| 2022Sustainability Report | |
| and ESG ReportZHENDE MEDICAL CO.,LTD. | |
Contents
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2022 Sustainability Reportand ESG Report ZHENDE MEDICAL CO.,LTD.
Contents
About This Report 03About Zhende Medical 04Message from the Chairman 05- From Care to We CareKey Performance on Sustainability in 2022 07
Compliance and Reform
Care Employees 11Community Communication 12Donation 14
Responsibility Actions
Promoting Green Development
Sustainable Development Management
Caring-Employee Rights and Benefits 35Devotion-Growing Together with Employees 38Persistence - Employees' Safety and Health 42
Caring Employee Growth
To Be A Reliable Partner
ESG Strategy 17ESG Management O-Chart 19Stakeholder Communication 19Analysis of Material Topics 21
254527482950
Standardize Governance and ProtectInvestors' Rights and InterestsCompliant Operation and Adherence toBusiness EthicsContinuous Reform and Long-termDevelopment
Innovation - the Road to SustainableDevelopmentResponsibility - Protecting Our Green andBeautiful HomelandLow Carbon - Responding To ClimateChange
Craftsmanship - High-quality HealthServicesResponsibility - Promoting Mutual Benefitand Win-win Results in the IndustryEmpowerment - Bringing Healthy Lifewithin Reach
ESG Data 66Report Benchmarking Index Table 71
Benchmarking Index Table of Guideline No. 1for the Application of Self-regulatory Rules forCompanies Listed on the STAR Market of theShanghai Stock Exchange - Standardized Operation(2022)Benchmarking Index Table of GRI StandardsBenchmarking Index Table of SDGsAppendix: List of Laws, Regulations,Policies and Standards
About Zhende Medical
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2022 Sustainability Reportand ESG Report ZHENDE MEDICAL CO.,LTD.
About This ReportThis report is the firstSustainability Report and ESG Reportof Zhende Medical Co., Ltd., which discloses to investors and otherstakeholders Zhende's philosophy, established management methods, implemented work, and achieved results in terms ofsustainable development issues in its operations.
Report PeriodThis report covers the period from January 1, 2022 to December31, 2022. Unless otherwise specified, the data in this reportcome from this period.Preparation BasisThis report is based on theGuideline No. 1 for the Applicationof Self-regulatory Rules for Companies Listed on the STARMarket of the Shanghai Stock Exchange - StandardizedOperation(2022), and has been prepared with reference totheGRI Standards(2021) and the United Nations SustainableDevelopment Goals (SDGs).
Report Preparation PrinciplesThis report is prepared in accordance with the principles ofimportance, accuracy, balance, clarity, quantification andconsistency, completeness, timeliness, and verifiability.It is approved for release by Zhende's Board of Directorson August 29, 2023. The Board of Directors guaranteesthat the content of the report is free from false records,misleading statements, or significant omissions.This report is published in Simplified Chinese and English.Any inconsistency between the Chinese and Englishexpressions shall be subject to the Chinese version.Data DescriptionThe data and cases in the report come from official recordsof Zhende's actual operations.The financial data in the report are all in RMB. If thefinancial data is inconsistent with the Zhende's annualfinancial report, the annual financial report shall prevail.Report AcquisitionThis report is released in electronic form, and can beviewed on or downloaded from Zhende's official website(http://www.zhende.com) or Zhende's official WeChatpublic account "Zhende Medical".Contact UsIf you have any suggestions for the report, you can reachus through the following ways:
Address: No. 55 Xiangji Road, Gaobu Town, Yuecheng District,Shaoxing City, Zhejiang ProvinceEmail: dsh@zhende.com
Report ScopeThe scope of this report covers Zhende Medical Co., Ltd. andits subsidiaries (referred to as "Zhende Medical", "Zhende" or"we"). Unless otherwise specified, the scope of this report isconsistent with that of consolidated financial statements for thesame period of Zhende Medical (stock code: 603301.SH).Subsidiaries Mentioned in the Report
Abbreviations in the
ReportXuchang Zhende Surgical Dressing Co., Ltd.Xuchang ZhendeXuchang Zhengde Environstar MedicalProducts Co., Ltd.
Xuchang ZhengdeShaoxing Haoshide Medical Products Co., Ltd.Shaoxing HaoshideHenan Zhende Medical Products Co., Ltd. Henan ZhendeZhejiang Steriger Sports Safety TechnologyCo., Ltd.
Zhejiang SterigerROCIALLE HEALTHCARE LIMITEDRocialle Healthcare
About Zhende Medical
Company Profile
Zhende Medical, established in 1994, is an A-share listed company in China (stock code: 603301. SH). It is headquartered inShaoxing City, Zhejiang Province. Zhende has become one of the domestic manufacturers of medical dressings and infectionsite control and protection products with a relatively complete varieties and a leading scale, whose scope of businesses andservices 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 Communate Europpene (CE), ISO 13485Quality Management for Medical Devices, and the National Medical Products Administration (NMPA) of China. Zhende's productline covers different usage scenarios such as bandaging and fixation, wound care, surgical site infection control, basic care,protective isolation, pressure therapy and venous thromboembolism (VTE) prevention, stomal incontinence care, high-endwound care, personal care, rehabilitation care, and intravenous therapy care.For detailed business information of Zhende, please refer toZhende Medical Annual Report 2022.Honors of Zhende in 2022
Top 100 Global Medical Device Companies in 2022.Top 500 Chinese Manufacturing Enterprises in Charity andPublic Welfare in 2022.“2022 Social Responsibility Pioneer Award”at the 12thPhilanthropy Festival.“Gold Award”of CPEO Summit.“2022 National Intellectual Property Demonstration Enterprise”.Official supplier of medical and health protective equipment forthe 19th Asian Games.Top 500 Innovative Brands in China in 2022.2022 Zhejiang Province“Future Factory”Pilot Enterprises.Top 10 Health Industry Brands in 2022 byBeijing Evening News.
Top 500 ChineseManufacturingEnterprises in Charity and
Public Welfare
2022 SocialResponsibility PioneerAward
"Gold Award" ofCPEO Summit
Top 500 Innovative Brands in China
Rated the official supplierof medical and healthprotective equipment forthe 19th Asian Games
Message from the Chairman - From Care to We Care
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Social Sustainable Development - We Care PhilosophyWe always believe that the organization, employees, and society are inseparable. Only when the enterprise and employeesgrow, can they make greater contributions to society and bear more social responsibilities. In 2022, Zhende upgraded itsoriginal Safety Management Committee and established the ESG Decision-making Committee and ESG Standing Office. Viabenchmarking with the GRI Standards and the UN SDGs, Zhende's sustainable development strategy has been comprehensivelyupgraded and clearly incorporated into its development strategy. The upgraded sustainable development philosophy is theWeCare Philosophy Model. Zhende's sustainable development strategic policy is to "care employee growth; promote greendevelopment, to be a reliable partner". Zhende has clearly formulated its 2030 goals and actions based on material topicsfrom nine dimensions, namely safety and health, employee rights and benefits, growing together, environmental responsibilitymanagement, innovation and green product development, climate change mitigation and adaptation, customer and productresponsibility, assisting industry development, and social contribution.This is a complete and virtuous cycle of ESG model from Care to I Care and then to We Care, from caring for employees to caringfor the company, and then to the company focusing on social sustainable development with employees. With the brand ideal of"bringing healthy life within reach", we work together with stakeholders to create a better society.
Care
Care Employee Growth, Promote Green Development,
and To Be a Reliable Partner
CareWe
Message from the Chairman—
From Care to We Care2022 marked the second year of Zhende's new strategy sinceits release. In 2022, we adhered to the corporate mission of"Ensure medical safety and reduce healthcare cost", focusedon continuous innovative practices in the medical and healthindustry, and achieved business breakthroughs in multiple fields.Our hospital line business covered 7,000 hospitals nationwide,including over 1,000 Grade-A tertiary hospitals. The number ofe-commerce store’s fans exceeded 8 million. We covered 98%of the top 100 chain pharmacies. Stoma and modern wounddressing products of Zhende increased by 145% over thesame period. In the past 30 years of development, in additionto providing high-quality services and products to customers,we have always attached great importance to organizationalcapacity building and public undertakings. Integrating thedevelopment experience of these years, we released theorganizational development“Care”philosophy model andemployee development“I Care”philosophy model. On this basis,“We Care”philosophy model has been created as a guide forsustainable development strategy.
Organizational Sustainable Development- Care PhilosophyWe always believe that the sustainability of businessdevelopment is closely related to organizational development.In combination with our business strategy, we release ourorganizational development strategy the Care PhilosophyModel. Its core content is that we must base ourselves onlong-term strategy, shift from emphasizing "opportunities"to emphasizing both "opportunities" and "abilities". Thatis, we aim to gradually move towards "team success andorganizational success" by "care business, care organization,care individual, empowering with dedication, co-create value,and share success". We will strive to achieve team success by2025 and organizational success by 2030.
Employee Sustainable Development - ICare Philosophy
We always believe that while the organization cares employeedevelopment, employees in turn nurture the organization.Under the guidance of the I-Care philosophy, employees'work standards not only include completing their own work,but also include: What difference can I make in comparisonwith others at the same position? What improvement canI make? What achievement am I proud of? Employees aremore proactive in taking on course development, part-timelecturers, and lean/process/quality/workers' congress/environment/health/safety improvement projects. These arekey performance behaviors.
共创价值 共享成功Care
o-create Value Share Success
用“心”赋能
Care
Transition from Opportunity-based SuccessTo Team and Organizational Success
CareI
Care
Transition from Opportunity-based Success
To Team and Organizational Success
Key Performance on Sustainability in 2022
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Key Performance on Sustainability in 2022Responsibility ActionsA total of
employees were sponsored, with a subsidy amount of RMB
2,068,500Scholarships were granted to a total of
employees' children with the amount of RMB
372,000
employees participated in voluntary activitiesThe total duration of employee volunteer service was
hoursTotal annual amount donated: RMB
5.274
million
Care Employee GrowthFemale employees accounted for
65.63
%The second phase of the employee stock ownership plan included
employeesNew employee satisfaction rate reached
%, and employee net promoter score (E-NPS) was
62.85
%The coverage of employees receiving training was
%and the average training time per employee was
66.11
hoursThe work-related injury rate per one thousand employees was
0.59
and
working days lost due to work-related injuriesPromote Green DevelopmentAnnual R&D investment was RMB
millionZhende was granted
Class II medical device product registration certificates and
patents for inventionThe annual expenditure on environmental protection investment reached RMB
15.04
millionCirculating water usage accounted for
63.75
%The total amount of waste generated was
1,120.48
tonsTotal greenhouse gas emissions (Scope 1 + Scope 2) were
102,187.23
tons of CO
equivalentrepresenting a decrease of
9.73
% compared to 2021
To Be a Reliable Partner
The C-NPS of domestic market customers was
88.11
%, while the C-NPS of foreign market customers was
30.51
%Zhende participated in the formulation (revision) of
group standardsThe collaboration rate of purchase orders was
98.64
%, the compliance rate of standard delivery times was
92.30
%, andthe change rate of order delivery times was
4.78
%Environmental and social risk survey was conducted on
suppliers
ComplianceFemale directors accounted for
33.33%
investor exchange conferences were heldA total of
internal audits were conducted
anti-corruption themed training sessions were provided
Reform
modules and
statements of BI management cockpit were optimizedVertical warehouse in Shaoxing saw an increase of over
60%in efficiency with approximately
15,000
boxes/day handledfor inbound and outbound shipments.
TPI projects were completed, saving RMB
23.84
million in costsOver RMB
million incentives were distributed to employees5,093
proposals for improvement were raised
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Responsibility Actions
While creating profits for shareholders and ensuring the steady development ofbusiness, Zhende Medical always undertakes its corporate responsibilities toemployees and society. Zhende firmly believes that employees are the most valuableasset of an enterprise. Internally, we attach importance to conveying humanistic careto employees. We create a family-friendly workplace, and set up mutual aid funds tosupport employees in need and their families, thereby helping employees overcomingdifficulties. Externally, we uphold the philosophy of giving back to the society. Webelieve that the prosperity and development of the community is interwoven with thesuccess of an enterprise. We regularly carry out volunteer activities and participate incharitable donations. We fulfill our social responsibilities, and deliver Zhende’s care andwarmth to the society.
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2022 Sustainability Reportand ESG Report ZHENDE MEDICAL CO.,LTD.
Care Employees
Employees are the most valuable asset of Zhende Medical and the engine for its long-term, stable and harmonious development.We respect employees, and advocate humanistic care for them. We fully mobilize their enthusiasm and vitality, and stimulatetheir potential. We pool the wisdom of all to promote our sustainable development.In the event of marriage, funeral, injury and illness, childbirth, or major family accidents, Zhende will pay visits to employees,bringing them care and support of the company. In the winter of 2022, Zhende purchased 5,689 pieces of heat preservationjackets for the employees of the Xuchang base, a heart-warming gesture that protected them from coldness.
To care for employees and their families, we broughtthe Talent Scholarship Foundation into being in 2019to help employees' children to further their studiesand develop. Our core value of "sharing success" wastherefore put into practice. In 2022, we distributedthe Talent Scholarship to 39 students for the fourthtime. As of the end of 2022, we have accumulativelyawarded scholarships to 124 employees' children.
We established the Mutual Aid Foundation in 2011 to provide assistance to employees and their families who are infinancial difficulties. In 2022, Zhende subsidized 42 employees in total, with a total amount of RMB 261,000. As ofthe end of 2022, the Mutual Aid Foundation has supported 554 employees in need.
Zhende Medical Established the Talent Scholarship to Assist in the Study and Development of Employees' Children
Zhende Medical Established the Mutual Aid Foundation to Assist in Employees in Need
Granting Ceremony of Mutual Aid Foundation Fund
To solve the difficulty of taking care of employees' children during holidays, enrich children's lives and promotetheir development, we have offered winter (summer) vacation care services four times. We provided homeworkcounseling and a series of interest courses, such as painting, poetry appreciation, clay making, cupcake making,and enhance their understanding and friendship between each other through games.In 2022, a total of 45 children received such services. In the future, we will continue to work hard in caring for thefamilies of our employees, building a "harmonious and beautiful" home of Zhende.
Zhende Medical Provided Child Care Services for Employees to Create a Family-Friendly Workplace
Sending Gifts to the Children
Group Photo of Employees’ Children Awarded the Talent Scholarship
Community Communication
Zhende Medical adheres to the philosophy of giving back to society. We actively participate in community communicationactivities, and support the development of our operating location through various means.We have established systems such as theRegulations on the Management of External Donationsand theManagement Rules forVolunteer Teamscovering both the headquarters and subsidiaries. These ensure that our public welfare, charity, and volunteerservice projects can be rolled out efficiently, transparently, and in compliance.A volunteer team composed of employees was set up in 2011, which has expanded to over a hundred people. For more thana decade, it has persisted in carrying out volunteer activities such as assisting retirement homes, people with disabilities andstudents, charity sales, and tree planting. In these ways, the warmth and care from Zhende has been conveyed and our socialresponsibility has been fulfilled.In 2022, the number of employees participating in voluntary activities reached 184, contributing a total volunteer service time of926 hours.
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In May 2022, Zhende's volunteer team launched aseries of activities such as helping the disabled andimpoverished, supporting entrepreneurship, andproviding volunteer services before and after the"National Day of Helping the Disabled".In these activities we provided one-on-one assistanceto entrepreneurs with disabilities and poor families ofpeople with disabilities. We offered living necessitiesand health supplies to those in need, as well asvolunteer services such as cleaning and housekeeping.We helped people with disabilities better feel thebeauty of life with“gift packages”.
In June 2022, Zhende collaborated with Shengzhou Shenggao Primary School in carrying out the public welfareclass and friendly football match. At the same time, Zhende donated medical and health supplies to ShenggaoPrimary School, and also prepared small gifts for the children.Six volunteer team members presented different courses to children of different grades, including paper folding,scientific experiments, safety protection tips, encouragement, psychological education, and English, whichenriched the children's extracurricular knowledge. In addition, the volunteers also had a friendly football match withthe children, allowing them to experience the joy of sports.
In August 2022, Zhende participated in the "Pomegranate Seed · Yixing Love Fund" donation activity in the formof a charity sale. All the proceeds from the charity sale were donated to students of ethnic minorities living indifficulties in Yuecheng District of Shaoxing, conveying humanistic care and helping children grow.One-on-one Disability Services Showed Zhende’s Care and Warmth
Zhende Medical and Shengzhou Shenggao Primary School Jointly Launched "Caring Children, VolunteerTeaching" Public Welfare Classroom and Friendly Football Match
Zhende Medical Participated in "Pomegranate Seed · Yixing Love Fund" Donation to Convey Care Through Charity Sale
Scene of One-on-one Disability Services
Volunteer Team Members and Students of Shenggao Primary School on the Football Field
Charity Sale Booth
DonationWe are an enterprise determined to help human beings lead a healthier life. Caring people and performing social responsibilityhave already been deeply rooted in our corporate genes. We strive to give back to the society as much as possible, help people inneed, and bring warmth to more people. In 2022, we donated a total of nearly RMB 5.274 million in cash and kind.At the 6th China Enterprise Charity Forum in 2022, Zhende Medical was honored as one of the 2022 Top 500 ChineseManufacturing Enterprises in Charity and Public Welfare. Zhende Medical obtained the "2022 Social Responsibility PioneerAward" at the 12th Philanthropy Festival.
On August 12, 2022, Zhende Medical donated RMB330,000 worth of ostomy supplies to the "Panda andHis Friends", a mutual-aid patient organization, tocare for and help rectal cancer patients with ostomy.Through this event, we hope that the high-performanceostomy supplies manufactured by Zhende can helppatients to recover as soon as possible. Efforts arealso made to let them feel the warmth and supportfrom society amid their fight against the disease.
Zhende Medical Donated Ostomy Supplies to Patients of "Panda and His Friends" Organization
Zhende Medical Donated Products to Patients withOstomy of "Panda and His Friends" Organization
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Sustainable DevelopmentManagementBased on the SDGs and the global governance concept proposed by the Chinesegovernment, Zhende Medical has put forward the "We Care" sustainable developmentstrategic model in combination with its own business. Under the leadership of its ESGManagement Committee, Zhende has established a comprehensive ESG governancestructure in light of environment, society, and governance. This will help put thecomplete, efficient, and balanced ESG management into practice. We integratestakeholder communication into the entire process of material topic management, andregularly disclose ESG information. Together with our stakeholders, we create a moresustainable future.
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2022 Sustainability Reportand ESG Report ZHENDE MEDICAL CO.,LTD.
ESGStrategy andResponses toSDGs
KeyDimensions
Key Actions
2030 GoalsCommittedSafety andhealth
? Established an occupational health and safety managementsystem and passed the ISO 45001 certification? Established safety production goals with the goal responsibility
letter signed from top to bottom? Regularly carried out hazard identification and risk assessment? Regularly conducted EHS themed training
? The work-relatedinjury rate per onethousand employeesis less than 0.5.
Employee rightsand benefits
? Established a talent introduction strategy? Implemented employee stock ownership plans to retain talents? Established communication channels for employees, such as trade
unions, workers' congresses, and general manager's mailbox? Cared for female employees and increased the proportion of female
managers? Cared for employees with difficulties? Established a comprehensive remuneration system and reward
system.? Conducted surveys on employee satisfaction and engagement.
? The proportion offemale directors andmangers above thislevel reaches 20%.? Employee NPS is
greater than 70points.
Growingtogether
? Established a panoramic scheme for talent training and
development.? Supported employee to pursue higher education and skill
certification.? Established a clear, transparent, unobstructed dual-channel for
career development.
? The average trainingtime of employees isgreater than 60 hours.
Care
ESG StrategyThe philosophy of sustainable development of ZhendeMedical originates from its mission and vision. Webelieve that integrating the philosophy of sustainabledevelopment into Zhende's operations will help usgrow steadily and constantly into the future. In 2022,based on its own business, the SDGs and the globalgovernance philosophy proposed by the Chinesegovernment, Zhende Medical developed an ESG policythat included three major strategies: "Care employeegrowth," "Promote green development," and "To be areliable partner".In the future, we intend to incorporate SDGs into ourlong-term operation plans. We will actively plan keyactions centering on three major strategies, andformulate sustainable development goals. This canensure that Zhende's ESG policy fully responds tothe expectations of customers, the society and otherstakeholders, and keeps pace with the SDGs.
ESGStrategy andResponses toSDGs
KeyDimensions
Key Actions
2030 GoalsCommittedEnvironmentalresponsibilitymanagement
? Established an environmental management system and passedthe ISO 14001 certification? Performed up-to-standard wastewater discharge and gasemission? Performed compliant disposal of waste
? All factories passthe ISO 14001certification.
Innovation andgreen productdevelopment
? Introduced IPD consulting projects, optimized the constructionof end-to-end new product development processes,and improved the efficiency of commercialization andtransformation of new products? Improved resource utilization efficiency through measures suchas waste heat and energy reuse and wastewater recycling? Developed surgical site infection control materials that met
ISCC certification standards? Calculated product carbon footprint based on international
standards
? The proportion ofenvironmentallyfriendly packagingmaterials used infinished productsexceeds 80%.
Climate changemitigation andadaptation
? Reduced greenhouse gas emissions through measures such as
investment in energy-saving equipment? Installed photovoltaic power generation facilities in the factory
area to reinforce the use of clean energy? Conducted factory carbon inventory verification based on ISO
14064 standards
? With 2020 as the baseyear, the emissionsof greenhouse gasesrelated to production(Scope 1 and Scope
2) decrease by 30%.
? Renewable electricityaccounts for over30% of total electricityconsumption.Customerand productresponsibility
? The product passed multiple domestic and foreign system
certifications such as ISO 13485, CE and GMP? Established and improved the comprehensive quality
management system and introduced Six Sigma management
methods to improve product quality
? All active suppliersestablish qualitysystems.
Assistingindustrydevelopment
? Participated in industry exchange activities such as the 86th China
International Medical Equipment Fair; collaborated with Beijing
Hospital of Traditional Chinese Medicine affiliated to Capital
Medical University and other units; rolled out school-enterprise
cooperation with Shaoxing Vocational & Technical College? Participated in the formulation of industry standards such as
Medical Elastic Bandage,Medical Anti-embolism Stockings, and
Medical Varicose Vein Compression Socks
? Developed an SRM platform, continuously optimized supply chain
capabilities, and conducted supplier environmental and social risk
research; developed a CRM system
? Environmental andsocial risk researchcovers all keysuppliers.
Socialcontribution
? Created jobs in the operating location and assisted in local
economic development; developed management systems
on public welfare and charity; established mutual aid and
poverty alleviation foundations, talent scholarships, and
volunteer teams; carried out public welfare and charity
projects and volunteer services with awards granted? Donated Covid-19 pandemic prevention materials;
improved local medical service accessibility by building
factories overseas, etc.
? External donationsare made annually.
Care employee
growth
Promote green
development
To be a reliablepartner
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ESG Management O-Chart
Stakeholder Communication
To promote the integration of ESG policies into its strategy, Zhende formed a top-down ESG management organizationalstructure in 2022, further optimizing relevant management processes. The construction of the ESG management systemis promoted by the ESG Management Committee, and the ESG Office serves as the executive office to coordinate relevantmanagement, communication, and disclosure. A long-term management mechanism has been put in place. The ESG Officeregularly reports on work progress to the ESG Management Committee and receives guidance.
Zhende Medical expects to establish a long-term mutual-trust relationships with its stakeholders. With a regular communicationmechanism with stakeholders, it aims to gain a deeper understanding of their opinions, needs, and expectations on thecompany. We maintain two-way communication with relevant parties and respond to their focuses in the field of sustainabledevelopment.
? The ESG Management Committee is chaired by the CEO, participates in thedeliberation and decision-making of major ESG issues, and provides decision-makingsupport for ESG related matters.Decision-makingbodyESG ManagementCommittee
? The ESG Office includes relevant professional leaders of the Group with the Vice
President of the Group acts as the Executive Director, and is responsible for planning,executing, and monitoring ESG work.Executive officeESG Office
? Implement relevant ESG management measures in accordance with the requirements
of the ESG Office.Executing agencyEach department andproduction base
Main StakeholdersTopics of ConcernCommunication Methods/Channels
Government and regulatoryagencies
? Compliant operations? Anti-corruption and businessethics? Emissions and waste? Environmental managementsystem
? Legal operation? Compliant tax payment? Anti-corruption mechanism? Inspection by leaders and
supervision authorities? Responding to governmentpolicies? Participation in governmentprojects
Main StakeholdersTopics of ConcernCommunication Methods/ChannelsInstitutional investors and individualshareholders
? Protection of investors' rights andinterests? Corporate governance? R&D and innovation? Intellectual property protection
? Exchanges’informationdisclosure platform? Disclosure of periodical reportsand official website information? Investors exchange conference? Investors hotline? Company visit? General Meeting of ShareholdersCustomers and consumers ? Product quality and safety
? Customer service? Data security and privacy
protection? Responsible marketing? Climate change mitigation andadaptation? Resource utilization
? Customer satisfaction survey? Professional customer service
team? Email and service hotline? Customer complaint channels? Customer visit
Partners ? Compliant operations
? Anti-corruption and business
ethics? Supply chain management? Industry exchange andcooperation
? Industry events (exhibitions,seminars, etc.)? Industry-university-research
cooperation? Supplier conference
Employees? Employee recruitment and hiring
? Employee training anddevelopment? Employee rights and benefits? Occupational health and safety
? Internal mail? Internal communication platform? Employee complaint channels? Employee training? General meeting of worker
representatives? Employee care mechanism
(Mutual Aid Foundation, Talent
Scholarship, etc.)Community and the public? Community communication and
development? Medical accessibility? Emissions and waste
? Volunteer service activities? Public welfare projects? Company website and self-media? Inclusive products
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Analysis of Material TopicsIn 2022, Zhende conducted analysis based on the business characteristics of its industry in view of domestic and foreignindustry policies and standards. We have identified current policy hotspots, conducted material topic benchmarking with peerESG issues, summarized ESG rating concerns, and established an ESG topic library suitable for ourselves. In addition, we haveorganized research on internal and external stakeholders. Taking external expert opinions into consideration, we have discussedand confirmed the expression and importance ranking of material topics.Zhende Medical's ESG topics of high materiality identified are shown in the table below. The relative ranking of material topicsis shown in the matrix diagram. The material topics highlighted by Zhende's stakeholders are in the upper right corner of thematrix, and will be responded in this report.
◇Material Topic MatrixHigh
LowHigh
Impacts on stakeholders
’ sustainable development
Impacts on Zhende’s sustainable developmentGovernance topics
DimensionsSerial NumberMaterial Topics
Governance
1Corporate governance2Anti-corruption and business ethics3Compliant operations4Protection of investors' rights and interests
Society
5R&D and innovation6Intellectual property protection7Industry exchange and cooperation8Product quality and safety9Customer service10Data security and privacy protection11Responsible marketing12Employee recruitment and hiring13Employee rights and benefits14Occupational health and safety15Employee training and development16Supply chain management17Community communication and development18Medical accessibility
Environment
19Environmental management system20Resource management21Emissions and waste22Climate change mitigation and adaptationSocial topicsEnvironmental topics
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The SDGs responded in this chapter are
Compliance and ReformWe prioritize compliance, standardize corporate governance and information disclosure,and protect investors' rights and interests. We continue to strengthen our awarenessof risk prevention and control. Our internal control management system has beenimproved. We adhere to compliant operations and business ethics, and strictly prohibitany form of corrupt behaviors. At the same time, we uphold the values of "reform andinnovation". We bravely innovate in management models, operational mechanisms,and business models. Fearless of difficulties, we forge ahead and strive to achieve newbreakthroughs and development.
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Standardize Governance and Protect Investors'Rights and InterestsCorporate GovernanceZhende Medical has formulated the Articles of Association to continuously improve the corporate governance structureand standardize its operations. Zhende establishes a corporate governance structure consisting of the General Meeting ofShareholders, Board of Directors, and Board of Supervisors. We have formulated systems such as theRules of Procedure forShareholders’ General Meeting, Rules of Procedure for Board of Directors,andRules of Procedure for Board of Supervisors.These ensure that the General Meeting of Shareholders, the Board of Directors and the Board of Supervisors exercise decision-making and supervisory power, and enhances their independent operation.The Board of Directors consists of four specialized committees: Strategy Committee, Audit Committee, Nomination Committee,and Compensation and Assessment Committee. All members of the specialized committees are directors. Independentdirectors hold the majority and serve as the chairman of the Audit Committee, Nomination Committee, and Compensation andAssessment Committee. Each committee strictly fulfills its responsibilities in accordance with relevant regulations, and fullyutilizes its professional advantages, to improve the scientific decision-making of the Board of Directors.
During the reporting period, Zhende held the General Meeting of Shareholders and meetings of the Board of Directors and Boardof Supervisors in accordance with legal procedures. Each specialized committee of the Board of Directors performed theirresponsibilities, and improved the level of enterprise management and risk prevention capabilities. The maximum interests ofZhende and all its shareholders were safeguarded.
◇Corporate Governance Structure
◇Composition of the Board of Directors and Board of Supervisors and Operation of Shareholders' GeneralMeeting and Meetings of the Board of Directors and Board of Supervisors in 2022
General Meeting of Shareholders
Board of Directors
Strategy CommitteeAudit CommitteeNomination Committee
Remuneration andAssessment Committee
Board of Supervisors
Compositionof the Boardof Directors
directorsIncluding
female directors and
independent directors
Compositionof theBoard ofSupervisors
supervisorsIncluding
employee supervisor
Convening of
the GeneralMeeting ofShareholdersand Meetingsof the Boardof Directorsand Board ofSupervisors
General Meeting of Shareholderswitha total of
proposals deliberated
Board of Directors meetings, with atotal of
proposals deliberatedIncluding
meetings of specializedcommittees of the Board of Directors
Board of Supervisors meetings, witha total of
proposals deliberated.
Investor Relations ManagementZhende Medical has formulated systems such as theInvestor Relations Management System.Multiple channels have been set up for investor communication in order to maintain thelegitimate rights and interests of investors, especially small and medium-sized investors, andenhance their understanding and identification with Zhende. We listen to investors' opinionsand suggestions to improve our corporate governance.
During the reportingperiod, Zhende heldinvestorexchangeconferences
Information DisclosureZhende Medical has formulated systems such as theInformation Disclosure ManagementSystemand theInternal Reporting System for Major Informationto truthfully, accurately,completely, and timely fulfill information disclosure obligations. It is required to keepinformation confidential before disclosure to ensure the openness, fairness, and impartiality ofinformation disclosure.Zhende designatesShanghai Securities News,Securities Times,Securities Daily,ChinaSecurities Journal, and the website of the Shanghai Stock Exchange as the newspapers andwebsite for information disclosure. During the reporting period, Zhende did not keep anyinformation that should have been disclosed, and there was no selective information disclosurebehavior. It has properly fulfilled the information disclosure obligations of a listed company andeffectively protected the legitimate rights and interests of investors.
During the reportingperiod, Zhendereleased a total of
◇Investor Communication Channels
0575-88751963dsh@zhende.comOfficial website of Zhende, website of Shanghai StockExchange, e-interaction platform of the Shanghai StockExchange, etc.General Meeting of Shareholders, investor exchangeconferences, roadshows, etc.
announcementsand documents
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◇Routine and Special Audits in 2022
Compliant Operation and Adherence toBusiness Ethics
Compliant OperationsZhende Medical has formulated systems such as theInternal Audit Regulationsand theImplementation Rules for ContractApproval Management. Under the guidance of the Audit Committee of the Board of Directors, the Internal Audit and Risk ControlDepartment of Zhende headquarters is responsible for internal audit, risk management, and other related work.During the reporting period, Zhende conducted a total of 15 routine and special audits, including audits of procurement, cost,assets, engineering, remuneration, and safety production modules. Through the "audit + rectification" model, Zhende timelyurges closed-loop rectification to items that are to be improved found in audits. This has effectively reduced risk exposure, andpromoted the continuous improvement of Zhende's business processes and operational mechanisms.
Zhende also attaches great importance to improvingemployees' legal awareness and enhancing their sense ofcompliance. Based on the professional characteristics ofdifferent positions, targeted training courses covering "allemployees", "professional positions", and "management" areprovided. Various means such as centralized training andsessions on the E-learning platform are adopted to improveemployees' awareness of compliance and sharpen their abilityto fulfill their responsibilities. These promote standardizedand healthy development of Zhende.Anti-corruption and Business EthicsZhende Medical has established a comprehensive anti-corruption management system and shaped a clean and honestcorporate culture. The Board of Directors of Zhende has an Audit Committee responsible for managing and making decisions onanti-corruption and business ethics. The Group's Internal Audit and Risk Control Department is designated as a permanent bodyfor audit and supervision, and responsible for organizing and implementing daily anti-fraud work throughout the Group.Zhende has formulated regulations such as theRegulations on the Management of Anti-commercial Bribery, Complaints andReportingand theManagement System for Bidding. It sends theAnti-commercial Bribery Contact Letterto suppliers anddistributors externally, and announces "Anti-commercial Bribery, Adherence to Integrity" proposal among employees internally.Anti-corruption themed training and other measures are also taken.During the reporting period, Zhende provided
The coverage rate of anti-corruption relatedtraining for employees was
22.64%
with an average duration of
0.91
The coverage rate of anti-corruptionrelated training for directors was
with an average duration of100%4
Zhende adopts a zero tolerance attitude towards corruption, fraud, and money laundering. A reporting hotline and email hasbeen made available to ensure the transparency and smoothness of reporting channels. At the same time, Zhende takesprotective measures for complainants and whistleblowers. Those who violate the regulations by disclosing information aboutwhistleblowers or retaliating against whistleblowers will be dismissed with their labor contracts terminated. In case of violationsagainst the law, related personnel will be transferred to the judicial authorities.◇ Channels for Reporting Corrupt Behaviors
CategoryAudit ModuleAudit Scope Audit Results
Routine
Audit
Supply chain (6items)
Cost, assets, safety production, procurement, labor,engineering, total productive innovation (TPI), outsourcedprocessing, and financial management modules
A total of
routineand special audits werecompleted, items to beimproved were identifiedand subsequentlyrectified as planned.
Marketing (1 item)
Freight management, sales management, expenseverification, etc.Subsidiary (4items)
Basic financial management, procurement management,sales management, cost management, assetmanagement, labor management, etc.
Special audit
Assets (1 item)
management, budget execution, price control, contractexecution, supplier management, accounting processing,etc.Procurement (1item)
System, responsibilities, processes, procurementstrategies, procurement cost reduction, price analysis,supplier and accounting period management, SRM systemoperation, sluggish material management, etc.Outsourcing (1item)
Systems, processes, labor cost, losses, and settlements,etc.Compliance (1item)
Customs' authorized economic operator (AEO) advancedcertification, import and export business, etc.
18658516729Hotline
tousu@zhende.com
Zhende Medical Headquarters (Internal Audit and Risk Control Department), Yuecheng
District, Shaoxing City, Zhejiang ProvinceEmailMailing Address
anti-corruption themedtraining sessionshours per person
hours per person
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◇Application Architecture of Each Business Line
◇Process Digitalization Governance Structure
Continuous Reform and Long-term DevelopmentManagement Innovation
Process DigitizationIn 2020, we formulated an information application architecture plan based on the new five-year strategy, which included fourlayers: basic service, shared service, operation management, and the Group control. The strategy helps to achieve innovativemanagement, improve quality and efficiency, enhance market competitiveness, and drive sustainable development of Zhende.
Lean ManagementAdhering to the philosophy of "rooting out all ineffective work and waste to pursue perfection", we have established a leanmanagement system covering all factories from the perspective of management innovation. Lean strategies and processes areclarified, and a series of supporting systems are developed. We carry out on-site management, standardized operations, leanworkshop management and skill management. While continuously eliminating waste and improving efficiency, we endeavor toachieve the maximization of enterprise value.
To further promote the effective implementation of process digitization, we have established the Process DigitizationGovernance Committee with the Executive President serving as the Director. The Committee is mainly responsible for effectivemanagement of the overall budget and project group for process digitization. It strives to optimize the allocation of processexperts and information resources, and coordinate and solve problems in process optimization and digitization projects. In thisway, the expected business value can be realized. In addition, Zhende has established the Process and Information Departmentthat is responsible for the development of process digitization related systems and the implementation of specific tasks.
Sales Business Line
Basic general-purpose software
Supply Chain Business Line Functional Business Line? Customer relationship
management (CRM) system? E-sales system? E-commerce direct shipmentwarehouse? Product management system? Surgical package APP? Private domain membermanagement (SCRM) system? Patient relationship platform
? Shaoxing factory mask
workshop manufacturingexecution system (MES)? Xuchang Zhende bleachingworkshop manufacturingexecution system (MES)? Shaoxing's vertical warehouse
? Supplier relationship
management (SRM)procurement platform? Financial sharing system? Budgeting management project
(BPC)? General technology platform? Freight coordination informationplatform? R&D cloudSAP, BI, OA, etc.
◇Core Elements of Zhende's Lean Management System
Lean strategy
? Develop lean strategic goals.? Optimize the organizational structure centering on these goals and cascade them intokey performance indicators (KPIs) of departments at every level.
Lean process
? Establish and optimize efficient operational systems for all functions (processes) in
response to Zhende's requirements on efficiency, delivery, quality, and continuousimprovement, to ensure the achievement of KPIs.
?Regulations on Accounting and Reward Management for Equipment, ProcessImprovement and IE Improvement,Regulations on Proposal Improvement Management,Lean Manufacturing Rating System,5S Management Regulations,5S Incentive Plan, etc.
Managementdirection
Managementsystem
? On-site management: Implement 5S and visual management;? Standardized operations: Implement standardized measures on production and
equipment management to ensure the stability and efficiency of the production process;? Lean workshop management: Improve the efficiency and accuracy of workshopmanagement through methods such as creating benchmark workshops, selecting 5Smodel workers in workshops, and cultivating versatile workers;? Skill management: Through lean themed training, improve the management ability and
lean skills of employees in relevant positions, thereby upgrading the overall work quality
and efficiency;
During the reporting period, Zhende optimizedAutomation of Shaoxing's vertical warehouse was initiated with
approximatelymodules and
boxes/day for inbound and outboundshipments handled, featuring anefficiency improvement of overreports for BImanagementcockpit1615,00014360%
Process Digitization Governance Committee
First-level process leader Director of Process and Information DepartmentProcess BP Product ManagerProject ManagerR&D EngineerData Engineer
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During the reporting period, Zhende focused on six aspects including the TPI project and the introduction of automatic sewingequipment for abdominal pads, further optimizing production processes, improving automation, ensuring product quality, andenhancing Zhende's market competitiveness. At the same time, Zhende also organized 44 lean themed training sessions toeffectively improve employees' lean capabilities.
At the same time, we actively promote Six Sigma quality improvement to reduce resource consumption in production whileimproving product quality.
◇Main Achievements of Lean Management in 2022
The construction of the 'Future Factory' is essential for us to build a globally advanced manufacturing base. As aleading supplier of medical, nursing and protective products in China, we have a factory base covering roughly 67hectares, and have been vigorously promoting the development of intelligent and future-oriented factories.Zhende has optimized comprehensive production process through the transformation and expansion ofproduction workshops, with lean manufacturing as the driving force. A large amount of non-standard automationequipment has been developed and put into operation. It thus effectively improves the per capita efficiency offrontline employees and significantly upgrades product quality. The introduction of digital management hasfurther improved production management and supported the comprehensive increase of supply chain productionefficiency.In the future, we will continue to build future factories characterized with digital design, intelligent production, digitalmanagement, green manufacturing and secure control.
Zhende Medical Selected as a Pilot for "Future Factory" in Zhejiang Province
Zhende Medical's Future Factory Collaboration Platform
Mechanism InnovationZhende revised and clarified its strategic development plan and direction in 2020, and underwent structural changes. In 2022,a crucial year for the implementation of Zhende's new development strategy, it further strengthened its basic management andimproved economic efficiency.To meet its strategic goals and the demand for organizations and talents, in 2022, Zhende launched three mechanisms forstrategic collaboration, namely the senior management personal business commitment (PBC) and organizational performancelinkage mechanism, profit center assessment mechanism, and operating profit reward mechanism. These have further ensuredthe effective implementation of Zhende's strategic plans.
In addition, Zhende has developed systems such asOrganizational Performance, Profit Center Assessment, and TUP AllocationPlanto clarify the meanings of the three mechanisms and provide a basis for relevant human resources management.
During the reporting period, the mechanism operated well. It helps Zhende attract, retain, and motivate outstanding managementtalents and core technical talents, and improves Zhende's industry competitiveness and performance.
◇Performance and Strategic Collaboration Mechanisms
? TPI project:
projects were completed, saving RMB
23.84
million in cost;? Introduction of automatic sewing equipment for abdominal pads:
sets were completed, achievingindependent product production and significantly improving production efficiency and quality stability;? Introduction of lean logistics: Relevant project tests and operation were completed;? 5S promotion:
innovative activities were carried out, and the number of personnel actively maintainingthe factory environment increased from 23 to1,413;? Proposal improvement:
5,093improvements were made;? Standard working hours development:
3,797
documents were finished.
Strategydevelopment
Strategydecomposition
Organizationalperformance
Salary package managementBonus package managementLong-term incentive managementPersonalperformance
Value creation
Value evaluation
Value distribution
Senior Management PBC andOrganizational Performance
Linkage Mechanism
Profit Center Assessment MechanismOperating Profit Reward Mechanism
The total performance score of senior management includes PBC andorganizational performance.Each product line’s profit center establishes incremental rewards as needed; andeach factory establishes an excess profit assessment mechanism.It clarifies the annual incentive plan.
Senior Management PBC andOrganizational PerformanceLinkage MechanismProfit Center AssessmentMechanismOperating Profit Reward Mechanism
◇The Meaning of the Three Mechanisms of Strategic Collaboration
During the reporting period,Zhende issued incentives toemployees totaling over RMB
million
Such amount includedthe strategic collaborationmechanism rewards of RMB
million
and research anddevelopment rewardsof RMB
4.5
millionproject rewards of RMB
3.5
million
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The SDGs responded in this chapter are
Caring Employee GrowthTalent is the most important asset for the sustainable development of Zhende. Takingthe activation of the organization as the starting point, "focus on the business" asthe guide, we establish the principle of "care employee" in management. We haveestablished a sound occupational health and safety management system, to firmlysafeguard the safety and health of our employees. We strive to build an equal, diverse,and inclusive workplace culture. A comprehensive remuneration system and rewardsystem are put in place to effectively protect employees' rights and provide richemployee benefits. We invest heavily in establishing a comprehensive talent cultivationsystem and smooth career development channels, to help them achieve success withthe "Care" model.
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Caring-Employee Rights and Benefits
Employee Recruitment and Hiring
Zhende Medical adheres to legal employment. We are committed to building an equal, diverse, and inclusive workplace culture.Zhende has formulated regulations such as theManagement Rules for Signing Labor Contracts,Recruitment ManagementRules for General Workers,Management Procedures for Child Labor and Juvenile Workers,Non-compulsory Work Procedures,andProcedures for the Prevention of Discrimination and Harassmentto prohibit the employment of child labor and forced labor,and to prevent workplace discrimination and harassment.The types of employees of Zhende include contract employees, rehired employees who have retired, and interns. In recent years,Zhende has implemented a talent introduction strategy. Talents are reserved through targeted recruitment from universities andcooperation with universities.
Employee Rights and BenefitsZhende Medical adheres to the management principle of "care employee". A comprehensive remuneration system has beenestablished. Zhende has formulated systems such asEmployee HandbookandWelfare Management Rulesto safeguard thelegitimate rights and interests of every employee. In addition, Zhende also sets up internal honors and awards to recognizeemployees with outstanding performance and contributions.
During the reporting period, Zhende had one case of labor arbitration. Zhende has learned relevant experience from this case.When it comes to issues related to employee resignation, Zhende's HR and business department heads will conduct sufficientcommunication with employees to avoid such incidents from happening again. In addition, Zhende has no violations of any laborrelated laws or regulations, or incidents of workplace discrimination and harassment.
◇ Comprehensive Remuneration System
Relying on sound hardware facilities, Zhende carries out cultural and sports activities and holiday celebrations which enrichemployee lives, promote organizational unity, and demonstrate the power of Zhende. Zhende values humanistic care for everyemployee and helps those in need. In addition, Zhende also cares for female employees by fully protecting their rights andsupporting their development.
ManagementContent
Management Measures
? Strictly implement the ID card-based assessment system before employment;? If child labor is found to be recruited by mistake, Zhende will notify their parents to
take them back, bear their travel expenses for returning home, and sponsor all fees forthem to finish the compulsory education.Prohibition ofchild labor
? If forced labor is found, employee representatives should investigate into the matter
and ask for opinions from the forced workers. Within a week, a meeting with themanagement will be set to seek solutions together, or report to the public safetyorgans.Prohibition offorced labor
? Make it clear that Zhende shall not engage in any discriminatory behavior against
employees due to their race, social class, nationality, religion, disability, gender, orgender orientation, etc.;? Establish a multi-channel complaint mechanism consisting of the complaint box,internal email, hotline (0575-88082530) and union representatives, through whichemployees can have their complaints heard;? After receiving the complaint, Zhende will respond by investigating into and verifying
it as soon as possible, and promptly disclose the progress to the complainant. Ifthe case is true, Zhende will handle it in accordance with the system and publicizethe treatment; in serious cases, Zhende will assist employees who have beendiscriminated against or harassed to report to the public security organs. If the caseis not true, or if it is a misunderstanding, Zhende will intervene for mediation.
Preventionof workplacediscriminationand harassment
During the reporting period, Zhende granted thesecond phase of employee stock ownership plan forand rated a total of
employeesemployees as outstanding individuals of the year.
Basic GuaranteesInclusive Policies
Medium-termIncentives
Long-term IncentivesSpiritual Motivation
Care PlanShort-term Incentives
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Making Pressed Flower on Women’s Day in Shaoxing Guessing Lantern Riddle on the Lantern Festival
Mini Reading Marathon in Zhende "Autumn Sports Season" Basketball Game
Zhende listens to the voices of employees, accepts their supervision and takes their suggestions into consideration. Wefurther safeguard their rights and interests through coordinating organization, mechanisms, and measures. We will continue toimplement improvement measures to enhance employee satisfaction and work efficiency.
? Zhende's headquarters and each subsidiary establish separate trade unions covering all
employees.? An annual general meeting of worker representatives is held. In 2022, one general meeting of
worker representatives was held, and a total of 120 employee representatives participated.
They elected the employee supervisor and approved the Second Employee Stock Ownership
Plan.? A collective contract is signed with all employees every year, in which the minimum salary
standards, payment dates, and other related matters are negotiated.? Factory affairs are made public. Hot issues of concern to employees, such as company
regulations and employee benefits, are publicized on the OA intranet.? We widely solicit employee opinions and needs through meetings, CEO suggestion boxes,
satisfaction surveys, and other channels. Feasible measures therefrom are put into practice.
For those that cannot be adopted or are difficult to implement, we promptly explain the
reasons to employees to obtain their understanding.
OrganizationalSupport
MechanismSupport
SupportiveMeasures? Zhende headquarters is equipped with
the gym, reading room, cafe, employeecafeteria, etc.;? The factory in Xuchang is equipped with aswimming pool, employee activity center,etc.
? Zhende carries out themed cultural andsports activities including "World BookDay" activity and "Autumn Sports Season"event, and celebrates the Spring Festival,Dragon Boat Festival, Mid-AutumnFestival and other festivals.
? Provide maternity leave, abortion leave, and other leaves in accordance with the law;? Zhende headquarters has a five-star Mother and Baby Room in Shaoxing City;? Distribute customized gifts to female employees on Women's Day;? Organize female employees to participate in artistic activities such as making pressed
flower frames, as well as outgoing activities including hiking around the lake.
Sound Hardware Facilities Diversified Cultural and Festive Activities
Caring Female Employees
Devotion-Growing Together with Employees
A Comprehensive Talent Development SystemZhende Medical adheres to the "We Care" philosophy. Based on the self-developed E-learning platform, supported by the internaltrainer system and curriculum structure, we have established a talent development system that covers all employees. This cancomprehensively improve their know-how and skills, and boost every employee to achieve success.Zhende has set up a series of supporting systems which cover the management of lecturers management, courses, expenses,external training, new employee and job transfer training, learning credits, and training administrators. These systems ensure theeffective implementation of training and the realization of Zhende's talent development strategy.
70%During the reporting period, thesatisfaction towards administrativeservices exceeded
92%
New employeesatisfactionwas
62.85%
and theemployee NPSreachedpoints
7.88
and that with the trade union'sperformance reached an averagescore of
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Following the principle of "expressing attitudes and conveying energy", Zhende organizes TED sharing activitiesquarterly.In 2022, Zhende carried out three sharing sessions with themes of "Youth and Memories", "Choice and Decision",and "Gratitude and Expression". Each session had four guests who shared personal experiences related to thetheme. There were about 80 on-site guests in each activity, and the videos of the entire session were pushedto all employees of Zhende. Each video had over 2,000 views online, and the training activity was filled with"expectations, surprises, climaxes, and touching stories".
In July 2022, Zhende organized this year's training activitiesfor approximately 56 college graduates in Shaoxing andover 20 in Xuchang to better prepare them as the company’sfuture managers. The training included the course training,outbound training, visit to the headquarters, free talk withsenior schoolmates, flipped classrooms, team building bye-commerce livestreaming competition, internship at factories,and closing party. The training came to an end at the endof July. It has effectively promoted the transformation fromcollege students to employees, laying the foundation for themto fulfill their job responsibilities in the future.
TED Sharing - Expressing Attitudes and Conveying Energy
New Talents Training Program - College Graduates as Management Trainee
? Develop theManagement Rules for Part-timeInternal Trainers;? An annual meeting of internal trainers is heldevery September to review the achievements ofthe training system in the past year, as well as thecontributions of lecturers in teaching and coursedevelopment, and to commend outstandinginternal trainers on site;? So far, the internal trainer team has developed toover 240 members, including junior, intermediate,and senior lecturers.
? Develop theDetailed Rules for Curriculum Developmentand 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.
Internal Trainer SystemCurriculum Structure
with a trainingcoverage rate of100%During the reporting period, Zhendeprovided training for
employees8,485
hoursThe total training duration was
560,978
hours perpersonwith an average trainingduration of
66.11
In addition to internal training and learningactivities, Zhende also strongly supportsemployees to participate in external training andpursue higher education. Through measures suchas introducing external resources and subsidizingtuition fees, Zhende further enhances employees'skills and abilities. During the reporting period,more than 20 people from Zhende took exams fora higher education degree.
Smooth Career Development ChannelsZhende Medical has made available a transparent and smooth career development channel, including development paths formanagement and profession. On top of that, Zhende supports, encourages, and guides employees to continue their developmentby establishing a comprehensive reward system.
◇Panorama of Talent Cultivation
and Development
EntryOn-the-jobAdvancedPanorama of Talent DevelopmentManagersJobRank
Professional TalentsSkilled TalentsLeadership Market Insight and Brand Power Product Power Marketing Power Excellent Manufacturing Power
EntryEntryOn-the-jobOn-the-jobAdvancedAdvancedInduction Training
Source Program - New Employee Induction TrainingTTT/Interviewer TrainingProfessional Training of Various Functions and SpecialtiesProfessional grade certification based on learning path mapLean/Quality/Equipment Skill Level CertificationExternal Certifications Such as PMPGeneral Knowledge: Company/Expertise/RegulationsNew Employee Position Training (Job Standards)Job Training for Transferred Employees
Induction TrainingNew Employee Position TrainingJob Training for Transferred Employees
Skills Competition for Frontline Employees
Frontline Versatile Worker CertificationAuxiliary Employee Rank EvaluationBasic Skills Certification of Auxiliary Employees
Strategic Position DevelopmentStrategy (Spark Program)Excellence Leadership(AB Library)
Voyage ProgramNavigator Program
Sailing ProgramNew/PromotedManagerEmpowerment
EliteEmpowerment (C Library)Youth TalentAction(D Library)New/PromotedSupervisorJade CarvingProgram
New TalentsProgram(ManagementTrainee)
Z- SpecialClass forOn-the-jobManagersZ- Special Class forOn-the-job Managers
Resource Library
Trainer SalonOpen ClassesLive Streaming ClassMicro-course CompetitionReading ClubTEDSharingPlatform
Lecturer SystemCourse System/Case LibraryE-learning Learning Path Map
Part-time Announcer/Part-timeTraining Administrator
Zhende launched the "LoveReading and Excel in Reading".Reading with senior managersled to a further understandingof management philosophy, lifewisdom, and life value.
Reading Sharing - Love Reading and Excel in Reading
Session 1:
Youth and memories
Session 2:
Choice and decision
Session 3:
Gratefulness and expression
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To attract and retain core talents, and promote the common growth of the company and employees, Zhende has put incentivemeasures in place. As of the end of 2022, Zhende has implemented two phases of employee stock ownership plan and onephase of equity incentive plan. Among them, the first phase of the employee stock ownership plan met the unlocking conditionsin July 2022, with a company level unlocking ratio of 42.4974%.
◇Comprehensive Reward System
◇Company Quality Model
A TrainingSystem Based on
Learning Paths
Safety and HealthEnvironmentSystem Based onWork EnvironmentImprovement
PerformanceManagementBased onStrategicCollaboration
Internal ImprovementPlan Based onEmployee Dedicationand Cultural Identity
Authorization SystemBased on Trust andRespect
Challenging Work Tasks
Based on EmployeeDevelopment
Core CompetencyBuilding Based onthe Strategy
A Qualified ZD Member
An Excellent ZD Member
Six Rules for Managers
Four Rules for Strategic Key Positions
? Customer first? Diligence and responsibility? Willing to contribute
? Professional and focused? Unity and hard work? Pursuing excellence
? Identifying with Zhende's core values is a prerequisite.? Whether managers observe moral standards is decisive.? Performance is a necessary condition.? Fully implementing the eight management principles is the
foundation.? Management and professional abilities are the core.? Priority is given to managers with cross-regional and frontline
experience in promotion.
? Reform and innovation? System construction? Superb performance? Industry leading
Persistence-Employees' Safety and HealthZhende Medical places high value on the safety and health of its employees. A sound occupational health and safetymanagement system has been put in place. As of the end of 2022, Zhende and its subsidiary, Xuchang Zhende, have passed thecertification of ISO 45001 occupational health and safety management system and been awarded the certificate.Zhende initiates an occupational health and safety management organizational structure that covers the headquarters and allsubsidiaries. The President's Office of Zhende has an EHS (Environment Health and Safety) Office which is responsible for theconstruction and operation of Zhende's EHS management system. Each department of Zhende headquarters has assigned EHScontacts. Each subsidiary has also instituted relevant departments responsible for the implementation of Zhende's EHS relatedsystems and policies.
To enhance employees' safety awareness and improve their relevant skills, Zhende provides occupational health and safetythemed training, covering all employees or those in specific positions. In addition, Zhende also holds fire-fighting competitions,skill competitions, and other activities. This further stimulates employees' interest in learning and increases their sense ofparticipation.
◇ Major Measures for Occupational Health and Safety Protection
◇Occupational Health and Safety Themed Training
During the reporting period, Zhendehad a work-related injury rate of
0.59
resulting in
Fire-fighting Competition Employee Safety Education
? Develop 1-5 classes of accident control indicators and cascade the objectives atall levels in the form of signing EHS responsibility letters.
Security risk level-to-level control
? Conduct quarterly, monthly, and daily inspections.Regular inspections
? Organize safety production month activities every year.Safety productionmonth activities.
? Regularly conduct occupational hazard factor testing to determine the affected
positions and employees;
? Conduct regular occupational health examinations;
? Distribute labor protection equipment.Detection andprevention ofoccupational
hazards
Trainees Training Theme
Safety education and training at 3 levels (factory level, workshop level, team level)New employee
Certification training for special operation personnel, safety management personnel and
responsible personsEmployees inspecific positions
Festival safety, mechanical safety, electrical safety, fire safety, traffic safety, hazardous
chemicals, special equipment, etc.All employees
lost working daysdue to work-relatedinjuries
per one thousandemployees
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The SDGs targets responded in this chapter are
Promoting Green DevelopmentAgainst the backdrop of the national green transformation and the goal of the "achieving carbonpeak by 2030 and carbon neutrality by 2060", as a listed company, Zhende not only contributesto economic development, but also bravely assumes environmental and social responsibilities.Continuing to invest in R&D, we improve product development efficiency, and explore the path ofsustainable development. We have created a sound environmental management system, whichensures that wastewater and waste gas are discharged in compliance with standards and wasteis disposed of in a standardized manner. We strive to improve resource utilization efficiency andreduce the environmental impact of our products through a variety of measures. Moreover, werespond to national policies and continue to improve our carbon management system. Throughmeasures such as energy conservation and carbon reduction, photovoltaic power generation,R&D, and the use of environmentally friendly products, we help achieve the "dual carbon" goals.
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Innovation - the Road to Sustainable DevelopmentR&D InnovationAdhering to the bottom line of compliance in the R&Dprocess, Zhende Medical forms a product R&D managementmechanism. Furthermore, Zhende has developed internalstandards such as theOperating Specification for ClinicalTrial Process Quality Managementto avoid ethical risks in theR&D process.In 2022, we introduced the integrated product development(IPD) consulting project, and established institutional normssuch as theManagement Regulations for New ProductDevelopment, as well as relevant processes such as theDevelopment and
Management Regulations for NewProduct Task Book,Decision Review Instructions,ProjectManagement Instructions,Technical Review Instructions,andPQA Operation Instructions. These have defined newproduct’s project approval management, end-to-end processand operational details of design and development. Productmanagement and R&D performance are thus improved.
To promote the core ideas of IPD in the implementation process of new product development, Zhende has established theIPD Promotion Office. An array of product line management mechanisms, matrix management models, and a new productdevelopment management system have been put in place.In addition, under the digital transformation of its processes, Zhende has set up a universal technology platform that covers 19major categories of products in 6 technical fields, including wet dressings (exudate management), medical adhesive products,ostomy products, active products, hydrocolloids, and biomaterials. This has achieved efficient information sharing acrossdepartments such as R&D, marketing, and sales. Effective support has been provided for the rapid iteration of product microinnovation, further accelerating the development efficiency of new products.In addition to optimizing the product development process, we also attach importance to the construction of R&D platforms andthe cultivation of R&D talents. We have set up a total of 4 enterprise R&D centers in domestic and foreign operating locations.They have been awarded multiple honors at the international and provincial levels. R&D themed training is provided internally,and industrial cooperation is promoted externally to carry out joint project research and industry talent cultivation. This hasfurther improved the level and ability of our technological innovation (see section 6.2 of this report, "Responsibility - PromotingMutual Benefit and Win-win Results in the Industry").During the reporting period, Zhende organized employees to participate in a total of 40 internal and external R&D themed trainingsessions, with 572 participants in internal training. The training themes include intellectual property, R&D processes, projectmanagement, etc., covering positions such as project managers, R&D engineers, and technicians. This has effectively improvedthe competence of employee R&D management and standardized the implementation of new product development processes.
◇ Product Development Process
◇R&D Investment and Achievements in 2022
Feasibility
Study
ProjectApproval
ProjectReview
ProjectAcceptance
ProductLaunch
◇Achievements of R&D Platform Construction
Enterprise R&D Centersin Shaoxing, Xuchang,Shanghai, and the UK
Provincial EngineeringTechnology Research Center
The First Provincial-level KeyEnterprise Research Institute in
the Industry
......
National High-tech EnterpriseCollaboration with Well-knownDomestic Universities such asZhejiang University and HubeiUniversity, as well as MedicalInstitutions such as Beijing Hospital
of Traditional Chinese Medicine
In 2022, Zhende invested RMB
million in R&D, and was awarded
Class IImedical device product registration certificates and
16patents for invention.
? Zhende took the lead in developing
surgical site infection controlmaterials that meet the InternationalSustainability and Carbon Certification(ISCC) in China. While developingmaterials with high performanceand cost advantages, we reducedthe carbon footprint of products (seesection 5.3 of this report on "LowCarbon - Responding To ClimateChange" for details)
? Key progresses were made inthe viscosity and anti-corrosionperformance of the hydrocolloidadhesive disc of the stoma bag;? The laboratory evaluation of a dual-component hydrocolloid adhesivedisc was completed, and theimprovement of hydrocolloid formulaand performance enhancement wouldbe conductive to enhance the marketcompetitiveness of ostomy products.
? Development of laboratory formulawas completed for the hydrophilicpolyurethane foam material;? Researches on the antibacterialeffect and process technology werecompleted for the basic dressingscontaining iodoform, PHMB, andhypertonic salt;? Technical pre-research and sampledevelopment were completed forsilver ion antibacterial series products;? Antibacterial efficacy research andsafety evaluation were completedfor antibacterial series productscontaining plant extracts.
Infection Control Material TechnologyOstomy Care TechnologyWound Care Technology
AchievementTransformation
Summarizationand Evaluation
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Intellectual Property ProtectionZhende Medical attaches significant importance to the protection of independent intellectual property rights. We also respectthe intellectual property rights of others. Zhende has established a sound intellectual property management system. We passedthe intellectual property management system certification of the China National Intellectual Property Administration for the firsttime in 2016. In 2022, Zhende passed certification review and maintained the validity of the certificate.Zhende has initiated a top-down organizational structure for intellectual property management. We have formulated systemssuch asIntellectual Property Management Regulations, Patent Value Evaluation Rules, andPatent Application ManagementRules for New Products. We also engage in planning, implementation, inspection, and improvement of intellectual propertymanagement. This provides important guarantees for Zhende's technological innovation and sustainable development.
In addition, Zhende holds intellectual property promotion and training activities for employees. In June 2022, Zhende launchedthe "Protect Intellectual Property, Promote Innovation at Zhende" themed activity in the Intellectual Property Month. It increasedemployee engagement and sense of gain through video learning, competition participation, expertise popularization training,playful activities, and other forms. Zhende organized a total of 7 intellectual property protection training sessions throughout theyear, with a total of 124 employees participating. These further improve employees' awareness of intellectual property protectionand upgrade their knowledge and ability levels related to intellectual property.
In 2022, Zhende was awarded the title of"National Intellectual Property Demonstration Enterprise"
As of the end of 2022,Zhende has had
patents forinvention
patents for utilitymodels
national Class II medical deviceregistration certificates
Class III medical deviceregistration certificates
Responsibility - Protecting Our Green andBeautiful Homeland
Environmental Management SystemZhende Medical holds fast to the concept of green development andestablishes a sound environmental management system. As of theend of 2022, Zhende and its subsidiary Xuchang Zhende have metthe ISO 14001 environmental management system certificationrequirements and passed such certification.Zhende institutes an environmental management organizationalstructure covering the headquarters and all subsidiaries. We haveformulated systems such as theEnvironmental Protection FacilityManagement System, and conducted environmental supervisionand management on the headquarters and subsidiaries throughstatements and other forms. In 2022, Zhende's environmentalprotection facilities operated well. New investment projects carriedout environmental management in accordance with the laws,regulations, and policy standards of the operating location. Therewas no incident of violating relevant environmental protection lawsand regulations.
Emissions and Waste ManagementZhende Medical has developed systems such as theWater Pollution Prevention and Control Management System,Air PollutionPrevention and Control Management System, andSolid Waste Pollution Prevention and Control Management System. Thesecan manage the entire process of Zhende's pollutant discharge and waste treatment.In terms of wastewater management, Zhende's operational activities generate production wastewater and domestic wastewater.Among them, production wastewater mainly comes from the bleaching process, while domestic wastewater from processessuch as office and canteen operations. All wastewater enters the sewage treatment station in the factory area, undergoesphysicochemical and biochemical treatment processes, and is then discharged into the municipal sewage pipeline network.Zhende's wastewater discharge follows standards such as theComprehensive Wastewater Discharge Standardand theIndirectEmission Limits of Nitrogen and Phosphorus Pollutants in Industrial Enterprise Wastewater. The detection indicators include pH,ammonia nitrogen, suspended solids, chemical oxygen demand, and five-day biochemical oxygen demand.In terms of waste gas management, Zhende's operational activities mainly generate waste gas from processes such as printing,coating, sterilization, and boiler combustion. Zhende adopts washing, purification and activated carbon adsorption purificationfacilities, multi-level (sulfuric acid) washing tower purification facilities, etc. to treat different types of waste gas. Zhende's wastegas emissions comply with standards such as theComprehensive Emission Standard for Air Pollutantsand theEmissionStandard for Boiler Air Pollutants. The detection indicators include non-methane total hydrocarbons, nitrogen oxides, particulatematter, sulfur dioxide, ethylene oxide, and odor.In terms of waste management, Zhende's operational activities generate hazardous waste and general solid waste. Hazardouswaste mainly includes waste acrylic adhesive generated during the coating process, waste activated carbon generated duringthe waste gas purification process, and chemical packaging barrels generated during the use of chemicals. Zhende entrustshazardous waste to a qualified third-party agency for treatment in accordance with theNational Catalogue of Hazardous Wastes
and theMeasures on the Management of Hazardous Waste Manifests. General solid waste mainly comes from production,office and other processes. For recyclable materials such as waste cardboard, Zhende hands them over to third-party recyclingagencies for reuse. For products’leftovers and unqualified products, Zhende entrusts a third-party company for handling.
Ostomy Bag Hydrocolloid Adhesive Disc Dual-component Hydrocolloid Adhesive Disc
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Low Carbon - Responding To Climate ChangeResource ManagementEnergy ManagementThe types of energy used in Zhende's operation include natural gas, gasoline and diesel consumed by its own vehicles, electricityand steam. Among them, electricity includes purchased renewable electricity. Zhende complies with relevant regulations tocarry out energy management.Against the backdrop of implementing a clean energy transformation in the society, Zhende has comprehensively clarified theenergy structure. Measures such as clean energy utilization and opting for energy-saving equipment are taken to optimize itsenergy structure, and improve its energy efficiency.
◇Energy Conservation and Carbon Reduction Measures and Results (Non-exhaustive)
Note 1: The data scope covers Zhende Medical headquarters and five subsidiaries including Xuchang Zhende, Xuchang Zhengde, and Henan Zhende, etc.
? Advocate for energy conservation among employees, requiring that the lights and
energy consuming equipment such as air conditioners in the office area to be turnedoff when people leave the area.Green office
? By upgrading the weaving loom from a single layer to a double layer, it can save
over 160,000 kWh of electricity annually.
Optimizingproduction process
? Use renewable electricity. In 2022, a total of 240,947 kWh of power were used.? Use natural gas to heat pressurized steam boilers. In 2022, a total of 1,156,316 cubic
meters of natural gas were used.
Use of clean energy
? All equipment whose electric power exceeds 11 kilowatts are equipped with variable
frequency motors. Adjusting the frequency of the motor can reduce the operatingspeed of the equipment, with more than 20% of the electricity saved.? A humidifier is used instead of a steamer, which saves electricity and steam requiredfor boiling water. Approximately 105,180 kWh of electricity can be saved per month.? Replacing fluorescent lights with LED energy-saving ones can save approximately
2,700 kWh of electricity per month.? Use air compressor waste heat recovery technology to heat the water tank to 55-
°C, and then channel the hot water to the office area for environmental heating.
This method can save over 40,000 kWh of electricity per month by reducing the
workload of air conditioners.? By collecting the steam water generated by pressurized steam boilers for thermal
energy recovery, it can achieve energy savings of over 20% and water conservation
of over 50%.
Recovery of wasteheat and energy
The factory in Xuchang of Zhende produces pollutants such as printing waste gas, ethylene oxide (EO) andpolyethylene (PE) waste gases. Zhende employs various treatment processes to ensure that the waste gasdischarged meets the emission standards. Among them:
For printing waste gas, its dust particles are first filtered out through a filter cotton. It then goes through anadsorption tower with honeycomb shaped activated carbon. In the tower, the gas is purified due to the strongadsorption ability of activated carbon to organic matter, and then treated with a three-way catalytic converter tomeet the emission standards.EO waste gas is collected and treated with diluted sulfuric acid water through a five-stage spray, which is followedby activated carbon adsorption treatment to meet the standards before being emitted.PE waste gas is collected and treated with an activated carbon adsorption and desorption and catalyticcombustion (RCO) device to meet the standards before being emitted.
The Factory in Xuchang Adopts Efficient and Economical Treatment Processes to Help Meet the EmissionStandards of Waste Gas.
During the reporting period, the wastewater and waste gas of Zhende headquarters and its subsidiaries were discharged oremitted in accordance with the standards, and the waste was disposed of in accordance with policies and standards.
EO Waste Gas Treatment Facilities in the Factory in Xuchang
Opting for energy-saving equipment
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Climate Change Mitigation and AdaptationWith the constant changes in global climate, more and more countries and regions haverecognized the urgency of climate issues and proposed strategies, goals, and policiesrelated to climate change. In 2020, China announced the goal of "attaining carbon peak by2030 and carbon neutrality by 2060". In 2021, the14th Five-Year Plan for the Developmentof the Pharmaceutical Industryrequired to "promote green and low-carbon development ofthe entire industrial chain".Being a listed company, we not only contribute to economic development, but also take onenvironmental and social responsibilities to respond to the national "dual carbon" goals. Atpresent, we have been improving carbon related management systems, setting emissionreduction targets, and taking actions related to climate change mitigation and adaptation.We work together with value chain partners to help achieve the "dual carbon" goals.
During the reporting period,Zhende set its greenhousegas (Scope 1 + Scope 2)emission reduction target,which was to achieve areduction in relatedgreenhouse gas (Scope 1 +Scope 2) emissions by 2030with 2020 as the benchmarkyear.
30%
We have realized that having a clear understanding of Zhende's greenhouse gas emissions is fundamental for carrying outcarbon management. Therefore, in 2022, we developed a carbon inventory verification plan and commissioned a third partyagency to conduct carbon inventory verification of Zhende headquarters and the factories of Henan Zhende, Xuchang Zhende,and Xuchang Zhengde and other subsidiaries, based on the ISO 14064-3 standard. This helps Zhende set emission reductiontargets and carry out emission reduction actions.
Note 1: The data scope covers Zhende Medical headquarters and five subsidiaries including Xuchang Zhende, Xuchang Zhengde, and Henan Zhende, etc.
During the reporting period, the total greenhouse gas emissions of Zhende
(Scope 1 + Scope 2) weretons of carbon dioxide equivalent (CO
e),representing a year-on-year decrease ofcompared to 2021102,187.239.73%Among them, the greenhouse gas emissions in Scope 1 were
tons of CO
e2,691.74
and the greenhouse gas emissions in Scope 2 were
tons of CO
e99,495.49
Raw Material and Packaging ManagementThe raw materials used in Zhende's production chiefly include non-woven fabrics, cottonfabrics, and melt-blown fabrics. The packaging materials mainly include plastic andcardboard. Zhende standardizes the transportation and use of raw materials and packagingmaterials. We continue to reduce the loss and waste of raw materials and packagingmaterials and improve resource utilization through measures such as lean managementand upgrading warehouse management systems.In addition, driven by the concept of green development, Zhende promotes the developmentof low-carbon products, selects green and environmentally friendly production rawmaterials and packaging materials. These reduce the impact of material use on theenvironment.
Note 1: The data scope coversZhende Medical headquartersand five subsidiaries includingXuchang Zhende, XuchangZhengde, and Henan Zhende,etc.
During the reportingperiod, the proportion ofenvironmentally friendlypackaging materialsused in Zhende's finishedproducts reached
51.20%
Zhende opts for cottonfiber that has been awardedOEKO-TEX certification asthe raw material for the basicdressing product. In 2022,Zhende used 6,000 kg ofthis raw material in productproduction, effectivelyreducing the productenvironmental impact.
Zhende Medical Uses Basic Raw Materials With OEKO-TEX Certification
to Reduce Product Environmental Impact
Photo of Product Raw MaterialsOEKO-TEX CertificateNote 1: OEKO-TEX certified products are textiles that have passed harmful substance tests and are produced under sustainableconditions. Such products are produced under optimized and environmentally friendly and socially responsible textile productionprocesses, ensuring that they do not contain genetically modified organisms (GMO). They also pass tests of insecticides and otherharmful substances, ensuring ecological safety.
Water Resources ManagementThe water resources used in Zhende's operation process include municipal water supply,surface water, and recycled water. For the use of surface water, Zhende applies for a waterintake permit in accordance with regulations. We pay water fees on time, and have nosignificant impact on the environment in terms of obtaining water sources.We take water-saving management measures in various aspects during the operation process.This allows us to save water from the source and improve the efficiency of water resourceutilization.
Note 1: The data scope coversZhende Medical headquartersand five subsidiaries includingXuchang Zhende, XuchangZhengde, and Henan Zhende,etc.
63.75%
◇Water Conservation Measures and Results (Non-exhaustive)
? Advocate for water conservation among employees and require them to turn off the
faucet immediately after use.
Green office
? Through a wastewater recycling treatment system, water resource recycling is
achieved. The purified regenerated water is used for toilet flushing, water tanks forfire protection, and other purposes, saving 5,000 tons of water per month.Wastewaterrecycling
? Collect and store the remaining condensate water from the bleaching process, and
use a water pump to channel the water to the living area of the new base. This cansave about 2,000 tons of hot water per month.
During the reporting period,the proportion of recycledwater in use of Zhende
reached
Optimizingproductionprocess
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Photovoltaic panels have been installed on buildings’ rooftop of approximately 65,000 m
, with an installedcapacity of about 6.9 MW. The project follows a centralized grid connection design scheme. Its power generated isconnected to the grid with transmission at 0.4/10kV. Approximately 2,036.44 tons of standard coal can be salvedannually.In 2022, 907,504 kWh of renewable electricity was generated at Zhende
through photovoltaic power generation.
Zhende Medical Launches Photovoltaic Power Generation Projects to Support Clean Energy Transformation andHelp Achieve "Dual Carbon" Goals.
Note 1: Including Zhende Medical Headquarters, Xuchang Zhengde, Xuchang Zhende, and Henan Zhende.
Photovoltaic Power Station in Zhende's Factory
In 2022, Zhende developed cost-effective andenvironmentally friendly surgical gowns. This productis made of nonwoven fabrics developed with ISCCcertified polypropylene resin of high-performanceAS&AR (alcohol resistance, blood resistance, andanti-static). Polypropylene resin is sourced fromrenewable raw materials. The produced nonwovenfabric is green spunbonded meltblown (SMS) productwith a gram weight of 35 grams, which has excellentbarrier performance. Treated by the after-finishingprocessed, the AS&AR product provides strongersafety guarantees for medical personnel.Surgical gowns made of high-performance AS&ARnonwoven fabric meet the regulatory requirements ofEuropean standard“EN 13795”and American standard“AAMI Level 2”in this regard. This allows customersto start marketing quickly while reducing carbonemissions. Compared to traditional petroleum resins,using 1 kg of this type of polypropylene resin canreduce 2.1 kg of CO
e emissions, contributing to globalsustainable development and greenhouse effect.
The medium packagingbox used in Zhende'stransparent dressingproducts has passedFSC certification. In2022, 11.48 million FSCmedium packagingboxes were usedby Zhende, helpingto reduce carbonemissions throughoutthe entire productlifecycle.
Zhende Medical Takes the Lead in China to Develop High-performance AS&AR Surgical Gowns That Meet ISCCCertification
Zhende Medical Uses FSC Certified Medium Packaging Boxes to Help Reduce Carbon Emissions Throughout Product Lifecycle
Note 1: The International Sustainability and Carbon Certification (ISCC) is an independent multi-stakeholder initiative and leading certification system supporting sustainable, fully traceable,deforestation-free and climate-friendly supply chains. The ISCC certification system covers allsustainable raw materials and is one of the largest certification systems in the world.
Note 1: As the leader in sustainable forestry, FSC is trusted by NGOs, businesses, and consumers worldwide. Its purpose is topromote responsible forestry so forests and people can thrive together. It is guided by a vision for a world where the true value offorests is recognized by all. FSC is the leader in sustainable forest management, operating the world's most rigorous and trustedforest certification system.
Photo of Surgical Gowns
Photo of Medium Packaging Box
ISCC Certificate
FSC Certificate
Surgical Site Infection Control Products
We also commission third party companies to carry out product carbon footprint calculations based on international standards. In2022, we completed the carbon footprint calculation of surgical site infection control products produced by Xuchang Zhengde. Weplan to complete the carbon footprint calculation of gauze, dressing, surgical gowns, and surgical drape products in 2023.
To better respond to climate change, we take energy-saving and emission reduction measures (see "ResourceManagement" in this report). Surgical site infection controlmaterials that meet ISCC certification are developed. (ForestStewardship Council (FSC) certified medium packagingboxes are purchased and used. These further reduce carbonemissions from daily operations and the entire lifecycle ofproducts.
Surgical site infection control products: The carbonfootprint of the product is
kg of CO
e per 10,000 sets ofproducts.
250.74
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The SDGs targets responded in this chapter are
To Be A Reliable PartnerWe uphold the corporate vision of "to be the one of the most reliable partners in the field ofhealthcare & personal care products". We connect with value chain partners such as customersand suppliers through high-quality products and services to promote industrial development andcontribute to society. We provide high-quality health services that everyone can perceive withprofessional experience and craftsmanship spirit. We facilitate reciprocal and win-win results inthe industry to fulfill our corporate responsibility. With the "Care" model, we support communityconstruction and development, increase medical accessibility at the social level, and bringhealthy life within reach.
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Craftsmanship - High-quality Health ServicesProduct Quality and SafetyProduct quality stays at the core of Zhende Medical's long-term development. Holding fast to the quality policy of "providing safe,effective, and competitive medical products is the responsibility of everyone at Zhende", we emphasize on the quality strategyof "precision, changes under control, seeking truth and being practical, and customer first". We have established and improvedthe quality management system, and passed certifications such as ISO 9001, ISO 13485, ISO 14971, EU MDR, EU MDD, US FDAQSR, ISO 13485 Sterilization, PPE UKCA/CE, etc. During the reporting period, all certificates of Zhende were within their validityperiod.
In 2022, guided by the corporate values of "reform and innovation", we released and upgraded multiple processes. These includegeneral new products, brand new products, change control, risk management, registration process, domestic (and foreign) UDIprogram, batch recording process, supplier control, customer complaint handling, corrective action & preventive action (CAPA),CNAS related processes, document control process, adverse events and recalls of drugs, and the combination system of drugsand equipment, etc. These have comprehensively improved and consolidated the operation of Zhende's quality system, ensuringthe effectiveness and suitability of the system operation.
◇ Quality Certifications
During the reporting period, Zhende providedwith
themed training sessions onproduct quality and systemregulationsemployee participants141,436
CertificationCoverage
Zhende Medical, Xuchang Zhende, Xuchang Zhengde, Shaoxing Haoshide, Henan Zhende ISO 13485 CertificateZhende Medical, Xuchang Zhengde, Shaoxing HaoshideISO 9001 CertificateZhende Medical, Xuchang Zhende, Xuchang ZhengdeISO 13485 SterilizationCertificate
Customer ServiceZhende's customers mainly include domestic and foreign corporate customers and individual consumers. Zhende embracesthe value of "customer first". A sound customer service management system has been established to improve customer servicecapabilities.For corporate customers, we develop a customer relationship management (CRM) system to create the maximum closed-loopof pre-sales and after-sales processes. Digital management and refined operation have been achieved throughout the customer
During the reporting period, the C-NPS ofdomestic market customers was
while the C-NPS of foreign marketcustomers was
88.11%30.51%
Responsible MarketingZhende Medical is committed to presenting true and accurate product information to customers. The mechanism and processfor reviewing information to be released to the public has been initiated to ensure information authenticity and accuracy. Thisalso prohibits misleading, exaggerating, or deceiving messages from being sent to customers or individual consumers duringthe marketing process.Data Security and Privacy ProtectionIn terms of data security and privacy protection, Zhende has formulated systems such as theInformation Security ManagementRegulations. Multiple measures are taken to ensure information security and maintain customer privacy.◇Information Security and Privacy Protection Measures of Zhende
Conduct remote application level backup for disarster recovery in data centers in Shaoxing and Xuchang.Establish a data backup system that backs up data every two hours.Automatically detect and remove viruses weekly through endpoint detection & response (EDR).Zhende's electronic file encryption is achieved through the Green-Shield terminal security management system.Conduct system permission management which ensures that employees in different positions can only checksystem information within their corresponding authority.
lifecycle. For individual consumers, we have developed an E sales system, omnichannel member management system, andwarehouse management system (WMS). These can provide support for improving omnichannel service capabilities andcustomer satisfaction.In terms of after-sales service and customer complaint handling, Zhende has developed systems such as theChina MedicalDevice Adverse Event Control Procedure,After-sales Supervision Control Procedure,Customer Satisfaction Survey ControlProcedure,Customer Complaint Control Procedure, and Customer Complaint Management System.We provide relevant training to further improve Zhende's customer service capabilities. In addition, we also conduct a customerNPS survey, collect opinions and suggestions from customers. Relevant measures are taken to overcome the shortcomings inour products and services.
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Responsibility - Promoting Mutual Benefit andWin-win Results in the Industry
Industry Exchange and Cooperation
Partners are one of the important stakeholders of Zhende Medical. After years of development, we have deeply realized thatwin-win results is an inevitable choice for sustainable development. Adhering to the corporate value of "sharing success", wecontinue to strengthen communication and cooperation among multiple parties. We advance mutual benefit and win-win resultsin the industry by participating in industry platform construction, standard formulation, industry exchange activities, and jointtraining of industry talents.In 2022, Zhende took the lead in the establishment of the Medical Device Industry Innovation Consortium and IndustrialTechnology Alliance. With the help of the provincial-level key enterprise research institute platform, Zhende strengthenedcommunication and cooperation with upstream and downstream enterprises, as well as industry peers. We also performed jointproject research to improve the level and capability of technological innovation. Zhende has also collaborated with more than30 medical consumables enterprises in Zhejiang Province to set up the Consumables Branch of the Zhejiang Medical DeviceIndustry Association. This can facilitate the healthy development of the medical consumables industry in Zhejiang Province.In addition, in 2022, Zhende reached strategic cooperation with Beijing Hospital of Traditional Chinese Medicine affiliated withCapital Medical University to seek higher quality development of both parties. Zhende collaborated with Donghua Universityon the“Functional Forming Technology of Textile Based High-end Dressings and Its Application on Complex Wounds”projectto boost the development of trauma medicine. Zhende cooperated and exchanged ideas with JD Health to explore futuredevelopment plans.We have participated in the formulation (revision) of industry and group standards for many times. This helps improve the overalldevelopment level and product quality of the industry.
Supply Chain ManagementZhende Medical categorizes supplier from multiple perspectives to achieve comprehensive management. Based on categorypositioning and the relationship with suppliers, and in view of our actual business situation, suppliers are divided into threelevels: core, important, and general. According to the annual performance evaluation of suppliers and other factors, suppliers aredivided into grades of A, B, C, and D. Over and above, Zhende formulates differentiated procurement management strategies forsuppliers of different levels to maximize the effectiveness of supplier management resources.Adhering to the idea of "shared concept, value collaboration, process compliance, and platform coordination", Zhende hasestablished a supplier lifecycle management process system from sourcing to elimination, and formulated detailed rules such asQualified Supplier Admission Management Rules, Qualified Supplier Assessment Management Rules, andSupplier Rectificationand Elimination Management Rules.What's more, to meet the needs of multiple parties and ensure sufficient reserves of suppliers, Zhende has formulated detailedrules such asSupply Market Research and Supplier Shortlisting Management RulesandPotential Supplier Admission andManagement Rules. These can fully meet the R&D, production and supply needs of new and old products, and continuouslyoptimize supplier structure. We have improved the SRM digital platform with effective implementation, ensuring the sustainabledevelopment of the supply chain.
We actively take part in or organize industry exchange activities. While learning excellent experiences from our peers, we sharethe concepts, expertise and experiences of Zhende. On top of that, in 2022, Zhende also conducted exchanges with outstandingenterprises such as Geely Automobile and Sanhua Holding Group.
We roll out school-enterprise cooperation. As an enterprise, we provide learning resources for students on campus to promotethe cultivation of industry talents. For example, in 2022, we collaborated with Shaoxing Vocational & Technical College andlaunched the first "Zhende Order Class" to help students learn professional skills in practice.
◇Zhende's Participation in Standard Formulation
◇Zhende's Participation in Industry Exchange Activities in 2022
? During the reporting period, Zhende participated in the formulation (revision) of
group standards.? As of the end of 2022, Zhende has completed the preparation (revision) of
industry standards of which
were mainly drafted by Zhende. These includeMedical Elastic Bandage - Characteristics and TestMethods for Basic Performance,Medical Thrombosis Prophylaxis Hosiery,Medical Compression Hosieryfor Varices, Sterile Surgical Films for Single Use, andContact Wound Dressing - Part 1: Paraffin Gauze.? As of the end of 2022, Zhende has completed the formulation (revision) of a total of
group standardsof which
were mainly drafted by Zhende. These includeDisposable Surgical Gowns,Paraffin Gauze,Medical Surgical Masks,Medical Disposable Protective Clothing,Medical Elastic Bandages,DigitalWarehouse Management Specifications, andDigital Production Management Specifications for Masks.
Shared conceptValue collaboration Process compliancePlatform coordinationAutomationInformatizationManagement abilityProfessional ability
Information sharingTechnical cooperation
Cost collaboration
Supplier lifecycle
managementBehavioral compliance
Using the SRMplatform to linkZhende with suppliers
February 2022Zhende participated in the MEDICAL JAPAN;
May 2022
As a top household medical device brand, Zhende was listed on the "2021-2022 Long-termBrand List in the Retail Market" of CPHF;
August 2022Zhende participated in the Zhejiang International Emergency Supplies Trade Fair;November 2022Zhende participated in the 86th China International Medical Equipment Fair.
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Zhende strongly supports the implementation of procurement digitalization projects. Since 2021, the SRM platform has beendeveloped and used, enabling the normal operation of seven modules till today, including supplier management, materialmanagement, demand management, sourcing management, order management, delivery system, and financial collaboration.Additionally, the BI administration cockpit is used to monitor and analyze operational data.This platform empowers procurement business management from three aspects: supplier management, end-to-endprocurement processes, and digital analysis.During the reporting period, the collaborationrate of Zhende's purchase orders was
the compliance rate with standarddelivery dates was
and the change rate of order deliverydates was
98.64%92.30%4.78%Supply Chain Environment and Social Risk ManagementWhile strengthening our own ESG management, we are aware that environmentaland social risks in the supply chain can also increase our ESG risk. Therefore, in2022, Zhende gradually strengthened the management of supplier environmentaland social risks through awareness promotion, research and evaluation, and othermethods.At the 2022 Supplier Conference of Zhende, we devoted a special session forpromoting environmental management and social responsibility managementawareness among suppliers. Zhende's ESG management in this regard was alsointroduced, and its requirements for environmental management and socialresponsibility management were made clear.In 2022, we conducted environmental and social risk surveys on 672 suppliersthrough questionnaire and other methods. The results show that 82% of suppliershave organized environmental and social impact assessments. In addition, weassisted two suppliers in passing third-party social responsibility audits.In the future, we will conduct survey on suppliers at least once a year. Several ofthem will be chosen annually to receive third-party social responsibility audits tofurther strengthen the management of supplier environmental and social risks.Empowerment - Bringing Healthy Life within ReachZhende shoulders the mission of "ensure medical safety and reduce healthcare cost". We advocate the brand proposition of"bringing healthy life within reach", and provide high-quality medical products and health services to society. In addition, wedonate medical supplies to the public, and build overseas supply chains to empower local medical development. We do our bestto meet the needs of different regions and people for medical products and health services, so as to improve social medicalaccessibility from multiple perspectives and levels.Professional Healthcare SolutionsWe provide professional clinical services and surgical site infection control and medium to long-term nursing solutions to thesociety, thereby reducing medical costs.
Today, workers who sit or stand for a long time are prone to varicose veins. In China, the prevalence rate of lowerlimb venous diseases is 8.89%, that is, nearly 100 million patients. The annual new incidence rate is 0.5%?3.0%, ofwhich venous ulcer accounts for 1.5%
, seriously affecting the quality of life of patients. Venous thromboembolism(VTE) is the third leading vascular lethal disease. Most of hospitalized patients have at least one or more riskfactors of VTE, with blood stasis being one of the three factors contributing to VTE formation.Medical compression socks are an effective physical therapy method for treating lower limb varicose veins andpreventing VTE. By applying external pressure that decreases from bottom to top to the lower limb, the diameterof the lower limb veins is reduced, and blood reflux is thus promoted. In this way, it reduces lower limb venoushypertension, mitigates blood accumulation in the lower limb veins, and improves the symptoms of lower limbvaricose veins. Lower limb venous thrombosis is also prevented.Zhende fulfills the responsibility of solving the problems of thousands of patients and bringing health andhappiness to thousands of families. Based on Chinese leg shape data, Zhende is the first to introduce world-classproduction equipment and a complete set of pressure testing equipment. With international imported raw materialsand technological R&D, Zhende takes the lead to launch a series of medical compression socks in China, such astherapeutic varicose vein socks, antithrombotic gradient pressure bands, and compression socks. As an industryleader, Zhende Medical has participated in the development of standards for therapeutic varicose vein socks andanti-embolism socks in the Chinese pharmaceutical industry.Based on its long-term exploration in the field of healthcare and the interaction established between its productsand patients, Zhende realizes that the value of these products lies not only in liberating patients from potentialhazards through preventive measures, but also in restoring and improving their quality of life.This recognition promotes the establishment of our corporate mission of "ensure medical safety and reducehealthcare cost", and affects everything we are doing and will do. In other words, excellent operations enable us tofurther expand our product portfolio and provide higher quality services to global users.
Zhende Medical's Solution for Preventing Chronic Varicose Veins Helps Patients Recover and Improve Their Quality Of Life.
Note 1: The source is theGuidelines for the Diagnosis and Treatment of Chronic Venous Diseases in China.
Medical Compression Socks
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Sustainable Development ManagementCompliance and ReformCaring Employee GrowthPromoting Green Development To Be A Reliable Partner Responsibility Actions2022 Sustainability Reportand ESG Report ZHENDE MEDICAL CO.,LTD.
In the operating room, medical personnel need innovative and customized solutions to improve both surgicalefficiency and safety. Zhende Medical is the most reliable partner for customers. We can optimize efficiencythroughout the entire cycle of surgical care, ensure medical safety and reduce healthcare costs, thus helpingcustomers achieve better medical outcomes.We initiate the action of replacing traditional cotton surgical bags with disposable surgical bags in China. Throughanalyzing the safety and cost of traditional cotton surgical bags and disposable sterile surgical bags, we havefound that the comprehensive use cost of disposable sterile surgical bags is lower than that of cotton surgicalbags. Moreover, product replacement makes surgical site infection control more effective.Ensuring product safety: Zhende’s disposable surgical bags have all production processes completed in thepurification workshop, from raw materials to finished product assembly. Strictly controlled sterilization procedurescan effectively ensure the hygiene and safety of medical products.Satisfying personalized needs: Zhende's R&D team designs products and combinations suitable for differentsurgical procedures based on the surgical characteristics of various parts of the human body, such as surgicalgowns made of various materials, surgical drapes specifically designed for a particular surgery, and variousmedical dressings. In this way, it meets the needs of various types of surgeries.Improving surgical efficiency: Zhende provides a product model of "standardized combination packaging, flexibleand independent assortments of accessories" for operating rooms. This can help medical workers efficiently applysurgical draping, maximizing the value of safety and efficiency.By identifying and implementing new methods, we continuously fulfill our corporate mission to improve theefficiency of operating rooms and reduce medical costs, while ensuring the safety of patients and healthcareworkers.
Based on 29 years of technical accumulation focused on medical supplies, Zhende Medical continuously developsand upgrades personal protective products, helping healthcare workers and patients solve problems whilereceiving comprehensive protection in work and life with a comfortable user experience.We continue to improve product performance by using wide ear bands to alleviate ear discomfort caused byprolonged wearing of masks. The use of low resistance protective masks reduces resistance without reducingprotective effects, and improves the breathability of wearing masks. Respiratory discomfort caused by prolongedwearing of masks is thus mitigated. Through continuous product upgrades, we provide products that are morecomfortable to wear and have stronger protective performance, bringing a healthy and comfortable life withinreach.
Zhende Medical Surgical Site Infection Control Products Improve Surgical Efficiency and Safety Zhende Medical Personal Protective Products Protect People's Safety and Health
Surgical Site Infection Control Products
Personal Protective Products
Popularizing Home Personal Care and Health ServicesWe promote the large-scale retail TOC health business and provide "non-professional family doctor" solutions for home personal care.In 2022, we fully promoted 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, we havecomprehensively examined our retail business, and strengthened the construction of customer and consumer centered productefficiency integration. Tools such as SCRM, CRM, and E sales system are utilized to enhance digital marketing capabilities, andto continuously improve customer and consumer satisfaction.Similarly, we continue to expand our product coverage, which makes it easy for consumers to purchase the home health careproducts they need.
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Construction of Overseas Supply ChainsTo promote Zhende's deep involvement in the global medical device value chain and enhance its global competitiveness,we enhance the implementation of our overseas factory building strategy. More efforts are made in our overseas businesslandscape. We also prepare to build overseas production bases in Africa and other regions.Rochelle Healthcare, a subsidiary controlled by Zhende in the UK, has acquired 100% equity of MIDMEDS LIMITED in the UK,expanding its service scope in the healthcare system. More important supplies and services are provided to hospitals, primarycare, and community care institutions. We will maintain our commitment to enhancing treatment, prevention and personalhealth throughout the healthcare industry, thereby benefiting more patients.The construction of these overseas production bases can create more jobs for local residents. At present, Zhende's UK factoryhas over 300 employees. After the construction of the factory in Kenya is completed, more jobs will be available for the localpeople. Besides, the construction of overseas production bases can also bring local enterprises advanced technology andmanagement experience. The competitiveness and innovation ability of local industries will be increased, and local economicdevelopment will be promoted.
? Through various modes such as self-operation
and cooperation, key sales channels such asTaobao, JD, Pinduoduo, Douyin, Kuaishou, 1688and Amazon have been covered.? In 2022, the online fans of Zhende e-commerce
shops exceeded 8 million.
? We continue to improve the market developmentand cooperation stickiness of national and regionalchain drugstores, individual pharmacies, andsupermarket convenience stores through a varietyof measures. These include dealer classificationand grading management, establishment of akey customer operation system, as well as IPcooperation, dual brand product construction, andmodel market creation, etc.? As of the end of April 2023, Zhende's coverage
rate of top 100 chain pharmacies has reached98%, totalling over 110,000 pharmacies, anincrease of over 20,000 compared to that of thebeginning of 2022. Over 18,000 conveniencestores and in supermarkets are also covered.
Online Retail ChannelsOffline Retail Channels
◇Measures and Achievements for Retail Business Enhancement
ESG Data
Employee PerformanceEmployee Recruitment and Hiring
Please refer to Zhende Medical's "2022 Annual Report" for details on corporate governance andoperational data.
DisclosuresUnit 2022Number of incidents punished for violating employment and labor laws andregulations
#0Total number of employees
Person8,485By gender
Number of male employees Person2,916Number of female employees Person5,569By work area
Number of employees working in Chinese Mainland Person8,182Number of employees working in Hong Kong, Macao,Taiwan, and overseas
Person303Employee turnover rate
%11.22
1. Data description: The total number of employees is consistent with the disclosed data in Zhende's annual report, including full-time labor contract
employees of the parent company and major subsidiaries, excluding part-time and other types of employment employees.
2. Calculation formula: Employee turnover rate = Employees who have resigned /total number of employees * 100.
Disclosures Unit 2022
Labor contract signing rate %100.00Employee remuneration and welfare expenses
RMB 10,00098,650New employee satisfaction
%92Employee net promoter score (E-NPS)
%62.85
1. Data description: This includes salaries, bonuses, allowances, subsidies, and other benefits paid to employees.
2. Data description: It refers to the results of the satisfaction survey among new employees.
3. Calculation formula: E-NPS = Proportion of employees willing to recommend the company to their families and friends - Proportion of employees
unwilling to recommend - Employee voluntary turnover rate.
Employee Rights and Benefits
ESG Data
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1. Calculation formula: Employee training coverage rate = Number of employees receiving training/Total number of employees * 100%.
2. Calculation formula: Per capita training time for employees = Total training time/Total number of employees * 100%.
1. Calculation formula: Work-related injury rate per 1,000 employees = Number of employees injured at work/(total number of employees/1,000).
2. Calculation formula: Coverage rate of employees receiving occupational health and safety related training = Number of employees receiving
occupational health and safety related training/Total number of employees * 100.
Disclosures Unit 2022Employee training coverage rate
%100.00Per capita training time for employees
Hour 66.11
Employee Training and Development
Disclosures Unit2022
Number of incidents punished for violating occupational health and safetylaws and regulations
#0Number of employees affected by occupational diseases Person0Work-related injury rate per 1,000 employees
/0.59Number of employees who died due to work-related injuries Person0Working days lost due to work-related injuries Day159Coverage rate of employees receiving occupational health and safety relatedtraining
%100.00
Occupational Health and Safety
R&D and Innovation Performance
DisclosuresUnit 2022
R&D investmentRMB 10,00022,700Number of R&D personnel Person656Number of R&D projects #578
R&D and Innovation
Disclosures Unit2022
Number of trademark applications in 2022 #9Number of trademarks granted in 2022 #47Number of patent applications in 2022 #133Number of patent authorizations in 2022 #121Accumulated number of patents applied#1,120Accumulated number of authorized patents #635
Intellectual Property Protection
Product and Customer Service Performance
DisclosuresUnit 2022Number of violations of laws and regulations related to products and services
#1Number of products sold that should be recalled due to safety and healthissues
#0
Product Quality and Safety
1. Data description: It refers to the sales of Zhende's products in the domestic market. Among them, in 2022, there was one case of violating
regulations concerning Zhende's products. Its industrial mask failed the particle filtration efficiency test. After the incident, Zhende traced thewhereabouts of products based on sales records. It has found that this batch of masks have no inventory in the market. Some product dealers havealready disposed of them as scraps. In the subsequent production of this civilian protective product, Zhende will strictly control the raw materials andconduct stricter inspections of the production to further improve the quality of its products.Customer Service
Disclosures Unit 2022Customer net promoter score(C-NPS)
Domestic market %88.11
Overseas market%30.51Number of complaints received regarding products and services #1,569Product and service complaint handling rate
%100.00
1. Data description: In 2022, Zhende began using the C-NPS method to replace the customer satisfaction survey method used in 2020 and 2021.
Calculation formula: C-NPS = % promoters - % detractors.
2. Calculation formula: Product and service complaint handling rate = Number of complaints processed/Total number of complaints received about
products and services * 100%.
ESG Data
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Calculation formula: Social contribution per share = (Net profit of Zhende + taxes created within the year + salaries paid to employees + loan interestpaid to creditors such as banks + value created for other stakeholders such as external donations - other social costs caused by environmentalpollution) /total number of shares of Zhende.
Disclosures Unit2022
Total investment in public welfare and charity RMB 10,000527.40Number of employees participating in voluntary activities Person184Total time of employee volunteer service Hour926Social contribution value per share
RMB 1.007.43
Community Public Welfare Performance
Environmental performance
Disclosures Unit 2022
Number of incidents punished for violating environmental protection laws andregulations
#0Penalty amount for violating environmental protection laws and regulations RMB 10,000 0Annual environmental protection investment expenditure RMB 10,000 1,504
Environmental Management System
DisclosuresUnit 2022
Total amount of purchased electricitykWh 84,890,248Purchased non-renewable electricity kWh 84,649,301Purchased renewable electricity kWh 240,947Self-generated renewable electricity
kWh 907,504Total amount of purchased steam Ton167,993Gasoline consumption Liter45,972.46Diesel consumption Liter25,605.10Natural gas consumption Cubic meters1,156,316Total water consumption Ton 1,031,955Recycled water ratio %63.75Total amount of packaging materials used for finished products Ton 8,300
Resource Management
1. Data description: The statistical scope of resource management related data includes Zhende Medical headquarters and five subsidiaries including
Xuchang Zhende, Xuchang Zhengde, and Henan Zhende, etc.
2. Data description: All self-generated renewable electricity is from photovoltaic power generation. Among them, in 2022, the power generated by
Zhende Medical headquarters was 22,000 kWh, Xuchang Zhengde 192,394 kWh, Xuchang Zhende 369,692 kWh, and Henan Zhende 125,418 kWh.
Disclosures Unit 2022Total amount of waste generated Ton1,120.48Total amount of non-hazardous waste generated Ton1,097.69Total amount of hazardous waste generated Ton22.79
Emissions and Waste Management
1. Data description: The statistical scope of data related to emissions and waste management includes Zhende Medical headquarters and 5
subsidiaries including Xuchang Zhende, Xuchang Zhengde, and Henan Zhende, etc.
DisclosuresUnit 2022The amount of environmentally friendly packaging materials used in thefinished product
Ton 4,250Proportion of environmentally friendly packaging materials used in finishedproducts
%51.20
Disclosures Unit2022Scope 1 greenhouse gas emissions Ton of CO
e 2,691.74Scope 2 greenhouse gas emissionsTon of CO
e 99,495.49Total greenhouse gas emissions (Scope 1 + Scope 2) Ton of CO
e 102,187.23
Climate Change Mitigation and Adaptation
1 2 3
1. Data scope: The statistical scope of greenhouse gas emissions data includes the data of Zhende Medical headquarters and five subsidiaries including
Xuchang Zhende, Xuchang Zhengde, and Henan Zhende.
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),ISO14064-1:2018 Greenhouse Gases - Part 1: Specification with Guidance at the Organization Level for Quantification and Reporting ofGreenhouse Gas Emissions and Removals, andGeneral Guideline of the Greenhouse Gas Emissions Accounting and Reporting for Industrial Enterprises(GB/T32150-2015),Guidelines for Accounting Methods and Reporting of Greenhouse Gas Emissions of Enterprises - Power Generation Facilitiesand otheraccounting 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 GWP valuecomes from IPCC AR6, 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 theGuidelines for Accounting and Reporting Greenhouse Gas Emissions from LandTransport Enterprises (Trial)(2015),China Energy Statistical Yearbook(2021), andGuidelines for Accounting and Reporting Greenhouse Gas Emissionsfrom Enterprises of Other Industries (Trial)(2015). The emission factors used in Scope 2 are calculated based on relevant documents issued by Ministryof Ecology and Environment of China. Among them, the emission factor of the power grid in 2020 is 0.5839 tCO
e/MWh, with reference to theNotice onPublic Solicitation of Opinions on the Guidelines for Accounting Methods and Reporting of Greenhouse Gas Emissions of Enterprises - Power GenerationFacilities(Revised in 2021) (Draft for Soliciting Opinions). The emission factor of the power grid in 2021 is 0.5810 tCO
e/MWh, with reference to theNoticeon Key Tasks Related to the Management of Greenhouse Gas Emission Reports for Enterprises in 2022. The emission factor of the power grid in 2022 is
0.5703 tCO
e/MWh, with reference to theNotice on Tasks Related to the Reporting and Management of Greenhouse Gas Emissions of Power GenerationEnterprises in 2023-2025.
Report Benchmarking Index Table
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Report Benchmarking Index TableBenchmarking Index Table ofGuideline No. 1 for the Application of Self-regulatory Rules for CompaniesListed on the STAR Market of the Shanghai Stock Exchange - Standardized Operation(2022)
Terms Report Chapter
8.1Sustainable Development Management
8.2
Anti-corruption and Business EthicsResponsible MarketingIntellectual Property Protection
8.3 Sustainable Development Management
8.4ESG Data
8.5 About This Report
8.6: (I) Zhende has disclosed its systems, measures,
and performance in environmental, social,and corporate governance aspects in thisreport. The specific content is detailed in therelevant chapters of the report.
8.6: (II)
8.6: (III)
8.7
Caring-Employee Rights and BenefitsPersistence-Employees' Safety and Health
8.8: (I)
Environmental Management SystemEmissions and Waste Management
8.8: (II) Environmental Management System
8.8: (III) Resource Management
8.8: (IV) Emissions and Waste Management
8.8: (V) Emissions and Waste Management
8.8: (VI) Not applicable
8.8: (VII) Supply Chain Management
8.8: (VIII) Climate Change Mitigation and Adaptation
8.9: (I) Environmental Management System
8.9: (II) ESG Data
8.9: (III)
Emissions and Waste ManagementESG Data
8.9: (IV) Emissions and Waste Management
8.9: (V) Environmental Management System
8.9: (VI) Emissions and Waste Management
8.9: (VII) Not applicable
8.9: (VIII) Not applicable
8.9: (IX)
Environmental Management SystemEmissions and Waste ManagementResource ManagementClimate Change Mitigation and Adaptation
Terms Report Chapter
8.10: (I) Environmental Management System
8.10: (II) Not applicable
8.10: (III) Not applicable
8.10: (IV) Not applicable
8.10: (V) Environmental Management System
8.10: (VI) Not applicable
8.11Environmental Management System
8.12: (I)
Not applicable because Zhende and its mainsubsidiaries are not key pollutant dischargeorganizations .
8.12: (II)
8.12: (III)
8.12: (IV)
8.13: (I) Product Quality and Safety
8.13: (II) Product Quality and Safety
8.13: (III) Product Quality and Safety
8.13: (IV) Product Quality and Safety
8.14: (I)
Employee Recruitment and HiringEmployee Rights and Benefits
8.14: (II) Persistence-Employees' Safety and Health
8.14: (III)
A Comprehensive Talent DevelopmentSystemSmooth Career Development Channels
8.14: (IV)
Employee Recruitment and HiringEmployee Rights and Benefits
8.15 R&D and Innovation
Benchmarking Index Table ofGRI Standards
Note
From January 1, 2022 to December 31, 2022, Zhende Medical reported the informationquoted in this index with reference to theGRI Standards.GRI 1 used 2021GRI 1: Foundation 2021Disclosures Report Chapter2-1
About This ReportAbout Zhende Medical2-2About This Report2-3About This Report2-6About Zhende Medical2-7ESG Data2-9
Corporate GovernanceESG Management O-Chart2-13ESG Management O-Chart2-14ESG Management O-Chart2-16ESG Management O-Chart2-22ESG Strategy2-25
Anti-corruption and Business EthicsEmployment and Recruitment2-27ESG Data2-28Industry Exchange and Cooperation2-29Stakeholder Communication2-30Employee Rights and Benefits3-1Analysis of Material Topics3-2Analysis of Material Topics3-3Analysis of Material Topics201-1ESG Data205-2Anti-corruption and Business Ethics205-3
Appendix: List of Laws, Regulations,Policies and Standards301-1ESG Data302-1ESG Data302-4Resource Management303-1Resource Management303-2Emissions and Waste Management303-5ESG Data305-1ESG Data305-2ESG Data306-1Emissions and Waste Management
Disclosures Report Chapter306-2Emissions and Waste Management306-3ESG Data401-1ESG Data401-2Employee Rights and Benefits403-1Persistence-Employees' Safety and Health403-2Persistence-Employees' Safety and Health403-3Persistence-Employees' Safety and Health403-5Persistence-Employees' Safety and Health403-6Persistence-Employees' Safety and Health403-7Persistence-Employees' Safety and Health403-9ESG Data403-10ESG Data404-1ESG Data404-2
A Comprehensive Talent DevelopmentSystem405-1ESG Data406-1Employee Recruitment and Hiring407-1Employee Rights and Benefits408-1Employee Recruitment and Hiring409-1Employee Recruitment and Hiring413-1Community Communication414-2Supply Chain Management416-1Product Quality and Safety416-2
Product Quality and SafetyESG Data417-1Product Quality and Safety417-2
Appendix: List of Laws, Regulations,Policies and Standards417-3
Appendix: List of Laws, Regulations,Policies and Standards418-1
Appendix: List of Laws, Regulations,Policies and Standards
Appendix: List of Laws, Regulations, Policies and Standards
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Benchmarking Index Table of SDGs
SDGs Report Chapter
Employee Rights andBenefitsCommunityCommunication andDevelopment
Empowerment - BringingHealthy Life within Reach
A Comprehensive TalentDevelopment SystemIndustry Exchange andCooperationCommunityCommunication andDevelopment
Employee Recruitment andHiringEmployee Rights andBenefits
EnvironmentalManagement SystemEmissions and WasteManagementResource Management
SDGs Report Chapter
Resource ManagementClimate Change Mitigationand Adaptation
Employee Recruitment andHiringEmployee Rights andBenefitsA Comprehensive TalentDevelopment SystemSmooth CareerDevelopment ChannelsR&D and InnovationEnvironmentalManagement SystemEmissions and WasteManagementResource ManagementClimate Change Mitigationand Adaptation
Resource ManagementClimate Change Mitigationand Adaptation
Anti-corruption andBusiness EthicsEmployee Recruitment andHiring
Appendix: List of Laws, Regulations,Policies and StandardsTo help readers better understand the compliance of Zhende's business activities, the following table lists the major laws,regulations, policies and standards that Zhende complies with by field. In 2022, Zhende had one violation in the field of productquality and safety, as detailed in the "ESG Data" section of this report. Except this case, Zhende had no violations in other fields.
Field Major Laws, Regulations, Policies and StandardsCorporate governance
Company Law of the People's Republic of China,Securities Law of the People's Republicof China, theListing Rules of the Shanghai Stock Exchange, andGovernance Standards forListed Companies
Investor relationsmanagement
Company Law of the People's Republic of China,Securities Law of the People's Republic ofChina, andGuidelines for Investor Relations Management of Listed Companies
Information disclosure
Company Law of the People's Republic of China,Securities Law of the People's Republic ofChina, andManagement Measures for Information Disclosure of Listed Companies
Construction of internalcontrol system
Company Law of the People's Republic of China,Securities Law of the People's Republic ofChina, andBasic Standards for Internal Control of Enterprises
Anti-corruption and businessethics
Criminal Law of the People's Republic of China,Law of the People's Republic of ChinaAgainst Unfair Competition,Anti-Money Laundering Law of the People's Republic ofChina, andInterim Provisions on Prohibition of Commercial Bribery issued by the StateAdministration for Industry and Commerce
Employee Recruitment andHiring
Labor Law of the People's Republic of ChinaandLabor Contract Law of the People'sRepublic of China
Employee safety and health
Law of the People's Republic of China on Work SafetyandLaw of the People's Republic ofChina on Prevention and Control of Occupational Diseases
R&D and innovation
ISO 13485:2016 Medical Devices - Quality Management Systems - Requirements forRegulatory Purposes(hereinafter referred to as ISO 13485:2016) and FDA 21 CFR Part 820R&D ethics
Helsinki Declaration of the World Medical Association,Quality Management Standards forClinical Trials of Medical Devices, andGuiding Principles for Clinical Trial Design of MedicalDevicesIntellectual property protection
Patent Law of the People's Republic of China,Trademark Law of the People's Republic ofChina, andCopyright Law of the People's Republic of China
Environmental management
Environmental Protection Law of the People's Republic of China,Environmental ImpactAssessment Law of the People's Republic of China,Water Pollution Prevention and ControlLaw of the People's Republic of China,Air Pollution Prevention and Control Law of thePeople's Republic of China, andLaw of the People's Republic of China on Prevention andControl of Environmental Pollution by Solid Waste.Resource management
Law of the People's Republic of China on Energy Conservation,Water Law of the People'sRepublic of China, andRegulations on the Administration of Water Intake Permits andCollection of Water Resource Fees
Product quality and safety
Medical Device Production Quality Management Standards,Medical Device Supervisionand Management Regulations,Medical Device Production Supervision and ManagementMeasures,ISO 13485:2016, andFDA 21 CFR Part 820
Responsible marketingAdvertisement Law of the People's Republic of China
Data security and privacyprotection
Data Security Law of the People's Republic of China