上海晨光文具股份有限公司SHANGHAI M&G STATIONERY INC.
2020年度企业社会责任报告2020 Corporate Social Responsibility Report
About This Report
The Board of Directors of the Company and all its directors guarantee that,this report does not contain any false information, misleading statement ormaterial omission, and severally and jointly accept responsibility for thetruthfulness, accuracy and completeness of the contents of this report.
Dear stakeholders, this “Corporate Social Responsibility Report of ShanghaiM&G Stationery Inc. for the Year of 2020” (CSR report) is the third of its kind issuedto the public by M&G Stationery. This report aims to truthfully present the CSRdevelopment and practice of the Company and reveal to our shareholders, employees,government agencies, customers and consumers, partners, local communities and otherstakeholders of the Company’s CSR activities.Reporting Period: From 1 January 2020 to 31 December 2020Reporting Cycle: Reported annuallyScope of Reporting:
This report covers Shanghai M&G Stationery Inc. and its subsidiaries. For theconvenience of expression, they are referred to as “M&G Stationery”, “M&G”, “theCompany”, “we” or “us”, etc. herein.Basis of Preparation
This report is prepared in accordance with the Guidelines to Report Sustainability(GRL-Standards) of Global Reporting Initiative (GRI) and Guidelines on CorporateSocial Responsibility Reporting for Chinese Enterprises (CASS-CSR 4.0) by ChineseAcademy of Social Sciences.Access to the Report
The report is prepared and published in simplified Chinese, and is available in bothhard copy and electronic versions. The latter may be downloaded from the website ofShanghai Stock Exchange (http://www.sse.com.cn).Report Assurance
III
The report was approved by the fifth meeting of the fifth session of the Board ofDirectors and the fourth meeting of the fifth session of the Board of Supervisors heldon 26 March 2021.
本报告分别以中、英文编制，在对中外文文本的理解上发生歧义时，以中文文
本为准。This English version is converted from the Chinese version.In case of any discrepancy between the Chinese version and the English version,
the Chinese version shall prevail.
IV
Contents
I. Company Profile..................................................................................................................................................1
(I) Overview ...... 1
(II) Development History ...... 3
(III) Awards in This Year ...... 4
(IV) Operation Performance ...... 5
(V) Responsibility of Communication ...... 6
II. Environment ........................................................................................................................................................8
(I) Carbon Emission ...... 8
(II) Energy Consumption ...... 8
(III) Clean Energy ...... 9
(IV) “Green” Factory ...... 10
(V) “Green” Products ...... 10
1. Environmentally-friendly materials ......................................................................................... 10
2. Recyclable materials .................................................................................................................... 11
(VI) “Green” Operation ...... 11
(VII) Environmental Protection Actions ...... 12
III. Society.............................................................................................................................................................. 14
(I) Product Responsibility ...... 14
1. Design and R&D ........................................................................................................................... 14
2. Manufacturing advantage ........................................................................................................... 14
3. Chemical safety ............................................................................................................................. 15
(II) Stakeholder ...... 18
1. Consumer ........................................................................................................................................ 18
2. Supplier............................................................................................................................................ 19
3. Distribution partner ...................................................................................................................... 21
(III) Human Resources ...... 21
1. Basic rights and interests............................................................................................................. 22
2. Development of talents................................................................................................................ 22
3. Vocational development .............................................................................................................. 24
4. Communication channels............................................................................................................ 24
5. Welfare system............................................................................................................................... 24
6. Work safety ..................................................................................................................................... 25
(IV) Charity ...... 27
1. Pandemic containment................................................................................................................. 27
2. Poverty alleviation ........................................................................................................................ 28
3. M&G Rainbow Creative Classroom ........................................................................................ 29
4. Rainbow is Coming ...................................................................................................................... 29
5. Kids of the Stars ............................................................................................................................ 30
IV. Governance ..................................................................................................................................................... 32
(I) Corporate Governance ...... 32
1. Governance system....................................................................................................................... 32
V2. Internal control .............................................................................................................................. 33
(II) Corporate Conduct ...... 34
1. Compliance with laws and regulations - anti-corruption .................................................... 34
2. Tax responsibility .......................................................................................................................... 36
3. Dividend return.............................................................................................................................. 36
4. Investor relations........................................................................................................................... 37
5. Information disclosure ................................................................................................................. 37
V. Outlook .............................................................................................................................................................. 39
I. Company Profile
(I) OverviewShanghai M&G Stationery is a comprehensive stationery supplier and an officesupplies service provider. The Company integrates the value of creativity into itsproducts and service advantages, advocates fashionable stationery lifestyle, andprovides solutions for study and work. Its traditional core businesses include designing,developing, manufacturing and selling writing instruments, student stationery, officesupplies and other products under brands, and it also develops the e-commerce M&G Technologies; its new businesses mainly comprise of own-operatedretail stores—Jiumu Store and M&G Life, and direct office service platform—M&GColipu.
Our mission: Make study and work more joyful and effectiveOur values: Sincerity, collaboration, focus, win-win, and consumer centricOur vision: Become a "world-class M&G"
M&G Stationery covers more than 80,000 retail stationery shops nationwide andhas 441 own-operated retail stores including M&G Life and Jiumu Store. The Companylaunches thousands of new products every year based on the market demand. Ourproducts are exported to more than 50 countries and regions and we have partners areall over the world. The Company has maintained double-digit growth in the past decade.Its total revenue reached RMB13.14 billion in 2020, increasing 18% year-on-year.Headquartered in Shanghai, China, the Company operates an industrial park thatcovers an area of 350 mu. The park is the home of China Writing Instrument IndustrialBase, China Writing Instrument Center, National Industrial Design Center, and ChinaKey Laboratory of Light Industry and Writing Instrument Engineering Technology. In2019, M&G Stationery Laboratory was accredited by China National AccreditationService for Conformity Assessment (CNAS), with its testing capabilities meetingglobal standard.
The Company invests more than RMB100 million in the design and developmentof product and technology every year. New products on the production line can beavailable in all retail shops across the country in only 7 days. Currently, the Companyhas more than 700 patents. M&G Stationery was awarded well recognized industrialdesign awards such as the Gold Ideas Medal and Red Star Medal. In 2020, theCompany's anti-breakage automatic pencil won the American IDEA Design Award. TheCompany won four major international industrial design awards (German Red DotAward, German iF Award, Japanese G-Mark Award, and American IDEA Award).
As a domestic brand favored by Chinese consumers, M&G Stationery is
pioneering a path of innovation in Chinese stationery from stationery products towardsthose with more cultural and creative elements, transforming from “Made in China” to“Created in China”, leaping from local brand to international brand, and becoming"world-class M&G".(II) Development History
2020Brought Israeli design brand-Peleg Design to attend CIIE, announced establishment
Brought Israeli design brand-Peleg Design to attend CIIE, announced establishment
of Israel office of its global design center;
2019
M&G Stationery acquired Shanghai Axus as its subsidiary;Brought Italian painting brand-CARIOCA to attend CIIE;
2017Explored new retail in the industry and started the strategic transformation of “taking
Explored new retail in the industry and started the strategic transformation of “taking
brand as the core and transforming from stationery to cultural and creative life";
M&G Colipu successfully acquired Office Depot (China);2015
2015
M&G Stationery officially listed on the Shanghai Stock Exchange A shares (stock code:
603899);
2013
Qingcun Industrial Park was completed and the largest three-dimensional warehouse
in the stationery industry in China was put into use;2008
2008
The first “franchise chain" project was launched in the stationery industry. At the sametime, the Guangming Park was completed, and China Writing Instrument Center andChina Writing Instrument Industrial Base were established, establishing the Company's
(III) Awards in This Year
| Description | Issued by |
| "Shanghai Brand" Certification | Shanghai Brand International Certification Alliance |
| First Grade Prize for State Science and Technology Progress Award issued by China National Light Industry Council (R&D and application of key technology for manufacturing pen tip and gel pen & ballpoint pen) | China National Light Industry Council |
| First Grade Prize for State Science and Technology Progress Award issued by China National Light Industry Council (development and industrialization of water-based ballpoint pen with regulator) | China National Light Industry Council |
| Contract Credit Rating Certification (2018-2019, AAA) | Shanghai Contract Credit Promotion Association |
2005
Selected as the designated stationery supplier of Boao Forum for Asia and has
provided support for Boao Forum for Asia for more than one decade;
2002
2002
K35, the first press gel pen in China, came out after 180 days of process debugging and17 process optimization, creating M&G classic products with ingenuity;
1999M&G settled in Liuli, Pudong, with more than 100 employees. It has successivelyestablished mold, injection, printing and assembly workshops, and the productionsystem has begun to take shape;
M&G settled in Liuli, Pudong, with more than 100 employees. It has successivelyestablished mold, injection, printing and assembly workshops, and the productionsystem has begun to take shape;1997
1997
The "M&G" trademark was officially launched, establishing the development path ofthe brand; cooperated with stationery agents across the country and established
partnerships;
1989
1989
First step in start up the Company in two small bungalows in Hengshan Village,
| Top 100 Private Manufacturing Enterprises in Shanghai in 2020 (Ranked 9th) | Shanghai Enterprise Confederation/Shanghai Entrepreneurs Association/Jiefang Daily |
| Top 100 Manufacturing Enterprises in Shanghai in 2020 (Ranked 27th) | Shanghai Enterprise Confederation/Shanghai Entrepreneurs Association/Jiefang Daily |
| Top 100 Private Enterprises in Shanghai in 2020 (Ranked 39th) | Shanghai Enterprise Confederation/Shanghai Entrepreneurs Association/Jiefang Daily |
| Company with Outstanding Contribution to Pandemic Prevention and Control and Work Resumption, by China Stationery & Sporting Goods Association | China Stationery & Sporting Goods Association |
| Golden Bee Enterprise Award | Economic Guide for Sustainable Development of the Ministry of Commerce |
| Charity Brand Project Award | China Charity Federation |
| Key financial indicators | 2020 | 2019 | Year-on-year increase or decrease (%) |
| Operating income (RMB) | 13,137,745,727.18 | 11,141,101,364.44 | 17.92 |
| Net profit attributable to shareholders of listed company (RMB) | 1,255,426,655.27 | 1,060,083,625.03 | 18.43 |
| Total assets (RMB) | 9,709,908,436.32 | 7,565,115,311.74 | 28.35 |
| Net assets attributable to | 5,193,568,712.05 | 4,201,500,384.99 | 23.61 |
| shareholders of listed company (RMB) | |||
| Basic earnings per share (Yuan/share) | 1.3558 | 1.1523 | 17.66 |
| Weighted average ROE (%) | 26.91 | 28.17 | -1.26 |
| Stakeholder | Issues of concern | Way of communication | Expectation |
| Government | 1. Operating performance 2. Products and services 3. Social responsibility | Site visit Consultation and Q&A Request information and assessment | Strengthen social responsibility construction, actively cooperate with the government, and promote local economic development and construction |
| Shareholder | 1. Corporate | Periodic/interim | The management can strive for the |
| governance 2. Operating performance 3. Social responsibility | report Performance briefing General shareholders’ meeting | best interests of the shareholders and investors and achieve the Company's sustainable development goals | |
| Consumer | 1. Products and services 2. Brand image 3. Social responsibility | Satisfaction survey Promotions After-sales service | Provide more considerate products and services and make the operation process more environmentally friendly |
| Supplier/distribution partner | 1. Operating with integrity 2. Supply chain management 3. Products and Services | Supplier selection Dealer training Feedback | Maintain a close and solid cooperative relationship, practice social responsibilities together, and achieve sustainable development goals |
| Employee | 1. Legitimate rights and interests 2. Talent cultivation 3. Career development | Remuneration and benefits Employee training | The Company can continue caring for employees, protecting employees' rights and interests, and improving employee benefits |
| Media | 1. Operating performance 2. Brand image 2. Social responsibility | Company official website Press releases | Play a leading role in the industry and encourage more peers to shoulder social responsibility |
| Community | 1. Operating performance 2. Poverty alleviation and relief | Public services Volunteer services | While driving local development, enhancing communication and exchanges with community residents through holding more community activities |
| Environment | 1. Energy saving and emission reduction 2. Clean energy 3. Ecological protection | Restrict the use of hazardous substances Reduce carbon emissions Carry out environmental protection publicity activities | The Company strictly controls the use of hazardous substances in the production and actively assumes the responsibility of reducing greenhouse gas emissions |
II. Environment(I) Carbon EmissionThe Company adhered to the concept of environmentally-friendly and low-carbondevelopment, actively practiced energy conservation and reduction, and tookenvironment protection and sustainable development promotion as its inescapableresponsibility.
According to an inspection made by carbon inspection organization in 2020, thecarbon emission of the Company in 2019 was 57,773tons. In 2020, the Companycontinued making efforts in cost reduction, efficiency increase, and energy savingimprovement: (1) the photovoltaic power generation in Guangming Park was put intofull use; (2) the photovoltaic power generation in Qingcun Park was started andconnected to the grid in the second half of the year; (3) the waste heat was recoveredfrom air compressors in Guangming Park; (4) the leakage of compressed air in QingcunPark was improved; (5) the energy saving of water pumps was improved. It is expectedto reduce electricity consumption by 5 million kWh throughout the year and reducecarbon emissions by 3,940tons.In view of the increased energy consumption caused by growth of the Company'sproduct, and the impact of the pandemic in the first half of the year, total carbonemissions of the Company in 2020 decreased by 5% to 55,528tons.(II) Energy Consumption
In order to implement the deployment of "dual control" of total energyconsumption and intensity of CPC Shanghai Municipal Committee and ShanghaiMunicipal People's Government, and to achieve the energy consumption "dual control"goal in the "13th Five-Year” plan, in accordance with the Circular of ShanghaiMunicipal Development & Reform Commission on Printing and Distributing thePriority Work Arrangements for Energy Conservation and Emission Reduction and
Tackling Climate Change in 2020, the control target of Shanghai MunicipalCommission of Economy and Informatization on total energy consumption andintensity in 2020 was that the value-added energy consumption per unit of the industryabove the designated scale would be reduced; the increased energy consumption isexpected to be kept below 1.7 million tons of standard coal, preferably below 1.4million tons.In 2020, the total annual consumption and intensity control targets of M&GStationery are shown as below:
| Company name | Target of total energy consumption (Tons of standard coal) | Target of energy intensity | ||
| Target value | Target value | Description of intensity indicator | Unit of intensity indicator | |
| SHANGHAI M&G STATIONERY INC. | 17,385 | 0.051 | Energy consumption per unit output value | Tons of standard coal/RMB10,000 |
(IV) “Green” FactoryIn accordance with the Environmental Protection Law of the People's Republic ofChina, the Law of the People's Republic of China on the Prevention and Control ofEnvironmental Pollution by Solid Wastes, the Law of the People's Republic of Chinaon Energy Conservation and other laws and regulations, the Company upheld theconcept of sustainable development and implemented the policy of protecting theecological environment and conserving resources.The Company attached great importance to environmental protection: thelandscaping rate of the plant was relatively high; the plastic raw granular edges did notproduce solid waste or environmental pollution after going through smashing, re-granulating and recycling process; the carton leftovers used for packaging wereclassified and sold to the local recycling station and then recycled into paper.
The Company strictly prohibited hazardous recycled waste materials duringproduction, didn’t produce volatile gases that are harmful to human health. Domesticwaste water was handled as required by local government. In daily management, theCompany strengthens the monitoring and handling of "three wastes" and ensures thatthey are discharged as per the requirements to reduce the impact on the environment.(V) “Green” Products
1. Environmentally-friendly materials
Breakthroughs have been made in the R&D and manufacturing of food-gradewatercolor inks, which have greatly improved the safety performance of children’s artsproducts and guaranteed the health of the consumers; the domestic lead-free materialswere developed to manufacture and process the pens, which ensured the safety of corematerials and made contribution to the environmental protection of China; the nationalkey research and development plan project, New Environmentally-friendly Materialsfor Writing Instrument, is being carried out smoothly and research on a number of sub-
topics have been completed.
Due to the increased demand for enhanced environmental friendliness and qualityof pens imposed by overseas nations, pens of enhanced environmental friendliness anddiversified functions are set to be favored by the market. Hence pen manufacturingsector will certainly need the rollout of nascent environmentally friendly materials inmaking pens. With the progress in research and development of lead-free materials, theCompany is endeavoring to enhance the overall technicality of our pen manufacturingsector, which could also translate into profitability and added value of products. In thatcase, we will be able to accelerate our speed of transformation from a mass penmanufacturer to a premium pen manufacturer. With the commercialization of nascentlead-free materials, the Company will reduce non-environmental friendly raw materialsto prevent harm to human health arising from heavy metal as lead, VOC emission willbe reduced, reducing energy consumption while bringing social and ecological benefits.
2. Recyclable materials
The Company advocated longer usage products by using consumables that areeasy to be replaced to reduce waste as well as using the refill that is more durable andhas large capacity.
In recent years, the recycling of waste products has increasingly attracted theconcern of the government and all sectors of the community. The promulgatedapplicable laws and regulations have set higher requirements for recycling. A qualitydivision team of the Company is set up to recycle the waste products according to theprescribed process.(VI) “Green” Operation
The Company’s centers and departments of perform their duties to implement theidea of environmentally-friendly operation. The Production Center is responsible formanagement of continuous energy conservation and reduction, clean production, and
environmental protection, to maximize conservation of natural resources. The R&DCenter is responsible for research and promotion of new energy conservation processesand technologies. The Equipment Engineering Department is responsible forsupervision and management of energy use and the statistics on energy data to helpfactories to make improvement. Equipment Engineering Department proposes energyconservation and emission reduction plans and organizes the implementation of suchplans. The Infrastructure Department is responsible for environmental assessment ofnew projects to ensure to satisfy the environmental protection needs of production andliving resources.In addition, the Company played an active role in advocating environmentally-friendly office, encouraged employees to develop low-carbon lifestyle from work andlife, took advantage of World Environment Day and other opportunities to organizeenvironmental protection activities, advocate practices of green lifestyle, and enhanceenvironmental awareness of employees and the public.(VII) Environmental Protection Actions
At the end of 2020, M&G Charity Foundation cooperated with Red Cross Societyof China Gansu Branch and Qingsuo Public Welfare Development Center to establisha haloxylon ammondendron forest in Minqin County, origin of one of China’s fourmajor deserts. With an initial investment of RMB350,000, all the donations will be usedto plant nearly 900 mu of haloxylon ammondendron in 2021.
Axus Stationery, a subsidiary of M&G, ensured safety and quality, improvedmanufacturing process, reduced waste and maximized use of existing resources.
In order to reduce the consumption of satinwood (a 2
nd
level state protected wood
species) for making pencils, Axus Stationery introduced the usage of fast-growingpoplar in producing pencils in 2009. From logging to the cultivation of forest, AxusStationery expanded its environment awareness to upstream and downstream industrialchain . It has thousands of mu of raw material timber forest bases in China.
III. Society
(I) Product Responsibility
1. Design and R&D
With its excellent design concept, the Joy-Shaking Pen of M&G Stationery wonthe German iF Design Award; M&G’s self-developed automatic tape-cutting holderwon two international awards - the German iF Design Award and the Red Dot Award;M&G’s anti-breakage automatic pencil won American IDEA Award. The Company wasawarded four well recognized industrial design awards.
The Company advocated environmentally-friendly design and proposedsimplified design and colorless design. Simplified design refers to simplifying parts,reducing mechanical processes, conserving energy, reducing carbon emissions,colorless design refers to using colorless plastics, avoiding colored printing to the extentpossible, and minimizing the use of toner which is harmful to earth.
2. Manufacturing advantage
The Company has raw material formula and production process with intellectualproperty rights, greatly enhancing the percentage of home-made raw materials andfinished products. The Company was recognized as a national high-tech enterprisesince 2010. The Company hosts the National Industrial Design Center, China Key
Laboratory of Light Industry and Writing Instrument Engineering Technology,Shanghai Writing Instrument Engineering Technology Research Center, and othernational, provincial and ministerial level technology centers. The testing laboratory ofthe Company obtained CNAS certification qualification.The Company benefits from experience of large-scale manufacturing accumulatedfrom past years, in-house mold capability, reliable supply chain, sound quality controlsystem and adoption of various information management systems. The Company hasthe capability of large-scale manufacturing with high quality control standard. Itsproduct quality has won general recognition and favorable comments from consumers.The Company promotes the application of intelligent manufacturing technology in theproduction and inspection, and applies machine vision technology in various key linksto improve the efficiency. The Company sets itself as a model for transforming thestationery industry towards a leaner manufacturing model.
3. Chemical safety
(1) Safety of raw materials
The Company provides consumers with high-quality products, also takes on socialresponsibilities. The Company pays close attention to consumers' health and safetyrequirements for products. The Company uses environmentally-friendly materialsthroughout the product life cycle, ensures products satisfy domestic and foreignstandards on environmental protection and safety. All student stationery produced by
the Company meet China's mandatory safety standard, General Requirements for theSafety of Student Supplies (GB21027-2020), including maximum limit for 8 types ofmigratable elements (see Table 1 below for details). In addition, our children's artsproducts meet maximum limit requirements for 19 types of migratable elements as setout in the EU's most advanced environmental protection standard EN71-3 (see Table 2below for details).
| Table 1 Maximum Limit of Migratable Element | ||||||||
| Unit: mg per kg | ||||||||
| Product name | Maximum limit of element | |||||||
| Antimony Sb | Arsenic As | Barium Ba | Cadmium Cd | Chromium Cr | Lead Pb | Mercury Hg | Selenium Se | |
| Artistic oil painting stick, crayon, watercolor paint, eraser, correction fluid, correction tape, correction paste, correction pen; watercolor pen, fountain pen, ink ballpoint pen, gel ink ballpoint pen, waterborne ink ballpoint pen, marker pen, whiteboard pen, highlighter pen, pencil, printing ink/ink, lead; printing, brushing and painting parts of student supplies that are touchable | 60 | 35 | 1000 | 75 | 60 | 90 | 60 | 500 |
| Colored clay | 10 | 10 | 350 | 15 | 25 | 25 | 10 | 50 |
| Table 2 Migration Limits of Toy Materials | |
| Element | Migration limit |
| Category Ⅰ mg/kg | Category Ⅱ mg/kg | Category Ⅲ mg/kg | |
| Aluminum | 5625 | 1406 | 70000 |
| Antimony | 45 | 11.3 | 560 |
| Arsenic | 3.8 | 0.9 | 47 |
| Barium | 1500 | 375 | 18750 |
| Boron | 1200 | 300 | 15000 |
| Cadmium | 1.3 | 0.3 | 17 |
| Trivalent chromium | 37.5 | 9.4 | 460 |
| Hexavalent chromium | 0.02 | 0.0005 | 0.2/0.053 |
| Cobalt | 10.5 | 2.6 | 130 |
| Copper | 622.5 | 156 | 7700 |
| Lead | 2.0 | 0.5 | 23 |
| Manganese | 1200 | 300 | 15000 |
| Mercury | 7.5 | 1.9 | 94 |
| Nickel | 75 | 18.8 | 930 |
| Selenium | 37.5 | 9.4 | 460 |
| Strontium | 4500 | 1125 | 56000 |
| Tin | 15000 | 3750 | 180000 |
| Organotin | 0.9 | 0.2 | 12 |
| Zinc | 3750 | 938 | 46000 |
| The migration limit of hexavalent chromium for Category III toy materials (scratchable toy materials) has been revised as per Commission Directive EU2018/725. The new limit (0.053mg/kg) took effect on 18 November 2019. Before such date, the 0.2mg/kg limit applied. | |||
The Company’s various departments performed their duties of raw material safetymanagement. The Technical Center is responsible for the safety list of raw materials.The Quality Control Department is responsible for the safety inspection of rawmaterials. The Procurement Center strictly implements quantitative procurement ofchemical hazardous chemicals and designated storage. The Safety Management Officestrictly controls the flow of hazardous chemicals.
(4) Product recall
In order to strengthen management of recall of defective products, eliminatepossible damage caused by defective products, and guarantee the personal and propertysafety of consumers, the Company formulated and enforced the Management Systemfor Product Recall in accordance with the Product Quality Law of the People's Republicof China and Management Measures for Recall of Defective Consumer Goods andother laws and regulations.(II) Stakeholder
1. Consumer
The Company always puts customers first and is committed to providingcustomers with better services, enhancing customer service experience, continuouslystrengthening service innovation, enriching service channels, and protecting the rightsand interests of the consumers.
(1) Satisfaction survey
Winning customer satisfaction is our relentless pursuit of products and services.The Company performs satisfaction surveys on service, product quality, operation andcustomer loyalty on a regular basis. This helps the Company learn customers’ feedbacksand improve its service quality. Meanwhile, the Company actively regulates itsbehavior around competition, protects consumers’ rights, prevents unfair competitionand combats fake and shoddy products.
(2) Product quality
The Company has formulated a series of strict, internal policies on quality control
and manufacturing procedure control, including the procurement of raw materials,product manufacturing and after sales service. The Company strictly complies withnational standards and industrial standards in controlling manufacturing procedures. Inthe absence of applicable national or industrial standards, the Company will adopt theinternal standards to ensure that product quality meets applicable standards andcontinuously improve customers’ experience.
(3) After-sales service
Shanghai Consumer Council has been making efforts to establish cooperation withenterprises, a complaint mechanism is built to enable consumer disputes to be settledfirst. Through the "12315" system, Shanghai Consumer Council sends the complaintinformation to the complained enterprises timely, so that the enterprise can know andhandle the complaints in the first time.To make better use of the mechanism, the Company has developed an after-salesservice system to designate departments and personnel to handle consumer complaints.Relevant personnel log in to the 12315 complaint handling system daily to check theCompany-related complaint information, contact consumers timely within one workingday after receiving the complaint, record the content of the contact, and try to coordinateand settle with consumers within 15 working days. If settlement can not be reached,relevant personnel will patiently communicate with and explain to consumers, tryingbest to make the consumers satisfied.
(4) Privacy protection
The Company fully respects the privacy of customers, strengthens themanagement and protection of customers' information security to prevent data frombeing disclosed, safeguard rights and interest of consumers.
2. Supplier
(1) Collaboration and win-win
With the idea of partnership in its business operation, the Company has strived tobuild a high standard supply chain ecosystem.
The Company keeps upgrading the management for supply chain, and hasinformation collaboration, inventory optimization, financial support, quality and ordermanagement, performance optimization to help supply chain partners to be stronger,improve consistency and operation capability of our supply chain partners.
(2) Fairness and integrity - anti-corruption
The Company has established a procurement system with fairness and integrity.The Company held regular supplier meetings, strengthened exchanges and cooperationwith suppliers, and realized the stable development of cooperative relations. TheCompany has established and improved relevant systems and strengthened cashmanagement and financial risk control to ensure the safety of assets and funds, protectsthe legitimate rights and interests of suppliers.
In order to enhance sense of integrity of the Company’s personnel, the Companystrictly follows the applicable national laws and regulations to supervise the businessconduct of its personnel, prevent commercial bribery, implement public bidding,implement transparent procurement, and eliminate improper transactions such asfavoritism, fraud, black-box operations, and commercial bribery to protect thelegitimate interests of the Company and suppliers and maintain a favorable businessenvironment.
(3) Shared responsibility
The Company requires its suppliers to pass the quality management system (ISO9001), environmental management system (ISO 14001) and occupational health andsafety management system (ISO 45001) certification, and urges suppliers to enhancetheir awareness of social responsibility and make them aware that the implementationof social responsibility is good for the sound development and long-term interests ofthemselves. This encourages suppliers to implement corporate social responsibilitymanagement and improve corporate operating philosophy.
3. Distribution partner
(1) Collaboration and win-win
Based on the characteristics of stationery products and the current status ofstationery consumption in China, the Company has established a targeted sales modelthat focuses on regional distribution, complemented by direct sales, direct sales in largestores, KA sales, online sales and overseas distribution, and has taken the lead in thedomestic stationery industry to carry out brand sales management and franchisemanagement of large-scale retail shops.The Company has a strong first-mover advantage and leading advantage with itswide and deep coverage of its distribution network in stationery industry, and theefficient management of the distribution system. As of 2020, the Company has 36 tier-1 (provincial) partners across the country, covering tier-2 and tier-3 partners and keyaccounts in 1,200 cities and more than 80,000 retail shops.
(2) Continuous optimization
The Company performs customer satisfaction surveys every six months to identifythe real needs of customers and incorporate them into the Company's service goals.Based on the feedback and suggestions from the Customer Satisfaction Survey Formsubmitted by the customers, we will subdivide the relevant information and maketargeted solutions for different customers to make up for the service deficiencies, meetcustomers' personalized service needs, and provide customers with morecomprehensive and better services.(III) Human Resources
The past achievements depend on the efforts of every M&G employee and the
future success requires hard work of more M&G employees. Talents are the mostvaluable asset for the future development of the Company. As the Company grows, itwill provide more opportunities for its partners. We advocate values of sincerity,collaboration, focus, win-win, and customer-centric. We are committed to providingeveryone with opportunities and space for sustainable development and creating idealconditions and environment for realizing value of life.
1. Basic rights and interests
The Company has established a complete recruitment mechanism andremuneration and welfare system in strict accordance with the Labor Law of thePeople's Republic of China and other laws and regulations. It respects, protects andsafeguards the basic rights and interests of every employee.The Company upholds the principle of fairness and justice, recruits employeesbased on job requirements, eliminates gender, age, and geographic discrimination. TheCompany adheres to the "people-oriented" philosophy and manages labor relationshipas required by laws. The labor contract signing rate is 100%. At the same time, theCompany offers old-age insurance, medical insurance, work injury insurance,unemployment insurance, maternity insurance as well as housing provident funds forits employees in accordance with applicable national and local regulations.
2. Development of talents
M&G Stationery aims to build a world-class team with ethical, dedicated, andhigh-quality employees. To support the rapid growth and effective operation, theCompany has built a mechanism for selecting and developing self-motivated and self-disciplined talents.
The Company provides employees with various forms of training, including butnot limited to the following:
(1) New employee training system
It not only helps new employees to adapt to the new environment and new jobs,
but also facilitates the recognition of new employees to M&G Stationery’s corporateculture and enhances their sense of responsibility and mission.
(2) Professional ability training system
M&G Stationery provides systematic vocational training for production backboneto improve their professional quality. By nurturing the corporate culture of coaching,the technical expertise handed down from years of business development can be passedto less experienced employees, who will in future form integral part of technocrats’team boasting excellent professional competence and official recognition.
(3) Management ability training system
M&G Stationery provides a series of management trainings for managers at alllevels to systematically improve their competence. This assists the Company in forgingan executive team boasting combined skill sets in business operation, management andleadership, who will in future direct the Company in a more institutionalized, orderlyand effective way while reflecting the Company’s culture with a consistentmanagement style and management philosophy.
3. Vocational development
M&G Stationery offers competitive remuneration package to its employees in itsindustry, and is also consistent in promoting and facilitating the promotion of thosehighly competent employees who match the culture of M&G Stationery and take theownership of responsibilities. By establishing multiple channels of vocationaldevelopment and forging an employees’ team of different skill levels, M&G Stationeryhas remained an enabler of outstanding professionally competent employees whilefocusing on the development of generic management talents, well-roundedmanagement talents as well as highly professional technocrats playing a leading role.
4. Communication channels
The Company advocates a culture that is transparent, with clear division ofresponsibilities and with active communication. It encourages an equal and unimpededdialogue among employees and between employees and their superiors. Employees canpropose reasonable suggestions or opinions to the Company through the channels andways such as superior and subordinate interviews, human resource center, theCompany’s suggestion box, opinion survey organized by the Company through contactinformation released by the Company.
5. Welfare system
Employee care is the basic guarantee for the sound growth of employees and thesustainable development of the Company. Through the care of employees, the Company
aims at cultivating a more positive attitude of employees, creating a more harmoniousteam atmosphere, enhancing team cohesion, innovation and execution, and promotingthe realization of corporate strategic goals.
(1) Office and entertainment
Cozy and joyful working environment and relaxation facilities are made availableto each employee of M&G Stationery. One can find within the Company’s premisessuch facilities as neat office buildings, book bars, gym, indoor basketball square,training classroom, employees’ dormitory, canteen etc. The Company regularly holdsinter-employees recreational activities as sports events, art festivals, weekend partiesetc. for employees to choose according to their personal interests, for a better work andlife balance.
(2) M&G Heart Plan
M&G Rainbow Charity established the M&G Heart Plan to provide employeeswith medical subsidies for major illnesses and outstanding scholarships. Any employeethat is eligible can apply for subsidies from the Company and recipients are required tocomplete a total of 3 hours of volunteer service in the next year. In 2020, a total ofRMB80,000 in cash was granted under the M&G Heart Plan.
6. Work safety
In order to ensure workplace health and effectively respond to unsolicitedaccidents, the Company has formulated such institutionalized workplace guidelines as“Control Policies on Workplace Safety”, “Policies on Workplace Safety RelatedTraining”, “Control Policies on Fire Prevention Practice” and “Precautionary Plansagainst Typhoon, Flood and Lightning Strike” etc. Moreover, the Company has taken
such initiatives to prevent any potentially hazardous risks from impacting theworkplace safety as including pre-employment orientation on workplace safety,upgrade of such fire-fighting and fire prevention devices as well as ad hoc or recurringinspection on workplace safety etc.In 2020, the safety training organized by the Safety Office covers safetybenchmark training, special operation personnel training, plan drill training, KYTactivity training, heatstroke prevention and flood prevention training, attracting morethan 5,600 participants. The pre-employment orientation on workplace safety providedby the HR Department and each branch is completed before the new employees areformally employed. The routine safety training responsible by each branch is carriedout at least twice a month with registration record to cover all front-line employees. In2020, there were no accidents in connection with workplace safety reported pursuant to“Ordinance on the Investigation and Reporting of Workplace Safety Related Accidents”issued by the State Council.
(IV) CharityM&G Stationery is committed to making joint efforts with governments,communities and non-governmental organizations to boost the economic developmentof the business locations, improve the quality of life of residents, continue carrying outcharity and public welfare undertakings, and promote the harmonious development ofthe community.In September 2015, M&G Stationery established the M&G Rainbow CharitySpecial Fund. M&G Rainbow Charity has performed a number of public welfareactivities for rural education, such as "Gold Seeds Plan", "Rainbow CreativeClassroom", "Rainbow is Coming Plan", and "Kids of the Stars". As a leader in thestationery industry, M&G Stationery hopes to spread the concept of kindness to morechildren through its influence and believes that in the future, they can also spread thelove and stories and make contributions to the society.In 2020, the Company donated RMB3 million to establish "Shanghai M&GCharity Foundation", and hoped to conduct more public welfare undertakings in thefuture and better integrate social responsibility into corporate development strategy. In2020, M&G Stationery donated stationery and cash worth around RMB6 million forpublic welfare undertakings.
1. Pandemic containment
Since the beginning of 2020, the whole country experienced a smokeless battle.Countless heroes have devoted themselves to the front line to protect the health andsafety of the Chinese people. The Company has also endeavored its best to providesupport. The Company's subsidiary, M&G Colipu, moved fast and overcame difficultiesto advance to Wuhan, opened a special line for pandemic prevention materials, gavepriority to providing protective materials to the frontline of pandemic prevention. Inaddition, M&G Colipu leveraged its own channel advantages, boosted supplies ofproducts and transport for epidemic prevention and control. The Company's subsidiary,M&G Office also took quick action to shorten the development cycle and launched
office pandemic prevention products within two weeks. M&G Rainbow Charitydonated 70,000 masks to Hubei at the start of a new semester, and donated pandemicprevention kits worthy of RMB400,000 to schools, that could be used by about 10,000persons.
2. Poverty alleviation
The year 2020 is the last year of poverty alleviation and M&G Rainbow Charityhas not been absent on the road to alleviate poverty. After initial success of the country,the focus next is on preventing the return to poverty and continue laying emphasis onrural education and rural revitalization. Poverty alleviation begins after educationimprovement. Education is a bridge linking the countryside and the city. Only a soundeducation can present children a bright future. Since September 2015, the Gold SeedsPlan has been launched in 32 poverty-stricken counties in 14 provinces and 100,000Gold Seeds stationery gift packs worth more than RMB27 million were donated. In thepast five years, we have allocated more than RMB2.5 million to the underprivilegedteachers and students. Furthermore, we follow the national poverty alleviation strategy,provide stationery gift packs to rural schools across the country, and pass the conceptof public welfare to partners. Now, there are 11 branches of Rainbow Charity in Chinaand each branch is led by the general manager of the regional partner, who isresponsible for assisting the local governments and social organizations in publicwelfare activities.
(1) Poverty alleviation - Gold Seeds Plan
In 2020, M&G Rainbow Charity donated 9,650 gold seed packs amounting toRMB2.32 million, covering 10 provinces, benefiting more than 10,000 teachers andstudents.
(2) Post-poverty alleviation - Spring Bud Program
At the end of 2020, Shanghai M&G Charity Foundation reached a partnership withShanghai Children’s Foundation, donating RMB150,000 as the living subsidies for 100female college students in Yunnan Province. The Spring Bud Program is a rescue
program for out-of-school girls initiated by China Children and Teenagers' Fund. M&GStationery responded positively and made a contribution to girls' education in China.
3. M&G Rainbow Creative Classroom
M&G Rainbow Charity found that creativity is the foundation of quality-orientededucation and reading and art education play an important role in awakening andshaping children's personality and aesthetic perception. M&G Stationery has richresources and experience in cultural and creative fields. Making use of these advantages,Rainbow Charity has established "M&G Rainbow Creative Classroom". As of 2020, atotal of 30 creative classrooms have been established.
4. Rainbow is Coming
Rainbow Charity is actively working with other like-minded partners to use itsadvantages to exert collective influence. The social innovation brought about bycollective influence can benefit several parties. In recent years, Rainbow Charity hasbeen actively involved in rural education in China, hoping to make quality educationalso available for children in remote areas.
(1) Jack Ma Foundation
In 2020, we continued working with the Rural Teachers and Principals Programinitiated by the Jack Ma Foundation to fund rural teachers to carry out teachingprograms for the third consecutive year. In 2020, we donated stationery worth RMB2.15million to 100 village teachers and 20 village principals to facilitate the teaching of therural teachers.
(2) Shenzhen One Foundation
Since 2019, it has reached a partnership with One Foundation to create charitable
kits with artistic style. The charitable kit is composed of a variety of daily necessitiesand materials to keep children warm during the winter. In 2020, the Company alsoprovided One Foundation 50,000 boxes of artistic oil painting sticks that were worthRMB860,000, so that children could be immersed in creative life after their basic livingneeds were satisfied.
(3) Tiktok Charity
On the occasion of Teacher's Day in 2020, Rainbow Charity and Tiktok Charityjointly launched a teacher's day event, giving full play to the advantages of companiesto attract social concern to rural education. During the event, it received more than 2billion clicks and views in total, effectively using new media to play the power of publicwelfare, fulfilling social responsibilities, and manifesting brand power.
5. Kids of the Stars
In 2020, M&G Rainbow Charity continued investing RMB300,000 in cash tosupport the creative training for children with autism and organized competitions toselect outstanding works. In 2020, the Company developed four public welfareproducts, and the profits from the products were used in the project operation.Additionally, we also provided bonuses for outstanding works of young authors andheld visits and lectures, in the hope that they can integrate into society. It also helpscreate a new public welfare mode of teaching people to fish. Works from Kids of theStars were exhibited in major domestic exhibitions.
IV. Governance(I) Corporate Governance
1. Governance system
M&G Stationery has been committed to optimizing the Company's internalgovernance structure and enhancing the corporate governance. The Company, in strictcompliance with laws and regulations such as Company Law, Securities Law and Codeof Corporate Governance for Listed Companies, as well as regulatory documents issuedby China Securities Regulatory Commission regarding the governance of listedcompanies, and based on its actualities, has established a strict three-board operationsystem and a clear decision-making authorization system. Besides, the Company hasstrengthened the construction of the internal systems, providing basic systemguarantees for corporate governance, preventing operating risks, and protecting thelegitimate rights and interests of all shareholders.
Management/monitoringMonitoring/guidance
| Management | Monitoring/guidance |
AppointmentSupervision
SupervisionReview
ReviewAccountability
AccountabilityAccountability
Accountability
Accountability
AccountabilityAccountability
AccountabilityInternal audit
| Internal audit | Management |
General shareholders’ meetingBusiness activities
Business activities
External audit
| External audit | Board of Supervisors |
Board of DirectorsAudit Committee
Audit Committee
Remuneration
and Appraisal CommitteeNomination Committee
Nomination CommitteeStrategic Committee
Strategic CommitteeCommittees of the Board of Directors
Committees of the Board of DirectorsAccountability
AccountabilityAccountability
AccountabilityAccountability
AccountabilityReview
ReviewEmployment
| Employment | Election | Election | ||
In 2020, the Company held 6 general meetings of the Board of Directors, 5meetings of Board of Supervisors and 2 meetings of shareholders. The generalshareholders’ meeting, Board of Directors, Board of Supervisors, the management aswell as independent directors perform functions in a regulative manner. By virtue of thestrict segregation of powers and duties as well as the inter-collaboration amongstauthority body, decision-making body, supervisory body and executive body, thegeneral policies of the Company is very effective in preventing the abuse of power.The Board of Directors of the Company consists of 7 directors, including 3independent directors. The independent directors of the Company, in compliance with“Rules on the Functioning of the Board of Directors”, “Guidelines on the Performanceof Duties by Independent Directors” and other applicable regulations, have exerciseddiscretionary review over the deliberation and decision making procedures regardingthe appointment of Company officer(s) and related party transactions etc. and expressedtheir independent professional opinions. They have effectively fulfilled their duties,ensuring the Company operating in a regulative manner and gaining quick growth.Subordinated to the Board of Directors, the Strategy Committee, Audit Committee,Remuneration and Appraisal Committee and Nomination Committee perform theirrespective functions in strict compliance with respective implementing rules. In 2020,the Audit Committee convened 5 working meetings, the Nomination Committee 2working meetings, the Strategy Committee 1 working meeting, and the Remunerationand Appraisal Committee 1 working meeting, giving full play to its professional role inpromoting the business management and standardized operations of the Company.
2. Internal control
The Board of Directors of the Company has established sound and effectiveinternal control system in compliance with “General Guidelines on Enterprise InternalControl System” and its interpretations as well as other regulatory requirementsgoverning internal control, with the Board of Supervisors overseeing the establishmentand implementation of internal control system by the Board of Directors. The
management shall be responsible for directing and coordinating the day-to-day runningof the Company. The Company has established sound and complete internal controlpolicies and procedures which give detailed specification on such issues as significantbusiness decisions at corporate level, investing and/or financing activities, relatedparties transactions, assets management as well as approval process, limits of approvingauthority and pertinent responsibilities pertaining to payments to third parties andexpense reimbursement.Meanwhile, instructed by the Audit Committee subordinated to the Board ofDirectors, the Audit Department of the Company has conducted independent audit andappraised on the effectiveness and efficiency of the design and implementation ofinternal control system. In 2020, the Company's internal control system has beenbasically sound and no defects or abnormalities that have significant impacts oncorporate governance, operation management and development have been found.The Company has focused on the construction of internal management risks andinternal control system, continuously optimized and improved internal control businessprocesses and concerned supporting systems, continuously improved the internalcontrol environment, strengthened training and publicity, to enhance the awareness ofrisk and risk control of the personnel at all levels, including the management.Meanwhile, the Company has improved the efficiency of risk management audit andemphasized the substantive elimination or reduction of risks so as to avoid therecurrence of internal control defects. In addition, the Company has made efforts tofundamentally solve problems by virtue of IT means or process improvement,ultimately improving the internal control management.(II) Corporate Conduct
1. Compliance with laws and regulations - anti-corruption
Legal compliance is fundamental to business operation. M&G Stationery highlyemphasizes risks management during operation and continuously promotes policyestablishment and culture building for compliance to ensure its stable operation. The
Company organized relevant personnel from functional departments to participate incompliance training from time to time. In 2020, 13 legal and regulatory trainingsincluding advertising compliance training, product labeling compliance training, andintellectual property compliance training were provided.In addition to relevant training, the Company has established a sound anti-fraudsystem and set up a dedicated telephone line and email to encourage reporting fraud.On the prominent positions of M&G Cloud Integration Platform and OA, the Companyhas placed links to publicize the ways to report fraud. The Company produces anti-fraud publicity posters on a regular basis, which are posted up in the areas with largeflow of people in the Company and in each branch factory. The posters are checkedregularly. In case of any loss, additional posters will be posted up.
The Company has signed the Procurement Integrity Agreement with its employees,external companies, and all annual suppliers, which also covers the way of reporting.Any employees and external interested parties with direct or indirect businessconnection with the Company may whistle-blow any actual or suspected fraudulentbehavior conducted by the Company and its employees by means of whistle blowinghot-lines or email etc. Furthermore, the Company promotes anti-fraud to all employeesand suppliers by means of WeChat official account platform and corporate WeChatplatform of the Company.
2. Tax responsibility
Taxation compliance has always been considered by the Company as basicrequirement of performing social responsibility and reciprocating local community. TheCompany has, in strict compliance with applicable taxation laws and bylaws, performedits legal obligation of timely and full settlement of tax liabilities arising from bona fidebusiness activities. In 2020, the Company paid about RMB700 million tax as requiredby laws. According to the 2020 tax payment credit evaluation results of the tax service,the Company's tax credit in 2019 was rated as Level A.
3. Dividend return
Emphasizing reasonable returns to our investors, the Company maintains ongoingand stable dividends policies to fully safeguard the benefit of minor investors. Pursuantto “Notice Regarding Further Implementation of Cash Dividend Distribution by ListedCompanies” and “Regulatory Guidance No.3 of Listed Companies — Cash DividendDistribution of Listed Companies” issued by the China Securities RegulatoryCommission, the Company has formulated a “three-year dividend distribution plan(from 2020 to 2022)”. If the Company satisfies the conditions for cash dividends,priority should be given to profit distribution by means of cash dividends. During therecent three years, the cash dividends have increased year by year, accounting for over30% of net profit attributable to the ordinary shareholders of the listed company in theconsolidated financial statements, which ensured that the investors share the businessresults.
| Year for dividend distribution | Amount of dividends distributed per 10 shares (RMB) (inclusive of tax) | Amount of cash dividends (RMB) (inclusive of tax) | Net profit attributable to the ordinary shareholders of the listed company in the consolidated financial statements for the year | Percentage of the net profit attributable to the ordinary shareholders of the listed company in the consolidated financial statements (%) |
| (RMB) | ||||
| 2020 | 5 | 463,713,800 | 1,255,426,655.26 | 36.94 |
| 2019 | 4 | 368,000,000 | 1,060,083,625.03 | 34.71 |
| 2018 | 3 | 276,000,000 | 806,847,308.41 | 34.21 |
completeness, timeliness and fairness of the Company's information disclosure. Inaddition, the Company also actively cooperated with the securities regulatoryauthorities of China to further strengthen the Company's information disclosure throughsystem construction, comprehensively elevated the quality of information disclosure,and enhanced the transparency of information disclosure, contributing to theeffectiveness of the whole capital market.In 2020, 40 interim announcements and 4 regular announcements were made. Wehave registered the insider information relating to major issues and promptly filed,therefore eliminating any insider trading and ensuring that all the investors can accessthe information of the Company equally. The Company's information disclosure in2019-2020 was rated by the Shanghai Stock Exchange as Grade A.
V. Outlook
With the economic development of China, residents' income has increased rapidly,the middle-income population has continuously expanded, and consumption upgrading.Consumers have raised higher requirements for products and services, and attachedmore importance to quality and famous brands, presenting personalized, diversified andhigh-end consumption.Facing consumption upgrade and the change in demand among the younggeneration, M&G Stationery will embrace these challenges, upgrade its branding,products and channels, as well as maintain momentum for high-quality growth.Looking ahead, M&G Stationery will, as always, focus on premium quality and pursueconstant innovation in response to the changing demand of consumers. The Companywill also develop itself into a well recognized brand with global competitiveness andboost the healthy and sustainable development in the industry, helping a sustainable andhigh-quality growth in China.The year 2020 marks an extraordinary year. Everyone faced a number ofchallenges. M&G Stationery remained true to our original aspiration and kept ourmission firmly in mind and strove to contribute to the society. The pandemic may slowdown the pace of society, but will not stop it. In 2021, M&G Stationery will continueremaining true to our original aspiration and pressing forward. With its uniqueadvantages in the stationery industry, M&G Stationery will continue to assume socialresponsibilities, fulfill corporate responsibilities, and continue to make contributions toeducation, charity, poverty alleviation, and development of rural education in China.