehensive identification, assessment,control and updating of hazard sourcesProvided EHS theme training for all employeesConducted EHS quarterly audit and improvementMade EHS regular meetings and managementimprovementCarried out QIT and KYT activities extensively
Three newsubsidiariespassed theISO 45001occupationalhealthand safetycertification.
100%↑The work-related injuryrate per onethousandemployees wasless than 0.5
0.450.38
↓
Employee rightsand benefits
The proportionof female seniorexecutives(above the levelof director)reaches 20%
Made ‘Five Must Visits’Established employee communication channelssuch as trade union, workers’ congress and generalmanager mailboxCared for employees in need and established amutual assistance fundMade surveys on employee satisfaction andemployee engagementEstablished a comprehensive remuneration andreward systemFormulated diversified inclusion policies andpromoted the SA system across the GroupDeveloped employee rights protection policy andimplemented EcoVadis rating activities
23.8%26.3%
↑Employee NPSis greater than
69.3375.55
↑
Growing together
The averagetraining time ofemployees isgreater than 60hours
Continued to promote organizational and talentdevelopmentMade talent review and established a jobqualification systemEstablished specific, transparent and smooth dualchannels for career developmentEstablished a panorama of talent training anddevelopmentEstablished a process-based curriculum systemEstablished a tutorial system and a job rotationsystemEncouraged employees to rotate across functionsand fieldsSupported employees to enhance their academicbackground and skills certificationContinued to improve E-learning platformContinued to promote lean ratings, processes andSix Sigma Green Belt and black belt certification
64.77hours64.9hours
↑
PromotingGreenDevelopment
Environmentalresponsibilitymanagement
All factoriespass theISO 14001certification
Established an ISO 14001 environmentalmanagement systemPerformed up-to-standard wastewater dischargeand gas emissionPerformed compliant disposal of wasteOrganized emergency exercises for environmentalemergencies
66.67%100%
↑
Innovation andgreen productdevelopment
Theproportion ofenvironmentallyfriendlypackagingmaterials usedin finishedproductsexceeds 80%
Continued to promote product innovation andsustainable materials development through IPDThe efficiency of using resources was enhanced byrecycling waste heat and energy, replacing energy-saving equipment, optimizing production processand recycling waste water.ISCC PLUS certificationISO 14067 carbon footprint certificationMade lightweight and green upgrading of packagingand continued to purchase sustainable packaging(with FSC certification, etc.)Established an EUDR team and guarded againstdeforestation risks in operation
65%68%↑
ESG Strategy and
Responses toSDGs
Key dimensions
2030 GoalsCommitted
Key Actions in 2024
Performance in2023
Progress in2024
BusinessTrendsPromotingGreenDevelopment
Climate changemitigation andadaptation
The Companyplans to jointhe SBTi andwill set targetvalues basedon the goalsestablished bythe SBTi
Carried out carbon verification for factories basedon ISO 14064 standardsFully promoted low-carbon concepts and activitiesReduced greenhouse gas emissions byimplementing the measures such as policyformulation and investment in energy-savingequipmentFurther reduced emissions through the constructionand expansion of photovoltaic, biomass powergeneration, and geothermal renewable energyutilization projectsMade climate risk and opportunity analysis andactively carried out response measures, andcommitted to advancing the SBTi at the board level
Totalgreenhousegas emissions(Scope 1 +Scope 2)decreasedby 8.3%compared tothe previousyear.
Committed↑
Renewableelectricityaccounts forover 30% oftotal electricityconsumption
11.1%20%
↑
Being a ReliablePartner
Customerand productresponsibility
100%maintainedISO13485systemcertificationPassed CE/FDAcertification asrequired
Products passed ISO 13485, CE, FDA and otherdomestic and overseas system certificationEstablished a code of business conductContinued to improve the "I CARE" processEnhanced customer satisfaction through end-to-endprocess improvement
100%100%↑Customer netpromoter score
Internationalmarket: 52.8
Domesticmarket: 83.9
Internationalmarket: 53Domesticmarket: 84.27
↑
Assisting Industry
development
Environmentaland social riskresearch coversall key suppliers
Established a supplier code of conduct and maderesponsible procurementDeveloped various academic exchange activitiesCarried out various kinds of school-enterprisecooperationParticipated in the formulation of national, industryand group standardsCarried out various association activities
80%88%↑
Socialcontribution
Externaldonations aremade annually
Provided support for employment of people inthe places of operation and contributed to localeconomic development; Formulated public welfareand charity-related management systems, andorganized various types of public welfare, charityand community volunteer service activities;Established factories overseas, thus promotingemployment in less-developed regionsActively organized public welfare donations to otherregions or countries
RMB 3.25
million
RMB 2.30
million
↓
1920
Topic 1:
Zhende Cares
Topic 2:
Zhende Ecology
ImprovingGovernanceSystem
Caring forEmployeeGrowth
Promoting Green
Development
Being A ReliablePartnerSustainableDevelopmentManagement— ESG Implementation Strategy Diagram —
ESGcommissionopportunitySupply chaincollaborationopportunityTrade riskEHSS risk
GRI/ISSB...ISO37301/37001/27001ISO14064/14067
Responsible Production:
ISO45001/14001/SA8000
Responsible sourcing:
RBA/Sedex/WRAP/Amfori...
EcoVadis/CDP/SBTi...
ESG strategyDual-carbon goals
Regional trade agreements such as
EU/ASEAN/RCEP/AURelevant acts of the US/UK/
Germany and the EUReview of human rights:
BSCI/SMETA...
System and standardRegulations and customer requirements
Stakeholder Engagement
Stakeholder Communication
Zhende Medical expects to establish a long-term mutual-trust relationships with its stakeholders. With a regularcommunication mechanism with stakeholders, it aims to gain a deeper understanding of their opinions, needs, andexpectations on the Company. We maintain two-way communication with relevant parties and respond to their focusesin the field of sustainable development.
Main StakeholdersTopics of ConcernCommunication Methods/Channels
Government and regulatory
agencies
Anti-corruption and businessethicsEmissions and wasteEnvironmental managementsystem
Legal operationCompliant tax paymentAnti-corruption mechanismInspection by leaders and supervision authoritiesResponding to government policiesParticipation in government projects
Institutional investors and
individual shareholders
Protection of investors’ rights andinterestsCorporate governanceR&D and innovationIntellectual property protection
Exchanges’ information disclosure platformDisclosure of periodical reports and official website informationInvestors exchange conferenceInvestors hotlineCompany visitGeneral Meeting of Shareholders
Customers and consumers
Product quality and safetyCustomer serviceData security and privacyprotectionAnti-unfair competitionClimate change mitigation andadaptationWater resource utilizationEnergy utilizationGreen packaging
Customer satisfaction surveyProfessional customer service teamEmail and service hotlineCustomer complaint channelsCustomer visit
Partners
Anti-commercial bribery and anti-corruptionSustainable supply chainIndustry exchange andcooperation
Industry events (exhibitions, seminars, etc.)Industry-university-researchcooperationSupplier conference
Employees
Employee training anddevelopmentEmployee rights and benefitsOccupational health and safety
Internal mailInternal communication platformEmployee complaint channelsEmployee trainingGeneral meeting of worker representativesEmployee care mechanism (Mutual Aid Foundation,Talent Scholarship, etc.)
Community and the public
Community communication anddevelopmentMedical accessibilityEmissions and wasteGreen packagingEcosystem and biodiversityprotection
Volunteer service activitiesPublic welfare projectsCompany website and self-mediaInclusive products
The UN: SDGs, UNGC...
2122
Topic 1:
Zhende Cares
Topic 2:
Zhende Ecology
ImprovingGovernanceSystem
Caring forEmployeeGrowth
Promoting Green
Development
Being A ReliablePartnerSustainableDevelopmentManagement
Subject to the deliberation and confirmation by the Company's Board of Directors, the reports gavethe key disclosure of topics of higher materiality in 2024.Deliberation andconfirmation of topics
Assessment of impact materialityBy inviting external experts and communicating with stakeholders, it’s evaluated from the twodimensions of "impact severity" (impact scale, scope and irremediability) and "impact possibility",contributing to an impact materiality matrix.Assessment of financial materialityCommunications with members of the Board of Directors, senior executives and representatives ofshareholders or institutional investors of the Company are organized by means of on-site interviewsand questionnaire survey; the assessment is made with reference to internal and external expertopinions from the two dimensions of "possibility of impact occurrence" and "degree of financialimpact", contributing to the formation of financial materiality matrix.Summary of double materiality resultsThe unified calculation is made of the impact and financial materiality of topics, forming the doublemateriality matrix. In addition, the boundary of the material topics is defined.
Assess themateriality oftopics
Analysis of Material TopicsThe identification of material topics serves as an important link of the Company's ESG management, which helpsthe Company to identify the key focus areas and determine the ESG strategic planning and work priorities. In2024, the Company made a "double materiality identification and analysis" on sustainable development topics byreferring to domestic and overseas sustainable development standards
. While focusing on the significant impactof the performance of the corporate topics on the economy, society and environment, the Company also took intoconsideration the expected impact of the topics on the Company’s finance in the short, medium and long term.
Notes:
1. Including but not limited to the Self-Regulatory Guidelines for Listed Companies - Sustainability Reporting (Trial) (the "Guidelines") released by Shenzhen
Stock Exchange, European Sustainability Reporting Standards (ESRS) and the European Financial Reporting Advisory Group (EFRAG) FRAG IG 1:
Materiality Assessment Implementation Guide, and International Financial Report Standards on Sustainable Disclosure No. 1 - General Requirements forSustainability-related Financial Information Disclosure (IFRS S1).
— Double Materiality Assessment Process —
— Double Materiality Analysis Results of Zhende Medical’s Topics in 2024 —
— Double Material Topic Matrix of Zhende Medical in 2024 —
Double materiality
Only financialmaterialityOnly impactmateriality
sustainable supply chain, technological research and innovation, customer service, occupationalhealth and safety, employee training and development, climate change mitigation and adaptationEnvironmental compliance managementEmployee rights and benefits, data security and privacy protection, industry exchanges andcooperation, community communication and development, anti-commercial bribery and anti-corruption, medical accessibility, sustainable management, green packaging, corporate governance,intellectual property protection, ecosystem and biodiversity conservation, water resource utilization,energy utilization, emissions and waste, anti-unfair competition, and protection of investors’ rightsand interests.
The Company's corporate sustainability management committee reviewed and confirmed the identification results ofmaterial topics. In 2024, the identification results of material topics are given in the matrix below. A total of 24 relatedtopics were identified, which was composed of 7 topics with both financial and impact materiality, 1 topic with onlyfinancial materiality, and 16 topics with only impact materiality.
Financial materiality
Impact materiality
Both financial andimpact materiality
Financial materiality withno impact materiality
Impact materiality withno financial materiality
No financial materialityand no impact materiality
Make preliminary identification and screening of relevant sustainable development topics inconjunction with standard benchmarking, policy analysis and peers benchmarking, and analyze theactual and potential impacts, risks and opportunities in respect of sustainable development topics.
Establish a list of
topics
By interpreting the Company's value chain, domestic and overseas sustainable development standards(including but not limited to stock exchange information disclosure requirements, international GRIstandards, and international sustainable Financial Standards SASB standards), understand theCompany's sustainable development background, and identify and understand the affected stakeholders.
Understand thebackground ofcorporate activitiesand business relations
High
LowHigh
Environment
1 Climate change mitigation and adaptation2 Energy use3 Green packaging4 Ecosystem and biodiversity conservation5 Emissions and waste6 Water resource utilization7 Environmental complianc management
Social
8 Product quality and safety9 Sustainable supply chain10 R&D and innovation11 Intellectual Property Protection12 Customer service13 Occupational Health and Safety14 Employee training and development15 Employees' Rights and Interests16 Data Security and Privacy Protection17 Industry exchange and Cooperation18 Community Communication and Development19 Medical accessibility Governance20 Sustainable management21 Corporate Governance22 Anti-unfair competition23 Investor Rights Protection24 Anti-Commercial bribery and anti-corruption
2324
Topic 1:
Zhende Cares
Topic 2:
Zhende Ecology
ImprovingGovernance
System
Caring forEmployee
Growth
Promoting GreenDevelopment
Being A ReliablePartnerSustainableDevelopmentManagement
— Table for Impacts, Risks and Opportunities of Zhende Medical’s Financial Materiality Topics in 2024 —重要性议题
Impact AnalysisFinancial AnalysisNature of ImpactImpact ScopeImpact DescriptionType of Risks and OpportunitiesTime RangeImpact DescriptionProduct quality and safetyPotential negative impact
Upstream/Downstream value chain
If product quality fails to reach the standards, upstreamsuppliers shall bear more inspection and rework costs,downstream distributors shall face returns and complaints,and consumers may be exposed to health risks, affectingtheir trust and loyalty to the product brand.
Liability riskMedium-term
Quality issues may trigger additional production costs, claims, andproduct recall expenses (such as transportation and storage fees), whilepotentially leading to a delay in delivery and a fall in sales, further harmingthe brand reputation.
Sustainable supply chainPotential negative impactUpstream value chain
If supply chains fail to meet sustainable developmentrequirements, upstream suppliers may sufferenvironmental regulatory and social responsibilitypressures, resulting in increased costs and productiondelays. In addition, the supplier's non-compliance behaviormay affect the Company's compliance and brandreputation, ultimately bringing about the disruption orinstability of the supply chain.
Market riskMedium-term
The failure of suppliers to satisfy regulatory compliance requirements canlead their products to be prohibited from the market, especially in highlyregulated regions such as the European Union. In addition, negative eventsof suppliers can trigger consumer boycotts, which in turn can result inlower sales and damaged brand image.
R&D and innovationPotential positive impactCompany’s own operation
Through continuous R&D and innovation, the Companycan enhance product competitiveness and marketadaptability, optimize production processes, reduce costs,and respond to changes in market demand.
Product/Service opportunities/Market opportunities
Long-term
Through R&D and innovation, the Company can optimize productionefficiency, reduce production costs, and enhance flexibility andadaptability, quickly adjust products and businesses, and seize marketshare. In addition, innovation can boost cooperation and strategicalliances between enterprises and bring new business opportunities.Environmental compliancemanagement
Potential positive impactCompany’s own operation
Through strict environmental compliance management,the Company can mitigate the risks arising fromenvironmental regulations, ensure the efficiency ofresource utilization and the minimization of environmentalimpacts in the production process, enhance operationalefficiency, and mitigate the risk of fines and lawsuits.
Resource considerationopportunities
Medium-term
The positive implementation of environmental compliance managementcan help the Company to raise the corporate image and brand value, whileproduction process optimization and energy conservation & emissionreduction can help to elevate resource utilization efficiency, reduce costsand boost sustainable development.Customer servicePotential positive impactDownstream value chain
Quality customer service can enhance the customersatisfaction and loyalty of downstream distributors andretailers, elevate product market penetration, decrease thereturn rate, and raise the market competitiveness of thebrand.
Market opportunitiesShort-term
Quality customer service can elevate customer loyalty and repurchaserate, and increase customer value and revenue; The product optimizationthrough market feedback helps to expand market share and attract moreconsumers.Occupational health and
safety
Potential positive impactCompany’s own operation
Good occupational health and safety managementcan reduce work-related injury accidents, enhanceemployee productivity and satisfaction, reduce productiondisruptions caused by sick leave and accidents, andoptimize the Company’s operational efficiency.
Resource efficiency opportunitiesMedium-term
Good occupational health and safety management can elevate employeesatisfaction and loyalty, which in turn enhances productivity and productquality, while helping to attract and retain outstanding talents and raisethe competitiveness of the Company.Employee training anddevelopment
Actual positive impactCompany’s own operation
Through continuous employee training and development,the Company can enhance the skills and work efficiency ofemployees, raise their loyalty and job satisfaction, reducethe brain drain, and boost the improvement of its operatingefficiency and innovation capability.
Resource efficiency opportunitiesShort-term
The provision of quality training and development opportunities canenhance the attractiveness of the Company, help to explore new businessareas, enhance employees’ capability and work efficiency, and elevate theCompany’s brand image and market competitiveness.Climate change mitigationand adaptation
Potential positive impactDownstream value chain
By taking climate change mitigation and adaptationmeasures, the Company can pass on environmentalresponsibility to downstream suppliers and consumers,enhance the environmental attributes of products,strengthen the trust of downstream partners andconsumers, boost the growth of green market demand,and elevate market competitiveness.
Energy source opportunitiesLong-term
The exploration of green raw materials market can help to expand marketshare, and the further cooperation in technological innovation can helpto elevate product competitiveness. In addition, by actively respondingto climate change policies the Company can also acquire relevant policysupport and subsidies to further promote business growth.
2526
Topic 1:
Zhende Cares
Topic 2:
Zhende Ecology
ImprovingGovernanceSystem
Caring forEmployee
Growth
Promoting GreenDevelopment
Being A Reliable
PartnerSustainableDevelopmentManagement
Building a Harmonious and Healthy FutureButterfly Baby Care Project – Helping to Enhance the Quality of Life of EB PatientsAfya Kesho Project – Innovative Health Education Solutions for Kenyan Teenagers【Topic 1】Zhende Cares
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Topic 1:
Zhende Cares
Topic 2:
Zhende Ecology
ImprovingGovernanceSystem
Caring forEmployee
Growth
Promoting GreenDevelopment
Being A ReliablePartnerSustainableDevelopmentManagement
Butterfly Baby Care Project — Helping to Enhance theQuality of Life of EB Patients
Zhende Medical has always adhered to the principle of deeply understanding and sincerely ful?lling its social responsibility.The Company actively engages in social initiatives that align with the characteristics of its products, striving to ensure thatmore patients bene?t from Zhende products through public welfare actions. By spreading love and warmth through practicalefforts, Zhende Medical is committed to contributing to the creation of a happier and more compassionate society.As a supplier of medical dressings, Zhende Medical has placed signi?cant emphasis on the health needs of patients withEpidermolysis Bullosa (EB), a rare disease often referred to as "butterfly disease"due to the fragility of the skin, mouth,esophagus, and other mucosal tissues prone to trauma and ulceration. The use of high-quality wound care products cangreatly enhance the quality of life for these patients, helping to alleviate physical pain and meet life’s challenges. To supportthis cause, Zhende Medical collaborated with the Shanghai Debra Butterfly Baby Care Center to launch the "Touch lifestay caring" public welfare project. Through professional medical support and compassionate care, the initiative providedpractical help to "butterfly babies", improving their quality of life and raising public awareness about the challenges faced byEB patients.
Afya Kesho Project —— Innovative Health EducationSolutions for Kenyan Teenagers
With the increasing global focus on public health, gender equality, and other important issues, adolescent healtheducation has become a key area in advancing sustainable social development. Zhende Medical has consistentlyembraced a strong sense of responsibility and, in partnership with the Innovation for Health Equity in Africa (IHEA) andthe Yi-nergy Minority Assistance Foundation, launched Afya Kesho, a community health education project in Kenya.Upholding the sustainable strategy of "caring for employee growth, promoting green development, and being a reliablepartner," Zhende Medical has been dedicated to deeply integrating the corporate social responsibility philosophy of"We Care" into the Afya Kesho project. The Company has made signi?cant strides infour key areas: social contribution,industry development, employee growth, and cultural integration. These efforts support balanced economic and socialdevelopment, contributing to global health and well-being.
— Zhende Medical ‘Touching Life and Warming Peers’ Public Bene?t Initiatives —
Caring donationNursing trainingSocial popularization
Donated money to ButterflyBaby Care Center to supportthe Center’s operation anddevelopmentDonated 200 nursing kitsto provide intimate care forbutterfly babies
Actively participated in EBNursing training courses, andprovided necessary nursingsupplies for patients on site
Worked with Butterfly BabyCare Center to plan the patientstory audio collection activity of"Sweet Words to Send Blessingsfor Butterfly Baby", calling on allsectors of society to pay attentionto the butterfly baby group
Launching ceremony of "Touch life stay caring"-themed Public Welfare Project on Caring for ButterflyBabiesIn April 2024, the launching ceremony of "Touch life stay caring"-themed public Welfare Project on Caring for ButterflyBabies, jointly developed by Zhende Medical and the Shanghai Debra Butterfly Baby Care Center, was successfully held.During the event, the Company shared a documentary which showcased the daily life and nursing of butterfly babies andtheir optimistic and idealistic attitudes towards life. The Company also invited several EB patients to share their personalexperiences and nursing conditions, helping attendees better understand the challenges and needs of EB patients whileraising social awareness. Additionally, Zhende Medical made a special fund donation to the Butterfly Baby Care Center,and the patients’ relatives also expressed their deep gratitude atthe launching ceremony and presented Zhende Medicalwith an embroidery work of "ZD" logo in Yi ethnic style.Numerous paintings by EB patients were exhibited at the launch event. These artworks were full of spirit and reflectedthe patients' beautiful pursuit and longing for life. Zhende Medical specially adopted the artworks of EB patients and alsocalled on more attendees to adopt the artworks onsite. All the funds raised would be used for EB patients, helping butterflybabies realize their artistic dreams.
We believe that the value of an enterprise lies not only in its economic contribution but also in itsresponsibility to society." From the heart, we express boundless love through practical action. Wereached out to the butterfly babies, warming their hearts and helping the seeds of dreams take rootin each patient's soul. Through the AFYA KESHO project in Kenya, we integrated into local primaryand secondary schools, lighting the beacon of knowledge and empowering the health concept totransform the lives of children.
——Shen Zhenfang, Vice Chairman of Zhende Medical
2930
Topic 1:
Zhende Cares
Topic 2:
Zhende Ecology
ImprovingGovernanceSystem
Caring forEmployee
Growth
Promoting Green
Development
Being A ReliablePartnerSustainableDevelopmentManagement
Industry Development
The Afya Kesho project effectively addresses the grassroots health needs in Kenya by providing health educationcourses, medical support, and sanitation facilities to local communities. This initiative ensures improved localhealthcare and enhances social well-being. With its sustainable, replicable, and localized approach, the project hasset an exemplary model for corporate social responsibility that other Chinese enterprises can learn from. It has alsocontinued to strengthen China-Africa cooperation in health education, public health, and sustainable development,making significant contributions to the advancement of the industry.Employee GrowthWe have always adhered to a "people-oriented" development philosophy, actively supporting employee growth whilepromoting health education and social contribution. We have engaged with the Kenyan community by organizinghealth education programs for the children of employees, enhancing the health and well-being of both employeesand their families. Additionally, we encourage employees to participate as volunteers in community health educationactivities, helping to foster their cross-cultural communication and teamwork skills.Cultural IntegrationWith the support of the Afya Kesho project, we have actively promoted cross-cultural exchanges and enhancedcultural understanding and cooperation through special activities such as the Spring Festival. These initiatives aim tostrengthen China-Africa relations and further deepen our commitment to social responsibility.
Highlights of Afya Kesho ProjectCovered Group
adolescents aged 9 to 15, with a total of
cumulative participations recorded
Online Influence10,000+ online usersCovered Area
primary schools at Kiambu and Nairobicounties
Academic Research
A baseline survey of
teenagers and apilot study of
teenagers were completedHealth education activities at Ngewe Primary School in Kenya
Caring donation to Ngewe Primary School in Kenya
The Afya Kesho project launched its first survey and trial teaching activities at Ngewe Primary School in Kiambu County,Kenya. Using innovative methods such as animated videos, interactive games, anonymous Q&A, public sharing, andpractical demonstrations, the project provided local students with engaging and informative health education simulationclasses. These activities not only captured the attention of teenagers, parents, and teachers but also laid a strongfoundation for improving the health awareness and well-being of Kenyan youth.
The Afya Kesho project held a donation ceremony atNgewe Primary School in Kiambu County, Kenya, providingthe school with essential items such as rice, flour, andcooking oil, as well as learning tools like computers. Thisinitiative offered material support and demonstrated deepcare and love for Kenyan students. Judy Satya, Head ofNgewe Primary School, expressed her gratitude to theproject team, stating that the donation would significantlyimprove the living and learning conditions of the students.She also expressed hope for long-term cooperation in thefuture to create a better growth environment for the pupils.
Health Education Simulation Class
Donation Ceremony at Ngewe Primary School
Social ContributionAfya Kesho highlights the five key dimensions of health education, equal education, technology empowerment,community empowerment and policy proposition to promote social contribution and enhance the accessibility ofhealth care.
Offered lively andage-appropriatesex educationcourses forprimary andsecondary schoolstudents in Kenya,establishedknowledge-based communitynetworks whileimproving theoverall healthof teenagers,and enhancedcommunity well-being
Health Education
Focused onthe materialshortages andeducational plightfaced by girls, andempowered girls'health by donatinghealth productsand boostinggender equality
Equal Education
Providedcommunitieswith thenecessary digitalinfrastructureand basic healthservices andpromoted theaccessibilityof digital andmedical services
TechnologyEmpowerment
Strengthenedthe skills trainingfor communityhealth workersand grass-roots medicalpersonnel,and continuedto empowergrassroots healthforces
CommunityEmpowerment
Cooperatedclosely withChina-Africagovernmentorganizations,the UnitedNations and otherinternationalorganizations aswell as local non-governmentalorganizationsto boostinternationalexperienceexchanges
PolicyProposition
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Topic 2:
Zhende Ecology
ImprovingGovernanceSystem
Caring forEmployeeGrowth
Promoting GreenDevelopment
Being A ReliablePartnerSustainableDevelopmentManagement
2024SBTi-CommitGrasping the existingsituation
Fulfilling responsibility
Improving energyefficiency
Making energytransformation
Achieving the
goals
2026SBTi-Target set
2030Compliance with dual-carbon targets【Topic 2】Zhende Ecology
Creating Value with Sustainability Thinking
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Topic 1:
Zhende Cares
Topic 2:
Zhende Ecology
ImprovingGovernanceSystem
Caring forEmployee
Growth
Promoting Green
Development
Being A Reliable
PartnerSustainableDevelopmentManagementZhende Medical is deeply embedded in the medical consumables industry. With a global presence, advancedmanufacturing capabilities, and a comprehensive product system, the Company consistently maintains its leadershipposition domestically while expanding its influence in international markets. As demand for global healthcare productsand services rises, and as regulations such as the EU Carbon Border Adjustment Mechanism (CBAM), the EU DeforestationRegulation (EUDR), and others are progressively implemented, the industry is rapidly shifting towards compliance, greendevelopment, and high-quality growth. In this context, carbon emission management, green supply chain development, andfull-life cycle low-carbon design have become key benchmarks for measuring core competitiveness.In this context, Zhende Medical is progressively shifting from "product competition" to "green value competition." Thistransition supports global business expansion through strong compliance management, effective carbon managementcapabilities, and robust financial performance, thereby laying a solid foundation for securing international marketshare, meeting the green procurement needs of overseas customers, and enhancing long-term resilience. Adhering tothe sustainable development philosophy of "integrating ESG into business operations," the Company is committed toembedding sustainability into its day-to-day management and business practices.
Building on this foundation, Zhende Medical actively responded to the "3060" dual-carbon goals and joined the Science-BasedTargets initiative (SBTi). The Company established carbon emission reduction targets for 2030 and outlined a clear path forachieving these goals. Zhende Medical has continued to strengthen the development of a green value chain, contributing to thelow-carbon transformation of the industry and promoting the high-quality development of the medical and healthcare sector.SBTi-Commit in 2024Grasping the existingsituation
Fulfilling responsibility
Improving energyefficiency
Making energytransformation
Achieve thegoalsSBTi-Target set in 2026Compliance with dual-carbon targets in 2030
Organize carbon verificationProduct carbon footprintSupply chain Scope 3Investigation: Set keyemission factorsEmission targets: EstablishSBTi scientific carbontargets
Scope 1 2,974.48tScope 2 93,053.09tScope 3 426,694.25tPercentage of Scope 3 bycategory1 Materials purchase 82%2 Assets purchase 5.1%3 Product waste disposal 4.8%4 Upstream transportation 2.7%5 Energy activities 2.4%6 Employees commuting 2.2%
Scope 2 decarbonizationthrough green electricityemissionsSteam accounts for 52% ofScope 2Scope 3 emissions accountfor 81% of total emissionsSupply chain: Scope 2 Energyconservation and emissionreductionProcess digitization: Energy BISystemConstruction and MaintenanceDepartment: Scope 2 Renewableenergy developmentScope 3 environmentally friendlyand low-carbon materialsdevelopmentProcurement: Scope 3 Supplieremission reductionOperations Management Center:
TransportationAll employees: Low CarbonAction
Energy saving managementEnergy efficiency systemWaste heat recoveryEquipment upgrading……Scope 2: Energy conservationand emission reduction(absolute energy falling 15%-20%, power + lean)Scope 2: Energy BI System(leak point optimization -Power + process digitization)
Clean energy use(photovoltaic and geothermalenergy)Purchase renewable powerOptimize steam systemIncrease alternative fuels (coalto gas, and petrochemical fuelto biological fuel)Photovoltaic development anduse (renewable energy ratio >30%)Renewable power (100% ofpower in Scope 2 shifting torenewable power)Steam optimization(petrochemical to biologicalenergy, and gas to electricity)
With 2023 asthe base year,GHG emissionsin Scope 1 andScope 2 will fallby 42% in 2030.With 2023 as thebase year, GHGemissions perunit of revenue inScope 3 will dropby 51.6% in 2030.
Green Supply Chain ConstructionBased on the 2023 carbon data, the Company has effectively identified key areas for carbon reduction. In 2023, the Company’stotal carbon emissions amounted to 522,786.87 tons of carbon dioxide equivalent, with Scope 3 emissions accounting for
81.7%, primarily from purchased goods and services (85.27%). As a result, carbon reduction in the upstream supply chain
is a top priority for Zhende Medical's green development. In addition to driving innovation, Zhende Medical has collaboratedwith suppliers to enhance environmental management and encouraged more partners to engage in sustainable developmentpractices, thereby laying the foundation for a low-carbon, circular, and responsible supply chain. During the reporting period, theCompany made significant contributions to the industry's green transformation by implementing multi-dimensional measures,including promoting the use of environmentally friendly materials, strengthening suppliers' social responsibility commitments,and optimizing packaging solutions.
Increasing the proportion of green packaging materialsThe proportion of recyclable packaging materials climbed to 68%The procurement volume of FSC-certified packaging accounts for 60%
Optimizing the sustainability of plastic packagingThe Company completed the development of degradable PE stretch film, and continued to boost the optimization of otherdegradable and recyclable plastic packaging.
— Green Supply Chain Construction Results of Zhende Medical in 2024 —
ISCC PLUS certification
promoted theconstruction of circular value chain
The Company used FSC-certified
packagingand labels to contribute to carbon reductionthroughout the product life cycle
Zhende Medical is dedicated to advancing thecircular economy and actively promoting sustainabledevelopment by continuously exploring new approachesto energy conservation, consumption reduction,efficiency improvement, and environmental protection.In 2023, the Xuchang production site of Zhende Medicalsuccessfully obtained ISCC PLUS certification, markinga significant milestone in sustainable production. Thesite manufactures surgical garments using certifiedrenewable raw materials and embraces the concept of acircular value chain, ensuring that the entire productionprocess complies with environmental standards andminimizes its environmental impact. This initiativenot only demonstrates Zhende Medical's strongcommitment to environmental and social responsibilitybut also sets a benchmark for the industry.
The company currently selects FSC-certified suppliersfor its carton, label, and inner box packaging. In 2024,the Company used a total of 14.69 million FSC-certifiedpackaging and labels, contributing to carbon reductionthroughout the product's entire lifecycle.
Photo of Inner Packaging BoxFSC CertificateNotes:
1. ISCC PLUS (International Sustainability & Carbon Certification PLUS) is an extended version of the ISCC certification system, designed for sectors such as bio-based materials,
the circular economy, and recyclable materials. As one of the world's leading sustainable supply chain certifications, it supports the circular economy model, full-chain traceability,and the efficient use of resources. ISCC PLUS covers a wide range of industries, including bioplastics, chemicals, food and feed, packaging, and textiles, contributing to theachievement of sustainable development goals by global companies.
2. The Forest Stewardship Council (FSC) is a global leader in sustainable forest management, renowned for its rigorous, authoritative, and credible certification system. FSC is
dedicated to promoting responsible forest management and the harmonious coexistence of forest ecosystems and human society, with the vision of securing global recognitionfor the true value of forests.In 2024, the ESG Office cooperated with the procurement department and shared ESG information and communicated onclimate change and other related topics with core suppliers on a quarterly basis, with the training coverage rate of up to 88%.
The Company is committed to achieving sustainable development through strategic carbon path planning.The Company plans to reduce carbon emissions through several approaches: firstly, by optimizing productionprocesses, adopting energy-efficient equipment and technologies, and reducing energy consumption; secondly,by promoting the use of renewable energy sources such as solar and geothermal energy to reduce relianceon fossil fuels; and thirdly, by strengthening supply chain management, selecting environmentally-friendlymaterials, and reducing carbon emissions in the packaging process. The Company will regularly assess andreport on the progress of its carbon emission reduction efforts to ensure the achievement of its goals, whileactively engaging in industry collaboration to promote the green transformation of the healthcare sector.
——Dasen Xu, CEO
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Topic 2:
Zhende Ecology
ImprovingGovernanceSystem
Caring forEmployee
Growth
Promoting GreenDevelopment
Being A ReliablePartnerSustainableDevelopmentManagement
Notes:
1. Total Productive Improvement (TPI) is a continuous improvement method in lean production, which focuses on enhancing production
efficiency, reducing waste and optimizing processes through company-wide participation, ultimately achieving the goals of lean production.
2. Best Practice Implementation & Transfer (BPIT) is a concept in lean production, which emphasizes the implementation and replication of
successful experiences within or across organizations, thereby elevating overall operational efficiency and quality levels.
Production Process Optimization
Lean Production Performance of Zhende Medical in 2024
Six Sigma Projects Key Results in 2024Initiated and completed
Black Belt projects and
Green Belt projects.
Trained a total of
Black Belts and
Green Belts.
Accumulated a total of
Black Belts and
Green Belts.
BPIT
Key Results in 2024
Completed
BPIT projectsRealized cost reduction of RMB
5.12 million
Saved45,000 working hours
employees passed the Green Belt certification
employees passed the Black Belt certification
As one of Zhende Medical's core values, transformative innovation is the spiritual element that guides the entirecompany in aligning with common goals and behaviors. The spirit of transformative innovation motivates andguides every employee to drive progress through innovation, advancing production technology and improving on-sitemanagement. This approach enhances production efficiency, ensures product quality, and better equips the Companyto compete in the modern business landscape, laying a solid foundation for sustainable development.
— Lean Production Results of Zhende Medical in 2024 —
The Shaoxing Base Pouch Manufacturing Manual Line Efficiency Improvement Project introduced U-shaped CELL lines tooptimize logistics routes, reduce work-in-process (WIP) inventory, and achieve continuous flow operations. This initiativeresulted in a manpower savings of
employees across two shifts.The Xuchang Base Composite Machine Edge Cutting Specification Optimization Project improved the stability of thecomposite machine slitting operation. By identifying the stability level of the equipment’s processing, the project monitoredfluctuations in the actual slitting dimensions during production, controlled the slitting width of waste materials, andreduced the use of wider raw material specifications. This resulted in an estimated annual net benefit of approximatelyRMB240,000.The Anhui Base Non-Woven Self-Adhesive Bandage Glue Savings Improvement Project reduced glue waste duringproduction by modifying the end baffles of the double-layer coating machine. This change led to a reduction in glueconsumption, resulting in an estimated annual net benefit of approximately RMB480,000.The Xuchang Base implemented automation equipment to enable continuous operations for the soft-folded fabricproducts, including automatic cutting, automatic inkjet printing, and automatic counting and stacking. This automationeliminated the need for manual stamping and removed production gaps between processes, resulting in an estimatedannual net benefit of approximately RMB180,000.The Xuchang Base Automatic Roll Change Improvement Project introduced automation equipment to enable the automaticroll change operation for the three-antibody equipment. This innovation also reduced material losses caused by manual rollchanges, resulting in an estimated annual net benefit of approximately RMB
1.04 million
.The Anhui Base Automatic Heat Shrink Packaging Machine Introduction Project implemented automated equipmentto enable automatic application and heat sealing of shrink film for elastic bandage and ripple bandage products. Thisautomation resulted in an estimated annual net benefit of approximately RMB180,000.Gauze folder machineIn 2024, the Company and developed and designed a new generation of gauze folding machines, replacing traditionalAmerican-style folding machines with modern technology and equipment. The new machine accommodates variousfolding requirements, such as center-folding, compatibility with different cutting sizes, both sparse and dense gauze, andadjustable layers of 8, 12, or 16, while ensuring the folded edge width remains within 1.5 cm. By optimizing the productionprocess, raw material usage per gauze piece was reduced by 4.4%, and single-channel production efficiency increased by
185.7%. This technological upgrade not only significantly improved production efficiency, but also lowered manufacturing
costs and optimized workshop energy consumption and space utilization. Upon full implementation, the transformation isexpected to save approximately 3,800 square meters of production space.Zhende Medical continued to deepen its commitment to lean production by encouraging each facility to strengthencultural development through improvement proposals, continuously optimize production processes, and enhanceequipment efficiency and operational quality. This year, the Company intensified its focus on workshop-levelimprovement initiatives, with a strong emphasis on operational models, process flows, product quality, equipmentmanagement, and material utilization. It established formal management regulations for proposal improvements andencouraged frontline employees to identify issues and suggest solutions based on their day-to-day responsibilities.This approach not only improved employees’ problem-solving capabilities but also fostered a culture of continuousimprovement. During the reporting period, process optimization efforts helped the Company reduce annual costs byRMB 39.86 million, significantly supporting the improvement of operational efficiency.
TPI
Key Results in 2024Completed
TPI projectsMade cost reduction of RMB
5.8 million
Completed5,650formulations ofstandard working hoursImproved5,121 proposalsAchieved6,800person-time participationin proposal improvement
A total of2,340employees participated in the leanknowledge training, among whom
employees passed the basic level exam
employees passed the Level 1 training exam
employees passed the Level 2 training exam
employees passed the equipment training exam
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Topic 2:
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ImprovingGovernanceSystem
Caring forEmployee
Growth
Promoting GreenDevelopment
Being A ReliablePartnerSustainableDevelopmentManagement
— Clean Energy Use Results of Zhende Medical in 2024 —
Use of Clean EnergyZhende Medical actively promoted the transition to clean energy by steadily advancing photovoltaic power generationprojects around key production bases, increasing the purchase of green electricity, and utilizing renewable energysources such as biomass steam and geothermal energy based on local conditions. These efforts have graduallyincreased the proportion of clean energy in its operations and contributed to reducing carbon emission intensity inproduction and business activities, thereby laying a solid foundation for achieving the dual-carbon goals.
Shaoxing Base purchased
MWh of greenelectricityIn 2024, the Companyexpanded the XuchangBase and established newsolar photovoltaic powerfacilities at the Anhuiand Kenya bases, witha cumulative installedcapacity of
MWp.
In the future, the Company will continue to advance the development of clean energy projects at key bases. The PhaseII Photovoltaic Project at the Huaian Base in Jiangsu is scheduled to be typo: out into service in 2025. Photovoltaicprojects are also being actively promoted at the new Shaoxing Base and the Shanghai Base. In Xuchang, the Companyplans to expand its photovoltaic capacity while maintaining a stable supply of biomass steam. Internationally, thePhase II Photovoltaic Project at the Kenya facility is also expected to be operational in 2025, further enhancing the useof geothermal and other clean energy sources. Through these initiatives, the Company aims to increase the proportionof clean energy in its operations and accelerate the green transformation of its key bases.
The steam energy ofXuchang Base adopted
100%biomass steam,which is mainly used forsteam sterilization, gauzebleaching and otherproduction links.
The Kenyan factoryadoptedgeothermalenergy andphotovoltaicenergy.
Publicity and Implementation of Carbon ReductionAwarenessZhende Medical places great importance on integrating low-carbon principles into its daily operations, activelypromoting green office practices and encouraging all employees to participate in low-carbon initiatives. The Companyhas implemented energy-saving and consumption-reduction measures through centralized management of energy-consuming equipment, 5S management practices, and the monitoring of water and electricity usage in office buildings.It also strives to reduce the use of disposable products by adopting low-carbon procurement, promoting paperlessoffice practices, and enforcing plastic reduction measures. Additionally, Zhende Medical has enhanced waste sortingand the centralized treatment of recyclable materials, encouraging employees to properly classify and dispose of wasteto support resource recycling.
— Green Office Results of Zhende Medical in 2024 —
— Zhende Medical’s Green Office Initiatives —
Electricity consumption percapita in office buildingsdecreased year-on-year
9.2%
Usage of disposablepaper cups was reduced10,000units
Usage of plasticpens was reduced
6,000units
ActionPlanningExpected annual effect
Reduce use of papercups
A total of50,000officepaper cups were used in2024
Reduce the use of disposablepaper cups by20%per year,and willeliminate theuseof disposable papercups by 2029
Reduce194 kgof carbondioxide equivalent
≈
Ｘ 120-year-oldmature tree
Reduce use of officepaper
A total of250 million
pieces of office paper wasused in 2024
Reduce the use of officepaper by5%per year, andwill decrease it to65%of the2023 level by 2030
Reduce2,625 kgof carbondioxide equivalent
≈
Ｘ 1320-year-oldmature tree
In 2024, the total mileage of domesticmajor commuter routes
was69,800 kilometers
carpools are added toeach commuter hub, savingthe driving mileage of5,190
kilometers per year
Reduce897 kgof carbondioxide equivalent
≈
Ｘ 520-year-oldmature treeEncouragecarpooling
12,000bottles of bottledwater
were used in 2024
By 2030, the use of bottledwater will nearly reachzero
Reduce2,160 kgof carbondioxide equivalent
≈
Ｘ 11
20-year-oldmature tree
Eliminate the use ofbottled water
Notes:
1. According to the Full Value Chain Carbon Footprint Analysis Report of Disposable Paper Cup, every 1,000 water-based coated paper cups can generate carbon emissions of
19.47kg CO2e only after recycling.
2. According to the Full Life Cycle Greenhouse Gas Emission System of Chinese Products (2022), the carbon footprint of a piece of A4 paper is 16gCO2e, and the carbon emission
of A4 paper after printed by laser printer is 5gCO2e. The carbon emission of a piece of A4 paper totals 21gCO2e from production to use.
3. Carpooling activities are mainly concentrated on the following routes: 24 km from Shaoxing Headquarters to Shaoxing North Railway Station, 50 km from Shaoxing
headquarters to Hangzhou Xiaoshan International Airport, 11 km from Xuchang base to Yanling Railway Station, and 88 km from Xuchang base to Zhengzhou XinzhengInternational Airport.
4. According to the Coping with China's Climate Challenge: Insight Report on Financing the Transformation and Achieving a Net-Zero Future, carpooling commuting reduces
173gCO2e per kilometer in average.
5. According to the "Hangshui" carbon label, the greenhouse gas emission of each bottle of water during the "full life cycle" is 0.18kgCO2e.
6. The water consumption is 6,000 bottles (50% of 380ml bottles and 50% of 500ml bottles) in Shaoxing, and 6,000 bottles (mainly 500ml bottles) in Xuchang and other regions.
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The Company has identified the improvement space for low-carbon office through 5S inspection. During the reportingperiod, the Company took the Low-carbon Office Evaluation group standards released by Chinese Society of TechnologyEconomics in 2022 as the benchmark, set an annual target of 90 points, and implemented improvement actions in thethree fields: low-carbon office operation, green working style and low-carbon awareness promotion, contributing to therealization of green office through the use of energy and resources, the procurement and operation & maintenance ofoffice supplies, and the management and recycling of wastes.
— Green Office Management Measures of Zhende Medical —
Energy andresource use
Establishing a unified control mechanism for energy consumption equipment, and regularlyswitching the cooling and heating modes of air conditioners;Optimizing lighting and water management, and adjusting the operating time of road lamps,LOGO lamps and hot water faucets according to seasons;Intensifying routine supervision and inspection, conducting energy use checks and reportingabnormal situations;Making hydropower data monitoring, regularly analyzing abnormal energy consumption andfollowing up rectifications.
Procurement ofoffice supplies
Achieving plastics restriction and low-carbon procurement by increasing degradablepackaging bags in the canteen, purchasing degradable garbage bags, disposabletoothbrushes and combs made of straw, and kraft paper file boxes and file bags, andspecifying more environmental-friendly reception tea break standards;Realizing efficient operation and maintenance of office supplies by optimizing administrativeinventory, material requisition, equipment recycling and office area space integration.
Proposition of green
work style
Achieving effective waste management by reducing more than 50% of garbage bins andgarbage points, harmlessly treating of wet wastes and intensively disposing of recyclablewastes;Developing Vehicle Management Rules and encouraging employees to carpool for greenmobility;Putting up low-carbon signs in multiple areas, showing low-carbon publicity posters onelevator LED screens, organizing garbage pickup activities, and raising employees' low-carbonawareness.Regularly conducting electricity use inspection
The Company confirmed and followed on the implementation effect of the improvement plan, and the low-carbonoffice assessment reached 94 points in 2024. In the future, the Company will continue to deepen its practices in termsof low-carbon mobility, low-carbon activities and low-carbon catering, thereby contributing to the steady improvementof the low-carbon office performance, and to the green and low-carbon development of the Company.
Waste classification has become a new fashion of the Company: Zhende Medical’s waste classification records
Since the implementation of garbage sorting, Zhende Medical has completed the allocation and updating of garbagebins and other hardware facilities pursuant to the requirements of Regulations on the Domestic Waste Managementin Zhejiang Province, and arranged more than 100 garbage bins in the Company's office area and production park. TheCompany has also adopted a series of effective measures to upgrade the garbage sorting hardware facilities, thuscontributing to the development of garbage sorting habits of employees.Well-equipped facilitiesThe Company has upgraded the garbage station, providing four-color trash cans in line with the national standards andachieving centralized sorting. The garbage room is provided with a classified information bulletin board to indicate thegarbage collection company and the destination of garbage. The public area of the office building has been equippedwith recyclable garbage bins and other garbage bins, and harmful garbage such as batteries and ink cartridges areuniformly dealt with by relevant departments. In addition, the Company has also provided four kinds of garbage bins for"other garbage", "recyclables", "harmful garbage" and "kitchen waste" at the centralized garbage point, and entered intoservice contracts with specialized garbage collection and transportation companies.
Extensive training and publicityThe Company released learning materials on garbage sorting on the internal E-learning platform, provided the mostcommon cases in response to the common classification questions, and helped employees to have an overallunderstanding and grasp of garbage sorting through online interpretation
In the future, Zhende Medical will further strive for thepromotion and education of garbage sorting, organizemore targeted training activities, and elevate theclassification accuracy and enthusiasm of employees.The Company will improve the mechanism to ensurethe strict implementation of garbage sorting. It willalso introduce advanced waste sorting technology andequipment to enhance sorting efficiency and quality.In addition, the Company will further cooperate withspecialized recycling enterprises to achieve the resourceutilization of wastes, thereby contributing more to greenand environmental protection, and fostering a betterfuture of sustainable development.
Nowadays, environmental awareness is increasing day by day. Green office and low-carbonoperation have become important directions for the sustainable development of enterprises, whichnot only helps to reduce the negative impact on the environment, but also enhances the corporateimage and lowers operating costs.
——Betty Ye, Low Carbon Project Leader of Zhende Medical
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Improving Governance System
Corporate Governance SystemCompliance Operation Management
33.33%
of female directors
investor exchange meetings
internal audits
sessions of anti-corruption theme training
ESGcommissionopportunitySupply chaincollaborationopportunityTrade riskEHSS risk
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Corporate Governance SystemCorporate Governance StructureZhende Medical has formulated the Articles of Association to continuously improve the corporate governance structureand standardize its operations. The Company has established a corporate governance structure consisting of the GeneralMeeting of Shareholders, Board of Directors, and Board of Supervisors. We have formulated systems such as the Rules ofProcedure for Shareholders’ General Meeting, Rules of Procedure for Board of Directors, and Rules of Procedure for Boardof Supervisors, ensuring that the General Meeting of Shareholders, the Board of Directors and the Board of Supervisorsexercise decision-making and supervisory power, with an increasing level of independent operation.The Board of Directors consists of four specialized committees: Strategy Committee, Audit Committee, NominationCommittee, and Compensation and Assessment Committee. All members of the specialized committees are directors.Independent directors hold the majority and serve as the chairman of the Audit Committee, Nomination Committee, andCompensation and Assessment Committee. Each committee strictly fulfills its responsibilities in accordance with relevantregulations, and fully utilizes its professional advantages, to improve the scientific decision-making of the Board of Directors.
During the reporting period, the Company held the General Meeting of Shareholders and meetings of the Board ofDirectors and Board of Supervisors in accordance with legal procedures. Each specialized committee of the Boardof Directors performed their responsibilities, and improved the level of enterprise management and risk preventioncapabilities. The maximum interests of the Company and all its shareholders were safeguarded.
— Corporate Governance Structure of Zhende Medical —
— Investor Communication Channels —
— Composition of the Board of Directors and Board of Supervisors and Operation of Shareholders’
General Meeting and Meetings of the Board of Directors and Board of Supervisors in 2024 —
General Meeting of Shareholders
Board of Directors
Strategy CommitteeAudit CommitteeNomination Committee
Remuneration andAssessment Committee
Board of Supervisors
Compositionof the Boardof Directors
directors, including
female directors and
independent directors
Composition
of theBoard ofSupervisors
supervisors, including
employee supervisor
Convening ofthe GeneralMeeting ofShareholdersand Meetingsof the Boardof Directorsand Board ofSupervisors
General Meeting of Shareholders with a totalof
proposals deliberated
Board of Directors meetings, with a total of
proposals deliberated, including
meetingsof specialized committees of the Board ofDirectors
Board of Supervisors meetings, with a total of
proposals deliberated.
Protection of Investor RightsThe Company performs its information disclosure obligations in a truthful, accurate, complete and timely manner, instrict accordance with laws and regulations and the Articles of Association, the Information Disclosure ManagementSystem, the Internal Reporting System for Material Information and Information Disclosure Deferral and ExemptionBusiness Management System, etc., and does a good job in maintaining confidentiality prior to the informationdisclosure to ensure that the information disclosure is open, fair and equitable, and that it effectively safeguards theinterests of the investors, in particular the small and medium-sized investors.In terms of equal treatment of small and medium-sized shareholders, the Company follows the principle of equalitywhen carrying out investor relations management activities, to treat all investors equally. Particularly, it createsopportunities and provides convenience for small and medium-sized investors to participate in the activities, andarranges on-site visits, discussions and communicationIn terms of related-party transactions, the Company has established an effective mechanism for the operation andsupervision of such transactions. The annual estimated related-party transactions are confirmed and implementedafter being voted on by the board of directors and deliberated by the independent directors and the shareholders'meeting, which ensures that the daily related-party transactions involved are necessary for the Company’s dailyproduction and operation. The transaction pricing is fair and reasonable and will not adversely affect the Company'sfinancial position and operating results, nor affect the Company's independence, nor jeopardize the interests of theCompany and its other shareholders, especially the small and medium-sized shareholders.The Company has formulated the Investor Relationship Management System and established diversified investorcommunication channels. Through the Company's shareholders' meeting,performance briefings, investor hotline, mailboxes, reception of investor researchvisits and other means, the Company communicated with investors to safeguardthe legitimate rights and interests of investors, especially the interests of smalland medium-sized investors, enhance the investors' understanding and trust of theCompany, and listen to the investors' opinions and suggestions, in a bid to improvethe Company's governance.
0575-88751963
Official website of the Company, website ofShanghai Stock Exchange, e-interaction platformof the Shanghai Stock Exchange, etc.
dsh@zhende.com
General Meeting of Shareholders, investorexchange conferences, roadshows, etc.
During the reportingperiod, the Companyheld
investor exchangemeetings.
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PartnerSustainableDevelopmentManagementThe Company designates Shanghai Securities News, Securities Times, SecuritiesDaily, China Securities Journal, and the website of the Shanghai Stock Exchangeas the newspapers and website for information disclosure. During the reportingperiod, it did not keep any information that should have been disclosed, andthere was no selective information disclosure behavior. It has properly fulfilledthe information disclosure obligations of a listed company and effectively protected the legitimate rights and interestsof investors.Zhende Medical has established and improved its sustainable and stable dividend policy and supervision mechanism,effectively safeguarded the legitimate rights and interests of investors, and distributed dividends to all shareholdersaccording to the dividend return plan.
Zhende Medical practiced the "investor-oriented" concept, boosted the high-quality development of the Companyand the enhancement of investmentvalue, protected the legitimate rightsand interests of investors, especiallysmall and medium-sized investors, andformulated an action plan of "improvingquality, increasing efficiency andhighlighting returns" in combination withits development strategy and realisticbusiness conditions. Specific measuresincluded focusing on the main business,emphasizing investor returns, stressingthe quality of information disclosure,standardizing operation and improvingcorporate governance, and strengtheningthe responsibility of the "key minority".
During the reporting period, theCompany released a total of
announcements and documents.
— Cash Dividend Distribution of Zhende Medical over the Past Three Years —
— Anti-corruption management measures and progress of Zhende Medical —YearDividend distributed per 10 shares (RMB) (tax inclusive)
202262023152024 6.5
MeasuresAchievements in 2024
Systemconstruction
The company has signed the Commitment Letter for Professional Ethicsand the Commitment Letter for Honest and Clean Practice with employees.Employees are required to prevent corrupt behaviors, such as acceptingbribes, organizing or participating in entertainment and consumptionactivities and soliciting bribes, strictly keep business secrets, observeprofessional ethics, enhance the awareness of integrity and self-discipline,and safeguard the legitimate rights and interests of the Company.The Company has formulated the Management System for Bidding andother systems for external parties. It has issued the “Anti-CommercialBribery, Adherence to Integrity” proposal for suppliers and distributors, andsigned the Integrity Agreement with them to prevent money exchanges withemployees, payment of kickbacks, pursuit of private interests and othercorrupt behaviors, and establish honest, trustworthy, reciprocal and win-wincooperation.
The signing rate of the Commitment Letter forProfessional Ethics with employees was100%,and the signing rate of the Commitment Letter forHonest and Clean Practice with employees was100%.The signing rate of the Integrity Agreement withsuppliers and distributors was100%.
Supervisionand review
Internal reviewThe Company has published supervision and reporting channels andtelephone numbers, and required all factories and marketing centers tocarry out internal supervision and audit.External auditEvery year, the Company has accepted audits from independent thirdparties at the request of customers, demonstrating its transparency andcompliance. In addition to financial audits, the Company has also acceptedethic reviews from independent third parties every year, with businessethics as one of the main topics.
Compliance audit was conducted annually in eachfactory, and the audit report was delivered at theannual management meeting of the Companyand was incorporated into the rectification of eachfactory.
Awareness
training
The Company has continued to provide customized business ethicstraining courses, covering employees in all key positions. The training hasrecorded and tracked the training effect through the E-learning platform,improving employees’ awareness of business ethics.For all employees, the Company organized the Enterprise Business EthicsTraining - Enterprise Anti-corruption and Anti-bribery to strengthen theirsense of self-discipline and continuously enhance their business ethics;The Company released the Code of Business Conduct and also organizedtraining on Anti-commercial bribery and Complaint Reporting ManagementRegulations for partners.
The Company provided anti-fraud case training,and analyzed fraud cases, including duty-relatedmisappropriation, embezzlement of funds andbriberies of non-government workers to enhancethe vigilance of employees.During the reporting period, the Company organizedvarious anti-corruption theme training for
times, involving sales, procurement, infrastructureand other departments. The proportion of directorsreceiving anti-corruption related training was100%, with the training time of
hours perperson.
Compliance Operation Management
Anti-commercial Bribery and Anti-corruption
Zhende Medical has established a comprehensive anti-corruption management system and shaped a clean and honestcorporate culture. The Board of Directors of the Company has an Audit Committee responsible for managing andmaking decisions on anti-corruption and business ethics. The Company’s Internal Audit and Risk Control Department isdesignated as a permanent body for audit and supervision, and responsible for organizing and implementing daily anti-fraud work throughout the Company.The Company has continued to improve anti-corruption and business ethics management systems, and consolidatedanti-corruption management achievements through various measures, such as system construction, audit supervision,due diligence and training.
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MeasuresAchievements in 2024
Supervisionandreporting
The Company has adopted a zero-tolerance attitude towards corruption,fraud, and money laundering, formulated the Regulations on theManagement of Anti-commercial Bribery, Complaints and Reporting, andestablished a reporting hotline and email to ensure the transparency andsmoothness of reporting channels. At the same time, the Company takesprotective measures for complainants and whistleblowers. Those whoviolate the regulations by disclosing information about whistleblowersor retaliating against whistleblowers will be dismissed with their laborcontracts terminated. In case of violations against the law, relatedpersonnel will be transferred to the judicial authorities.
Reporting channels
Hotline: 18658516729Email: tousu@zhende.comMailing address: Zhende Medical Headquarters (Internal Audit and RiskControl Department), Yuecheng District, Shaoxing City, Zhejiang Province
During the reporting period, the number ofcorruption reports received by the Company was
.
Anti-Unfair CompetitionThe Company has strictly observed the Anti-Monopoly Law of the People’s Republic of China, the Anti-Unfair CompetitionLaw of the People’s Republic of China, the Price Law of the People’s Republic of China and the Advertising Law of thePeople’s Republic of China and other relevant laws and regulations, standardized the employee confidentiality system inthe Employee Handbook, and refused to seek competitive advantages through unethical and illegal business practices.Zhende Medical has established and improved internal management system and self-discipline mechanism,standardized employee behavior, and prevented unfair competition from inside the Company. In addition, the Companyhas also formulated a reporting mechanism to encourage employees to report any unfair competition act. Once verifiedthrough investigation, any unfair act shall be dealt with according to relevant laws and regulations and the Company'sinternal rules, and the information of whistleblowers shall be strictly protected to avoid retaliation. In addition, this yearthe Company also performed publicity and training to boost the construction of anti-unfair competition managementsystem and corporate culture.Zhende Medical has firmly implemented the responsible marketing concept, complied with national lawsand regulations, actively advocated an active and healthy lifestyle, laid stress on the accuracy of marketing &communication terms and the scientific and rigorous description of product performance, and strictly implemented theadvertising review system. During the reporting period, the Company developed and released the Brand ManagementStandards, systematically regulated the information release and review process, and established a strict review processfor external information release. Through multi-level checks by multi-level personnel at various posts, the probabilityof misleading information to the public was effectively reduced, thereby avoiding the potential risk of misleadingconsumers. In addition, Zhende Medical performed responsible marketing training for all marketing personnel,including marketing, brand and after-sales personnel, stressing that any one shall not infringe on others' intellectualproperty rights, and shall not publicize mistaken or exaggerated product information.
Internal Control and AuditZhende Medical has formulated the Internal Audit Provisions and Implementation Rules on Contract Approval Managementand other systems. Under the guidance of the Audit Committee of the Board, the Internal Audit Risk Control Departmentof the Company headquarters is in charge of internal audit, risk management and other related work. The Internal AuditRisk Control Department regularly conducts routine audits and special audits, and regularly identifies and evaluatesvarious risks in routine work, collects risk management opinions, and reports risk control to the Board of Directors.
During the reporting period, the Company conducted 8 routineaudits and 2 special audits, covering the procurement, cost, assets,engineering, remuneration and safety production units. Throughthe mode of "audit + rectification", the Company has constantlyoptimized its business process and operating mechanism.
During the reporting period, the Companyconducted
special audits
routine audits— Routine Audit and Special Audit Results of Zhende Medical in 2024 —TypeAudit ModuleAudit ScopeAudit Results
Routine audit
Seven items for thesubsidiaries
Audits were made for key systems,process construction and implementation,involving cost, procurement, assets, labor,engineering, safety production and others.
Completed a total of
items in routine and specialaudits, identified improvementpoints and madeimprovement as plannedOne item for sales
Freight management, sales management,cost verification and othersSpecial audit
One item for compliance
Conducted internal audit according to AEOstandardsOne item for cost
Cost information, cost management, costinput and output, system process andothersThe Company has laid stress on the enhancement of the employees’ legalawareness, and designed hierarchical law-abiding and compliance trainingcourses according to the characteristics of different posts. The trainings werecarried out through the E-Learning platform.
During the reporting period,
people attended thetraining coursesIntellectual Property ProtectionZhende Medical has attached significant importance to the protection of independent intellectual property rights, and respectedthe intellectual property rights of others. We established a sound intellectual property management system, and passed theintellectual property management system certification of the China National Intellectual Property Administration for the firsttime in 2016.The Company has established a top-down intellectual property management structure and intellectual property compliancemanagement system, and designated management representatives to ensure the effective operation of the system. TheCompany has also formulated the Intellectual Property Compliance Management Manual, Intellectual Property ManagementRegulations, Patent Value Evaluation Rules, Patent Application Management Rules for New Products and other systems, andcarried out the planning, implementation, inspection and improvement of intellectual property management, thereby providinga significant guarantee for the technological innovation and sustainable development of the Company. During the reportingperiod, the Company developed relevant procedures for intellectual property risk assessment and management, establishedresponse strategy for identified risks, and released documents such as Intellectual Property Protection Compliance ControlProcedures and Intellectual Property Emergency Plan.This year, Zhende Medical established a long-term goal for intellectual property, i.e, improve the intellectual propertycompliance management system, raise the independent innovation capability, bolster product transformation and upgrading,and contribute to the sustainable development of Zhende. In addition, the intellectual property goals are planned as follows:
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Establish and improve the enterprise intellectual property compliance management system and intensify thefull chain protection of enterprise intellectual property;
The coverage rate of intellectual property protection reaches 100%;a 100% of intellectual property control during product life cycle (involving project initiation, survey, marketlaunch, production, sales, after-sales, withdrawal and others.);b Full-process management and control of intellectual property (including patents, trademarks, copyrights,technology development contracts and others)
In 2024, the Company was granted
As of the end of the reporting period
New Class II medical deviceregistration certificates
the Company has had patentsfor invention
Class III medical deviceregistration certificates
Invention patents
Class II medical deviceregistration certificates
Awarded the title of“National Intellectual PropertyDemonstration Enterprise”.
In addition, the Company has actively performedintellectual property publicity and training activitiesfor employees. In 2024, the Company launched theintellectual property competition on the "IntellectualProperty Day". By linking market side and the R&Dside, the Company also held two exchange meetingsonpatent mining. The Company organized theMarketing Department of each marketing center tocarry out basic intellectual property training threetimes, and effectively arranged intellectual propertyinternal auditor training, with 4 individuals passingthe internal auditor examination.Moreover, the Company has endeavored to protect our core competitiveness, strictly inspected counterfeits of our brands,regularly monitored trademark infringement, and closely monitored the Company’s trademark registration information inthe market, search engines, professional trademark databases, official trademark announcements and other channelsto determine whether there is unauthorized use of our trademarks. In 2024, we found many companies registeredsimilar products with the trademark “Zhende”. Eventually, the Company filed complaints about the trademarks regardingtrademarks related to its main products, thereby maintaining the reputation of the trademark “Zhende”. During the reportingperiod, the Company had no violations relating to intellectual property rights.
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KPI and target values by 2030Goals by 2025
Actual performance
in 2023
Actual performancein 2024
ProgressThe work-related injury rate per onethousand employees is lower than 0.5
<0.50.45
0.38
↓Female senior executives (above directorlevel) account for up to 20%
>20%23.80%
26.3%
↑Employee Net Promoter Score (E-NPS) isover 70
>6469.33
75.55
↑The average training time of employees isgreater than 60 hours
>5664.77 hours
64.9
hours
↑Protection of Employees’Rights and Interests
Employee Training andDevelopment
Occupational Healthand Safety
Caring for employee growth
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Protection of Employees’ Rights and InterestsEmployee Recruitment and EmploymentThe Company has adhered to legal employment, and been committed to building an equal, diverse, and inclusiveworkplace culture. The Company has observed the Labor Law of the People’s Republic of China, the Labor ContractLaw of the People’s Republic of China and other laws and regulations, formulated regulations such as the ManagementRules for Signing Labor Contracts and the Recruitment Management Rules for General Workers, defined relevantprovisions in the Corporate Social Responsibility Management Handbook, clearly prohibited child labor and forced labor,and prevented workplace discrimination and harassment.The types of employment include full-time employment, labor dispatch, and re-employment after retirement . Postsinvolve human administration, research and development, marketing, sales, finance, production and manufacturing andothers. The production and manufacturing posts may involve labor dispatch workers in terms of employment relations.In recent years, the Company has actively carried out the strategy of talent introduction, and intensified the talentreserve through targeted recruitment from colleges and universities, school-enterprise cooperation and so on.
— Employee Recruitment and Employment of Zhende Medical —
Prohibition of child labor
Strictly implement the ID card-based assessment system before employment;If child labor is found to be recruited by mistake, the Company will notify their parents to take them back, bear their travelexpenses for returning home and all fees for their compulsory education.
Prohibition of forced labor
If forced labor is found, employee representatives should investigate into the matter and ask for opinions from the forcedworkers. Within a week, a meeting with the management will be set to seek solutions together, or report to the public safetyorgans.
Prevention of workplace discrimination and harassmentMake it clear that the Company shall not engage in any discriminatory behavior against employees due to their race, socialclass, nationality, religion, disability, gender, or gender orientation, etc.;Establish a multi-channel grievance mechanism through the grievance box, internal email address, telephone (0575-88082530),union representatives and others. This mechanism provides anonymous complaints, and takes adequate protectionmeasures to ensure the confidentiality of complainants, and protects complaint-making employees from being retaliated/penalized;After receiving the complaint, the Company will respond by investigating into and verifying it as soon as possible, andpromptly disclose the progress to the complainant. If the case is true, it will handle it in accordance with the system andpublicize the treatment; in serious cases, the Company will assist employees who have been discriminated against orharassed to report to the public security organs. If the case is not true, or if it is a misunderstanding, it will intervene formediation.Provide employees with trainings on the prevention of harassment and abuse.
The Company has adopted a series of employment measures, aiming to create more employment opportunities forthe society:
Expand the size of recruitment and offer diversified posts: The Company provided a variety of posts from production
line to management, R&D, and sales in different regions of the country to meet the employment demand of talents atvarious levels. In addition, we strove to attract talents through social recruitment, online recruitment platform and otherchannels. Zhende Medical attaches great importance to campus recruitment, recruiting nearly 100 outstanding collegegraduates every year.Intensify school-enterprise cooperation and cultivate specialized talents: We jointly launched modern apprenticeshipclasses with Henan Vocational College of Water Conservancy and Environment, attempted targeted training programs,and provided internship and employment opportunities for students. We also cooperated with Zhejiang Sci-TechUniversity to establish a school-enterprise employment practice base, further helping college students to enter theenterprises for employment.
Increase industrial investment and expand employment: Xuchang Zhengde invested in the spunlace non-woven fabricproduction project in 2024, which can provide 300 jobs and promote the employment of 1,000 people in the relevantindustrial chain after the project’s operation. Currently, Zhende Medical has more than 100 supporting enterprises atYanling County, and the whole industrial chain can provide nearly 10,000 jobs.The Company has always respected and cherished talents, and laid stress on compliance, fairness and transparencyin recruitment and employment work. In order to effectively create a fair, orderly, and trustworthy talent selectionenvironment, the Company has implemented the following actions and measures.Establish clearrecruitment policies and
procedures
Ensure that all recruitment decisions made are in line with the Company’s policies and laws andregulations, specify the process and responsible person at each stage, and prevent personal bias ofsupervisors from affecting recruitment results.Make public job
information
Extensively publish recruitment information inside and outside the Company, disclose contactinformation to the public, ensure that all qualified candidates have the opportunity to apply for relevantposts, and prohibit any discriminatory conditions in the published recruitment information.
Formulate fairrecruitment standards
Make clear job requirements, establish evaluation standards and interview guidelines, and ensure thateach candidate are subject to consistent, objective and fair evaluation standards.Take diverse recruitmentchannels
In addition to traditional recruitment channels, also use social media, internal recommendation, campusrecruitment and other diversified channels to acquire more talents with different backgrounds.
Train recruitment-relatedpersonnel
According to the Management and Training for Recruiters, organize training for HR personnel andinterviewers participating in recruitment to prevent discriminatory behavior of recruiters and enhancerecruitment fairness.Establish a feedbackmechanism
Provide a feedback mechanism for rejected candidates, enabling them to understand the reasons forthe rejection, and collect feedback to optimize the recruitment process.Make regular inspection
and evaluation
Make a regular inspection of the implementation of the recruitment process, evaluate whether therecruitment results are in line with expectations, and rectify unfair behaviors in a timely manner.
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Employee Care and WelfareThe Company has adhered to the management principle of “caring for employee”. A comprehensive remunerationsystem, the Employee Handbook, the Welfare Management Rules and the Articles of Association of Medical AssistanceFoundation have been developed to safeguard the legitimate rights and interests of every employee. In addition, theCompany has also set up internal honors and awards to recognize employees with outstanding performance andcontributions.
During the reporting period, the Company conducted a comprehensive comparative analysis on remuneration in the marketto assess the competitiveness of the Company’s remuneration system, and put forward suggestions for optimizationto attract and retain key talents more effectively. Meanwhile, it gave an active response to market changes, significantlyreducing unnecessary brain drains, and building a solid talent base for the Company’s long-term development.In the management principle of “caring for employees”, Zhende Medical has established a comprehensive employeewelfare system, including mandated benefits, living allowances, health plans and other benefits. The Company paid work-related injury insurance for all its regular employees, with the total amount of work-related injury insurance paid reaching.
The Company attaches great importanceto the humanistic care for every employee.The Company has established a mutualassistance foundation, and all employeesare members of the foundation, which offerscertain support to employees and theirfamilies in need. In addition, the Companyhas also provided support for employees'work and life through various forms ofactivities such as "five must-visits". Forexample, when an employee encounters
difficulties, the Company promptly offerssupport and extends its condolences.
— Comprehensive Remuneration System of Zhende Medical —
— Employee Welfare System of Zhende Medical —
— Comprehensive Reward System of Zhende Medical —
Long-termIncentives
SpiritualMotivationInclusivePolicies
Care Plan
Short-termIncentives
A Training SystemBased on LearningPaths
Safety and HealthEnvironment System Basedon Work EnvironmentImprovement
PerformanceManagement Based onStrategic Collaboration
Internal ImprovementPlan Based on EmployeeDedication and Cultural
Identity
AuthorizationSystem Based onTrust and Respect
Challenging Work TasksBased on EmployeeDevelopment
Core CompetencyBuilding Based onthe Strategy
Mandated benefitsHealth planOther benefitsLiving subsidies
Social insurance
Housing provident fund
Staff health examination
Commercial insurance
Staff dormitory
Food subsidiesStaff canteen
Regular buses
Subsidies for festivalsAnnual vacation
Group tourVisits for employees withmarriage, funeral, injury andillness, childbirth, or major
family accidents
BasicGuarantees
Medium-term
Incentives
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Zhende Medical Provided Child Care Services for Employees to Create a Family-Friendly WorkplaceTo solve the difficulty of taking care of employees’ children during holidays, enrich children’s lives and promote theirdevelopment, we have offered winter (summer) vacation care services eight times. We provided homework counselingand a series of interest courses, such as painting, poetry appreciation, clay making, cupcake making, and enhance theirunderstanding and friendship between each other through games.In 2024, a total of 80 children received such services. In the future, we will continue to work hard in caring for the families ofour employees, building a “harmonious and beautiful” home of Zhende.
Zhende Medical Established the Talent Scholarship to Assist in the Study and Development of Employees’ ChildrenTo care for employees and their families, we brought the Talent Scholarship Foundation into being in 2019 to help employees’children to further their studies and develop. Our core value of “success-sharing” was therefore put into practice. In 2024,we distributed the Talent Scholarship to 36 students for the sixth time, with a total amount of RMB108,000. As of the end of2024, we have accumulatively awarded scholarships to 205 employees’ children, with a total amount of RMB 615,000.
The Trade Union organized reading and sharing activities to express attitudes and convey energyZhende Medical’s Trade Union organized reading and sharing activities every quarter, where employees shared theirexperience of reading numerous classic books, covering management, logical thinking, literature and other fields. The booksshared by the employees not only enriched their knowledge, but also boosted cross-departmental exchanges and cooperation.
Zhende Medical set up a “Love Mother-Baby Room” to solve special demands of female employeesZhende Medical’s Labor Union has established the “Love Mother-Baby Room”, whichgreatly alleviated the “difficulty” in breastfeeding for new mothers in the workplace.The room is designed with humanistic details and equipped with baby beds,crawling mats, baby wipes, back cushions, dolls and storage boxes. The warm,comfortable, neat and clean private space not only guarantees the privacy of themothers in breastfeeding, but also prevents them from “carrying breast milk”, so thatthey can work with peace of mind. The Company has provided books on parentingexperience for the mothers and toys for children. Parking for pregnant women isavailable in the basement for easy travel. In addition, the Company also organizedactivities of sending roses + Zhende gift package on Women’s Day to show careand respect to female employees, significantly enhancing their happiness.
Relying on sound hardware facilities, the Company has carries out cultural and sports activities and holidaycelebrations which enrich employee lives, promote organizational unity, and demonstrate the power of Zhende. Weorganized a total of 10 recreational and sports activities, festival celebrations and newcomer greeting activities,enriching employees’ cultural life and providing opportunities in do exercises in various activities. At the same time,we encouraged employees to participate in clubs, and established yoga, badminton, table tennis and reading clubs. In2024, we organized 45 club activities, about 800 participants.
The Company listens to the voices of employees, accepts their supervision and takes their suggestions intoconsideration. We further safeguard their rights and interests through coordinating organization, mechanisms,and measures. We will continue to implement improvement measures to enhance employee satisfaction and workefficiency.
In addition, the Company has also taken measures in various aspects such as enriching food choices, creating leisurespace, holding planting activities, and organizing sports events, so as to create a diverse and rich life after work foremployees in an all-round way, covering all employees of the Company.
Mid-Autumn FestivalMooncake Making Activities
at Shaoxing Headquarters
Women's Day FlowerArrangement Activities atShaoxing Headquarters
International AWCProduct Line NingdeXiapu Team Building
Frontline EmployeesOne-day Tour Activities
at Hengdian
In July, a self-operated dessert and bakery stallwas added, offering 45 products, including birthdaycakes, bread, and beverages. In August, we tookover the "Yican Haofan" rice stall, launching over 70dishes and group meal sets, serving more than 6,500customers.
Enrich food
choices
A new employee vegetable garden project wasadded, with a total of 48 land plots developed intwo phases, and employees took an active part inplanting.
Hold planting
activities
In August, a movie theater project with movie andKTV functions was added. Up to now, 138 moviesand 32 KTV shows have been played, attracting atotal of more than 1,100 participants in the movietheater project.
Create leisure
space
Five major types of employee activities andcompetitions, namely rampage, table tennis,badminton, swimming and basketball, with acompetition prize of more than RMB 30,000, anda total participants of 920 in the activities andcompetitions.
Organize sports
events
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ImprovingGovernanceSystem
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Promoting GreenDevelopment
Being A Reliable
PartnerSustainableDevelopmentManagement
Diversification and Rights Protection
The Company has upheld the principle of equality and diversity, complied with local policies, and formulated andmanaged a diversity system. In 2024, the Company received various second and third party social responsibility auditsfor 12 times, of which all were passed.
The Company also offers meticulous care to female employees. In view of most female employees' need to balancefamily and work, the Company has provided special care in combination with their routine family life. For example, onWomen's Day, the Company sent to female employees wonderful holiday gifts, showing blessings and care for them;The Company also set up childcare classes for employees' children to address the problem that parents have notime to look after children during school holidays. The Company allowed female employees to bring their children toworkplace on the premise of not interfering with their work. Special care is given in combination with childbirth, holidaychild care and others, to remove worries of female employees, so that they can focus more on work and personaldevelopment. For pregnant and lactating female employees, if they feel uncomfortable at their original posts, they havethe right to negotiate with the Company to adjust their posts or improve their working conditions during the period.
Zhende Medical adheres to the "We Care" philosophy. Based on the self-developed E-learning platform, supported bythe internal trainer system and curriculum structure, we have established a talent development system that coversall employees. This can comprehensively improve their know-how and skills, and boost every employee to achievesuccess.
The Company has continuously improved the Training Management Regulations, set up a series of supporting systemswhich cover the management of lecturers management, courses, expenses, external training, new employee and jobtransfer training, learning credits, and training administrators. These systems ensure the effective implementation oftraining and the realization of the Company’s talent development strategy.
— Employee Equality and Diversity Measures —Diversity ofemployees
The Company has treated all ethnic groups equally in the recruitment process.Currently, the Company’s employees are from the United States, Kenya, Brazil,Malaysia, the United Kingdom and other countries, and non-Chinese employeesaccount for 16.9%.Protectionof women'srights andinterests
The Company attaches great importance to the proportion of female employeesin various posts, including board members, senior management members, R&Dpersonnel, new female employees and others, to ensure that female employees aretreated equally in the recruitment and work process.
Employee Training and DevelopmentSound Talent Development SystemIn 2024, the Company's internal training for employees highlighted the four directions: skill improvement, leadershipdevelopment, new employee integration and industry information, covering the topics such as course development,sales skills, leadership improvement, corporate culture and institutional regulations, AI tool use, and foreign marketaccess. More than 2,000 sessions of trainings were performed online and offline throughout the year, covering allthe employees, focusing on the enhancement of sales team and management capabilities. The systematic trainingcontributed to the improvement of employee efficiency, management capability and new employee adaptability.
During the reporting period, the Company carried out training on different subjects and levels for allemployees
Training coverage rate
100%
Average training duration per person
64.9
hoursTotal training duration
506,410 hoursTotal expenditure on training forthe Company
2.64
million yuan
Total training sessionsconducted
2,282
Formulate the Regulations on Workers’Congress and hold workers’ congress regularly.Sign a collective contract with all employees in China each year and negotiate the minimumwage standards and payment dates.Institutional guarantee
Adhere to the publicity of factory affairs and make public the Company’s relevant systems andregulations, employee benefits and other hot issues of common concern on the OA Intranet.Extensively solicit employees’ opinions and needs throught channels such as democracydiscusssion meetings, president’s suggestion box and satisfaction survey, and measures canbe implemented are put into action. For those that cannot be implemented or are difficult to doso are prompltly explained to employees, with efforts made to gain their understanding.Formulate the Information Transfer and Communication Control Procedures, which defines thechannels and methods of internal communication among employees (communication channelsinclude the Company’s publicity window, general manager’s mailbox, internal contact letter,company documents, monthly company newspaper and internal network)Set up an employee suggestion box in the restaurant, open it regularly, and ensure a closed-loopmanagement and handling of employee suggestions.
Measure-based guarantee
Organizational guaranteeThe Company headquarters and each subsidiary set up trade unions, covering all employees inChina.
During thereporting period,the administrativeservice satisfaction
90.5%
the canteensatisfaction
71.7%
the Trade Unionwork satisfaction
78.8%
the new employeesatisfaction
94%
the employee NetPromoter Score(NPS)
75.55
Zhende Medical has always deemed employees as the most valuable assets of the Company. Thecontinuous improvement of employees' professional skills, and the continuous enhancement of theirsocial responsibility awareness and environmental protection concept, can inject a steady stream ofcreativity and innovation into the Company, which has become the core driver to fuel the sustainabledevelopment of the Company. Therefore, we are always committed to the in-depth integration ofemployee training & development with the sustainable development goals of the Company. With thehelp of a systematic training mechanism, we endeavor to help employees grow, while creating long-term value for the Company and society.
——Jason Hu, Vice President of Zhende Medical
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In 2024, the Company planned to rotate 101 employees (excluding 2 who have resigned and 5 withobjective exceptions). As of the end of December, the overall rotation rate was 99.01%, successfullyattaining the goal.
Goal Attainment
Through the public rotation sharing meeting and reports of Zhende Journal and Zhende OfficialAccount, the Company has fostered a good rotation atmosphere.Atmosphere
Creation
Internal Trainer SystemCurriculum Structure
Develop the Management Rules for Part-time InternalTrainers;An annual meeting of internal trainers is held everySeptember to review the achievements of the trainingsystem in the past year, as well as the contributionsof lecturers in teaching and course development, andto commend outstanding internal trainers on site;So far, the internal trainer team has developed toover 240 members, including junior, intermediate,and senior lecturers.
Develop the Detailed Rules for CurriculumDevelopment and Curriculum Structure Management;Fabricate the annual course development planthrough annual training research, develop thecurriculum according to the plan, and invite high-level lecturers and executives to participate in coursereviews every quarter;Based on the empowerment needs of businessdepartments, establish secondary colleges for eachstructure through the E-Learning platform, and useit as the foundation to build a complete curriculumframework.In 2024, the Company completed the process-based capacity building by sorting out the overall process, andestablished and improved the three-level training system for new employees.
In 2024, the Company continued to spontaneously mentor and train new employees, reserve cadres and collegestudents in various areas and departments. The Human Resources Department determined mentor selectiondimensions and requirements based on the situations of systems and mentors, and organized the annual appraisalfor excellent mentors. Furthermore, the Company planned to collect key behaviors of the selected excellent mentorsbased on the mentor appraisal, extracting their behaviors and traits with Zhende’s genes, forming a portrait of Zhende’smentors, and improving the mentor management mechanism.In addition to internal training and learning activities, the Company has also vigorously supported employees to
participate in external training and education degree enhancement programs for the sake of further improvingemployee literacy. In 2024, the Company subsidized 20 employees to upgrade their academic degrees, with the fundof up to RMB 23,000. Through the introduction of external resources, 68 employees participated in the external specialtrainings and received relevant certificates and qualifications.In 2024, the Company actively implemented the talent introduction strategy. We have cooperated with a number ofuniversities through targeted recruitment programs and school-enterprise cooperation programs to carry out campusrecruitment and intern recruitment. The Company continuously expanded and optimized the talent pool, and enhancedcore competitiveness in technological innovation to ensure the Company's leading position in the market competition.The Company has paid attention to cultivating inter-disciplinary talents, and encouraged cross-functional,interdisciplinary job rotation of employees. During the reporting period, we established a job rotation system, revisedthe Job Rotation Management Rules, and proposed key positions for the job rotation plan, and tracked the process. TheCompany focused on job rotation of three types of people, namely university graduates, employees in key positionsand senior executives, and organized job rotation sharing meetings according to actual situations.
In 2024, we focused on enhancing capabilities across four main processes based on R&D and marketing (domestic TOBprocess, international TOB process, large retail commodity department process, and new product development process).The initiative covers a total of 25 secondary sub-processes and 121 capabilities. In collaboration with business departments,we have broken down each competency into standard actions, and thus built a process-based curriculum system. Weplanned to develop 52 courses throughout the year, with 46 of them completed the development review and operation.
We improved the system according to the three-level training andestablished the standardized process of training new employeesin the Company. New employees need to receive trainings atcompany-level, department-level and post-level courses afterentering the Company. In 2024, the new employee onboardingtraining process (SOP+ online guidance) was established, andthe company-level online training courses and offline intensivetraining courses were iteratively improved.
In 2024, the Company officially launched and completed the construction of the rotation system, revisedand released the Rotation Management Rules. The mechanism worked efficiently by implementing theimplementation processes such as matching the rotation mentors, releasing plans, following up OA processof the rotation work plan, monitoring monthly reports, rotation reports, and rotation sharing meeting.Process-based capacity building
Three-level training system for new employees
— Flow Chart for Rotation System Construction —
SystemConstruction
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Being A ReliablePartnerSustainableDevelopmentManagement
Smooth Career Development Channel
Embracing the concept of "We Care", relying on the self-developed E-learning platform and the internal trainer systemand curriculum system, the Company has restructured and designed the direction and path of job qualification, dividingdevelopment into two tracks: the M-series (management post) and the P-series (professional post). A new job maphas been established, creating a transparent and smooth career development channel. In the future, professional titleswill replace job levels, and codes will be assigned upon certification. The Company is also restarting the developmentof qualification standards for all departments, with the formulation and certification process expected to begin in2025. Additionally, the Company has established a comprehensive reward system to support, encourage, and guideemployees in their continuous upward development.In 2024, the Company launched the "Hang" training camp, which is a leadership development program designed bythe Company for backup and on-the-job management personnel. It is designed to enhance management personnel'strategic mindset and leadership skills through intensive training, online courses, and outreach exercises. It had a totalof 234 participants in 2024, with the employee coverage rate of 13.2%. The Hang programs implemented during thereporting period included the Linghang program, Huhang program, Qihang program and Ruihang program.
"Hang"training
camp
Huhangprogram
Qihangprogram
Ruihangprogram
Linghangprogram
The "Linghang Program -Senior Leadership TrainingCamp" designed for futureexecutives, covers a total of
participants. Internal andexternal training resources areintegrated through the four modules of digital transformation,transformational leadership& culture, organization building, andmarket and customer, with a training duration of 1 year.
This training program designedfor grassroots cadres of largeretail has a training duration of 3.5months.
grassroots cadresare trained and empoweredthrough online course learning,offline empowerment, andreading sharing.
The "Huhang Program" designedfor talents entering Library C andD in annual talent review. A totalof more than
participantsare divided into two trainingcamps.The "Qihang Program" designed forthe grass-roots production cadres inthe supply chain, covers a total of
participants,
courses and
classhours. It is developed and taught by
mentors of the Company, with a trainingduration of 4 months.
In order to attract and retain core talents, foster the common growth of both the Company and employees, and offertalents a stage to tap their capabilities; Zhende Medical has implemented various incentive measures, including equityincentive and option incentive. Furthermore, the Company has combined with the talent policy of the local governmentto positively pursue the corresponding talent incentives for employees.In 2024, the Company made a talent review of all employees, performed multidimensional evaluations of all employeessuch as capability evaluation, performance evaluation and values evaluation, and finally produced the review resultsthrough the nine-squre grid tool and calibration meetings. The final annual review results of all employees provide areference for the candidate for 2025 Linghang program- backup talents for senior management, Huhang program –backup talents for middle management, and Qihang program – backup talents for basic management, involving a totalof more than 1,600 employees.
Occupational Health and SafetyGovernance
The Company has attached great importance to the occupational health and safety of its employees, and strictlycomplied with the Production Safety Law of the People's Republic of China, the Law of the People's Republic of China onthe Prevention and Control of Occupational Diseases, and other laws and regulations and related requirements in thecourse of production and operation.The Company has continued to optimize the occupational health and safety management structure of theheadquarters and subsidiaries, and set up a comprehensive and efficient management system. At the headquarterslevel, the Company has established an ESG Management Committee, and the ESG Office under the President Office isresponsible for the construction and operation of the EHS management system. In addition, EHS contact personnel aredesignated in each department of the headquarters, and EHS departments are established in subsidiaries, which arein charge of boosting the implementation of EHS related systems and policiesof the Company. The Company has formulated the EHS Change ManagementRules, EHS Supervision and Inspection and Hidden Danger RectificationManagement System, EHS Training and Education Management Rules, HazardSource Identification and Evaluation Control Management Rules, OccupationalHealth Physical Examination Management System, Labor Protective EquipmentManagement System and other internal systems, and updated the EHSAccident Management Rules during the reporting period, thus contributing tothe constant improvement of occupational health and safety managementrequirements.StrategiesZhende Medical has embraced the work policy of occupational health and safety highlighting prevention, and promptlyidentified and removed occupational health and safety risk points by implementing hierarchical control of safety risks,regularly identifying danger sources, investigating hidden dangers and taking other management measures, therebycontributing to the formation of a complete closed-loop management mechanism. On this basis, the Companyhas continued to boost the cultivation of occupational health and safety culture, and held regular theme activitiesto raise employees’ safety awareness, and create a favorable occupational health and safety culture atmosphere,demonstrating its commitment to fostering a safe, healthy and sustainable working environment.
During the reporting period, ZhendeMedical and its
subsidiarycompanies passed the ISO 45001Occupational Health and SafetyManagement System Certification.
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Management of Impact, Risk and Opportunity
The Company has relied on hazard identification to systematically review the occupational health risks and potentialopportunities involved in the production and operations process. The Company has specified management methodsand requirements for key processes such as risk point identification, hazard identification, and risk assessment.They proactively identified risks and developed targeted control measures based on the risk levels, thereby effectivelyreducing the likelihood of risk occurrence and ensuring the occupational health and safety of employees. During thereporting period, the Company did not experience any major safety responsibility accidents.
— Major Measures for Occupational Health and Safety Protection of Zhende Medical —
Regular inspections and hazard recticationsConduct quarterly, monthly, and daily inspections;Relevant personnel carry out routine inspections, regular inspections, special inspections, comprehensive inspections, andrequire to make rectifications for the hazards within a fixed period of time;Make EHS supervision on relevant parties, examine and approve hazardous work behaviors and implement safety measures.
In order to strengthen the safety awareness of employees and enhance the relevant skills of employees, the Companyplanned the theme activities of "production Safety Month" every year, and continued to organize occupational healthand safety theme training covering all employees or employees in specific posts. During the reporting period, theCompany organized multiple sessions of occupational health and safety trainings on key contents such as specialequipment safety, electrical safety, mechanical safety and forklift safety management, with a total of 56,826 employeesparticipating in the trainings. In addition, the Company organized the executives above team leader level to receiveoffline examinations four times a year, and front-line employees to receive online safety tests to determine the trainingeffect, thereby further consolidating employees’ occupational health and safety knowledge level and their practicaloperating capability.
— Occupational Health and Safety Themed Training of Zhende Medical —
TraineesTraining ThemeNew employee
Safety education and training at three levels (factory level, workshop level, teamlevel)Employees in specific positions
Certification training for special operation personnel, safety management personneland responsible persons, occupational health trainingAll employees
Festival safety, site safety, hazardous chemicals cabinet safety, related partyconstruction disclosure safety, limited space safety, special equipment safety,electrical safety, mechanical safety, forklift safety management, environmentalprotection knowledge, industrial injury prevention and so onOccupational Health and Safety Training Test Performance Highlights of Zhende Medical in 2024
executives attended the offline examination, with the pass rate of up to
98.3%
6,044front-line employees received online safety tests, with the pass rate of up to
96.7%
The health and safety of employees is always our core work. By optimizing the production layout andintroducing environmental protection equipment, we can effectively mitigate potential hazards in theworkplace; we regularly held comprehensive safety training, support employees with professionalprotective equipment. In addition, we continue to improve the safety management system, intensifythe supervision and assessment mechanism, and ensure that all measures are put in place. Thisseries of measures have deeply integrated health and safety into ESG practice, thus fostering a safeand healthy working environment for employees and achieving the win-win situation of the Companyand society.——Anthony Dong, Director of ESG Management Committee Office of Zhende Medical
Hierarchical security controlDevelop 1-5 classes of accident control indicators and cascade the objectives at all levels in the form of signing EHSresponsibility letters.Hazard identication, assessment and controlRegularly identify, evaluate, control and update the hazards arising from the production activities and routine management ofthe Company;The managers taking on important positions regularly observe safety behaviors, and relevant team leaders regularly organizerisk prediction activities.
Detection and prevention of occupational hazards
Make regular tests of occupational hazards to determine the posts and employees related to hazards. The occupationalhazards regarding the Company mainly include noises, heat strokes, electric ophthalmia, chemical skin burns and others;Regular occupational health inspections;Distribute labor protection equipment to employees in specific posts;Establish the files of employees taking on occupational hazard positions to achieve "one file for one employee".
Production equipment safety protection
Carry out the "three simultaneous" measures for the changed project to ensure the essential safety level of equipment andfacilities;Standardize the safety management of special equipment to ensure the safe and compliance operation of special equipment.
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Being A ReliablePartnerSustainableDevelopmentManagement
Carried out a series of "Safety Month" activities to raise employees’ safety awareness
Carried out emergency drill activities to enhance emergency response capabilityPublicized related policies and guidelines, laws and regulations and elementary knowledge on safety production, firecontrol, occupational health and others by hanging the "Production Safety Month" banner, placing the "Production SafetyMonth" thematic display board, and using the LED display to roll the activity sloganOrganized occupational health and safety training to strengthen employees' awareness of occupational hazardsHeld KYT activities with the theme of "ethylene oxide dosing operation", identified 11 hazards from the chemical dosingprocess, labeled 4 important hazards and proposed 8 countermeasuresHeld two safety behavior observations on skin care powder making and glue making activities, identified 6 unsafebehaviors, discovered 17 hazards, and formulated 19 risk control measuresOrganized the "30-second emergency fire extinguishing capability" assessment activity, and randomly inspected theemergency fire extinguishing capability of workshop employeesCarried out fire competition activities, covering fire clothing wearing, fire extinguisher extinguishing, double people hose-carrying shuttle run, and double people hose coupling, with a total of 6 teams participating in the competition.
In May 2024, the Company organized an emergency drill coping with chemicals leakage, and carried out theoreticaland practical training on the use of fire extinguishers, gas masks and alarms at the same time, with a total of
participants.In July 2024, the manufacturing workshop of the Company organized fire emergency evacuation drills, and held thetheoretical and practical training on the use of fire extinguishers, hydrants and alarms, with a total of
participants.
Phase I "Safety Month" Campaign in Kenya
Emergency Drills
In addition, the Company has regularly carried out special emergency drill activities, which helped to enhance theemergency response capability of employees through the simulation of real scenarios, thus ensuring that employeescan take actions quickly, accurately and efficiently in case of emergencies, and decreasing the possibility ofoccupational health and safety accidents.
Indicators and Targets
Target<0.5
0.38
Progress towards the targetduring the reporting period
Injury rate per 1,000 people
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KPI and target values by 2030Goals by 2025
Actual performancein 2023
Actual performance
in 2024
ProgressAll factories pass the ISO 14001certification.
1. All factories that have
passed the ISO 14001certification maintain the
certification.
2. New factories (e.g. Kenya
phase 2 factory) pass thecertification.
66.67%
100%↑
Environment-friendly packagingmaterials for finished products accountfor over 80%.
68%65%
68%↑The Company plans to join the SBTiand will set target values based on thegoals established by the SBTi.
Reduce by 6%Reduce by 8.3%Reduce by 5.8%↓Renewable electricity accounts for over30% of total electricity consumption.
>24%11.1%
20%↑Environmental ManagementSystem
Resource Conservation andUtilization
Climate Change Mitigation andAdaptation
Promoting GreenDevelopment
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Environmental Management SystemEnvironmental Compliance ManagementGovernanceThe Company adheres to the concept of green development, establishes and improves an environmental managementsystem. The Company identifies the environmental laws and regulations it uses and conducts compliance evaluations,mainly including the Environmental Protection Law, the Law on Environmental Impact Assessment, the Water PollutionPrevention and Control Law, the Law on Air Pollution Prevention and Control, the Law on the Prevention and Control ofEnvironmental Pollution by Solid Wastes, the Law on the Prevention and Control of Environmental Noise Pollution, as wellas the Regulations on the Administration of Environmental Protection for Construction Projects, etc. We have formulatedpollution prevention and compliance discharge systems such as the Environmental Protection Facility ManagementSystem, covering management regulations in terms of exhaust gas emissions, wastewater discharges, and wastemanagement. An environmental management organizational structure covering the headquarters and all subsidiariesis established and environmental supervision and management for the headquarters and all subsidiaries is carried outthrough statements and other forms.In 2024, the Company invested RMB
11.78
million in environmental protection. During the reporting period, allenvironmental protection facilities operated normally. New investment projects adhered to local laws, regulations, andpolicy standards regarding environmental management at their operational sites. There were no incidents of violatingenvironmental protection laws or regulations. Xuchang Zhende was awarded honorary titles such as the provincial-level “Green Factory” and municipal-level “Waste-Free Factory”.
— Environmental Governance Framework of Zhende Medical —
— Environmental Governance Framework of Zhende Medical —
EHS Management Department
ESG Office
ESGCommittee
The executive president serves as the director, and the vice president incharge serves as the executive director.
Established in the President's Office.
Set up an EHS management department in each factoryof the manufacturing center, which reports to both thefactory general manager and the ESG Office.Strategies
This year, the Company has formulated the Environmental Management Statement, which clarifies the environmentalcompliance management policy. It is committed to reducing the discharge of wastewater and emission of waste gas,the generation of wastes and noises during the production process. It promises to reduce environmental hazards byusing alternative materials that are less hazardous or less toxic.
Management of Impact, Risk and OpportunityThe Company has formulated the Procedure for Identification of Environmental Factors and Risk Assessment and Control,which stipulates the processes and methods for the identification and evaluation of environmental factors. It identifies,evaluates, controls and updates the environmental factors that can be controlled and those on which an impact canbe exerted in the Company's activities, products and services, so as to determine the significant environmental factors,provide a basis for formulating environmental objectives and indicators, and effectively control environmental risks.
Identification ofEnvironmental Factors
Evaluation ofEnvironmental Factors
Planning of Control
MeasuresComprehensively considerthe environmental impactsthroughout the entire life cycleof the Company's productionand operation, as well as the"three states, three time tenses,and eight aspects", and identifyall environmental factors whichthe Company can control orexert influence on during theproduction activities, productand service processes.
Evaluate environmentalfactors using material balancemethod, product life cycleanalysis (LCA), process analysismethod, questionnaire surveymethod, and comprehensivescoring method alone or incombination, and identify majorenvironmental factors aftercomprehensively consideringthe frequency and severity ofoccurrence.
Develop operational controlprocedures in the order ofelimination, substitution,technical measures, signageand warnings, management andcontrol measures, and personalprotective equipment.Establish targets for importantenvironmental factors formanagement and control,clarify the planning schemesfor achieving the targets,emergency preparednessand response management,and ensure that the requiredresources are provided in place.To implement the environmental management system, the Company has established a comprehensive and multi-dimensional environmental protection approach. It covers various aspects, including environmental protectiontraining, 5S inspections to standardize electricity usage across all modules, and the development of environmentalemergency response mechanisms. Through meticulous management practices, we aim to continuously enhance ourenvironmental awareness and environmental management capabilities.
According to the Company's sustainable development plan, we will upgrade production equipment and optimizethe technological process to reduce greenhouse gas emissions during the production process and graduallyphase out high-energy-consuming equipment; actively purchase green electricity, increase the proportionof renewable energy use, and reduce carbon emissions caused by electricity consumption. Meanwhile, theCompany implements the lean manufacturing concept. By reducing waste, improving resource utilizationefficiency, optimizing inventory management and production scheduling, we will further reduce energy andraw material consumption. Through these measures, Zhende Medical actively fulfills its environmentalresponsibilities while achieving economic benefits and promotes the sustainable development of the industry.
——Bric Long, Vice President of Zhende Medical
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We actively organize environmental training covering topics such as relevant laws and regulations, emission standards,analysis of key provisions, standardized environmental management, and case studies. During the reporting period,Shaoxing Factory organized training on laws and regulations related to environmental protection, and offered online andoffline training, with 44 participants. In May 2024, we held a sharing session on the theme of "Sharing EnvironmentalProtection Related Laws and Regulations" for various departments, workshop managers and EHS staffs, with a total of24 participants. Through case analysis and other forms, we taught relevant personnel the basic knowledge and practicalapplication of environmental protection laws and regulations, improved their awareness of the rule of law and responsibility,and promoted the continuous conduct of environmental protection work.
Environmental Training
We conduct 5S (Sort, Set in Order, Shine, Standardize, Sustain) inspections of energy consumption to enhance allemployees’ water and electricity conservation awareness, and analyze current environmental pain points based onproposals for improvements.5S Inspections
We have developed the Environmental Emergency Response Plan and the Comprehensive Emergency Rescue Plan forSafety Production Accidents, along with specialized emergency plans. These plans detail management measures andhandling procedures for environmental emergencies, based on environmental risk assessments and internal emergencysupply investigations. Additionally, we conduct annual emergency training and drills for various environmental incidents,which effectively enhance our emergency response capabilities. During the reporting period, the Company carried out 11environmental emergency drills.
Emergency Response Plan and Drill
Technical Transformation Project for Coating VOCs (Volatile Organic Compounds)
This year, the Company has carried out the VOCstechnical transformation project for coating andachieved substantial progress. Through the in-depth analysis of regulations and policies and theevaluation of the current environmental managementlevel, the Company has scientifically set projectenhancement targets, systematically carried outroot cause studies, and innovatively formulated aseries of high-efficiency solutions. These initiativeshave enabled the Company to achieve significantbreakthroughs in the field of VOCs treatment:
treatment efficiency has been significantly improved,a perfect monitoring system for coating VOCsemissions has been established, and significantprogress has been made in RTO (RegenerativeThermal Oxidizer) exhaust gas treatment technology.The project has been continuously optimized since implementation, maintaining compliance with emission standards forcoating VOCs while maintaining excellent control of operating costs, which are only 3%-5% of other similar RTO technologies.The project has been so effective that it has not only significantly reduced the number of exhaust gas-related complaints, butalso won the recognition of the regulatory authorities. In the future, the Company will continue to improve the construction ofstandardized system for VOCs treatment, expand the scope of technology application, and provide solid support for ZhendeMedical to build a green, compliant and sustainable operation mode.
Indicators and targets
Target
100% of factories have passedISO 14001 system certification100%Progress in achieving the targetduring the reporting periodISO 14001 systemcertification coverage
Emissions and Waste
Zhende Medical has developed systems such as the Water Pollution Prevention and Control Management System,the Air Pollution Prevention and Control Management System, and the Solid Waste Pollution Prevention and ControlManagement System, and implemented comprehensive management of pollutant discharge and waste treatmentaccordingly. During the reporting period, the headquarters and all subsidiaries adhered to discharge standards forwastewater and waste gas and policy standards for waste disposal. Moreover, a third-party testing agency wascommissioned to test pollution sources including wastewater, waste gas and boundary noise. The testing resultsshowed that all indicators met relevant discharge standards and there was no significant impact on the surroundingenvironment.
— Management Requirements and Treatment Methods for Emissions and Wastes —
Applicable standards: Integrated Wastewater Discharge Standard (GB 8978-1996) Indirect
Discharge Limits of Nitrogen and Phosphorus Pollutants from Industrial Enterprises (DB33/ 887-2013)Key control indicators: pH, ammonia nitrogen, suspended solids, chemical oxygen demand(COD), five-day biochemical oxygen demand (BOD5)Discharge types: production wastewater and domestic sewage. Among them, productionwastewater mainly comes from the de-bleaching process, and domestic wastewater mainlycomes from office, canteen cooking, etc.Method of disposal: All wastewater is treated by the physical and chemical and biochemicaltreatment process of the factory sewage treatment station and discharged into the municipalsewage network after reaching the discharge standard.Applicable standards: Comprehensive Emission Standard for Air Pollutants (GB 16297-1996),Emission Standard for Boiler Air Pollutants (GB 13271-2014)
Key control indicators: Non-methane hydrocarbons, nitrogen oxides, particulate matter, sulfurdioxide, ethylene oxide, and odor.Emission types: Processes such as printing and coating, sterilization, and boiler combustion,etc.Methods of disposal: Different types of waste gases are treated by washing purification andactivated carbon adsorption purification facilities, multi-stage (sulfuric acid) washing towerpurification facilities, etc.; for some waste gases containing cotton dust, a dust collecting unitis used to remove the cotton dust.
Wastewater
Waste gas
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Discharge types: General solid waste mainly comes from production, office and otherprocesses, and includes recyclable materials, leftovers and unqualified products.Disposal method: The leftovers from the injection molding are crushed by a line-edge powdershaking machine and then recycled; recyclable materials such as waste cardboard, leftovers ofother products and unqualified products are handed over to third parties for recycling or solidwaste environmental protection units for disposal.General solid
wastes
Applicable standards: National Catalogue of Hazardous Wastes, Management Regulation on
Hazardous Wastes Manifests.
Discharge types: mainly including waste acrylic glue generated during the coating process,waste activated carbon generated during the waste gas purification process, chemicalpackaging barrels for the use of chemicals, etc.Disposal method: a qualified third-party hazardous waste disposal agency is entrusted fordisposal of hazardous wastes.Hazardous
wastes
Protection of Ecosystems and Biological Diversity
The Company is committed to respecting and protecting local biological diversity and endeavors to minimize thenegative impacts of its operations on wildlife populations and habitats. In the Company's operational activities, thedesign, construction, acceptance, and operation of new or expanded factory buildings or product operation projects,the generation, treatment, and discharge of waste during factory operations, the design of environmental emergencyresponse plans, as well as the handling and follow-up processes in the events of environmental emergencies all involvethe protection of ecosystems and biological diversity.The Company complies with all relevant national and local laws, regulations, and provisions in the locations whereits factories are situated, as well as the binding clauses of generally recognized international organizations, industryregulations, and the supplier codes of conduct of its core customers. During the reporting period, the Companyformulated the Management Procedure for Ecosystem and Biological Diversity Protection and defined the correspondingrisk assessment management process. Every year, the LEC (Likelihood-Exposure-Consequence) method is used forrisk classification, and corresponding preventive and disposal measures are formulated for different risk levels toensure that operational activities meet the requirements of biological diversity protection, continuously improve thelevel of ecological environment management, and contribute to the protection of the stability and diversity of regionalecosystems.The EU Deforestation Regulation (EUDR) came into effect at the end of 2024, requiring forestry and agriculturalproducts sold to the EU to provide evidence of no deforestation. The period of prosecution extends back to the endof 2020, and violations will result in huge fines and market exclusion. To proactively address the potential impacts ofthe EU Deforestation Regulation, the Company established a special response team in September 2024 to coordinateand promote related work. The response team organized internal training to enhance the understanding of regulatoryrequirements and compliance awareness of relevant personnel. Based on the product list specified in the regulationand the customs codes of the Company's export products, the list of potentially affected products is sorted out andidentified. Meanwhile, the Company actively communicated and collaborated with customers, collected and organizedcompliance evidence for the identified products, and provided relevant materials for customers to review and file forrecord, so as to meet the EU's review requirements and ensure the stable and compliant operation of its business.
Resource Conservation and UtilizationZhende Medical attaches great importance to the conservation and efficient utilization of resources. Upholding theconcept of green and low-carbon development, the Company continuously promotes the refined management ofenergy, improves the utilization efficiency of resources such as water, electricity, and steam, and reduces resourceconsumption. By establishing and improving the energy management system and strengthening the control of thewhole process and various links, the Company constantly improves the management mechanism and optimizes theenergy consumption structure to support sustainable operations.The Company adopts a matrix management model. The President's Office coordinates and promotes energymanagement, and the Power Department is responsible for the operation and management of energy facilities such aswater, electricity, steam, AGVs, air conditioners, and air compressors. The manager of the Power Department serves asthe head in charge of energy management and reports directly to the Assistant General Manager of the ManufacturingCenter. In addition, the manager also provides feedback on the energy management of each factory to the generalmanagers of each factory, ensuring the efficient implementation of energy management measures and guaranteeingthe green and orderly production and operation.Energy ManagementZhende Medical adheres to the energy management policy of “energy conservation and emission reduction, fullparticipation, continuous improvement, and the pursuit of excellence". The Company aims to achieve the goal ofenergy conservation and consumption reduction through cultural guidance, professional supervision, process controland full participation. It also commits to improving the energy utilization efficiency in the processes of procurement,production, operation, and sales, as well as increasing the utilization rate of renewable energy sources such as solarenergy, wind energy, and tidal energy, so as to mitigate the negative impacts of climate change.The types of energy used in Zhende's operation include natural gas, gasoline and diesel consumed by its own vehicles,electricity and steam. Among them, electricity includes electricity from municipal facilities and self-built solar panels,and purchased renewable electricity. We adhere to relevant regulations for energy management, and have establishedprocedural documents, such as the Energy Management System, the Energy Review Management Rules, the MainEnergy-Consuming Equipment Management Rules, and the Energy Management Assessment System, to standardize theconstruction of our energy management system.The Company regularly conducts risk diagnoses on the energy management of each base. Based on the energymanagement diagnosis results of Xuchang Zhende and Xuchang Zhengde during the reporting period, we haveformulated an energy conservation and consumption reduction plan. It is expected that a 15% reduction in energyconsumption can be achieved after rectification, and the plan is considered to be promoted and implemented in otherfactories according to the actual energy consumption reduction effect. Meanwhile, we continuously improve theconstruction of the energy management system by referring to standards such as ISO 50001, to further standardizethe Company’s energy use. As of the end of the reporting period, the Company's subsidiaries Shaoxing Zhende andXuchang Zhengde have obtained the ISO 50001 energy management system certification.
During the reporting periodElectricity from renewable energy sources accounted for20% of the Company’s total energy use.Note 1: The data involves all operational sites.
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In 2024, Zhende has comprehensively reviewed its energy structure, and implemented measures such as using cleanenergy, adopting energy-saving equipment, and carrying out intelligent control transformation, to optimize the energystructure and enhance overall energy efficiency.
In the future, we plan to build an Energy Management Business Intelligence (BI) system. Through digital management tools,the centralized monitoring, analysis, and early warning of energy data can be achieved, the potential for energy conservationis explored to assist in achieving refined energy consumption and continuously optimizing the energy structure.Utilization of Water ResourcesWe are committed to implementing actions to reduce water resource consumption, improve resource utilizationefficiency, minimize resource waste, and promote sustainable development. The Company responsibly handles waterand other natural resources. The water resources used in the operation of Zhende Medical come from municipal watersupply, surface water, and recycled water. For the extraction of surface water, the Company applies for a water intakepermit in accordance with regulations, pays water resource fees on time, and has no significant environmental impactin terms of water source acquisition.Poor water resource management may lead to an increase in water intake fees and a rise in operating costs. In 2024,a comprehensive review of water usage situation in Xuchang Prefecture was conducted, and it was planned to launchthree projects in 2025, namely the recovery of steam condensate water, the recovery of concentrated water, and therecycling and utilization of reclaimed water from the sewage treatment plant. It is expected that upon the completionof the construction, the overall recycled water volume will reach 91.6% of the total water consumption. In additionto encouraging employees to carry out technological transformations for water conservation during the productionprocess, the Company also advocates water conservation among employees in daily life, requiring them to turn offfaucets promptly and achieve the reuse of water resources.
— Achievements of Energy-saving Equipment Replacement in 2024 —
— Pathway to Green Packaging —
In the casting workshop of Xuchang Zhengde, the casting machine requires cold water for equipment cooling duringoperation. The previous cooling method used a lithium bromide air conditioner to produce cold water for equipmentcooling. After technological transformation and intelligent control transformation, the cooling tower is utilized to takeadvantage of the external environment in winter for equipment cooling, which can save1,334tons of steam per year.In 2024, the air compressors of Xuchang Zhengde and Xuchang Zhende underwent intelligent transformation, achievinglinkage of the air compressors. This reduces the number of unloading times of the air compressors and decreases theload of the air compressors during meal and rest times, thereby reducing energy consumption. This can save100,000
kW?h of electricity per year.The previously used aeration fan motor in the sewage station of Xuchang Zhende was a common motor, which had highpower consumption. After equipment upgrading, the aeration fan was replaced with a high-tech, green, energy-savingand environmentally friendly magnetic levitation motor. This fan is highly efficient and more energy-saving, which cansave120,000 kW?h of electricity per year.
During the reporting period
the proportion of recycled water used by the Company
reached
52.05%
.Note 1: The data involves all operational sites.
Raw Material and Packaging Management
The Company is committed to minimizing the waste of resources and environmental damage during the operationprocess, and promoting the transformation of the enterprise towards a circular economy. The product packaging ofthe Company adheres to the basic principles of “lightweight, recyclability, and biodegradability”. It adopts a lightweightstrategy to optimize the design, reduce the use of materials, improve recyclability, and decrease resource consumptionand environmental pollution, so as to provide more environmentally friendly and sustainable products and services. Themain raw materials used in the Company's production include non-woven fabrics, cotton fabrics, and melt-blown fabrics,etc., and the packaging materials mainly include plastics and cardboard. The Company standardizes the transportationand use of raw materials and packaging materials, and through measures such as lean management and upgrading thewarehouse management system, it continuously reduces the loss and waste of raw materials and packaging materials,and improves the utilization rate of resources. In addition, driven by the concept of green development, the Companyactively promotes the development of low-carbon products, selects green and environmentally friendly production rawmaterials and packaging materials, reducing the environmental impact of material use.
In the exploration and practice of recyclable and eco-friendly packaging, the Company is committed to driving asustainable revolution in an innovative way. While meeting the increasingly stringent global environmental protectionand packaging regulations, it helps customers achieve their environmental goals and lead the green transformation ofthe industry. Through continuous breakthroughs and innovations, the Company has made positive progress in reducingcarbon emissions throughout the product life cycle, contributing to a sustainable future.
In response to customer demands forenvironmental sustainability, we continuouslyinnovate eco-friendly packaging materials,focusing on aspects such as high temperatureresistance and biodegradability.By conducting in-depth analyses of materialperformance, we ensure a balance betweenenvironmental benefits and practicality. We alsorigorously monitor testing progress to ensure theproject advances efficiently.
We optimize the design of paper boxes andcartons with the goal of reducing packagingweight by 5%, achieving both energy savingsand cost optimization.The project will involve multiple types oftesting to ensure quality and promote newstandards for green packaging.Developmentof Eco-FriendlyPackaging
PackagingLightweighting
The Company actively implements the concept of environmental protection. For cubic bag packaging with relatively lowperformance requirements, we promote the development and application of degradable materials, replace traditional plasticswith degradable and eco-friendly materials to reduce the environmental impact during the usage process, and further reducethe burden caused by packaging waste and promote the green upgrade of packaging.
Development of Eco-friendly Cubic Bags to Promote Green Transformation of Packaging
During the reporting period68% of the Company’s
finished products used recyclable packaging materials.Note 1: The data involves all operational sites.
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The Company has launched optimization for the packaging materials of paper tube bags. After performance and practicalitytests, the previously used 80g RST paper has been changed to 70g ST paper. This achieved a cost optimization of 30% whileensuring no influence on the packaging performance and usage strength.
Regarding the packaging of alcohol swabs, the Company has optimized and adjusted the thickness of the aluminumfilm while ensuring product performance and safety. Due to the volatility and flammability of alcohol in alcohol swabs, analuminum film is used as a barrier material to prevent the diffusion of alcohol molecules. Through scientific verification, theCompany has successfully reduced the thickness of the aluminum film used in the packaging of alcohol swabs from 101g to73g, achieving a cost optimization of 25%. In 2024, a total of 3,500 kilograms of aluminum film were saved.
Optimization of Paper Tube Bag Packaging
Optimization of Alcohol Swab Packaging
In packaging lightweighting, the Company has promoted a green upgrade of product packaging through detailed designand material optimization. This effort has enabled a reduction in packaging weight and contributed significantly to thedevelopment of a green supply chain in the medical field, in addition to reduction in the Company's operating costs.
Climate Change Mitigation and AdaptationZhende Medical has made constant and proactive efforts to improve its climate change response mechanismsin alignment with relevant policies and guidelines. In 2023, the Company enhanced its climate change responsemechanisms in the dimensions of governance, strategies, risk management, and indicators and targets by referencingthe requirements of the International Financial Reporting Standard for Sustainability Disclosure No. 2—Climate-relatedDisclosures (IFRS S2).Governance
The Company has issued the Climate Change Response Policy this year, committing to following the Science BasedTargets Initiative (SBTi), conducting comprehensive three-carbon emission verification, and formulating a carbonemission reduction pathway plan. In addition, the Company plans to disclose its organizational carbon emissionsand climate response strategies and plans to stakeholders through the CDP to enhance the transparency of climategovernance. Climate change is incorporated into the Company’s ESG management system. The Board of Directors,as the highest authority for climate governance, formulates and coordinates climate change response strategies,reviews climate-related management targets, such as greenhouse gas emissions, and assesses progress. The ESGManagement Committee, as the decision-making and supervisory body in ESG management, identifies, prioritizes,analyzes, and manages climate risks and opportunities, sets climate-related goals, and oversees and supports specificinitiatives. The Committee regularly reports on climate change response activities to the Board. The ESG Office, as theexecutive body of ESG management, implements and advances climate-related management tasks. It collaborateswith relevant functional and business departments to integrate climate management into daily operations. Throughenergy-saving technological upgrades, transition to clean energy, and awareness training, the office aims to enhanceclimate management performance and achieve climate change management goals.
Besides, the Company integrates greenhouse gas emissions performance into the long-term incentive plans for seniorexecutives to encourage sustained economic and shareholder value creation.StrategiesTo address the increasingly severe challenges posed by climate change to human society and corporate operations,the Company is committed to mitigating climate change by improving energy efficiency and the utilization rate ofrenewable energy in the procurement, production, and operation processes.
— Climate Risk and Opportunity Matrix of Zhende Medical —
Probability of risks and opportunitiesHighLow
HighImpact level of risks and opportunities
Risk: Acute riskRisk: Reputational risk
Risk: Policies and laws
Opportunity: Energy transitionOpportunity: Market opportunity
Risk: Chronic riskOpportunity: Resource efficiencyOpportunity: Climate resilience
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Description
Potential ImpactDurationFinancial Impact
Risk: Acutephysical risk
Extreme weather events triggered by climate change, such as frequenthurricanes and floods, may lead to severe consequences for the Company,including asset damage, casualties, and disruptions to business operations,forcing the Company to take immediate response measures and investsubstantial resources to restore normal R&D and production as quickly aspossible.
Short-mid term
Operating revenue▼Operating costs▲Risk:
Reputationalrisk
With the release of China's 'dual carbon' goals and growing focus on low-carbon transformation both domestically and internationally, the Companyrisks damaging its reputation if it does not take proactive and effectiveclimate actions and timely disclose relevant information to meet externalstakeholder demands.
Short-mid termOperating revenue▼Risk: Chronicphysical risk
Long-term climate changes, including persistent high temperatures, mayimpact the Company’s daily operations and lead to rising sea levels orongoing heatwaves. For facilities near coastal areas, these changes couldresult in asset damage and may force the Company to consider relocatingor adjusting work hours to adapt to changes in the coastline and sustainedhigh temperatures.
Long termOperating costs▲
Risk: Policies
and laws
Domestic and international climate policies and regulations are increasinglyfocused on encouraging companies to take proactive measures to addressclimate change and imposing restrictions on activities that may worsen it.To adapt, the Company must promptly adjust its strategies related to energyconsumption, emissions, and climate information disclosure; otherwise,it may face legal action and liability for failing to meet environmentalmanagement standards.
Short-mid term
Operating costs▲Operating revenue▼Opportunity:
Energytransition
With advancements in green energy technologies and the introductionof supportive policies, renewable energy sources are becoming moreaccessible and their prices are expected to steadily decrease. Proactivelyadjusting the energy consumption structure will not only help the Companyreduce energy costs but also effectively address the low-carbon challengesposed by regulatory requirements and end-market demands.
Mid-long termOperating costs▼Opportunity:
Marketopportunity
With growing global attention to climate issues and the release of the"dual carbon" goals, green and sustainable products and services will beincreasingly expected by the market and the public. Therefore, focusingon developing and providing climate and environment-friendly productswill inject new momentum into the Company's business development andrevenue growth.
Mid-long termOperating revenue▲Opportunity:
Resourceefficiency
By improving the efficiency of energy, water, and raw material usage,vigorously implementing green production practices, and establishing acomprehensive resource management system, the Company can effectivelyreduce resource waste, lower operational costs, and achieve steady low-carbon development.
Mid-long termOperating costs▼Opportunity:
Climateresilience
By selecting environmentally friendly suppliers, and strengthening carbonemissions measurement and control capabilities, the Company can adaptmore quickly to climate change. This will lay a solid foundation for usto seize climate-related business opportunities and further enhance thestability of our assets and daily operations, thereby positioning the Companyadvantageously in future industry competition.
Long termOperating costs▼
Management of Impact, Risk and OpportunityZhende Medical regularly identifies and assesses potential climate-related risks and opportunities in operations basedon regional characteristics, industry attributes, and other factors, creating a climate risk and opportunity assessmentmatrix. By evaluating the likelihood and impact of these risks and opportunities, the Company prioritizes them as thebasis for decision-making in climate change response strategies and action plans, which supports its progress ina complex and changing climate environment. Additionally, we communicate regularly with stakeholders includingcustomers, suppliers, and investors to gather their opinions and suggestions on climate-related risks and opportunities.
Climate-related risks are integrated into the Company’s overall risk management framework. We have establisheda cross-departmental climate risk management and coordination mechanism led by the ESG Office, aiming toenhance climate risk managements through annual performance data tracking and target evaluation. Moreover,the management of climate risks and opportunities is integrated into the Company's strategy and decision-makingprocess. The Company is committed to achieving carbon neutrality in its own operations and value chain by means ofmeasures such as the R&D of low-carbon products, the application of clean energy, the optimization of equipment andprocesses, and green office practices, so as to seize new market opportunities.Indicators and TargetsIn order to address the challenges posed by global warming, Zhende Medical has actively responded to the Paris Agreementand the Chinese government's “3060” dual-carbon target, and officially joined the SBTi (Science Based Targets Initiative) in 2024,promising the public to formulate carbon emission reduction targets and implementation paths in line with SBTi standards.
— Target Setting Timeline —September 2024April 20252026 (planned)Committed to joining the SBTiSubmit target setting applicationPass the target review
— Science Based Target Commitment —Absolute emission reduction targetIntensity reduction target
By 2030, greenhouse gas emissions in Scopes 1 and 2will be reduced by42% compared to 2023
By 2030, greenhouse gas emissions intensity per unitof revenue in Scope 3 will be reduced by
51.6%
compared to 2023
Focusing on the implementation of the target, the Company carried out the emission accounting of base year greenhousegas scopes 1, 2 and 3, compiled a greenhouse gas inventory, and set a carbon emission reduction target for 2030.Meanwhile, the Company invited third parties to carry out energy diagnostics on major manufacturing bases, identify energysaving potential and propose transformation plans to continuously improve energy efficiency and reduce carbon emissions.In addition, during the reporting period, Xuchang Zhengde has passed ISO 14064 certification, and Xuchang Base PowerDepartment has launched energy conservation and emission reduction projects. The company also conducts regularbusiness accounting and discloses carbon-related management results through the annual Greenhouse Gas AccountingReport of Zhende Medical, and steadily promotes the achievement of SBTi targets, contributing to global climate action. In2024, the Company's greenhouse gas emissions intensity per unit revenue (Scope 1 and 2) was 0.21 tons of carbon dioxideequivalent/RMB 10,000 , up slightly from the previous year.
— Zhende Medical GHG Emissions Overview in 2024 —
Emission TypeSourcesGHG Emissions1(Unit: tCO
e)
Scope 1natural gas, gasoline, diesel3,913.52Scope 2 (location-based) purchased electricity, steam86,544.74Note 1: The data involves all operational sites.
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KPI and target valuesby 2030
Goals by 2025
Actualperformancein 2023
Actualperformancein 2024
Progress100% maintain the ISO13485 certificationPass CE/FDAcertification as required
1. All factories that have passed the ISO 13485
certification maintain the certification.
2. New factories (e.g. Kenya phase 2 factory) pass the
certification.
100%100%↑
Customer net promoterScore >60/>80
>55/>80
Internationalmarket: 52.8Domesticmarket: 83.9
Internationalmarket:
Domesticmarket:
84.27
↑Environmental andsocial risk researchcovers all key suppliers
1. All qualified suppliers sign the Code of Conduct, and
commit to meet social responsibility standards.
2. All key suppliers that fail to provide the third-party
social responsibility report receive ESG or socialresponsibility training or communication.
80%
88%↑
Being A Reliable Partner
Innovative SolutionsSustainable SupplyChain
Safety and Quality of Productand ServiceCommunity Communicationand Development
Data Security andPrivacy ProtectionIndustry Exchangeand Cooperation
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Innovative solutionsR&D and InnovationGovernance
The Company regards R&D and innovation as the core driving force for sustainable development and has establishedthe second technical committee. The Company formulates the Project Management Guidance, Decision ReviewGuidance, Technical Review Guidance, Operation Guidance and other normative document templates, and updatesthe Regulations on Management of New Product Task Development, and Regulations on Management of New ProductDesign and Development, conducts feasibility pre-study of new products in regulations, markets, raw materials,technology, supply chain, etc., and identifies and solves the core problems of project materials and technology in atimely manner.In addition, the Company issued the Regulations on Management of New Product Project Rewards, which definesthe incentive allocation principles for personnel at all levels of new product development. Through a scientific andreasonable incentive mechanism, the Company fully mobilized the enthusiasm of all personnel to participate in R&Dand innovation and stimulated the team's innovation vitality.Strategies
Zhende upholds an innovation-driven development strategy, follows the industry development trend as the innovationdirection, and takes market demand as the leading factor. We closely focus on key products such as stoma andmodern wound care, surgical sensing and control, and health protection, and actively build a diversified R&D layoutcovering the medical and health areas. We have established and improved the R&D management system, andcontinuously improve the R&D efficiency by integrating multi-disciplinary resources through independent R&D andindustry-university-research cooperation. In addition, Zhende continues to enrich product categories, accelerateiterative upgrades, promote technological innovation, and continue to expand the business territory throughinternational layout and medical consumer goods upgrades, further enhancing the Company's core competitiveness.
Management of Impact, Risk and OpportunityIn the new product development process, the Company clarifies the responsibilities of personnel at all levels in theproject, ensures that all links from planning to execution implement a hierarchical approval process, avoids unplanned,undocumented, unaudited, and unsupervised work, and ensures the orderly, compliance, and legitimate progress of the
project. Meanwhile, the Company introduces a Failure Mode and Effects Analysis (FMEA) management mechanism toevaluate the risks of projects and products during development and implementation. By defining and scoring the risksources, frequency of occurrence, and degree of harm, the latent risks are identified accurately and response measuresare taken in a timely manner to further enhance the stability of R&D project management.
In addition to the ongoing optimization of the product development process, we also emphasize the construction ofR&D platforms and the development of R&D talents. We have established four enterprise R&D centers at home andabroad, which have received a number of national and provincial honors.
Construction of R&D systemThe Company adheres to the bottom line of compliance in the R&D process, and builds a management system thatfully covers the Product Research & Development process across various stages from demand analysis to productmarketing. This system aims to accelerate product innovation, shorten the marketing cycle, and improve productquality by clarifying the goals and standards of each stage, thereby satisfying customer needs and enhancing theCompany's competitiveness.The Company introduces the Integrated Product Development (IPD) management model, establishes a product linemanagement mechanism and matrix management, and forms a market-oriented data decision-making system.Through market research, requirement management and scientific project approval, we promote the product designand testing in parallel, focusing on strategic projects and improving R&D efficiency. On this basis, we added a taskdevelopment stage, which focuses on the core technology breakthroughs, and conducts exploratory studies withsmall investment to comprehensively evaluate technical feasibility, regulatory feasibility, market feasibility, and supplyfeasibility, in order to promote decision-making evaluation, accelerate the R&D process, and create more market-competitive products.
— Product Development Process —
— R&D Platform Construction —
Feasibility
Study
ProjectApproval
ProjectReview
ProjectAcceptance
AchievementTransformation
ProductLaunch
Summarizationand Evaluation
Enterprise R&D centers inShaoxing, Xuchang, Shanghai,
and the UK
National Hi-tech EnterpriseCollaboration with Well-knownDomestic Universities such asZhejiang University and HubeiUniversity, as well as MedicalInstitutions such as Beijing Hospital
of Traditional Chinese Medicine
The First Provincial-level KeyEnterprise Research Institutein the Industry
Postdoctoral Workstation
Co-establishment of ZhejiangProvincial Key Laboratory ofDiagnosis & Treatment andand Emergency Rescue of
Severe Burn Trauma
We have been actively promoting the development of sustainable products and materials, and arecommitted to reducing the impact of medical products on the environment. The company integratesthe concept of sustainable development in the product design stage, and prefers to use degradable,recyclable or bio-based materials to reduce resource consumption and carbon emissions. This initialintention affects everything we are doing and will do. Through continuous technological innovationand product optimization, we are committed to reducing the comprehensive cost of medical care,adapting to clinical needs, and providing higher quality services to users around the world throughcontinuous technological innovation.
——Eric Zhang, Director of Zhende Medical
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The Company actively engages in "industry-university-research cooperation" and continuously promotes industrialpartnerships. Leveraging the provincial-level key enterprise research institute, we collaborate with academic institutionsto establish postdoctoral research workstations, attract high-level talents, and enhance our technological innovationcapabilities.
— Industry-University-Research Cooperation Projects —
— R&D investment and achievements in 2024 —
We have established the “Joint Innovation Center for Wound and Mucosal Medical Antimicrobial Application Technology”with the Technical Institute of Physics and Chemistry of the Chinese Academy of Sciences, and began to put into practice theindustrialization transformation of "antimicrobial peptide gel products with selective antifungal effect”.We have collaborated with the experts from the Adhesive Research Institute of East China University of Science andTechnology to enhance our overall R&D capabilities. We have established microscopic characterization methods for thephysical properties of adhesives, including infrared spectroscopy, rheology, molecular weight and its distribution, and solventcontent testing. These methods have helped us solve the technical problems of double-sided adhesives.
R&D investment:
R&D investment reached RMB
135.49
millionR&D achievements:
strategic projects,
company-level projects, and
department-level projectsAcquired
Class II medical device product registration certificates
inventions grantedThreepapers with three indications in the fields of stoma care, cell regeneration, and chronic woundtreatment were included in the national ministerial core journal-China Medical Device Information.
R&D of Sustainable Products
The Company integrates the We Care sustainability strategy into every stage of product development, aiming to reducethe environmental impact throughout the life-cycle of products while ensuring product health and safety.
Committed to providing superior comfort and protection to doctors and patients, Zhende Medical hasadopted advanced SMS fabric technology to comprehensively upgrade the traditional surgical gown.This new fabric not only meets the strict health and safety standards of the surgical gown; but alsofeatures enhanced air permeability, lighter weight, higher hydrostatic pressure head, and improvedmoisture absorption and perspiration performance,delivering an exceptionally soft wearing experienceand a stronger safety barrier for medical and nursing staff.
Innovative research and development of low gram weight surgery coat
The main reasons why gauze may harbor bacteria on the wound include using ordinary gauze instead of sterilegauze, not changing gauze in time, and improper wound management. Failure to change gauze in time after usemay lead to bacterial infection at the wound site, resulting in symptoms such as redness, swelling, pain and, insevere cases, pus.Bacteria-adherent medical gauze is a medical technology product based on biomaterials innovation. Thegauze adopts a natural cellulose substrate, combined with oriented modification of polysaccharide molecularchains, and makes use of physical-biological dual-action mechanism: on the one hand, it adsorbs bacteriaphysically through the microporous structure of the surface, and on the other hand, with the help of the biophilicmaterial imitating the characteristics of the cell membrane of the host, it can recognize and adhere to thedisease-causing bacteria accurately and thus block their contact with the wound surface. The technology is acombination of nanomimicry and biomimetic technology. This technology combines nanobionics and clinical medicine, which not only solves thedrug resistance problem caused by the abuse of antibiotics, but also avoids the secondary damage of chemical bacteriostatic agents on fragilewounds, providing a safer solution for chronic wound care, burns infection prevention and control, etc., and is expected to reshape the industrystandard of functional dressings.
Innovative development of non-cytotoxic antibacterial and anti-adhesion gauze
Antibacterial foam dressings innovatively adopt the “gaseous microenvironmental regulation” technology,realizing non-contact pathogenic bacteria inactivation. The product is based on medical polyurethanefoam and loaded with volatile antimicrobial factors through a nanoscale porous structure, forming agaseous antimicrobial barrier of 0.5-2mm on the wound surface. This technology is expected to breakthrough the limitations of traditional antibacterial dressings of “contact killing”, through the constructionof physical isolation of the antibacterial micro-environment, especially for large burns, diabetic ulcersand other fragile wound care, providing a revolutionary solution for precise antibacterial treatment.
Innovative development of non-contact antibacterial foam dressings
In the face of the environmental challenge of perfluorinated and polyfluoroalkyl substances (PFAS) andthe increasingly stringent regulatory trend of PFAS worldwide, Zhende Medical has responded swiftly toactively develop new eco-friendly PFAS-free products. The Company's persistent pursuit of PFAS-freedrives the continuous exploration of sustainable solutions. These solutions not only meet customers'performance needs, but also work to minimize the impact on the environment. Alternatives to PFAS-freeadditive products is our goal of years of joint efforts with partners.
Active development of new eco-friendly materials that can replace PFAS
The Company continuously promotes the development of R&D talent capabilities and the cultivation of an innovation culture byoffering diverse training courses. During the reporting period, the Company provided training courses to more than 150 employeesfrom different positions, including R&D, engineering, quality control, and sales. A total of 14 types of training courses, amounting to122 class hours in total, were conducted. The course content covered multiple areas, such as the R&D intellectual property system,medical device registration and regulations, patent search, writing and application, and the new product development process.
8990
Topic 1:
Zhende Cares
Topic 2:
Zhende Ecology
ImprovingGovernanceSystem
Caring forEmployeeGrowth
Promoting GreenDevelopment
Being A Reliable
PartnerSustainableDevelopmentManagement
Indicators and targetsIn the future, the Company will take green design as its core direction, accelerate the replacement of new materials andthe low-carbon improvement of products, continuously increase R&D investment, and promote the in-depth integrationof sustainable concepts into the full life cycle management of products.Medical AccessibilityExpanding the Breadth and Depth of Medical ServicesZhende Medical actively promotes its healthcare business by creating professional and comprehensive productsolutions tailored for home use, aiming to bring the expertise and quality honed over 30 years of serving hospitals toindividual consumers.We fully promote the operation of the big health category by optimizing product structure and competitiveness.Through multi-dimensional consumer research and resource integration based on Zhende's product advantages, wehave comprehensively examined our retail business, and strengthened the construction of customer and consumercentered product efficiency integration. Tools such as SCRM, CRM, and E sales system are utilized to enhance digitalmarketing capabilities, and to continuously improve customer and consumer satisfaction. Meanwhile, we continue toexpand our product coverage, making it easier for consumers to purchase the home health care products they need.
— Measures and Achievements for Retail Business Enhancement —Online Retail ChannelsOffline Retail Channels
Through various modes such as self-operation andcooperation, key sales channels such as Taobao,JD, Pinduoduo, Douyin, Kuaishou, 1688 andAmazone have been covered.In 2024, the online fans of Zhende e-commerceshops exceeded
9.5 million
.
We continue to improve the market development andcooperation stickiness of national and regional chaindrugstores, individual pharmacies, and supermarketconvenience stores through a variety of measures.These include dealer classification and gradingmanagement, key customer operation system,as well as IP cooperation, dual brand productconstruction, and model market creation, etc.As of 2024, Zhende’s coverage rate of top 100chain pharmacies has reached99%, totally over210,000 pharmacies.
In order to facilitate the Company's in-depth participation in the global medical device value chain and enhance itsglobal competitiveness, we have also been continuously deepening the strategy of establishing overseas factories andstrengthening the overseas industrial layout. The company is building production bases overseas in countries such asMexico and Kenya, which can promote the development of local medical supply chains and reduce the difficulty andcost of obtaining medical supplies in these regions.
Safety and Quality of Product and ServiceProduct Quality and SafetyGovernanceThe Company has established a Quality and Regulations Center at the primary level, led by the Chief Quality Officer. Thecenter includes the Quality Management Department, the CQS Department, and the Regulatory Affairs Department.It oversees the establishment and maintenance of the Company’s quality management system. Meanwhile, theCompany has formulated the Adverse Event Control Procedure for Medical Devices, Non-Conformity Product ControlProcedure, Measures for the Management of Medical Device Recall, and Regulations on Management of US MedicalApparatus Recalls, etc., and strives to achieve strict control of product quality and safety.During the reporting period, the Company passed the certification such as ISO 9001, ISO 13485, ISO 13485 sterilizationcertificates, European Union MDR (Regulation on Medical Devices), European Union MDD (Medical Devices Directive),US FDA QSR (Quality System Regulation) 820, PPE UKCA/CE, and obtained product registration in South America,Brazil, Middle East, Saudi Arabia and other regions.
Providing Safe and Efficient Medical ProductsUpholding patient-centered values, the Company is dedicated to creating a more humane and convenient medicalexperience through innovative technologies. We continuously develop medical devices and consumables to preciselyaddress patient needs, offer more convenient services and greater comfort during treatment, and enhance patientrecovery efficiency from multiple perspectives.At the same time, we focus on the convenience and ease of operation of the product in the process of new productresearch & development to ensure that the product can be widely used in primary medical institutions and areas withlimited medical resources, so that more patients can benefit from high-quality medical care.
— Quality Certifications —
CertificationCoverage
ISO 13485 Certificate
Zhende Medical and its subsidiaries, including Xuchang Zhende, Xuchang Zhengde, andHenan Zhende, achieving 100% operational coverageISO 13485 Sterilization CertificateZhende Medical and its subsidiaries, including Xuchang Zhende, Xuchang Zhengde, etc.Strategies
Zhende Medical regards product quality and safety management as the key to the Company's sustainabledevelopment. The company has a clear quality strategy of “getting it right the first time, changing under control,seeking truth and being pragmatic, and customer complaints first”. We improve production efficiency and productconsistency through strict quality inspection, standardizing the control of non-conforming products, and optimizingtechnological processes to ensure that products meet high standards of quality requirements. At the same time, weadhere to the quality policy of "providing safe, effective and competitive medical products is everyone's responsibilityin Zhende". Quality awareness is integrated into every aspect of the Company's production and sales; we strive to buildan all-round and whole-process quality assurance system to provide customers with safe, effective and high-qualitymedical products to help the high-quality development of the medical industry.
9192
Topic 1:
Zhende Cares
Topic 2:
Zhende Ecology
ImprovingGovernanceSystem
Caring forEmployeeGrowth
Promoting GreenDevelopment
Being A ReliablePartner
SustainableDevelopmentManagement
Management of Impact, Risk and Opportunity
The Company has established a cross-functional risk management team, which consists of professionals in thefields of product design, production process, quality management, regulatory standards, etc. The team will identifythe product quality and safety-related risks periodically according to the assessment methods of potential risk types,occurrence possibility, severity and frequency in the Risk Control Procedure. Meanwhile, the Company establishesrisk management plans for various products, and continuously improves product quality and safety-related riskidentification and control capabilities through risk analysis, risk evaluation, and residual risk evaluation.During the reporting period, the Company continued to promote a series of product quality management improvementmeasures to comprehensively ensure the safety and high quality of its products.
— Product Quality Management Measures —
Management MeasuresActions in 2024Quality Inspection
The Company conducted inspections and supervision of incoming materials, production andall other stages in strict compliance with internal quality management requirements, therebyincreasing finished product acceptance rate.For outsourced testing, we selected institutions with CNAS or CMA accreditation according toCNAS-CL-01 (ISO/IEC 17025:2017). We regularly evaluated these service providers, updated theirqualifications, and maintained a directory of outsourced testing service suppliers.
Quality Audit
During the reporting period, the Company conducted one comprehensive internal audit inaccordance with the Regulations for the Quality Management in the Production of Medical Devices,ISO 13485, EU MDR and U.S. FDA regulations, to further guarantee the effectiveness of the qualitysystem.Additionally, the Company underwent several external audits, including unannounced inspectionby Zhejiang Medical Products Administration, GPM audit by the Inspector Management Center ofZhejiang Medical Products Administration, third-party audits by TUV, and multiple client audits, allof which were successfully passed.Non-conforming Product
Control
The Company strictly controls non-conforming products according to its Non-Conforming ProductControl Procedures. Any product that fails to meet the specified inspection requirements will beclassified as non-conforming. All nonconformities must be separated, marked, reviewed, handledand recorded in strict accordance with the requirements.
Process Optimization
Each factory carried out proposal improvement activities, and improved the working mode,process, quality, equipment, materials based on the actual conditions, to consistently improve theproduct quality. During the reporting period, a total of
proposal activities were completed, and1,226 valid proposals were produced.We strengthened the design and implementation of on-site standard work, and formulatedoperating standards in combination with new product quotations and the data in the IE actiondatabase.
Quality AwarenessTraining
The Company has highly valued employee training in quality awareness. Based on legalregulations, quality management system requirements, and market and customer concerns, wehave carried out multiple quality training through lectures by internal lecturers and participation inexternal training.During the reporting period, the Company conducted
training sessions on regulatory systemsfor all employees in the production quality management system, covering Chinese and foreignregulations, MDSAP, ISO 13485, ISO 14971, basic microbiological knowledge, CAPA, and adverseevents, etc. The cumulative number of trainees exceeded1,000.
Zhende has established a product recall system in line with the Measures for the Administration of Medical DeviceRecalls issued by the National Medical Products Administration (NMPA) and relevant recall regulations from the U.S.FDA. We have developed and constantly improved the product recall system. Additionally, regular mock recalls areconducted. During the reporting period, no product recalls occurred.
During the reporting period, the Company did not experience any incidents of being punished by relevant departmentsfor violating quality and safety-related laws and regulations.
— Product Recall Process —Health HazardAssessment
SeverityGrading
Developing a
Recall Plan
Issuing a Recall
Notice
Executing aRecall
Implement andValidate CorrectiveMeasures
9394
Topic 1:
Zhende Cares
Topic 2:
Zhende Ecology
ImprovingGovernance
System
Caring forEmployeeGrowth
Promoting Green
Development
Being A ReliablePartnerSustainableDevelopmentManagement
— Customer Feedback Channel —Indicators and targets
Target98%
98.40%
Progress in achieving targetsduring the reporting period
Pass rate of finished products
Target98%
99.15%
Progress in achieving targetsduring the reporting period
One-time pass rate of first article
Customer Service
GovernanceZhende's customers mainly include domestic and foreign corporate customers and individual consumers. TheCompany’s Quality and Regulations Center has established the Customer Quality Service (CQS) and After-SalesQuality Service departments. A series of management procedures have been developed, including the Process ControlProcedure Related to Customers, the Design and Development Control Procedure, the Alert System ManagementProcedure, the After-Sales Supervision Control Procedure, the Medical Device Adverse Event Management Procedure, theRegulations on Management of Domestic Medical Device Adverse Events, the Customer Complaint Control Procedure,the Customer Satisfaction Survey Control Procedure, and the Risk Management Procedure.
Strategies
The company is aware that high-level client service management is the key to winning the trust of customers andmaintaining market competitiveness. For this purpose, the Company continuously improves the client service system,and achieves rapid response and efficient solution to customer requirements by building diverse communicationchannels and optimizing feedback handling processes, so as to continuously improve client service satisfaction andbuild long-term and stable customer relationships.Management of Impact, Risk and OpportunityThe Company is committed to building an efficient pre-sales and after-sales customer service framework. By relyingon the customer feedback, customer satisfaction surveys and other channels, we actively identify and evaluate therisks and opportunities related to customer services, formulate and implement targeted response strategies accordingto their materiality degree.The company has built convenient and diversified customer feedback channels, and continuously optimized thecustomer complaint process. By establishing a linkage mechanism between customer service personnel andmanufacturing plants, we have improved the timeliness of customer complaint handling process, and quicklyresponded to and handled customer feedback and complaints. During the reporting period, the Company's customercomplaints mainly focused on the problem of foreign bodies in the product appearance. The relevant factories havestarted rectification for special projects. The customer complaint handling completion rate has reached 100%.
0575-88086666zhende@zhende.comwww.zhende.com
Customer service hotlineCorporate emailMessage on the Company’s website
9596
Topic 1:
Zhende Cares
Topic 2:
Zhende Ecology
ImprovingGovernanceSystem
Caring forEmployeeGrowth
Promoting Green
Development
Being A ReliablePartnerSustainableDevelopmentManagement— Customer Feedback Handling Process —
Feedback information from customers
Sales representatives collect and summarize complaint information and related information on real object, and fillout the Customer Feedback Handling Process through OA.
The factory’s Quality Management Department outputs the opinions on investigation and handling; CQS willconfirm and collect them.
Logistics Department handles the issues about compensation, goods return and replenishment.
In order to improve the quality and efficiency of customer feedback processing, we conducted a satisfaction surveyon the customer complaint process, and the results showed that the satisfaction rate reached 99.2%. Meanwhile, theCompany conducted customer satisfaction surveys, distributing questionnaires to clients, distributor clients, and retailcustomers. The satisfaction rate of e-commerce client services reached 95.3%.To further enhance the Company’s customer service capabilities, we conducted training sessions for all customerservice personnel on topics such as Marketing Awareness Cultivation, Specialized Training for Comforting, E-commerceCustomer Service Empathy, E-commerce Customer Service Understanding and Expression Ability Improvement, EffectiveCommunication Skills, E-commerce Customer Service Problem Solving Ability Improvement. These efforts strengthenedemployees' awareness of customer service, improved their professional skills, and increased overall customersatisfaction.Indicators and targets
TargetTarget
Domestic Customer NetPromoter score >80International CustomerNet Promoter score >60
84.27
Progress in achieving targetsduring the reporting periodProgress in achieving targetsduring the reporting period
Customer Net Promoter score
Data Security and Privacy ProtectionTo protect the Company’s data security and customer privacy, Zhende has implemented data security protectionmeasures in strict compliance with relevant laws and regulations such as Computer Information System SecurityProtection Regulations of the People’s Republic ofChina, Personal Information Protection Law of the People's Republicof China, and established Management Regulations on Information Security, Information Security ManagementSystem Manual, Information Security Management Strategy, Management Regulations on Data Reliability,Management Procedures for Computerized System Emergency. During the reporting period, the Company conducteda comprehensive assessment of the information security and improved the construction of the informationsecurity system in accordance with the ISO 27001 standard to ensure the effectiveness of the information securitymanagement system.
— Information Security Certification —Cyber security level protection 2.0 certification
ISO 27001 information securitymanagement system certification
— Information Security Management Measures —
Management MeasuresProgress in 2024Risk identification and
assessment
Zhende introduced Sangfor's MSS (Managed Security Service) and conducted a pre-operation securityassessment. This assessment involved identifying security flaws in areas such as strategy management,security protection, asset management, vulnerabilities, attack threats, and security incidents, and developingimprovement plans accordingly. These measures have significantly enhanced the overall security protectionlevel of the Company.
Information security audit
Zhende underwent third-party vulnerability assessments and performed targeted remediation based on thevulnerability scan reports provided by the third party.Information securitytechnology
Zhende implemented remote application-level disaster recovery at data centers in Shaoxing and Xuchang.We have established a data backup system that performs backups once every two hours.Viruses are automatically detected and removed weekly through Endpoint Detection & Response (EDR).The Green-Shield Endpoint Security Management System is used to encrypt electronic files of the Company.Additionally, the Company conducts system permission management, ensuring that employees can onlyaccess system information corresponding to their specific roles.Supplier informationsecurity management
The Company has established an audit team to assess the risks of proposed or adopted computer systemsand to audit potential suppliers.The Company strengthens supplier information security management by signing non-disclosure agreements,and conducts regular evaluation on suppliers through the Supplier Evaluation Record Form and SupplierPerformance Periodic Assessment and Evaluation Form.Emergency response
The Company has established an emergency handling procedure for emergencies such as crashes anddelays, blue (black) screens, communication interruptions, and system crashes to ensure that emergenciessuch as system failures, security attacks, and data loss can be responded correctly and quickly and handledin a timely and effective manner.Information securityawareness training
To foster an information security culture, the Company offered employee training on information securityawareness. Topics included common information security awareness and the information securitymanagement regulations, etc. A total of 3,000 employees participated in such training sessions.
During the reporting period, there were no incidents where the Company was punished by relevant authorities forviolating laws and regulations related to information security and privacy protection.
9798
Topic 1:
Zhende Cares
Topic 2:
Zhende Ecology
ImprovingGovernance
System
Caring forEmployee
Growth
Promoting GreenDevelopment
Being A ReliablePartnerSustainableDevelopmentManagement
Sustainable Supply Chain
GovernanceThe Company has established a sound sustainable supply chain management system. The Procurement Departmentworks with the Quality Management Department of the Quality and Regulatory Center to conduct periodic on-siteaudits of suppliers, and all departments work together to promote the efficient management of sustainable supplychains.The Company has formulated the Administrative Rules of Qualified Supplier Access, Administrative Rules of QualifiedSupplier Assessment, Administrative Rules of Supplier Quota, and Administrative Rules of Supplier Rectification andElimination, and other rules, to achieve the full life cycle management of suppliers, and issued the SOP for MOQ Settingof Purchased Materials, Management Regulations on Procurement Cost Control, Administrative Rules of ProcurementMethods, Administrative Rules of Import Materials Procurement, to further refine procurement management andimprove management efficiency.In order to ensure the security and stability of the supply chain, the Company has formulated detailed rules suchas Administrative Rules of Supply Market Research and Supplier Shortlist, Administrative Rules of Potential SupplierAdmission, and Administrative Rules of Risk Suppliers, to provide support for building a high-quality supplier resourcepool and regularly identifying supplier risks. In addition, the Company has established the Sustainable Supply ChainManagement Policy to continuously improve the environmental and social responsibility performance of suppliers andstrengthen the construction of responsible supply chains.StrategiesThe Company always upholds the concept of “shared concept, value collaboration, process compliance, and platformcollaboration”, establishes a whole life cycle management process system from supplier sourcing to elimination toachieve high-standard control of supply chain quality. Meanwhile, the Company resolutely implements the concept of“prevention in advance” and the policy of “Do It Right the First Time”. By improving supplier quality and ESG awareness,we continuously optimize the supply chain performance, realize all-round and multi-angle management of the supplychain, and promote the sustainable development of the supply chains.
AutomationInformatizationManagement abilityProfessional ability
Information sharingTechnical cooperationCost collaboration
Link Zhende withsuppliers throughthe SRM platformSupplier life cyclemanagementBehavior complianceSharedconcept
Valuecollaboration
PlatformcollaborationProcesscompliance
Management of Impact, Risk and OpportunityIn order to identify and control supply chain risks in a timely manner, the Company conducts regular assessmenton suppliers from four key dimensions- quality, cost, delivery and services, and carries out monthly inspections fordelivery risks. In addition, the Company has set up automatic reminders of certificate expiration with the SRM systemto accurately prevent and control the risk of certificate expiration, and assigns a special person to check the supplier'sbusiness license and qualification certificate, and continuously tracks the update to ensure the integrity and validity ofthe supplier's qualification.Supply Chain Quality ManagementZhende Medical categorizes suppliers from multiple perspectives to achieve the fine management. Based on categorypositioning and the relationship with suppliers, and in view of our actual business situation, suppliers are dividedinto three levels: core, important, and general. According to the annual performance evaluation of suppliers andother factors, suppliers are divided into grades of A, B, C, and D. Over and above, Zhende formulates differentiatedprocurement management strategies for suppliers of different levels, and updates the material importance periodically,to enable the proportion of each module in the supplier cycle assessment to be more compliant with the actualsituation and maximize the effectiveness of supplier management resources.In terms of performance rectification projects, the Company has included Grade D suppliers in the scope of mandatoryrectification. After implementing differentiated management in 2024, 55 Grade D items were improved and upgradedto Grade C, indicating that the Company has achieved certain results in supplier empowerment.The Company has established a supplier’s life-cycle quality management system to clarify the requirements forsupplier access, qualified supplier assessment, supplier quota management, rectification and elimination and achievestrict control of supplier quality.
Zhende Medical attaches great importance to the construction of sustainable procurement as animportant measure to achieve corporate social responsibility and green development. The Companyensure the sustainability of the supply chain by establishing a strict supplier evaluation system andgiving priority to partners who meet environmental protection standards, social responsibility andethics.
—Steven Shen, Director of Zhende Medical
99100
Topic 1:
Zhende Cares
Topic 2:
Zhende Ecology
ImprovingGovernanceSystem
Caring forEmployeeGrowth
Promoting GreenDevelopment
Being A ReliablePartnerSustainableDevelopmentManagement
Require rectification for suppliers with supply abnormalities and poor performance, and track theirrectification progress.Propose supplier elimination and risk control plan for suppliers that fail to pass the review, andeliminate suppliers according to the plan.Supplier Rectification
and Elimination
Formulate and adjust monthly and annual quota plans based on supplier assessment results, latestmaterial prices, and supplier quality/delivery performance.Execute orders according to the approved quota plans, monitor performance monthly, make timelyadjustments, and generate cause analysis and improvement plans.Allocate more order quotas to suppliers with improved quality.
Supplier QuotaManagement
Conduct supplier performance assessment according to the supplier relationship management plan.Calculate supplier performance by the information system, calibrate the results, and generate theQualified Supplier Periodic Assessment Form and the Summary of Periodic Assessment of QualifiedSuppliers.Organize performance interview with suppliers.Work out supplier management measures based on the assessment and interview results, andconduct annual audits.Qualified Supplier
Assessment
— Supplier’s Life-Cycle Quality Management —
After a procurement or change request is initiated by the requesting unit, review the shortlistof suppliers; procurement engineers are responsible for collecting and maintaining supplierqualifications and information.The Procurement Department then initiates the introduction of shortlisted suppliers, and conductswritten and on-site supplier audits.For suppliers that pass the audit, conduct material/service certification according to the MaterialConfirmation Management Regulations. Sign cooperation agreement with qualified suppliers, andrate them.A process for evaluating suppliers of purchased finished products is established to better match themanagement requirements of purchased finished products.
Qualified Supplier
Admission
In order to ensure that suppliers meet the quality control requirements, the Company conducts periodic on-site auditsof suppliers and fills in the Supplier Audit Report. Meanwhile, the Company sets up the “Quality Progress Award” atthe annual supplier conference to commend suppliers who have performed well in quality, so as to motivate suppliersto continuously improve their quality performance. During the reporting period, the SQE team of the Company'sQuality Law Center established a key material quality planning PQP project. While continuously improving the qualityawareness of suppliers, it promotes the learning of quality knowledge and tools for team members and enhances theteam’s overall ability.
Quality interviewInvited suppliers to the factory site for quality interviews more than
times,and organized online meetings for more than
times
Invited suppliers to the factory site for more than
times, online meeting for more than
times
Supplier audit
On-site audit of supplier countermeasures for more than
times, special audit of foreign bodies for more than
timesAnnual auditOn-site evaluation and defect rectification of
suppliers, video evaluation and defect rectification of
suppliers
Technical exchange
times
Supply Chain Security
The company attaches great importance to supply chain security to ensure the stability and reliability of the supplychain in case of market fluctuations and uncertainties, and avoid the risk of supply interruption.The company has a sufficient reserve of supplier resources to address the R&D demands of new products and theproduction and supply needs of existing products. Additionally, we continue to optimize the supplier structure andconduct the SRM digital platform construction to achieve the efficient interaction with suppliers and the safety andstability of the supply chains.The Company regularly identifies and assesses supplier risks, and promptly and effectively monitors and addresses anyissues that arise during cooperation. This helps safeguard project progress and ongoing supply needs while protectingthe Company's interests. Furthermore, the Company has developed the Supplier Survey Form to systematically collectand review information on suppliers’ capabilities and system development. This keeps us informed about suppliertrends and ensures the stability and efficiency of our collaborative relationships.Responsible Supply ChainWhile strengthening our own ESG management, we also pay close attention to the ESG performance of our suppliersand comprehensively prevent potential environmental and social risks in the supply chain.We continue to improve the SRM system. In the supplier registration stage, suppliers are required to fill in ISO 14001,ISO 45001, FSC certificate, human rights audit and other relevant information. In addition, the ESG questionnaire isset as a required item to understand the ESG performance of suppliers in a timely manner. In the supplier admission
— Supplier’s Health Management Measures and Performance Highlights For 2024 —
101102
Topic 1:
Zhende Cares
Topic 2:
Zhende Ecology
ImprovingGovernance
System
Caring forEmployeeGrowth
Promoting GreenDevelopment
Being A Reliable
PartnerSustainableDevelopmentManagement
stage, suppliers are required to upload a Social Responsibility Commitment Letter, and sign the commitment letter as anecessary condition for entry. Meanwhile, the Company stipulates the relevant requirements of social responsibility inthe Purchase Agreement to further clarify the Company's specific expectations for suppliers in terms of environmentaland social responsibility.We attach great importance to the improvement of suppliers’ ESG awareness and capabilities as a key link in supplychain management. During the reporting period, we conducted 4 ESG training sessions for key cooperative suppliers,covering ESG standards, Zhende sustainable development philosophy, social responsibility introduction, human rightsreview process, etc. In addition, we share ESG-related information with suppliers through the WeChat official account“Zhende Procurement Collaboration Platform”, share the industry best practices and policy trends, and help suppliersto continuously improve the ESG management level.Furthermore, the Company has incorporated supplier environmental and social responsibility targets into theperformance evaluations of procurement personnel to support the effective development of a sustainable supplychain.
The Company abides by the Law of the People's Republic of China on the Promotion of Small and Medium-sizedEnterprises, the Regulations on the Protection of Payment of Small and Medium-sized Enterprises, and other relatedlaws and regulations, strictly protects the legitimate rights and interests of the small and medium-sized suppliers,actively supports their growth and development, so as to promote the coordinated progress of the industrial chain.
— Performance of Supplier Social Responsibility Management Highlights —The Company signed a Social Responsibility Commitment with
key suppliers, with a signing rate of88%
key suppliers participated in ESG training, with a participation rate of89%
suppliers passed third-party human right audits
AccessCooperationDaily operation
Uphold the principle of fairness,provide equal opportunities forSMEs to ensure them to enjoy fairtreatment in competition
Actively provide technical supportfor SMEs, help them improve theircapacity and quality managementlevelMitigate the operating pressure andstabilize the cooperative relationshipthrough long-term and stable ordersCarry out SRM system construction,promote the enhancement of digitalmanagement capabilities in SMEsand help improve their operationalefficiency
Encourage SMEs to participate inproduct research & developmentand innovation, fully stimulate theirinnovation potential and jointlypromote the technological progressof the medical industry through jointR & D, technical cooperation, etc.Build a learning platform for SMEs,and promote the sustainabledevelopment of SMEs in themedical field
As of the end of the reporting period, neither the balance of the Company's accounts payable (including notes payable)nor its ratio to total assets exceeded the thresholds set by the Guidelines; neither the Company nor its holdingsubsidiaries had to disclose to the public through the national enterprise credit information publicity system due tooverdue payments to SMEs.Indicators and Targets
Target100%89%
Progress in achieving the targetduring the reporting periodESG training coverage rate
Target100%
88%
Progress in achieving the targetduring the reporting periodSigning rate of the Social Responsibility
Commitment of key suppliers
Community Communication and Development
Zhende Medical engages in various charitable activities to give back to society to the best of its ability. The Companyhas established the External Donation Management Regulations to oversee its donation activities in a unified manner.During the reporting period, Zhende made donations of cooling vests and flood relief materials.Upholding the idea of giving back to society, the Company actively participates in community volunteer activities.The Company has formulated the Volunteer Team Management Regulations and other regulations that cover boththe headquarters and its subsidiaries to standardize and improve the organization of volunteer teams, and enhancethe quality and efficiency of volunteer services. During the reporting period, the volunteer team actively organized thecondolence activities of the nursing home and sent supplies equivalent to RMB 23,000 to the nursing home.
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Topic 1:
Zhende Cares
Topic 2:
Zhende Ecology
ImprovingGovernance
System
Caring forEmployeeGrowth
Promoting GreenDevelopment
Being A ReliablePartner
SustainableDevelopmentManagement
“Cooling vests” bring coolness
On August 1, 2024, Zhende Medical donated 13,000 “coolingvests” to front-line outdoor workers through the Red Cross ofShaoxing City and the Red Cross of Yuecheng District, whichhas a total value of RMB 1.17 million; on August 5, Zhende,in collaboration with The Red Cross of Yuecheng District,Shaoxing City, donated 1,584 “cooling vests” to the Red Crossof Kaihua County, with a total value of RMB 169,488. Theseactivities brought coolness and care to construction workersand sanitation workers.
Caring for special childrenOn the eve of Children's Day in 2024, Zhende Medicalcarried out a public welfare donation event in Peizhi School,Panlong District, Kunming, to donate medicine kits, first aidkits, Band-Aids and other medical supplies to the school;organized the trauma dressing training to help teachersand students master first aid skills. This event conveyedsociety's care for special-needs children, demonstratedthe enterprise's original intention, and called on morepeople to care about special groups and help safeguardchildren’s healthy growth.
“Better Home ? Caring Mom” Children Care Theme ActivityZhende Medical actively participated in the “Better Home -Caring Mom” Theme Activity for Caring Children hosted bythe Women's Federation of Shaoxing, Zhejiang Province,and advocated for public engagement in the care initiative.Participants delivered school bags, stationery, sports supplies,and other heartfelt gifts to children, and wrote “love cards” aspart of the care activities to support children’s growth in anall-round way.
Nursing home visitDuring the Spring Festival, Zhende Medical VolunteerTeam visited Zhejiang Huikang Lihai Nursing Homeand delivered eight-treasure congee, milk and othermaterials to 51 elderly people in special need and30 disabled children. The condolence team in theelderly care rooms, engaged in conversations with theresidents, and exchanged ideas warmly with the nursinghome staff. This visit reflected Zhende’s cultural valueof ongoing support for disadvantaged groups and itscommitment to spreading positive energy throughout society.
— Volunteer Activities in 2024 —
— Formulation or revision of standards in 2024 —
“Cooling Vest” Donation Ceremony
Visit to Xiaogaobu Nursing Home
Training for Trauma Dressing
“Better Home ? Caring Mom” Children Care Theme Activity
In response to the rural revitalization strategy, we purchased 1,000 boxes of agricultural grapes during daylight savingtime for employee welfare distribution, and helped farmers in increasing their incomes with our actions. In addition, weworked closely with the local Federation of Trade Unions in Xuchang to promote employment through various means,especially for rural people and poor family members to achieve targeted poverty alleviation and help rural revitalization.During the reporting period, we donated a total of RMB 2.3 million.
Industry Exchange and CooperationPartners are one of the important stakeholders of Zhende Medical. Adhering to the corporate value of "sharingsuccess", we continue to advance mutual benefit and win-win results in the industry by participating in industryplatform construction, joint training of industry talents, standard formulation, industry exchange activities.Zhende actively engages in industry platform construction, taking the lead in establishing industry technology alliancesand the Consumables Branch of the Zhejiang Medical Device Industry Association, to promote healthy and orderlyindustry growth. Furthermore, we have participated in the formulation (revision) of industry and group standardsmultiple times, facilitating overall advancement of the industry and product quality enhancement.
Zhende led and participated in the formulation(revision) of
national standards
GB-19082-2023 Disposable Protective Clothing for Medical UseGB19083-2023 Protective Face Mask for Medical UseGB/T 42770-2023 colostomy plugZhende completed the formulation (revision) of
industry standards, including
standards asmain drafter
Medical Elastic Bandage - Characteristics and Test Methods for BasicPerformanceMedical Thrombosis Prophylaxis HosieryMedical Compression Hosiery for VaricesSterile Surgical Films for Single Usecontacting Wound Dressing - Part 1: Paraffin GauzeZhende completed the formulation (revision) of
group standards, and continued to promotethe formulation (revision) of
group standards
Transparent DressingsMask Evaluation and classification of breathabilityZhende is currently applying for participating in the drafting of
national standards and
industry standards
105106
— Industry exchange activities in 2024 —
The Company continues to strengthen industry-university-research cooperation, partnering with vocational institutionsin Shaoxing, Henan and other regions to jointly develop industry professionals through “order class”, frameworkagreement and other means.
We actively take part in or organize industry exchange activities to gain genuine feedback from clinical practice throughin-depth interactions with medical professionals.
ESG Performance Tables
Employee-related Performance
DisclosuresUnit202220232024
Employee Recruitment and Hiring
Number of incidents punished for violatingemployment and labor laws and regulations
Case000Total number of employees
Person8,4856,7177,807Byemploymentform
Full-time employees under alabor contract
Person8,4856,7177,807Full-time employees underlabor dispatch
Person676621616By gender
MalePerson2,9162,0852,645FemalePerson5,5694,6325,162By work area
Chinese MainlandPerson8,1826,1856,301Hong Kong, Macao, Taiwan,and overseas
Person3035321,526By age
>50Person20137330830-50Person6,8075,1335,094<30Person1,4771,2112,405Bymanagementlevel
Front-line employeesPerson8,1486,4227,467Mid-level managementPerson268232283Senior managementPerson696357Percentage of female employees%65.6368.9666.12Percentage of female senior executives (abovedirector level)
%20.2923.8126.3Percentage of ethnic minorities and vulnerablegroups in all employees
%0.150.190.37Percentage of ethnic minorities and vulnerablegroups in senior management team
%1.671.851.80Coverage of diversity-related training%100100100Total number of new hires Person1,4101,8862,517
The 89th China International Medical Equipment Fair (CMEF)MEDICA 2024(Dusseldorf)National Intravenous Therapy Nursing Academic Conference 20242024 China VTE Prevention and Treatment ConferenceThe Third Global Digital Trade Expo2024 Beijing Operating Room Nursing Academic Annual Conference2024 Health Industry Ecosystem Conference
— Industry-University-Research Cooperation Projects in 2024 —
Worked with Shaoxing Vocational & Technical College to buildthe Silk Road College (Health Care) school-enterprise alliance
to jointly cultivate international talents in health careWorked with Jiaxing University College of Design andYiwu Jiachuang Platform to carry out school-enterprisecooperation training and jointly cultivate industry talents
Cooperated with the Second Affiliated Hospital Zhejiang Universityschool of medcial to build the provincial key laboratory for diagnosisand treatment of severe burns and trauma and emergency rescueSigned a technical cooperation project agreementwith the Technical Institute of Physics and Chemistry
of the Chinese Academy of Sciences
ESG Performance Tables
107108
DisclosuresUnit202220232024Byemploymentform
Full-time employees under alabor contract
Person1,4101,8862,517Full-time employees underlabor dispatch
Person412248325By gender
MalePerson589485948FemalePerson9781,4011,596By work area
Chinese MainlandPerson1,4101,8861,237Hong Kong, Macao, Taiwan,and overseas
Person001,280By age
>50Person25191230-50Person7841,0941,260<30Person6017731,245Percentage of new hires
%14.9418.1924.4By gender
Male%17.5914.2628.70Female%16.0620.1026.91By age
>50%10.873.423.4230-50%10.6314.5719.99<30%32.7933.4948.26Employee turnover ratePerson9523,6541,950By gender
MalePerson4321,316781FemalePerson5202,3381,169By age
>50Person291826630-50Person5672,3751,209<30Person3561,097675Employee turnover rate
%10.0935.2319.99By gender
Male%12.9038.6925.75Female%8.3333.5418.77By age
>50%13.5582.7317.5630-50%7.8530.0618.46<30%17.8248.7621.92
DisclosuresUnit202220232024
Employee Rights and Bene?tsLabor contract signing rate%100100100Employee compensation and bene?ts expenses
RMB 10,000100,401100,36592,240New hire satisfaction
%92.0093.3094.00Employee Net Promoter Score (E-NPS)
/62.8569.3375.55Unadjusted average gender pay gap
%6.195.030.00Ratio of highest annual salary to median annualsalary
%13.7613.4014.00Percentage of employees covered by collectivebargaining agreements
%100100100Percentage of operational sites assessed forhuman rights impacts or risks
%54.55100100Percentage of operational sites with labor andhuman rights certi?cation
%50.0063.6475.00Number of employees eligible for parental leavePerson7159108By gender
MalePerson201935FemalePerson514073Number of employees taking parental leavePerson715935By gender
MalePerson201912FemalePerson514023Number of employees returning to work afterparental leave
Person715935By gender
MalePerson201912FemalePerson514023Parental leave return rate %100100100By gender
Male%100100100Female%100100100Number of employees still employed 12 monthsafter returning from parental leave
Person746952By gender
MalePerson283319FemalePerson463633Parental leave retention rate
%92.5097.1888.14
ESG Performance Tables
109110
DisclosuresUnit202220232024By gender
Male%95.00100.00100.00Female%82.1470.5982.50Number of employee discrimination incidentsCase000
Employee Training and Development
Number of employees receiving training Person8,4856,7177,807By gender
MalePerson2,9162,0852,645FemalePerson5,5694,6325,162Employee training coverage
%100100100Total hours of employee trainingHour560,858.50435,075.60506,409.90Average duration of employee training
Hours/Person66.1064.7764.87By gender
MaleHours/Person58.6563.6065.68FemaleHours/Person70.0065.3064.45Total training hours for front-line employeesHour537,130.50404,586.00481,778.56Number of front-line employees receivingtraining
Person8,1486,4227,467Average training hours per front-line employeeHours/Person65.9263.0064.52Total training hours for mid-level managementHour18,760.0025,953.6120,907.52Number of mid-level management receivingtraining
Person268232283Average training hours per mid-levelmanagement
Hours/Person70.00111.8773.88Total training hours for senior managementHour4,968.004,536.003,723.81Number of senior management receivingtraining
Person696357Average training hours per senior managementHours/Person72.0072.0065.33Percentage of employees receiving regularperformance and career development appraisals
%100100100By gender
Male%100100100Female%100100100
DisclosuresUnit202220232024
Bymanagementlevel
Percentage of seniormanagement receiving regularperformance and careerdevelopment appraisals
%100100100Percentage of mid-levelmanagement receiving regularperformance and careerdevelopment appraisals
%100100100Percentage of front-lineemployees receiving regularperformance and careerdevelopment appraisals
%100100100Occupational Health and SafetyNumber of incidents punished for violatingoccupational health and safety laws andregulations
Case000Number of employees with occupationaldiseases
Person000Injury rate per thousand employees
%0.590.450.38Number of workplace injuriesPerson533Number of safety incidentsCase533Number of injury incidentsCase533Number of lost-time incidentsCase533Number of severe injury incidentsCase000Number of deaths due to work-related healthissues
Person000Number of recordable work-related health issuesCase001Total working hoursHour16,494,84013,057,84816,271,766Recordable injury rate per million working hours
Case/Hour0.300.230.21Total work hours lost due to injuriesHour1,272624936Number of deaths due to work-related injuriesPerson000Percentage of deaths due to work-relatedinjuries
%000Number of workdays lost due to injuriesDay15978117Percentage of operational sites with health andsafety risk assessments
%100100100
ESG Performance Tables
111112
DisclosuresUnit202220232024Percentage of employees receiving occupationalhealth and safety training
%68.2375.21100Notes:
1. The total number of employees and the total number of new hires are consistent with data disclosed in the Company’s annual report and include full-
time labor contract employees from both the parent company and major subsidiaries. Part-time and other types of employees are not included.
2. In 2024, the number of employees working in Hong Kong, Macao, Taiwan and overseas as well as the number of new employees working in Hong
Kong, Macao, Taiwan and overseas is increased due to the commencement of works in the Kenya base.3 Ratio of new employees by category = number of new employees by category in the reporting period / (total number of employees by category atthe end of the reporting period + number of employees lost by category in the reporting period) * 100%. Adjustments to the employee turnover rate bycategory for 2022 and 2023 are made according to the calculation formula.
4. Employee turnover rate by category = number of employees lost by category during the reporting period / (total number of employees by category
at the end of the previous reporting period + number of new employees by category during the reporting period)*100%. Adjustments to the employeeturnover rate by category for 2022 and 2023 are made according to the calculation formula.
5. Based on salaries, bonuses, allowances, subsidies and other benefits paid to employees.
6. Based on the results of new hire satisfaction survey.
7. Employee Net Promoter Score (E-NPS) = Percentage of employees willing to recommend the Company to friends and family - Percentage of
employees unwilling to recommend - Employee voluntary resignation rate.
8. Unadjusted average gender pay gap= (Average salary of men - average salary of women) / average salary of men * 100%. The unadjusted average
gender pay gap in 2022 and 2023 is adjusted according to the calculation formula.
9. Retention rate of employees on parental leave = number of employees who returned to work after the end of parental leave and are still employed after
12 months/number of employees who returned to work during the reporting period after the end of parental leave in the previous year *100%.
10. Coverage of employee training = (Number of employees who received training / Total number of employees) * 100%
11. Average training hours per employee = Total training hours / Total number of employees
12. Injury rate per thousand employees = Number of workplace injuries / (Total number of employees / 1,000)
13. Recordable injury rate per million working hours = Number of workplace injuries / Total number of working hours * 100%
14. Percentage of employees receiving occupational health and safety training = (Number of employees receiving occupational health and safety training
/ Total number of employees) * 100%
R&D and Innovation Performance
Products and Customer Services Performance
DisclosuresUnit202220232024
R&D and Innovation
R&D investmentRMB 10,00022,700.0013,894.6513,549.00Proportion of R&D investment in main businessincome
%3.703.373.18Number of R&D personnelPerson656546447Ratio of R&D personnel %7.738.135.73Number of R&D projects#578512498
Intellectual Property Protection
Number of patent applications during thereporting period
#1333233Number of patent granted during the reportingperiod
#1217964
DisclosuresUnit202220232024
Quality Management of Products and ServicesNumber of incidents punished for violatingproduct and service related laws and regulations
Case110Number of products recalled due to safety andhealth issues
Case000Number of legal and regulatory violations relatedto health and safety in products and servicesprovided
Case000Amount of damages caused by major accidentsrelated to safety and quality of products andservices during the reporting period
RMB 10,000000Customer Relationship ManagementCustomer NetPromoter Score(C-NPS)
Domestic market/88.1183.8984.27International market/30.5152.8053.00Total number of complaints received aboutproducts and services
Case1,5699761,023Handling rate of complaints received aboutproducts and services
%100100100Data Security and Customer Privacy ProtectionNumber of people covered by personalinformation security training for employees
Person8,4856,7177,807Number of incidents punished for violatinginformation security laws and regulations
Case000
DisclosuresUnit202220232024Number of trademark applications during thereporting period
#9159170Number of trademark granted during thereporting period
#4717106Number of invention patent applied to mainbusiness
#6379107Total number of patent granted#1,1201,1521,216Total number of patent applications#635871904
ESG Performance Tables
113114
DisclosuresUnit202220232024Number of confirmed incidents of leakage, theftor loss of client information
Case000Amount involved in data security incidentsRMB 10,000000Amount involved in customer privacy breaches RMB 10,000 000
Notes:
1. Based on the results of customer satisfaction survey, including data from both domestic and international markets. Starting from 2022, we adopted
the Customer Net Promoter Score (C-NPS) method, replacing the customer satisfaction survey method used in 2020 and 2021. Calculation Formula:
Customer Net Promoter Score (C-NPS) = Percentage of promoters - Percentage of detractors.
2. Based on the results of customer satisfaction survey, including data from both domestic and international markets. Starting from 2022, the Company
adopted the Customer Net Promoter Score (C-NPS) method, replacing the customer satisfaction survey method used in 2020 and 2021. CalculationFormula: Customer Net Promoter Score (C-NPS) = Percentage of promoters - Percentage of detractors.Community Public Welfare Performance
Environmental Performance
DisclosuresUnit202220232024
Charity and volunteer servicesTotal investment in public welfare and charityRMB 10,000527.40324.57230.00Number of employees participating in voluntaryactivities
Person184320334Total time of employee volunteer serviceHour9261,9532,004
Rural revitalization
Amount of investment in rural revitalizationRMB 10,000107.2480.4083.80Number of people benefited from ruralrevitalization
Person6,8505,0505,128
DisclosuresUnit202220232024
Environmental Management SystemNumber of employees participating inenvironmental protection training
Person3,1543,1023,267Percentage of employees who have receivedtraining on specific environmental issues
%5.705.605.70Percentage of workplaces that haveundergone environmental risk assessment
%90.0090.00100.00Percentage of operational sites withenvironmental certification
%50.0066.67100.00
DisclosuresUnit202220232024Number of incidents punished for violatingenvironmental protection laws andregulations1
#000Total fines imposed for violations ofenvironmental protection laws andregulations
RMB 10,000000Annual investment in environmentalprotection
RMB 10,0001,504.001,048.141,177.79Energy Management
Direct energy consumption
Ton standardcoal
1,786.613,037.584,928.48Natural gas consumptionCubic meters1,156,316.001,252,191.001,621,451.60Liquefied petroleum gas consumptionTon7.095.266.33Fixed source diesel consumption
Ton4.004.1511.15Diesel consumption for official vehicles
Liter 26,462.6422,191.0155,963.00Gasoline consumption of official vehiclesLiter72,575.3572,940.0082,378.45Indirect energy consumption
Ton standard
coal
27,095.1724,822.49 23,164.57Total purchased electricity MWh91,169.3981,270.8984,685.12Purchased electricity from non-renewablesources
MWh90,928.4481,270.8983,539.37Purchased electricity from renewablesources
MWh240.950.001,145.76Purchased steam consumptionGJ465,487.50434,558.75373,660.98Self-produced renewable energyconsumption
Ton standard
coal
118.911,250.182,585.79
Comprehensive energy consumptionintensity (per unit operating income)
Ton standardcoal /RMB
10,000
0.050.070.07Renewable energy consumption
MWh1,207.8010,165.0522,170.52Percentage of renewable energy in totalenergy consumption
%0.515.789.70Total energy consumption
Ton standardcoal
28,881.7927,860.0728,093.05Clean energy consumptionMWh13,471.2523,706.2439,204.89
ESG Performance Tables
115116
DisclosuresUnit202220232024
Clean energyconsumptionby energytype
Natural gasCubic meters1,156,316.001,252,191.001,621,451.60Solar energyMWh966.8510,165.0521,024.76Other
MWh0.000.00645.76Proportion ofclean energyby energytype
Natural gas%92.8257.1244.72Solar energy%7.1842.8853.63Other
%0.000.001.65The Circular economy
Total usage of finished product packagingmaterials
Ton47,80025,60036,971Packagingmaterialusage by type
PaperTon37,30025,00026,584PlasticTon10,50060010,387Usage of environment-friendly packagingmaterials for finished products
Ton26,29016,64025,140Percentage of environment-friendlypackaging materials for finished products
%556568Total usage of non-renewable materialsTon10,50060010,387Total usage of renewable materialsTon37,30025,00026,584
Water Resources Management
Total water withdrawalCubic meters1,131,305.001,321,508.001,014,871.24Waterconsumptionby source
Surface waterCubic meters715,042.00884,940.00622,036.00Municipal water supplyCubic meters416,263.00436,568.00392,835.24Total water dischargeCubic meters911,168.541,104,704.68816,720.34Waterdischarge bydestination
Surface waterCubic meters0.000.001200.00Sewage pipesCubic meters911,168.541,104,704.68815,520.34Total water consumptionCubic meters220,136.46216,803.32198,150.90Water consumption rate
Cubic meters/RMB 10,000
0.360.530.45Total recycled water usageCubic meters659,592.70745,372.90528,270.80Percentage of recycled water%58.3056.4052.05
DisclosuresUnit202220232024
Wastewater ManagementIndustrial wastewater discharge
Ton384,321.74483,204.46357,821.02Chemical oxygen demand (COD)discharge
Ton50.5946.6844.28NH
-N dischargeTon1.831.752.97
Waste Gas ManagementTotal emissions of waste gasesCubic meters209,965,214.29303,726,592.86278,069,230.65Nitrogen oxides (NOx) emissions
Kg243311446.36Emissions of VolatileKg2,082.853,624.843,645.80
Waste Management
Total amount of non-hazardous waste Ton5,206.174,735.774148.27Non-hazardouswaste density(per unit ofrevenue)
Incinerated with energyrecovery
Ton495.59394.44474.53LandfillTon0.000.0071.59Recycling/reuse Ton4,690.784,314.033,574.05Other
Ton19.8027.3028.10Non-hazardous waste intensity (per unit ofrevenue)
Ton/RMB10,000
0.00800.01100.0095Total amount of hazardous waste
Ton39.8365.5889.11Amount ofhazardouswaste bydisposalmethod
Incinerated with energyrecovery
Ton7.5129.7432.49Incinerated without energyrecovery
Ton0.000.000.06Other
Ton32.3235.8456.56Hazardous waste density (per unit ofrevenue)
Ton /RMB10,000
0.00010.00020.0002Total waste generatedTon5,246.004,806.154,237.38Total waste recycledTon1,094.48880.84995.21Percentage of total operational wastetransferred from landfills
%20.86 18.33 23.49Climate Change Mitigation and Adaption
Scope 1 GHG emissionstCO
e2,781.55 2,974.48 3,913.52Scope 2 GHG emission (location-based)tCO
e101,966.74 93,053.09 86544.74
ESG Performance Tables
117118
Notes:
1. The energy management-related data covers all operational sites in China. In 2024, the Company verified energy data according to unified standards,
retrospectively adjusted part of energy consumption data, while retrospectively adjusting the scope 1 and 2 greenhouse gas emissions and totalgreenhouse gas emissions in 2023.
2. In 2024, the increase in diesel use from stationary sources is mainly due to the construction of the Kenyan base.
3. In 2024, the increase in diesel consumption of official vehicles is mainly due to the official operation of the Kenyan base, which uses diesel vehicles.
4. The amount of self-generated renewable energy is solar photovoltaic self-generated electricity.
5. Renewable energy includes solar photovoltaic self-generated electricity, purchased green electricity and green electricity certificates.
6. Other clean energy is geothermal energy used in Kenya.
7. In 2024, due to the improvement and upgrading of equipment, the discharge of industrial wastewater decreased significantly.
8. In 2024, the increase in particulate matter, nitrogen oxide and sulfur oxide emissions will be mainly driven by emissions from the Kenyan base.
9. The statistical data related to waste management covers all operational sites.
10. It was transported uniformly by a third-party solid waste disposal unit, and the treatment method was unknown.
11. In 2024, the Shaoxing Factory uniformly handled the experimental glue, thus causing fluctuations in the total amount of hazardous waste.
12. Data description:
(1) The GHG emission data covers all operational sites in China.
(2) Reference standard: The calculation of Scope 1 and Scope 2 greenhouse gases refers to the GHG Protocol Corporate Accounting and Reporting
Standard (Revised Edition), the ISO14064-1:2018 Greenhouse Gases - Part 1: Specification with Guidance at the Organization Level for Quantificationand Reporting of Greenhouse Gas Emissions and Removals, and the General Guideline of the Greenhouse Gas Emissions Accounting and Reporting forIndustrial Enterprises (GB/T32150-2015), the Guidelines for Accounting Methods and Reporting of Greenhouse Gas Emissions of Enterprises – PowerGeneration Facilities and other accounting standards.
(3) Emission factors: The greenhouse gas types calculated in this report include CO
, CH
, and N
O in Scope 1,and CO
in Scope 2. The selected GWPvalue comes from IPCCAR6, where CH
corresponds to a GWP value of 27.9 tCO
e/tCH
, and N
O corresponds to a GWP value of 273 tCO
e/tN
O.The default values of emission factors used in Scope 1 are derived from the Guidelines for Accounting and Reporting Greenhouse Gas Emissionsfrom Land Transport Enterprises (Trial) (2015), China Energy Statistical Yearbook (2021), and Guidelines for Accounting and Reporting GreenhouseGas Emissions from Enterprises of Other Industries (Trial) (2015). The emission factors used in Scope 2 are calculated based on relevant documentsissued by Ministry of Ecology and Environment of China. Among them, the emission factor of the power grid is 0.5366 tCO
e/MWh, as published in theAnnouncement on the Release of the 2022 Power Sector CO
Emission Factor by the Ministry of Ecology and Environment of People’s Republic of Chinaand National Bureau of Statistics.
Governance Performance
DisclosuresUnit202220232024
Corporate GovernanceNumber of board membersPerson999Number of female directorsPerson333Number of independent directorsPerson333Percentage of female directors on the board ofdirectors
%33.3333.3333.33Number of employee supervisorsPerson111
DisclosuresUnit202220232024
Scope 2 GHG emission (market-based)tCO
e/96,092.6290,023.36Total GHG emission (Scope 1 + Scope 2)(location-based)
tCO
e104,748.30 96,027.57 90,458.26GHG emission density (Scope 1 + Scope 2)(per unit of revenue) (location-based))
tCO
e/RMB10,000
0.17 0.23 0,21
DisclosuresUnit202220232024
Number of shareholders' meetings#331Number of board of directors' meetings#1267Number of supervisory board meetings#966
Anti-corruption and Anti-briberyNumber of directors participating in anti-corruption training
Person999Percentage of directors covered by anti-corruption training
%100100100Total hours of anti-corruption training receivedby directors
Hour363636Hours of anti-corruption training per directorHours/Person444Number of management staff participating inanti-corruption training
Person337295340Percentage of management staff covered byanti-corruption training
%100100100Number of employees participating in anti-corruption training
Person3,1543,1023,219Percentage of employees participating in anti-corruption training
%37.1746.1844.19Total hours of anti-corruption training receivedby employees
Hour12,61612,40812,786Hours of anti-corruption training per employeeHours/Person1.491.851.76Number of suppliers participating in anti-corruption training
#696684762Percentage of operational sites that haveundergone corruption risk assessments
%100100100Percentage of sites audited for specific businessethics issues
%100100100Percentage of at-risk trading partners coveredby the corruption and information security duediligence process
%100100100Number of reported incidents of corruption andbribery received
#
Number of corruption lawsuits filed andconcluded against the issuer or its employeesduring the reporting period
#
Total number of confirmed incidents (in whichemployees were dismissed or disciplined due tocorruption)
#
ESG Performance Tables
119120
Economic Performance
Supply Chain Performance
DisclosuresUnit202220232024
Economic Performance
Social contribution per share
RMB 7.555.845.69Basic earnings per shareRMB/Share2.870.741.45Operating incomeRMB 10,000613,763412,704426,389Net profit attributable to ordinary shareholdersafter extraordinary gains and losses
RMB 10,00070,19718,95831,640Total tax paymentsRMB 10,00026,63033,17224,620Total employee salaries and benefits paid by theCompany
RMB 10,000100,401100,36592,240Interest on borrowings from banks and othercreditors
RMB 10,0003,3542,8932,873Value created for other stakeholders, such asdonations to external parties
RMB 10,000527324230Other social costs due to environmentalpollution, etc.
RMB 10,000000Total shares issued by the CompanyShare266,451,202266,451,202266,451,202
DisclosuresUnit202220232024
Supply Chain ManagementNumber of suppliers in the Mainland China#667653730Number of suppliers in Hong Kong, Macao,Taiwan and overseas
#293132Total number of suppliers#696684762Percentage of target suppliers that have signedthe Supplier Code of Conduct
%/100100Percentage of suppliers signing contractswith environmental, labor, and human rightsprovisions
%/1088Percentage of target suppliers that haveundergone on-site CSR audits
%53.3380.0088.00Number of suppliers assessed forenvironmental, labor, and ethical aspects andfailed
#000Percentage of suppliers assessed forenvironmental, labor, and ethical aspects andpassed
%100100100Number of suppliers identified as having actualand potential significant negative social andenvironmental impacts and receiving support inimplementing corrective action plans
#000Percentage of suppliers agreeing toimprovements after environmental and socialimpact assessments
%766650Percentage of procurement staff who havecompleted sustainable procurement training
%100100100Percentage of procurement spending on localsuppliers
%98.9696.3993.31
Notes:
1.Social contribution per share = Basic earnings per share + (Total tax payments + Salaries paid to employees + Interest on borrowings from banks and
other creditors + Value created for other stakeholders, such as donations to external parties - Other social costs due to environmental pollution, etc.)/Total shares issued by the Company.
Notes:
1. During the reporting period, the Company strengthened ESG management of key suppliers. Suppliers with higher procurement amounts were included
in the target scope of on-site assessments in areas such as environmental impact, labor practices, and ethics, and were evaluated through on-siteinspections and comprehensive scoring. The total procurement amount from these key suppliers included in the ESG on-site audits accounted for over80% of the Company’s total procurement.
2. The procurement spending on local suppliers is specifically for those located in the same area as the Company's key operational sites.
DisclosuresUnit202220232024Total number of confirmed incidents (wherecontracts with business partners wereterminated or not renewed owing to corruption-related irregularities)
#
Anti-unfair CompetitionNumber of cases in which the Company wassanctioned by the relevant authorities forunfair competition practices in its operationsor violations of the antitrust and anti-monopolylaws
#000Amount of litigation or major administrativepenalties caused by the Company's unfaircompetition during the reporting period
RMB 10,000//0
ESG Performance Tables
121122
Report Benchmarking Index Table
Index Table of the Guidelines No.14 for Self-Regulation of ListedCompanies on the Shanghai Stock Exchange: Sustainability Report (Trial)
Terms and Disclosure ContentReport ChapterChapter 1 General ProvisionsSustainability managementChapter II Disclosure Framework forSustainability Information
Sustainability managementChapters and sections in this report
Chapter III Environmental Disclosure
Section 1 Climate ResponseClimate change tackling
Zhende Ecology - Creating value with sustainable thinkingPromoting green development - Climate change mitigation andadaptationESG quantitative performance tableSection 2 Pollution Control and Ecosystem ProtectionPollutant discharge
Promoting green development-environmental management systemESG quantitative performance tableWaste disposal
Promoting green development-environmental management systemESG quantitative performance tableEcosystem and biodiversity protectionPromoting green development-environmental management systemEnvironmental compliance managementPromoting green development-environmental management systemSection 3 Resource Utilization and Circular EconomyEnergy usage
Promoting green development- resources conservation andutilizationESG quantitative performance tableUsage of water resources
Promoting green development- resources conservation andutilizationESG quantitative performance tableCircular economy
Promoting green development- resources conservation andutilizationESG quantitative performance table
Terms and Disclosure ContentReport Chapter
Chapter IV Social Disclosure
Section 1 Rural Revitalization and Social ContributionsRural revitalization Be a trustworthy partner - community communication and
developmentESG quantitative performance tableContributions to the societySection 2 Innovation-Driven Development and Ethics of Science and TechnologyInnovation-driven
Be a trustworthy partner - innovationESG quantitative performance tableEthics of science and technology
Not applicable. The Company does not engage in scientific researchor technology development activities in the field of ethics of scienceand technology, such as life sciences and artificial intelligence,during its production and operation.Section 3 Suppliers and ClientsSupply chain securityBe a trustworthy partner - sustainable supply chainEqual treatment of small and medium-sizedenterprises
Be a trustworthy partner - sustainable supply chainSafety and quality of products and servicesBe a trustworthy partner - product and service safety and qualityData security and customer privacyprotection
Be a trustworthy partner - information security and privacy protectionSection 4 EmployeesEmployees
Caring for employee growth-Protection of Employees’ Rights and
Interests
Caring for employee growth-employee training and development
Caring for employee growth-occupational health and safety
ESG quantitative performance tableChapter V Corporate Governance Information Related to Sustainable Development DisclosureSection 1 Sustainability-Related Governance MechanismsDue diligence Sustainability managementCommunications with stakeholdersSustainability management- Stakeholder engagementSection 2 Commercial BehaviorsAnti-commercial bribery and anti-corruption
Improving the governance system-compliance operation
managementAnti- unfair competition
Improving the governance system-compliance operation
management
Chapter VI Supplementary Provisions and Interpretation
Report Benchmarking Index Table
123124
GRI Standards (2021)
Note
From January 1, 2024 to December 31, 2024, Zhende Medical prepared thereport in compliance with the GRI Standards.GRI 1 usedGRI 1: Foundation 2021Applicable GRI industry standardsNo applicable industry standards
Zhende Medical has developed the Benchmarking Index Table based on the GRI principles combined with the materialtopics identified and the information disclosed in the 2024 Sustainability Report. The Company has determined thatthe following topics are non-material and thus will not be included in the Benchmarking Index Table: GRI 202 (MarketPresence), GRI 207 (Tax), GRI 101 (Biodiversity), GRI 410 (Security Practices), GRI 411 (Rights of IndigenousPeoples), GRI 415 (Public Policy).
GRIStandards
DisclosureLocation
Notes to OmissionRequiredOmissions
ReasonExplanationGeneral Disclosures
GRI 2:
GeneralDisclosures(2021)
2-1 Organizational detailsAbout Zhende Medical
Not applicable for “omission”2-2 Entities included in theorganization’s sustainabilityreporting
About This Report2-3 Reporting period,frequency and contact point
About This Report2-4 Restatements ofinformation
ESG Performance Tables2-5 External assuranceAssurance Statement2-6 Activities, value chain andother business relationships
About Zhende Medical2-7 Employees
Caring for employee growth
- Protection of Employees’
Rights and Interests
ESG Performance Tables2-8 Workers who are notemployees
ESG Performance Tables2-9 Governance structure andcomposition
Improving the Governance
System- Corporate
Governance System2-10 Nomination andselection of the highestgovernance body
Improving the Governance
System- Corporate
Governance System
GRIStandards
DisclosureLocation
Notes to OmissionRequiredOmissions
ReasonExplanation
GRI 2:
GeneralDisclosures(2021)
2-11 Chair of the highestgovernance body
See 2024 Annual Report ofZhende Medical for details2-12 Role of the highestgovernance body inoverseeing the managementof impacts
Improving the GovernanceSystem- CorporateGovernance SystemSustainable DevelopmentManagement- Structure andResponsibilities2-13 Delegation ofresponsibility for managingimpacts
Improving the GovernanceSystem- CorporateGovernance SystemSustainable DevelopmentManagement- Structure andResponsibilities2-14 Role of the highestgovernance body insustainability reporting
Sustainable DevelopmentManagement- Structure andResponsibilities2-15 Conflicts of interest
Improving the GovernanceSystem- CorporateGovernance SystemImproving the GovernanceSystem-ComplianceOperation Management2-16 Communication ofcritical concerns
Sustainability Management-Stakeholder Engagement2-17 Collective knowledge ofthe highest governance body
Sustainable DevelopmentManagement- Structure andResponsibilities2-18 Evaluation of theperformance of the highestgovernance body
Omitted
2-18-a2-18-b2-18-c
Confidentialityrestrictions
Thisinformationwill not bedisclosedfor the timebeing due toconfidentialityrequirements.2-19 Remuneration policiesOmitted
2-19-a2-19-b
Confidentialityrestrictions
Thisinformationwill not bedisclosedfor the timebeing due toconfidentialityrequirements.2-20 Process to determineremuneration
Omitted
2-20-a2-20-b
Confidentialityrestrictions
Thisinformationwill not bedisclosedfor the timebeing due toconfidentialityrequirements.2-21 Annual totalcompensation ratio
ESG Performance Tables
Report Benchmarking Index Table
125126
GRIStandards
DisclosureLocation
Notes to OmissionRequiredOmissions
ReasonExplanation
GRI 2:
GeneralDisclosures(2021)
2-22 Statement onsustainable developmentstrategy
Sustainable DevelopmentManagement- StrategyMessage from the Chairman2-23 Policy commitments
Improving the GovernanceSystem-ComplianceOperation Management2-24 Embedding policycommitments
Improving the GovernanceSystem-ComplianceOperation Management2-25 Processes to remediatenegative impacts
Caring for employee growth- Protection of Employees’Rights and Interests2-26 Mechanisms for seekingadvice and raising concerns
Improving the GovernanceSystem-ComplianceOperation Management2-27 Compliance with lawsand regulations
Improving GovernanceSystemCaring for employee growthPromoting GreenDevelopmentBeing a Reliable Partner2-28 Membershipassociations
About Zhende Medical-Company Events in 2024Being a Reliable Partner-Industry Exchange andCooperation2-29 Approach to stakeholderengagement
Sustainability Management-Stakeholder Engagement2-30 Collective bargainingagreements
Caring for employee growth- Protection of Employees’Rights and Interests
Material Topics
GRI 3:
Material
Topics
(2021)
3-1 Process to determinematerial topics
Sustainability Management-Stakeholder Engagement3-2 List of material topics
Sustainability Management-Stakeholder EngagementEconomic Performance
GRI3:
Material
Topics
(2021)
3-3 Management of materialtopics
Sustainability Management-Stakeholder EngagementESG Performance Tables
GRIStandards
DisclosureLocation
Notes to OmissionRequiredOmissions
ReasonExplanation
GRI 201:
EconomicPerformance(2016)
201-1 Direct economic valuegenerated and distributed
ESG Performance Tables201-2 Financial implicationsand other risks andopportunities due to climatechange
Promoting Green
Development-Climate Change
Mitigation and Adaptation201-3 Defined benefitplan obligations and otherretirement plans
Omitted
201-3-a201-3-b201-3-c201-3-d201-3-e
Informationmissing/incomplete
Thisinformationhas not beencollected soit cannot bedisclosed forthe time being.201-4 Financial assistancereceived from government
Omitted
201-4-a201-4-b201-4-c
Informationmissing/incomplete
Thisinformationhas not beencollected soit cannot bedisclosed forthe time being.Indirect Economic ImpactsGRI3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainability Management-
Stakeholder Engagement
Zhende Charity, Building a
Harmonious and Healthy
Future
Being a Reliable Partner-
Community Communication
and Development
GRI 203:
IndirectEconomicImpacts(2016)
203-1 Infrastructureinvestments and servicessupported
Zhende Charity, Building aHarmonious and HealthyFutureBeing a Reliable Partner-Community Communicationand Development203-2 Significant indirecteconomic impacts
Zhende Charity, Building aHarmonious and HealthyFutureBeing a Reliable Partner-Community Communicationand DevelopmentProcurement PracticesGRI3:
Material
Topics
(2021)
3-3 Management of materialtopics
Being a Reliable Partner-Sustainable Supply Chain
GRI 204:
Procurement
Practices(2016)
204-1 Proportion of spendingon local suppliers
ESG Performance Tables
Report Benchmarking Index Table
127128
GRIStandards
DisclosureLocation
Notes to OmissionRequiredOmissions
ReasonExplanationAnti-corruption
GRI3:
Material
Topics(2021)
3-3 Management of materialtopics
Sustainability Management-Stakeholder EngagementImproving the GovernanceSystem-ComplianceOperation Management
GRI 205:
Anti-corruption
(2016)
205-1 Operations assessedfor risks related to corruption
ESG Performance Tables205-2 Communication andtraining about anti-corruptionpolicies and procedures
Improving the Governance
System-Compliance
Operation Management205-3 Confirmed incidents ofcorruption and actions taken
ESG Performance TablesAnti-competitive BehaviorGRI3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainability Management-
Stakeholder Engagement
Improving the Governance
System-Compliance
Operation Management
GRI 206:
Anti-competitive
Behavior(2016)
206-1 Legal actions for anti-competitive behavior, anti-trust, and monopoly practices
ESG Performance Tables
Materials
GRI3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainability Management-Stakeholder EngagementPromoting GreenDevelopment-ResourceConservation and UtilizationESG Performance Tables
GRI 301:
Materials(2016)
301-1 Weight or volume ofmaterials used
ESG Performance Tables301-2 Recycled inputmaterials used
ESG Performance Tables301-3 Recycled products andtheir packaging materials
ESG Performance Tables
EnergyGRI3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainability Management-Stakeholder EngagementPromoting GreenDevelopment-ResourceConservation and Utilization
GRIStandards
DisclosureLocation
Notes to OmissionRequiredOmissions
ReasonExplanation
GRI 302:
Energy(2016)
302-1 Energy consumptionwithin the organization
Promoting GreenDevelopment-ResourceConservation and UtilizationESG Performance Tables302-2 Energy consumptionoutside of the organization
Omitted
302-2-a302-2-b302-2-c
Informationmissing/incomplete
Thisinformationhas not beencollected soit cannot bedisclosed forthe time being.302-3 Energy intensity
Promoting GreenDevelopment-ResourceConservation and UtilizationESG Performance Tables302-4 Reduction of energyconsumption
Promoting GreenDevelopment-ResourceConservation and Utilization302-5 Reduction in energyrequirements of products andservices
Promoting GreenDevelopment-ResourceConservation and UtilizationWater and EffluentsGRI3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainability Management-Stakeholder EngagementPromoting GreenDevelopment-ResourceConservation and UtilizationPromoting GreenDevelopment-EnvironmentalManagement System
GRI 303:
Water andEffluents(2018)
303-1 Interactions with wateras a shared resource
Promoting GreenDevelopment-ResourceConservation and UtilizationPromoting GreenDevelopment-EnvironmentalManagement System303-2 Management of waterdischarge-related impacts
Promoting GreenDevelopment-EnvironmentalManagement System303-3 Water withdrawalESG Performance Tables303-4 Water dischargeESG Performance Tables303-5 Water consumptionESG Performance Tables
Report Benchmarking Index Table
129130
GRIStandards
DisclosureLocation
Notes to OmissionRequiredOmissions
ReasonExplanationEmissionsGRI3:
Material
Topics(2021)
3-3 Management of materialtopics
Sustainability Management-Stakeholder EngagementPromoting GreenDevelopment-EnvironmentalManagement SystemPromoting GreenDevelopment-Climate ChangeMitigation and Adaptation
GRI 305:
Emissions(2016)
305-1 Direct (Scope 1) GHGemissions
Promoting GreenDevelopment-Climate ChangeMitigation and AdaptationESG Performance Tables305-2 Energy indirect (Scope
2) GHG emissions
Promoting GreenDevelopment-Climate ChangeMitigation and AdaptationESG Performance Tables305-3 Other indirect (Scope 3)GHG emissions
Promoting GreenDevelopment-Climate ChangeMitigation and AdaptationESG Performance Tables305-4 GHG emissionsintensity
ESG Performance Tables305-5 Reduction of GHGemissions
Zhende Ecology, Creating
Value with Sustainable
Thinking305-6 Emissions of ozone-depleting substances (ODS)
Omitted
305-6-a305-6-b305-6-c305-6-d
Informationmissing/incomplete
Thisinformationhas not beencollected soit cannot bedisclosed forthe time being.305-7 Nitrogen oxides (NO
X
),sulfur oxides (SO
X
), and othersignificant air emissions
ESG Performance Tables
WastesGRI3:
Material
Topics(2021)
3-3 Management of materialtopics
Sustainability Management-Stakeholder EngagementPromoting GreenDevelopment-EnvironmentalManagement System
GRI 306:
Waste(2020)
306-1 Waste generation andsignificant waste-relatedimpacts
Promoting GreenDevelopment-EnvironmentalManagement System306-2 Management ofsignificant waste-relatedimpact
Promoting GreenDevelopment-EnvironmentalManagement System306-3 Waste generatedESG Performance Tables
GRIStandards
DisclosureLocation
Notes to OmissionRequiredOmissions
ReasonExplanationGRI 306:
Waste(2020)
306-4 Waste diverted fromdisposal
ESG Performance Tables306-5 Waste directed todisposal
ESG Performance Tables
Supplier Environmental Assessment
GRI3:
Material
Topics(2021)
3-3 Management of materialtopics
Sustainability Management-
Stakeholder Engagement
Being a Reliable Partner-
Sustainable Supply Chain
GRI 308:
SupplierEnvironmentalAssessment
(2016)
308-1 New suppliers that werescreened using environmentalcriteria
Omitted308-1-a
Informationmissing/incomplete
Thisinformationhas not beencollected soit cannot bedisclosed forthe time being.308-2 Negative environmentalimpacts in the supply chainand actions taken
ESG Performance Tables
Employment
GRI3:
Material
Topics
(2021)
3-3 Management of materialtopics
Sustainability Management-Stakeholder EngagementCaring for employee growth- Protection of Employees’Rights and Interests
GRI 401:
Employment
(2016)
401-1 New employee hiresand employee turnover
ESG Performance Tables401-2 Benefits provided tofull-time employees that arenot provided to temporary orpart-time employees
Caring for employee growth
- Protection of Employees’
Rights and Interests
401-3 Parental leaveESG Performance Tables
Labor/Management RelationsGRI3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainability Management-Stakeholder EngagementCaring for employee growth- Protection of Employees’Rights and InterestsGRI 402:
Labor/ManagementRelations(2016)
402-1 Minimum noticeperiods regarding operationalchanges
Omitted
402-1-a402-1-b
Informationmissing/incomplete
Thisinformationis temporarilyunavailable soit cannot befully disclosed.Occupational Health and Safety
GRI3:
Material
Topics
(2021)
3-3 Management of materialtopics
Sustainability Management-Stakeholder EngagementCaring for employee growth-Occupational Health andSafety
Report Benchmarking Index Table
131132
GRIStandards
DisclosureLocation
Notes to OmissionRequiredOmissions
ReasonExplanation
GRI 403:
Occupational
Health andSafety(2018)
403-1 Occupational healthand safety managementsystem
Caring for employee growth-Occupational Health andSafety403-2 Hazard identification,risk assessment, and incidentinvestigation
Caring for employee growth-Occupational Health andSafety403-3 Occupational healthservices
Caring for employee growth-Occupational Health andSafety403-4 Worker participation,consultation, andcommunication onoccupational health andsafety
Caring for employee growth-Occupational Health andSafety403-5 Worker training onoccupational health andsafety
Caring for employee growth-Occupational Health andSafety403-6 Promotion of workerhealth
Caring for employee growth-Occupational Health andSafety403-7 Prevention andmitigation of occupationalhealth and safety impactsdirectly linked by businessrelationships
Caring for employee growth-Occupational Health andSafety403-8 Workers covered byan occupational health andsafety management system
Caring for employee growth-Occupational Health andSafetyESG Performance Tables403-9 Work-related injuriesESG Performance Tables403-10 Work-related ill healthESG Performance Tables
Training and EducationGRI3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainability Management-Stakeholder EngagementCaring for employee growth-Employee Training andDevelopmentGRI 404:
TrainingandEducation(2016)
404-1 Average hours oftraining per year per employee
ESG Performance Tables404-2 Programs for upgradingemployee skills and transitionassistance programs
Caring for employee growth-
Employee Training and
Development404-3 Percentage ofemployees receiving regularperformance and careerdevelopment reviews
ESG Performance Tables
Diversity and Equal Opportunity
GRIStandards
DisclosureLocation
Notes to OmissionRequiredOmissions
ReasonExplanationGRI3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainability Management-Stakeholder EngagementCaring for employee growth- Protection of Employees’Rights and InterestsGRI 405:
Diversityand EqualOpportunity(2016)
405-1 Diversity of governancebodies and employees
ESG Performance Tables405-2 Ratio of basic salaryand remuneration of womento men
ESG Performance TablesAnti-discriminationGRI3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainability Management-
Stakeholder Engagement
Caring for employee growth
- Protection of Employees’
Rights and InterestsGRI 406: Non-discrimination(2016)
406-1 Incidents ofdiscrimination and correctiveactions taken
Caring for employee growth
- Protection of Employees’
Rights and InterestsFreedom of Association and Collective BargainingGRI3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainability Management-
Stakeholder Engagement
Caring for employee growth
- Protection of Employees’
Rights and InterestsGRI 407:
Freedom ofAssociationandCollectiveBargaining(2016)
407-1 Operations andsuppliers in which the right tofreedom of association andcollective bargaining may beat risk
Omitted
407-1-a407-1-b
Informationmissing/incomplete
Thisinformationis temporarilyunavailable soit cannot befully disclosed.Child LaborGRI3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainability Management-
Stakeholder Engagement
Caring for employee growth
- Protection of Employees’
Rights and InterestsGRI 408:
ChildLabor(2016)
408-1 Operations andsuppliers at significant risk forincidents of child labor
ESG Performance Tables
Caring for employee growth
- Protection of Employees’
Rights and InterestsForced or Compulsory LaborGRI3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainability Management-
Stakeholder Engagement
Caring for employee growth
- Protection of Employees’
Rights and Interests
Report Benchmarking Index Table
133134
GRIStandards
DisclosureLocation
Notes to OmissionRequiredOmissions
ReasonExplanationGRI 409:
Forced orCompulsoryLabor(2016)
409-1 Operations andsuppliers at significant riskfor incidents of forced orcompulsory labor
ESG Performance TablesCaring for employee growth- Protection of Employees’Rights and Interests
Local CommunitiesGRI3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainability Management-Stakeholder EngagementPromoting GreenDevelopment-EnvironmentalManagement System
GRI 413:
LocalCommunities
(2016)
413-1 Operations with localcommunity engagement,impact assessments, anddevelopment programs
Omitted413-1-a
Informationmissing/incomplete
Thisinformationis temporarilyunavailable soit cannot befully disclosed.413-2 Operations withsignificant actual andpotential negative impacts onlocal communities
Omitted413-2-a
Informationmissing/incomplete
Thisinformationis temporarilyunavailable soit cannot befully disclosed.
Supplier Social Assessment
GRI3:
Material
Topics(2021)
3-3 Management of materialtopics
Sustainability Management-Stakeholder EngagementBeing a Reliable Partner-Sustainable Supply Chain
GRI 414:
Supplier
SocialAssessment
(2016)
414-1 New suppliers thatwere screened using socialcriteria
Omitted414-1-a
Informationmissing/incomplete
Thisinformationis temporarilyunavailable soit cannot befully disclosed.414-2 Negative social impactsin the supply chain andactions taken
ESG Performance Tables
414-2-c414-2-e
Informationmissing/incomplete
Thisinformationis temporarilyunavailable soit cannot befully disclosed.Customer Health and Safety
GRI3:
Material
Topics(2021)
3-3 Management of materialtopics
Sustainability Management-Stakeholder EngagementBeing a Reliable Partner-Product and Service Safetyand Quality
GRIStandards
DisclosureLocation
Notes to OmissionRequiredOmissions
ReasonExplanationGRI 416:
CustomerHealthand Safety(2016)
416-1 Assessment of thehealth and safety impactsof product and servicecategories
Omitted416-1-a
Informationmissing/incomplete
Thisinformationis temporarilyunavailable soit cannot befully disclosed.416-2 Incidents of non-compliance concerning thehealth and safety impacts ofproducts and services
Being a Reliable Partner-Product and Service Safetyand QualityESG Performance TablesMarketing and LabelingGRI3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainability Management-Stakeholder EngagementBeing a Reliable Partner-Product and Service Safetyand Quality
GRI 417:
MarketingandLabeling(2016)
417-1 Requirementsfor Product and ServiceInformation and Labeling
Omitted
417-1-a417-1-b
Informationmissing/incomplete
Thisinformationis temporarilyunavailable soit cannot befully disclosed.417-2 Violations InvolvingProduct and ServiceInformation and Labeling
The Company did nothave any violations relatedto product and serviceinformation and labelingduring the reporting year417-3 Violations InvolvingMarketing Communications
Omitted
417-3-a417-3-b
Informationmissing/incomplete
Thisinformationis temporarilyunavailable soit cannot befully disclosed.Customer PrivacyGRI3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainability Management-Stakeholder EngagementBeing a Reliable Partner-Data Security and PrivacyProtectionGRI 418:
CustomerPrivacy(2016)
418-1 Substantiatedcomplaints concerningbreaches of customer privacyand losses of customer data
Being a Reliable Partner-Data Security and PrivacyProtectionESG Performance Tables
Report Benchmarking Index Table
135136
Benchmarking Index Table of SDGs
SDGsSDGs Sub-targetsReporting Chapters
1.1 By 2030, eradicate extreme poverty for all people
everywhere, currently measured as people living on lessthan $1.90 a day.
1.2 By 2030, reduce at least by half the proportion of men,
women and children of all ages living in poverty in all itsdimensions according to national definitions.
Being a Reliable Partner-Innovative SolutionsBeing a Reliable Partner-CommunityCommunication and DevelopmentZhende Charity, Building a Harmonious andHealthy Future
3.8 Access to safe, effective, quality and affordable
essential medicines and vaccines for all.
Being a Reliable Partner-Innovative SolutionsBeing a Reliable Partner-CommunityCommunication and DevelopmentZhende Charity, Building a Harmonious andHealthy Future
4.4 Substantially increase the number of youth and adults
who have relevant skills, including technical and vocationalskills, for employment, decent jobs and entrepreneurship.
Caring for employee growth-Employee Trainingand Development
5.5 Ensure women’s full and effective participation and
equal opportunities for leadership at all levels of decision-making in political, economic and public life.
Caring for employee growth - Protection ofEmployees’ Rights and Interests
6.3 By 2030, improve water quality by reducing pollution,
eliminating dumping and minimizing release of hazardouschemicals and materials, halving the proportion of untreatedwastewater and substantially increasing recycling and safereuse globally.
6.4 By 2030, substantially increase water-use efficiency across
all sectors and ensure sustainable withdrawals and supply offreshwater to address water scarcity and substantially reducethe number of people suffering from water scarcity.
Promoting Green Development-EnvironmentalManagement SystemPromoting Green Development-ResourceConservation and Utilization
7.2 By 2030, increase substantially the share of renewable
energy in the global energy mix.
7.3 By 2030, double the global rate of improvement in
energy efficiency.
Promoting Green Development-ResourceConservation and UtilizationZhende Ecology, Creating Value withSustainable Thinking
8.5 By 2030, achieve full and productive employment and decent
work for all women and men, including for young people andpersons with disabilities, and equal pay for work of equal value.
8.7 Take immediate and effective measures to eradicate forced
labour, end modern slavery and human trafficking and securethe prohibition and elimination of the worst forms of child labour,including recruitment and use of child soldiers, and by 2025 endchild labour in all its forms.
8.8 Protect labour rights and promote safe and secure working
environments for all workers, including migrant workers, inparticular women migrants, and those in precarious employment.
Caring for employee growth - Protection ofEmployees’ Rights and InterestsCaring for employee growth-Employee Trainingand Development
SDGsSDGs Sub-targetsReporting Chapters
12.5 By 2030, substantially reduce waste generation
through prevention, reduction, recycling and reuse.
12.6 Encourage companies, especially large and
transnational companies, to adopt sustainable practicesand to integrate sustainability information into theirreporting cycle.
Being a Reliable Partner-Innovative SolutionsPromoting Green Development-EnvironmentalManagement SystemPromoting Green Development-ResourceConservation and UtilizationZhende Ecology, Creating Value withSustainable Thinking
13.3 Improve education, awareness-raising and human
and institutional capacity on climate change mitigation,adaptation, impact reduction and early warning.
Zhende Ecology, Creating Value withSustainable ThinkingPromoting Green Development-Climate ChangeMitigation and Adaptation
Report Benchmarking Index Table
137138
Assurance Statement
Assurance Statement
139140
Assurance Statement