Table of Contents
About This Report ...... 3
Letter from the Management ...... 5
Letter from Chief Compliance Officer ...... 7
Chapter 1 Our Company at A Glance ...... 9
1.1 Company Profile ................................................ 9
1.2 Operational Performance ......................................... 15
1.3 Corporate Governance ........................................... 15
1.4 ESG Management .............................................. 20
Chapter 2 Innovative Development for Excellence ...... 26
2.1 Committed to Innovation and R&D ................................ 26
2.2 Quality Assurance .............................................. 29
2.3 Cybersecurity .................................................. 34
Chapter 3 Empowering Customers’ Success for Win-Win Results ...... 39
3.1 Provide Quality Services ......................................... 39
3.2 Protect User Privacy ............................................ 42
3.3 Listen to Customer Feedback ..................................... 43
3.4 Contribute to Industrial Ecosystem ................................. 45
3.5 Supply Chain Development ....................................... 46
Chapter 4 Serve the Society to Create a Better Future ...... 49
4.1 Dedicated to Public Welfare ...................................... 49
4.2 Help to Build Harmonious Ecology ................................ 51
4.3 Build a Smart City Together ...................................... 56
4.4 Embrace Intelligent Manufacturing ................................. 61
Chapter 5 Talent-Focused, Growing Together ...... 63
5.1 Protect the Rights and Interests of Employees ........................ 63
5.2 Talent Training ................................................. 65
5.3 Safeguard Health and Safety ...................................... 68
5.4 Empathize Employees’ Well-being ................................. 71
Chapter 6 Pursue Green Operation, Empower Sustainable Ecosystem ...... 76
6.1 Build Management System ....................................... 76
6.2 Practice Green Operation ........................................ 78
6.3 Reasonably Reduce Emissions .................................... 81
6.4 Create Environmental-friendly Culture .............................. 85
Appendix Report index: GRI Standards ...... 88
About This Report
This report is the first Environmental, Social and Governance (hereinafter referred to as "ESG")Report of Hangzhou Hikvision Digital Technology Co., Ltd. (hereinafter referred to as "Hikvision","we" or "the Company"). This report covers Hikvision's performance and guidelines on ESG issueswith a focus on the concerns of stakeholders and how the Company could achieve sustainabledevelopment in the environmental, social and economic aspects.
Scope
This report covers the data and information of the Company from January 1 to December 31, 2018(hereinafter referred to as the “reporting period”). Some information covers in or prior to 2017. Thisreport covers Hikvision and its subsidiaries.
Basis of Preparation
This report is made reference to GRI Standards issued by the Global Reporting Initiative (GRI)(hereinafter referred to as “GRI Standards”) in 2016, and Shenzhen Stock Exchange SocialResponsibility Instructions to Listed Companies. This report is in line with a set of establishedprocedures, including identifying and ranking relevant stakeholders, identifying and ranking materialESG issues, determining the scope of reporting, collecting relevant data, preparing the report based onthe data, and viewing the data.
Data Source and Reliability Assurance
Information and cases included in this report are mainly from the Company's statistical reports andrelevant documents. The Company promises that this report does not contain any false or misleadingstatement and is responsible for the authenticity, accuracy, and completeness of its contents.
Access and Feedback
This report is available in Simplified Chinese and English. For download, please visit
www.cninfo.com.cn
Confirmation and ApprovalAfter confirmation by management, this report was approved by the Board of Directors on April 18
th
2019.
We highly value the opinions from stakeholders and appreciate your feedback us through the followingcontact methods. Your comments will help us further improve this report and our ESG performance.
Contact: 0571-88075998Website: www.hikvision.comBoard Office: hikvision@hikvision.comInvestor Relations: ir@hikvision.comAddress: No. 518 WuLianWang Street, Binjiang District, Hangzhou
Letter from the Management
Throughout history, no matter how science and technology progressed, business modelsupdated, society, economy and culture evolved, pursuing security, innovation and sustainabledevelopment has always been the eternal theme of the world, and as well, the socialresponsibility and mission that the Company should undertake. In 2018, the explosivedevelopment and integration of new technologies such as artificial intelligence, Internet ofThings, cloud computing, and big data has improved our production and life, prompting thewhole society to enter a new cycle of revolution. The Company continues to increaseinvestment in technology R&D, and develops intelligent Internet of Things technology withvideo as its core, keeps promoting social security and intelligence development to enhancethe ability to understand the world and make rational decisions for the public. At the sametime, while striving for business success, the Company is also pursuing the harmony betweenthe Company and society, between people and nature. Committed to the philosophy ofsustainable development, we have been taking into account the macro-planning andimplementation of corporate environmental, social and governance management, andcombine corporate values with social progress and improvement of people's livelihood todeepen the integration of corporate business and social responsibility.
For a long time, the Company has been practicing the core values of “dedication to clients’success, value oriented, integrity and down-to-earth, pursuit of excellence”.
The first is centered on customer needs. We adhere to the engineering culture and the spirit ofartisans, continue to promote the R&D of technology and products, and improve productquality. Meanwhile, we regard open integration as a new business pattern in the era ofintelligence, and establish a complete open system covering products, services andtechnologies, and work together with partners including suppliers to promote industrialdevelopment.
The second is highly focused on the social responsibility value for products and solutions. Asan important technology, product and solution provider for “smart city” establishment, theCompany continues to explore innovative intelligent solutions in the areas of public security,transportation, finance, education, manufacturing and other related aspects of social economyand people's lives. We will create a safe, efficient, convenient and happy life for the publicwith intelligent methods, and strive to make more people feel the support of science andtechnology for society and environment.
The third is to build a harmonious team. The Company attaches great importance toemployee rights and care, and has established a series of employee training and developmentmanagement systems to help employees improve their knowledge and skills to meet current
and future job requirements, thereby enhancing the overall operational efficiency andcompetitiveness of the Company. We advocate rewarding employees based on theircontributions, providing employees with competitive pay package and perfect welfareguarantees, establish long-term incentive policies for sustainable development, and achieve awin-win situation for both employees and the Company.
The fourth is to practice the concept of green development and help build a sustainableecosystem. The Company not only conserves energy and reduces emissions in daily operation,but also seeks clean technology opportunities in its own products to improve thecomprehensive utilization efficiency of resources, protect the natural ecological environment,and cope with climate change.
The fifth is caring and giving back to the society. In the process of development, we neverforget our social responsibilities, treat people with sincerity, and develop businesses withintegrity. We always combine corporate social responsibility with our own businessdevelopment. We are always grateful and strive to give back to the society. The Companycontinues to practice social welfare and promotes ecological protection and harmoniousdevelopment of the society through the strengths of science and technology.
In the future, the Company will continue to promote diversified development by virtue ofvideo technology and artificial intelligence, enable individuals and families to controlreal-time security and empower innovators to discover deep insights, providemulti-dimensional information for decision makers, and lay the foundation for building anddeveloping smart society. We will conduct business operations in a more responsible way,motivate talents and management teams more effectively, strengthen communication withstakeholders more sincerely and transparently, and continue to enhance the Company's corecapabilities in sustainable development.
Hikvision empowers visionaries to see the future. See far, go further!
April 2019
Letter from Chief Compliance Officer
Hikvision is committed to being a respected, global company that contributes to the secureand sustainable development of society.Complying with local, national and international laws is the hallmark of our global businessstrategy. We constantly work to deepen our understanding of statutes and regulations –particularly, but without limitation, rules applying to data protection, export controls, faircompetition and anti-commercial bribery. In December 2018, the Company created a newCompliance Department to promote the establishment of standardized approach tocompliance.Over the past year, there have been numerous reports about ways that video surveillanceproducts have been involved in human rights violations. We read every report seriously andare listening to voices from outside the Company. We are taking a hard look at our productsand business. As part of this process, we have recently commissioned an internal review ofour operations by the U.S. law firm, Arent Fox LLP, mandating it to look into relevanttransactions so the Company can enhance its screening standards to better protect humanrights. Arent Fox will also help us improve the policies that will help ensure human rightscompliance going forward. As part of this effort, a high-level team from Arent Fox hasalready traveled to China twice.Technological innovation is the driving force of our Company. We provide high qualityproducts and services to create value for customers. Video technology plays an increasinglyimportant role in nearly all aspects of life today, from national security, law enforcement,business, education, art, culture, personal and property protection, and social networking.Our company has made an important contribution to the safety and development ofhumankind. At the same time, the Company is also keenly aware of the sensitivity of videotechnology. Through the joint efforts with external consultants, we hope to stick to originalaspiration for the benefits of humankind and to deliver the goodwill that technology canprovide to our valued partners.See far, go further!
Huang Fanghong
April 2019
Chapter 1 Our Company at A Glance
As an Internet of Thing (IoT) solution and big data service provider with video as its corecompetence, Hikvision advances the core technologies of video and audio encoding, videoimage processing, and related data storage, as well as cutting-edge technologies such as cloudcomputing, big data, and deep learning. We provide professional solutions and big dataservices for various sectors, including public security, transportation, judiciary, financialservices as well as intelligent buildings. Hikvision extended its business to various industriessuch as smart home, industrial automation, and automotive electronics based onaccumulation of video technologies to explore channels for sustainable long-termdevelopment. Thanks to effective corporate governance, Hikvision not only madebreakthrough in business performance, but also won extensive recognitions from all sectorsof society. Looking forward to the future, we are committed to become a well-respectedworld-class company.
1.1 Company Profile
First established as an audio-video compression board provider in November 2001, Hikvisionhas gradually developed into a provider of a board range of products and solutions coveringthe demands of security and visualized management of the entire video surveillance industry.Hikvision is a witness, practitioner and important promoter of video surveillance indigitalization, HD networking, and intelligence. We provide global clients with integratedhigh-quality security, data intelligent management and AI (artificial intelligence) empoweredsolutions based on a client satisfaction-oriented management system.According to an IHS report, Hikvision has been ranked as global No. 1 in the videosurveillance industry for seven consecutive years, with 22.6 percent
of the global videosurveillance market share. Furthermore, in the "A&S Security 50" list published by A&SSecurity Automation, Hikvision has been ranked No.1 in the world for three consecutiveyears.
Based on the global video surveillance market report published by IHS Markit in June 2018, with the2017 data as the statistical basis.
Business LayoutVideo, the most informative type of perception, has become an important bridge connectingthe physical world to the digital world supported by AI technologies. It promotes the Internetof Everything and helps industry clients to achieve intelligent industrial upgrading with AIOT（AI+IoT） as the core. Hikvision combines AI, video technology and the multi-scenariobusiness demands together to expand the use of video technology from security to manyother vertical markets, so as to help more clients to improve business efficiency andmanagement capbility, and facilitate the transformation and upgrading of traditionalindustries.As of the end of the reporting period, the Company has established 32 provincial businesscenters/level one branches in Mainland China and 44 branches overseas. Hikvision's productsand solutions have been applied in more than 150 countries and regions, significantlyfacilitating major projects such as G20 Hangzhou Summit, Beijing Olympics, Expo 2010,APEC Summit, Nuremberg High-speed Rail Station in Germany, and Seoul Safe City inSouth Korea.
32 provincial operation centers/First-level branches in Mainland China 44 overseas branches
Corporate PhilosophyFaced with opportunities and challenges arising from technological revolution, industrialintegration and globalization, we have always been committed to "empower vision for thesecurity and growth of the world." In order to achieve our sustainable development goals, weare ready to work with our clients, partners and professional organizations to improve theability of mankind in understanding the world and making scientific decisions. We willprovide new vision, new insights and new wisdom to stakeholders to collaborativelysafeguard public security, promote sustainable development, and create a safer and betterfuture.Looking ahead, we will continue to unleash the potential of computer vision to empowersmart security, smart transportation, smart manufacturing, smart education, smart business,smart tourism, smart home, etc. We will provide brand new solutions to lay the foundation fora smart society.
Corporate HonorsAs we create economic value, we also strive to undertake social responsibilities, act as a goodcorporate citizen and earn public respect. During the reporting period, we continued tooptimize management in terms of product quality, collaborative business relationship, socialwelfare, employee development and environmental protection with our own businessescompetence and development. We actively communicate with various stakeholders, furtherimprove corporate governance, and strive for sustainable development of economy, societyand environment.
? Quality Awards
| The Awards | From |
| National Quality Benchmark | China Association for Quality |
| National Quality Inspection Stable Qualified Products | China Association for Quality Inspection |
| National Typical Quality Integrity Benchmark Enterprise | China Association for Quality Inspection |
| National Leading Brand in Quality | China Association for Quality Inspection |
? Awards for Security Products
| The Awards | From |
| a&s Top 10 Security Brands in China 2018-Ranked Top 10 in Access Control | a&s magzine |
| a&s Top 10 Security Brands in China 2018-Ranked Top 10 in Alarm | a&s magzine |
| a&s Top 10 Security Brands in China 2018-Ranked Top 10 in AI Application | a&s magzine |
| a&s Top 10 Security Brands in China 2018-Ranked Top 10 in Intercom/ Smart Home | a&s magzine |
? Awards in Recognition of Industrial Position
| The Awards | From |
| 2018 Top 10 Contribution to Innovation in Chinese Electronic Information Industry | China Information Technology Industry Federation |
| 2018 Top 50 Social Contribution in Chinese Electronic Information Industry | China Information Technology Industry Federation |
| 2018 Top 100 Chinese Electronic Information Company | China Information Technology Industry Federation |
| 2018 Top 100 Chinese Enterprises in Software and Electronic Information Services | China Information Technology Industry Federation |
? Awards for Science and Technology Innovation
| The Awards | From |
| Second Prize of State Technological Invention Award | State Council of the People’s Republic of China |
| Second Prize of Zhejiang Science and Technology Awards | The People’s Government of Zhejiang Province |
| Zhejiang Patent Gold Award | Science Technology Department of Zhejiang Province |
| Top 100 High-tech Enterprise of Innovation Capacities | Zhejiang High-tech Enterprise Association |
? Awards for Manufacturing Capacities and Services
| The Awards | From |
| National Individual Champion Manufacturing Enterprise | Ministry of Industry and Information Technology of the People’s Republic of China China Federation of Industrial Information |
| a&s Top 100 Integrators Award | a&s magzine |
| Five-Star Certificate for After-Sales Services | National Commodity After-service Evaluation Compliance Certification Committee Beijing Sky Certification |
? Awards for Environmental Protection
| The Awards | From |
| CEC 024-2018 Five-Star Rating on Green Supply Chain Assessment for Security Camera | Alliance of Green Consumption and Green Supply Chain |
| CEC 022-2018 Five-Star Rating on Green Supply Chain Assessment for Disk Storage | Alliance of Green Consumption and Green Supply Chain |
? Awards for Social Responsibility
| The Awards | From |
| National “Value the Contract, Define the | State Administration for Industry and |
| Credit” Enterprise | Commerce of the People’s Republic of China |
| Zhejiang Province “Value the Contract, Define the Credit” Enterprise | Zhejiang Administration for Industry and Commerce |
| Enterprise of Responsibility and Valuable Innovation in Electronic Information Industry | Chinese Electronics Standardization Association |
| Zhejiang Quality Education Social Practice Base for Primary and Middle School Student | Quality and Technology Supervision of Zhejiang Province Department of Education of Zhejiang Province |
? Capital Market Awards
| The Awards | From |
| A-level Evaluation on Information Disclosure Assessment of Listed Companies in Small and Medium Enterprise Board | Shenzhen Stock Exchange |
| Golden Horse Award for Listed Innovation Tech Company | Security Daily |
| Top 50 Chinese Company Listed on the SME Board by Value / Top 10 Management Team of Chinese Company Listed on the SME Board | Security Times New Fortune |
| Top 10 Board of Directors in China | Fortune (China ) Aon Hewitt Investment Consulting |
? Other Awards
| The Awards | From |
| First Prize in the 2018 Video Behaviour Recognition Challenge "Full Track" category | CVPR (International Conference on Computer Vision and Pattern Recognition) |
| National Top 100 Quality Integrity Benchmarking Demonstration Enterprises | General Administration of Quality Supervision, Inspection and Quarantine |
| 2018 China Top 50 Big Data Enterprises | China Electronics Information Industry Development Research Institute China Big Data Industry Ecology Alliance |
| Silver Award for Innovation in China International Industry Fair | China International Industry Fair |
1.2 Operational Performance
During the reporting period, we continued to penetrate the market, focus on client value, andseek innovation-powered development. According to our medium and long-term strategicplan, we increased our inputs in R&D to promote video-centered businesses. Moreover, wecontinuously improved our management capabilities and adhered to sustainable developmentstrategies to further increase our business volume as well as profitability. With soliddevelopment of operational businesses and improving economic performance, the Companycontinues to create sustainable returns to investors and society as it develops itself.
* Payment to government includes Hikvision's total tax payment in each country/region excluding deferred taxes.
1.3 Corporate Governance
Sound corporate governance and strict risk management are important pillars for the healthydevelopment of a company. We are committed to creating a transparent, honest and compliantoperating atmosphere. We aim to establish an effective accountability mechanism andconform to regulations against corruption, monopoly, and unfair competition to protect thefair interests of the Company as well as our clients and shareholders.In strict accordance with Company Law of the People's Republic of China, Securities Law ofthe People's Republic of China, Code of Corporate Governance of Listed Companies, StockListing Rules of the Shenzhen Stock Exchange, Guidelines of the Shenzhen Stock Exchangefor the Standard Operation of Listed Companies on the Small and Medium-sized EnterpriseBoard, and other relevant laws and regulations as well as regulatory requirements ofsupervision departments, we aim to create an efficient corporate governance structure inorder to protect the interests of shareholders and other stakeholders with our managementsystem, and continuously enhance the Company's value and management transparency.
During the reporting period, independent directors of the Company followed our operationand performed their duties independently in accordance with relevant laws and regulations,offering professional opinions on our systems and routine operational decision-making, inorder to improve our supervision mechanism and to protect the interests of the Company, itsshareholders, and public shareholders in particular.The Company held three general meetings of shareholders during the reporting period. Allgeneral meetings adopted a combination of on-site voting and online voting to ensure thatshareholders are able to exercise their rights. In 2018, the general meetings considered andapproved the appointment and removal of members of the fourth Board of Directors andBoard of Supervisors as well as 20 proposals, including Proposal on the Amendment to theAuthorization Management System, 2018 Incentive Restricted Stocks Plan (Revised Draft)and Summary, and Measures for the Implementation of Restricted Stocks in 2018, etc. In2018, the Company held 10 board meetings and considered and approved 56 proposals intotal.For more information on corporate governance, please refer to the Corporate Governancesection of the Company’s 2018 Annual Report.Integrity and Compliance OperationTo operate with integrity and compliance is the foundation for the survival of a company andthe cornerstone of its sound and sustainable development. Hikvision unswervingly pursuesthe concept of integrity and compliance management, abides by business ethics, strictlycomplies with the applicable laws and regulations as well as related provisions in differentcountries and regions, and learns from international rules and industry leading practice toensure solid global operation. We have a professional legal team to investigate, identify andtrack laws and regulations applicable to our operation, and to organize and assist variousdepartments of the Company to perform compliance risk assessments, implement complianceinitiatives and optimize compliance mechanisms. Furthermore, we work actively to establish
long-term cooperation with well-known, experienced domestic and foreign law firms.In order to further regulate employee business behavior, and strengthen professional ethicseducation, we have established Integrity and Ethical Compliance Committee. The committeeis directed by the head of the internal control department, the head of the human resourcesdepartment, the employee supervisor, and the manager of the internal audit department asmembers. They are mainly responsible for dealing with employees violating laws andregulations, internal rules and regulations of the Company, and the Company's moralstandards and committing corruption.In order to enhance the level of compliance in a more systematical way and cater for ourglobal expansion, during the reporting period, we improved our organizational structure,established a dedicated compliance department, and appointed the Company's ChiefCompliance Officer.Code of Business ConductIntegrity and trustworthiness is the core value of Hikvision. We require employees to complywith relevant laws and regulations and high ethical standards in business activities. In 2012,we issued the Hikvision Code of Business Conduct, requiring employees to comply with thelaws in business activities and act in an ethical way conforming to principles of integrity, faircompetition, and incorruptibility. In 2014, in light of the changes to our business environmentand refined management, we thoroughly revised the 2014 Hikvision Code of BusinessConduct to form Hikvision Code of Business Conduct for Employees (hereinafter referred toas the “Code of Business Conduct”) and further revised it respectively on March 2017 andNovember 2017. The Code of Business Conduct stipulates the general rules Hikvisionemployees need to follow in business activities and requires employees to always complywith laws and regulations, work honestly, devote themselves to their duties, and be honest inperforming their duties. The Code of Business Conduct covers more than 10 aspects,including working environment, corporate assets, intellectual property rights, fair competition,impartiality and integrity, gift and hospitality, conflict of interest, and insider trading. At thesame time, we ask employees to sign, learn, master and comply with the requirements of ourCode of Business Conduct. We made the Code of Business Conduct one of the documents thatnew employees need to learn and sign, and asked employees to check and review how theyare following it as they perform their duties.Banning Corruption and Commercial BriberyHikvision takes active steps to create a business environment and working atmosphere ofhonesty and integrity, and performs “transparent sales” and “transparent procurement”. TheCode of Business Conduct requires employees to be honest and self-disciplined in business
activities and personal lives. It specifies that employees should comply with laws andregulations as well as ethical standards and common business practices when dealing withclients, partners, or suppliers and as well as gifts or hospitality. Employees shall not give oraccept any gift or hospitality that exceeds reasonable extents or violate the Company’spolicies. Employees shall not engage in bribery or anything reasonably suspected to bebribery. Moreover, the Company performs financial procedures in accordance with applicableaccounting laws and regulations and accounting standards. The Company supervises businessconducts through financial systems and control processes on a regular basis. As for violationof the Code of Business Conduct, the Company has established mechanisms forcomplaint/reporting, investigation and so on, and formulated Management Measures forComplaint and Reporting, which identifies procedures for handling complaints and measuresto protect whistleblowers. We encourage employees and relevant parties to report violationsof laws, regulations or rules, frauds and conducts that damage the interests and image of theCompany to promote transparency and steady development. Once a violation is confirmed,we will hold relevant parties accountable according to internal rules, or report the case tojudicial authorities in accordance with relevant legal procedures. Furthermore, we willdemand the responsible person to be responsible for rectification of the exposed internalcontrol issues to promote management improvement.Hikvision demands that all suppliers and distributors sign an Honesty and IntegrityAgreement, and incorporate anti-corruption and anti-commercial bribery clauses intocontracts with other clients and partners. We have set up complaint/reporting channels on ourwebsite and placed a Letter to Suppliers in the reception halls of our office buildings to showour attitude and determination to eliminate corruption and commercial bribery to all oursuppliers.Hikvision continues to foster a culture of integrity in order to enhance the ethical awarenessof employees and internalize Company values and business ethics into employee personalcode of conduct. We stress the importance of honesty and trustworthiness to new employeessince their very first day. Moreover, we offer new employees a dedicated anti-corruptioncourse as part of their orientation training. In 2018, we provided corporate culture training onanti-corruption for 9,326 new employees. In 2018, we held a dedicated meeting onincorruptibility for middle-level managerial personnel and above, employees assuming keyposts, and their family members. Representatives of employees' family members issued an"Integrity Family Proposal" at the meeting. All employee family members attending themeeting signed a Letter of Commitment on Integrity. We aim to build a more incorruptibleatmosphere through corporate-family interaction. In 2018, a special story titled "Integrity:
Anti-corruption Efforts" was published on View, our internal magazine. Besides, weconducted various forms of integrity education and publicity including makinganti-corruption posters, asking employees to do self-examination on a wide scale, and
organizing key employees to attend court trials on economic crimes as a lecture, to enhancethe awareness of integrity.
Fair CompetitionHikvision advocates fair and equal competition and abides by applicable laws and regulationson fair competition and anti-monopoly. As required by the Code of Business Conduct, allemployees should participate in market competition in a legal and ethical manner. Weactively carry out research on anti-monopoly legislation, law enforcement and judicialpractice at home and abroad, and conduct anti-monopoly compliance training for keypersonnel to achieve more effective management of employee business behavior. In thereporting period, we established a selective distribution system in the UK and implemented aMinimum Advertised Price (MAP) policy in the US to comply with local laws andregulations and to optimize the distribution channel management mechanism in a more openand transparent way, in order to sustain normal, productive market competition orders.Export ControlHikvision attaches great importance to export control requirements related to our globaloperation. We follow laws and regulations on export control at home and abroad, and conductcompliance construction in various aspects including policy, organization, process, andexecution. We have developed an internal management system for export control and
established export examination procedures covering classification and identification of rawmaterials and finished products, customer review, end-use examination, and risk elimination,etc. We ensure the effectiveness of our internal control mechanism by developing andcontinuously optimizing the information management method. We also conduct promotionand training on departments and personnel related to export controls. In addition, wecorporate with internationally renowned external law firms regarding export controlcompliance to continuously improve our compliance and management capabilities.Human Rights GovernanceHikvision respects the human rights as set forth in the Universal Declaration of HumanRights, International Covenant on Civil and Political Rights and the International Covenanton Economic, Social and Cultural Rights in commercial practice. Meanwhile, we willincorporate these provisions into our business procedures and policies in accordance with theUN Guiding Principles on Business and Human Rights Framework to enhance the value ofour business activities.In 2018, the Company has appointed the Chief Compliance Officer, responsible forpromoting the compliance construction covering areas of human rights protection, datasecurity and privacy protection as well as social responsibility, etc. We have a professionallegal team conducting investigating, recognition and tracking the laws and regulationsapplicable to global operation of the Company and carrying out the construction of humanrights compliance with the situation of the company.
1.4 ESG Management
The Company always regards ESG management as an important part of its daily operationand management. We continuously integrate the concept of ESG responsibility into ourbusiness strategy, adhere to honest management and scientific development, and executecorporate social responsibility and sustainable development ideas in all aspects of operationto take on more social responsibilities with a high sense of mission and responsibility.Stakeholder Identification and CommunicationThe Company always seeks to have diverse communication and contacts with allstakeholders, share ideas and experiences under bilateral, transparent and regularcommunication mechanisms, and discuss issues closely related to our development. We hopethat all stakeholders can achieve win-win results based on mutual trust and respect.
In the reporting period, we identified the following six categories of stakeholders who havedecision-making power and influence on the Company:
Through communication with stakeholders, we came to understand their concerns, andexamined the results of relevant actions on a regular basis. Also, we improvedcommunication channels to better listen to stakeholders. The following table lists the topicsof interest of different stakeholder groups in the reporting period.
| Stakeholder | Issues Concerned | Way of Communication/Response | Frequency |
| Shareholder /Investor | Economic growth Sustainable operation R&D | Regular report/temporary announcement Site inspection Telephone E-mail Information session/roadshow | Regular/Irregular Regular/Irregular Irregular Irregular Regular/Irregular |
| Government and Regulatory | Tax payment Employment promotion Environmental protection | Regular report/temporary announcement/letter Site inspection | Regular/Irregular Irregular Regular/Irregular |
Hikvision
Client
Shareholder
/Investor
Government
andRegulatoryEmployeePartner
Community
| Client | R&D Product safety and quality Privacy and information security | Hotline Information feedback Satisfaction survey | Irregular Irregular Regular/Irregular |
| Employee | Wages and benefits Professional development Benefits | Health check-up Professional training Activities | Regular Regular/Irregular Regular/Irregular |
| Partner | Good faith Supplier management Privacy and information security | Public tendering Site inspection Suppliers’ meeting | Irregular Regular/Irregular Regular/Irregular |
| Community | Community communication Environmental protection Product safety and quality | Community activities Media coverage Interview and investigation | Irregular Regular/Irregular Irregular |
The Company attaches great importance to the opinions and feedback of stakeholders and iscommitted to establishing open and transparent communication channels for stakeholders.The Company has maintained long-term effective communication with regulatory bodies,actively cooperating with and responding to relevant work. Moreover, in the reporting period,the Company carried out a number of investor relations activities, and had in-depthcommunications with investors in One-on-One, One-on-multi, small group Meetings, andother ways, and formed good interactions.
Materiality AssessmentDuring the reporting period, Hikvision conducted stakeholder surveys including in-depthinterviews in order to understand stakeholders' opinions and expectations of the Company'sresponse to and disclosure of economic, environmental, social and governance issues. Thesurveys provide a strong basis for our long-term ESG strategy.We perform materiality assessments in four steps. As shown in the figure below, we firstlyidentify material economic, environmental, social, and governance issues that may affect ourbusiness or stakeholders, rank the potential material issues in order of importance, afterwhich we verify from the management perspective. Lastly, we review the materialityassessment procedures closely.
Through the assessment procedures above, we identified 8 issues of high importance, 14topics of moderate importance, and 3 topics of relatively low importance to the Company.The material ESG issues constitute the key parts of this report and are disclosed in latersections.
| Corporate Management | Employment | |||
| 1 | Economic growth | 6 | Occupational health and safety | |
| 2 | Sustainable operation | 7 | Talent acquisition and development | |
| 3 | Anti-corruption | 8 | Diversification and inclusiveness | |
| 4 | Fair business practice | 9 | Employee benefits | |
| 5 | Factory automation | 10 | Respect for human rights and labor practice | |
| Environment | Operation Practices | |||
| 11 | Energy management | 19 | Product safety and quality | |
| 12 | Greenhouse gas emission reduction | 20 | Management of clean technology opportunities | |
| 13 | Reduction and management of toxic materials | 21 | Privacy and information security | |
| 14 | Chemicals management | 22 | Supply chain management | |
| 15 | Environmental protection management | 23 | Shared development with partners | |
| 16 | Water resource management | |||
| 17 | Disposal management | Community | ||
| 18 | Influence of climate change | 24 | Public charity activities | |
| 25 | Influence on local economy | |||
Chapter 2 Innovative Development for Excellence
Hikvision adheres to the business philosophy of “professionalism, honesty, and integrity” andrefers to the core corporate value of “dedication to clients’ success, value oriented, integrityand down-to-earth, pursuit of excellence” as the code of practice to continuously advancevideo technology and serve the society. As for R&D and innovation, Hikvision continued toincrease R&D investment and dedicated resources to the development and application ofintelligent technologies. As for quality assurance, Hikvision upheld the principle of qualityand integrity, and aimed to foster a quality culture. As for cybersecurity, Hikvision improvedits management and control structure and conducted a number of explorations andinspections on the existing structure.
2.1 Committed to Innovation and R&D
Strong R&D capability is one of the principal competitive edges we have maintained for along time. It has also firmly guaranteed the continuing steady growth of our core business.Years of R&D practice not only provided us with a number of cutting-edge core technologiesand patented technologies, but also a high-quality R&D team with rich experience in R&Dand patent registration and ability to efficiently manage R&D process. These advantages havebeen successfully applied to our R&D practices which laid a solid foundation for sustainabledevelopment in the long run and become the core competitiveness of the Company. Duringthe reporting period, the Company invested RMB 4,482.78 million in R&D, which accountedfor 8.99% of the total operating income.
R&D Strategies and Strategic ObjectivesIn terms of technological innovation and product development, the Company follows afour-in-one operation mechanism integrating strategic planning, business planning, actionplanning and performance assessment, and focused on the layered decomposition of strategicobjectives to achieve implementation.To ensure the competency of our products and technologies, we strengthen control of theproduct development processes, and clarify the specifications and requirements of each link.
Intellectual PropertyAs we make progress in R&D, we are also committed to protecting intellectual property. Wehave a professional team to manage our intellectual properties including trademark, patent,and copyright, and deal with disputes in this regard. In accordance with applicable laws andregulations, we issued and implemented Measures for the Management of Trademarks,Measures for the Management of Patent Awards, and other internal rules and regulations.
During the reporting period, we reached a number of achievements concerning patent andsoftware copyright:
| Number | ||
| New patents | Patent for invention | 116 |
| Patent for utility model | 270 | |
| Design patent | 464 | |
| Total | 850 | |
| New software copyrights | 112 | |
| Newly registered trademarks | 230 | |
| All patents | Patent for invention | 513 |
| Patent for utility model | 741 | |
| Design patent | 1,555 | |
| Total | 2,809 | |
| All software copyrights | 881 | |
| All registered trademarks | 1,070 | |
Hikvision respects the intellectual property rights of others, abides by and appliesinternational intellectual property rules, and takes a friendly approach to resolve intellectualproperty issues through negotiation, cross-licensing, business cooperation or other methods.In the event of malicious infringement, we will take legal actions to protect our intellectualproperty rights, such as complaint, civil litigation, or file the case to the judiciary divisionsand ensuring criminal responsibility.
R&D CooperationHikvision not only attaches importance to its own innovation and R&D but also extendscollaboration in R&D with various institutions to seek intelligent solutions in various fields.
| Collaboration in R&D with various parties |
| Through cooperation with governments, enterprises, and universities, we continue to broaden our R&D thinking, actively explore industrial applications and enhance our brand influence. |
2.2 Quality Assurance
While seeking innovation in intelligent manufacturing R&D, we are deeply aware thatmanaging and improving quality integrity is the cornerstone for the Company to bepositioned well in the industry and society. To this end, we incorporate "integrity andpragmatism" into our corporate culture and core values, include quality integrity into ourquality management system, and ensure product quality by virtue of rules and regulations.Our philosophy and core value on quality is to "contribute to clients' success and deliver theright products at the first time". Not only have we improved the quality of our own productsthrough a well-established management and control system, we have also facilitated theformulation of national, industry and local standards to actively promote the industrydevelopment. During the reporting period, the Company contributed to the preparation of 17national standards, 44 industry standards, and 15 local standards.Quality Management ArchitectureIn the light of the guideline of “Leading Technology, Quality First, Customer Satisfaction,Continuous Innovation”, the Company has established quality management goals (includingquality integrity management goals, such as products failed in spot checks, customersatisfaction, rate of unpacking defective products, annual repair rate, etc.) for variousdepartments. We analyze the achievement of quality management goals and the operation ofthe system each year to identify problems and make improvements.
The Company established a Quality Management Committee as the highest division to guideand promote the Company's quality works. Its principal responsibility is to initiate,coordinate and institutionalize measures aimed at breakthrough quality improvement. Normaloperation of the Quality Management Committee is a top-down approach to systematicquality improvement. Under the leadership of the Quality Management Committee, theCompany has established a hierarchical quality management system that involves productdevelopment, implementation and after-sales. The quality management system is responsiblefor the execution of quality management functions.
In addition, the Company has established a quality accountability system, identifying thequality red line and quality standards to integrate quality responsibilities and requirementsinto daily work and engage all employees in quality management process.Quality Management SystemThe Company have been developing its own quality management system in accordance withthe requirements of ISO 9001 certification and quality management system since itsestablishment. We obtained the ISO 9001 certification in 2005 and remain it till now. Inaddition, we established a more comprehensive management system for specific processesand products to effectively satisfy the needs of customers. For example, the R&D process iscertified by CMMI (Capability Maturity Model Integration)-Maturity Level 5 (the highestlevel). The measurement process is certified by ISO10012 Measurement ManagementSystem (AAA level). We have gradually formed a quality management system that coverscultural awareness, code of practice, institutional guarantee, and technical support due torelentless efforts.
ISO 9001 Certification ISO 10012 CertificationQuality Control ProceduresAssurance and improvement of product quality rely on the efforts of all employees and strictcontrol of all procedures. In order to improve the traceability of the entire process, and thecomprehensive competitiveness of the Company's products and solutions, the Companyclarifies the processes of various aspects including quality control, quality improvement,quality monitoring and measurement, and control of non-conforming products, setsrestrictions on operation methods, and aims to standardize the Company's products andsolutions.
Product Quality and SafetyWe strictly control harmful substances in products, especially harmful substances mentionedin the RoHS (Restriction of Hazardous Substances, short for Directive on the Restriction ofthe Use of Certain Hazardous Substances in Electrical and Electronic Equipment) in the
designing stage. As a part of our social responsibility for environmental protection, we takestrict measures to ensure that there is no harmful substance in product design and productionprocesses and that our products conform to the requirements of RoHS. During the reportingperiod, more than 7,000 Hikvision specifications and models have been RoHS certified.Moreover, around 5,000 Hikvision specifications and models have been REACH SVHC(Registration, Evaluation, Authorization and Restriction of Chemicals) certified.
RoHS Certification Report REACH SVHC Certification ReportIn addition to hazardous substance control, we actively develop and produce energy-savingand environmentally friendly products. During the reporting period, more than 5,000Hikvision specifications and models obtained the China Environmental Label. More than5,000 Hikvision specifications and models were certified as China Energy ConservationProduct. These specifications and models fall into six categories, i.e. video camera, server,monitor, all-in-one equipment, network hard disk video recorder and display. In addition,during the reporting period, we obtained the WEEE (the Waste Electrical & ElectronicEquipment Directive issued by the European Union) certification. More than 2,000 Hikvisionspecifications and models meet WEEE's requirements of recycling rate.
China Environmental Labeling China Energy Conservation WEEE CertificationProduct Certification Product Certification
As for product labelling, we strictly comply with the product labeling requirements of variouscountries and regions, and mark our products with corresponding environmental label ontheir packages.
Quality CultureWe attach great importance to developing a quality culture. We introduce it to new employeesduring the orientation training to unify their understanding of quality. In daily work, we instillquality concepts of “contribute to clients' success and deliver the right products the first time”into each employees’ mind from the cognitive level, the system level, and the behavior levelthrough various activities including quality education training, quality responsibility system,quality promotions, and further ensured the implementation of quality concepts in eachemployee's actions.
| Quality Themed Activities |
| On March 23, 2018, the Company held the 2018 Hikvision Conference on Quality (6th) on the theme of “Elimination of Problem, Pursuit of Excellence”. Nearly 300 people attended the conference including heads of the R&D, supply chain and customer service departments. The conference summarized quality results in 2017 and commended excellent teams on quality works in 2017. To promote the theme of “Elimination of Problem, Pursuit of Excellence”, we arranged posters, "Boss's Interpretation", quality culture fans, quality quiz, quality awareness training, etc., to engage employees and encourage them to pass on our quality culture to new employees. |
2.3 Cybersecurity
The “Internet of Everything” and intelligent IoT feature even more massive, diverse, andpowerful terminal devices, complex network architecture, extensive data, and diversifiedapplications. Therefore, we need to strengthen security protection and privacy protection atmore levels, such as terminal device, network, data, platform service, and application. We aredeeply aware of the importance of cybersecurity and are actively dealing with cybersecuritychallenges. While improving product quality and safety, we stick to the cybersecurity bottomline. During the reporting period, the Company officially released Hikvision CybersecurityWhite Paper, which aims to share our cybersecurity experience and practice with the industryand improve overall cybersecurity capabilities.Security Management StructureThe Company has a well-established organizational structure to address cybersecurity threats.Each division has clear responsibilities to integrate security management into R&D, supplychain, marketing and sales, project delivery and technical services.
Through close cooperation among different departments and the establishment of workprocesses, the Company can prevent cybersecurity problems the people to the maximum byvirtue of its organizational structure.Procedures and StandardsIn accordance with Law of the People's Republic of China on Guarding State Secrets andCybersecurity Law of the People's Republic of China, we formed a set of managementsystems to protect internal information security, such as the "Information SecurityManagement Manual" and "Information Security Applicability Statement" and defineddepartments and divisions subject to the systems.We recognized that standardization could reduce the occurrence of cybersecurity problems.Therefore, in accordance with domestic and international laws and regulations, industrystandards, customer security demands, third-party analysis, industry activities, peerexperience and the security requirements of certain businesses, we developed a series ofproduct security-related specifications and standards for general security baseline, securitycode, secure password application, secure key management, secure session management,security authentication, security testing, and security event management to ensure all aspectsof product security.
As to overseas operation, we followed the ISO 27001 information security managementsystem principally to establish an internal management system to protect the intellectualproperty and privacy of customers and partners around the world to the maximum.Security R&D ProcessTo provide customers with safer products and solutions, we integrated security works intoR&D (security design, security development, security testing, etc.) according to industry bestpractices for security and customer feedback. We proposed our product development securitymanagement process HSDLC (Hikvision Security Development Life-Cycle) to implementsecurity works at the R&D level.
HSDLC divides product life cycle into six stages: conception, design, development, testing,delivery, and emergency response, and presents security guidelines and standards for eachstage.Emergency Response
For post-delivery cybersecurity problems, the Company has established a productcybersecurity problem response mechanism, and arranged a dedicated team to receive,process, and disclose emergency responses to the security vulnerabilities in our products andsolutions. Moreover, the Company set time limits for security responses to ensure responseefficiency. For example, initial confirmation of security incidents must be completed in lessthan 24 hours and high-risk vulnerabilities must be corrected within 30 days.
For emergency handling of post-delivery vulnerabilities, the Company established proceduresfor security vulnerability and early warning disclosure based on ISO/IEC 30111, ISO/IEC29147 information technology-security techniques -- vulnerability disclosure and otherstandards. The procedures include vulnerability research and data collection, securityvulnerability assessments, analysis and verification, as well as tracking and solution.While safeguarding our own cybersecurity, we proactively participate in industry and publicevents. We have built long-term relationships with vulnerability disclosure platforms,relevant divisions of our clients, other suppliers, researchers and third-party coordinatingbodies.
| Invest more resources to ensure cybersecurity |
| Hikvision attaches great importance to product and cybersecurity. It has made many explorations and implementations in the field of cybersecurity. Hikvision joined the Forum of Incident Response and Security Teams (FIRST), China Cyber Threat Governance Alliance and some other information security organizations, shared information on cyber threat, and |
For more information on cybersecurity, please refer to the 2018 Hikvision CybersecurityWhite Paper.https://www.hikvision.com/en/Support/Cybersecurity-Center/Cybersecurity
Chapter 3 Empowering Customers’ Success for Win-Win Results
Hikvision follows the core values of “dedication to client’s success, value oriented, integrityand down-to-earth, pursuit of excellence” and continuously innovates to provide globalclients with high-quality products and services and create longer-term value together.Moreover, Hikvision continues to promote the industrial chain, and work together withupstream and downstream partners in the supply chain to face challenges and opportunitiesand pursue excellence.3.1 Provide Quality ServicesThe Company closely focuses on the needs of clients, researches into market segments andcarries out product development. The Company continues to uncover the needs of clients andprovide customized solutions with sufficient industry-specific knowledge to create value forusers.Satisfy Clients’ NeedsAs a client-oriented business, we embrace "industry segmentation, expansion of channels tocover more areas, and end-to-end business", always keep close to customers, constantlyimprove our abilities to provide customized solutions and consultant sales, and translatetechnologies into market value. Our clients are from different industries. They all have theirown business scenarios and business logic, which diversifies their needs. We take thefollowing measures to meet the diverse needs of our customers based on our understanding ofthe market.
Optimize Marketing Service SystemWe have a global marketing service system that enhances customer stickiness as well as ourbrand popularity and enables effective resource allocation targeted on a global scale whileefficiently serving customers.
| Global marketing network |
| Global marketing service network for global resource allocation ? 32 provincial business centers /first level branches in Mainland China ? 44 overseas branches ? Products and solutions employed in more than 150 countries and regions. |
To provide customers around the world with convenient, timely and high-quality services, wehave also established a three-tiered service system which consists of global customer servicecenters, customer service departments under subsidiaries and authorized customer servicestations.
Hardware/Product
In light of diversified scenarios,we offer a wide range of productsand models to deliver the bestperformance to customers withdifferent needs.
Solution
We offer customized solutions andcustomized hardware and softwareportfolios for different industries and
different customers.
During the reporting period, theCompany upgraded its softwareengineering capabilities and practicein an all-round way by establishing aunified software technologyarchitecture in light of thedevelopment needs of the business,and transformed its software R&Dmodel from the “market demand-oriented” to the “market demand-oriented and technology planning-driven". Eventually, the Companybecame able to launch high-qualitysoftware products in a quick andsustainable manner to meet therapidly growing demands of thesoftware market and support itsstrategic planning.
To further improve service quality, we entered into partnership with tens of thousands ofcontractors, distributors, outsourcing service providers, etc. to provide product delivery,project delivery, software deployment, system operation and maintenance, and other servicesto customers of all industries in all regions. Furthermore, we are constantly improving ourproduct and technical service standards, providing our partners with an all-round training andcertification system to help them improve their professional competencies and servicestandards.Technology-enabled Convenient ServiceInternet technology is bringing us ever closer to our customers. Today, customers can reachus more easily. They can also quickly solve common problems by self-service.
In the future, we will continue to optimize our marketing system and listen to our customers.We will expand and adjust the marketing system based on the characteristics of each marketto bring our sales and service system closer to customers.
Global customer service
centerCustomer service department
under subsidiaryAuthorized customer
service station
Central Service
Protal
? Where there is a product, there is
information and service. Weoptimized the QR code on the
device and enabled "one scan for
all". In addition to basicinformation on the device, userscan also access its instructions andinformation on latest products andservices easily;? As for access to information and
service resources, we greatlyimprove the accessibility ofinformation and services withoutcharging extra to customers;
One-stop Self-service
? Online robot assistant KK is
available 24/7 on all platforms. Atpresent, KK can provide 80% of
customers with fast, convenient
and efficient solutions to theirproblems. Customers can talk tohuman customer servicerepresentatives for moreprofessional issues via our WeChatpublic account.? As for product maintenance, we
provide one-stop repair services.Customers can start a repairrequest by one click and check therepair status in real time.
Online Materials and
Instructions
? We launched a mobile knowledge
library where customers can findanswers to frequently asked
questions other than product-
specific ones. It is easy to locate aquestion and its answer by postingor searching a question. In additionto texts and illustrations, we postvideos on certain product lines ona weekly basis for customers tolearn how to operate the products;? Security calculation tools are
powerful and contain variouscalculation formulas. It is of greathelp in the design process ofsecurity system solutions and is agood choice for millions ofsecurity practitioners.
3.2 Protect User Privacy
Regulations to Protect Client/User PrivacyHikvision adheres to the concept of “manipulating power of technology with the heart of awe,and protecting data security with prudence”. Hikvision sticks to reasonable, transparent,controllable and secure privacy policies and built a systematic and standardized data securityand privacy protection system. We set up a dedicated team to study laws and regulations aswell as national/industry standards on personal data, including but not limited toCybersecurity Law of the People's Republic of China, GB/T 35273-2017 InformationTechnology – Personal Information Security Specification, and EU General Data ProtectionRegulation (GDPR). We formulated personal data protection guidelines on R&D, sales,service, after-sales service, technical support, etc. in accordance with laws and regulationsand standards and in light of our own data processing scenarios. We issued supportingprocedures and policies and gradually put them into practice.
Data Protection Practice for Products and ServicesWe factor data security requirements in product design and R&D. We benchmark our practicewith industry best practices to establish data security and privacy protection mechanisms thatcover compliance management, product review, security assurance, employee education, etc.We adopt a variety of security technologies such as identity authentication, authoritymanagement, desensitization, and encryption based on the scenario.
If a user uses Hikvision hardware only, we will not and are not able to collect or use the user'spersonal data through hardware products. However, as a device manufacturer, we do our bestto suggest that users take necessary measures to protect their data.
If the user uses Hikvision cloud services as well, we will collect and use some user data. TheCompany has established a data life cycle management system that covers data collection,usage, transmission, storage and deletion to protect users' personal data. Moreover, wepresent our readily understandable privacy policy in a prominent position, informing usersthe purpose, method and scope of personal data collection and usage, and the rights of users.Besides, we have established a prompt and effective emergency response mechanism for datasecurity event. We provide dedicated contact channels and personnel to deal with questionsand comments regarding personal data handling.
For online sales, after-sales service and technical support, we further regulate scenarios inwhich user data is processed for operational purposes in documents such as InformationSecurity and Confidentiality Management System and Service Specifications. We strictlymanage the personal data of users collected for operational purposes, including but notlimited to authority management and regular deletion, etc.
During the reporting period, the Company has not been punished by any regulator forviolation of laws and regulations on data protection.
3.3 Listen to Customer FeedbackThe Company continues to enhance communication with customers and actively responds toconsumer inquiries, complaints, and suggestions. While responding to customers, weconstantly examine and improve the quality of our products and services.
Feedback and Complaint Channels Provided by Hikvision
To optimize our service processes and therefore improve customer satisfaction, we developeda Customer Complaint Handling and Closing Procedure to instruct and regulate the handlingof customer complaints lodged via the helpline, clarify the responsibility of each post, andensure that customer complaints are handled in a timely, effective and standardizedend-to-end manner.
After receiving a complaint, the customer service representative will enter it into the internalsystem, categorize it and follow it up to ensure that the problem is properly solved within thetime frame. Then we will confirm with the customer and ask for his/her feedback.
In addition to solving specific problems, we analyze frequent complaints on a regular basisand make a follow-up to implement the PDCA (Plan-Do-Check-Act) circle.
Satisfaction SurveyWe have established a customer satisfaction management system to implement HelplineCallback Service Procedure, After-sales Repair Satisfaction Callback Service Procedure,doing callbacks and follow-ups on customer feedback.
In order to systematically analyze customer satisfaction and identify reasons for satisfactionor dissatisfaction, we perform a customer satisfaction survey that involves all operations ofthe Company at the end of each year. All relevant departments are involved to form asatisfaction survey team to conduct the survey.
| Net Promoter Score System |
| EZVIZ products are mostly used in everyday scenarios. To this end, EZVIZ established a user Net Promoter Score (hereinafter referred to as "NPS") to improve user experience. EZVIZ conducts satisfaction survey for each product at regular intervals. EZVIZ uses three rounds of surveys to figure out to which degree a product meets the needs of users and user satisfaction in an effort to optimize the product. Then it tests the effect of the improvement to enhance user expectation of product experience and the competitiveness of the product. |
3.4 Contribute to Industrial Ecosystem
As we improve our supply chain, we pay great attention to communication and interactionwith partners. Intelligent applications are scenario-based and fragmented. Therefore, webelieve that open integration is the trend of the video industry and it is going to be a newformat in the intelligent era. In order to achieve open integration, we established a completeopen system.There is a massive scale of AI applications demands in real economy, especiallyscenario-based, fragmented ones. However, various prerequisites for AI applications such asdata, algorithm, computing power, product and application system make it difficult for AI toempower real economy. During the reporting period, in order to build an open and shared AIindustry ecological environment and help the implementation of AI, Hikvision launched theAI open platform to provide complete services from demand mining to application releaseand to help industries to upgrade. We work with different partners in the ecosystem togenerate synergy effects and create value for our clients together.
NPS is not only an evaluation mechanism but also an reflection of experiential culture. Wemeasure our product improvement as well as operation with NPS as an indicator. Accordingto recent NPS results, user recognition and loyalty to EZVIZ products are rising.Hikvision AI Cloud Open Platform: A Solid Step for the AI Ecosystem
| Hikvision AI Cloud Open Platform: A Solid Step for the AI Ecosystem |
| Hikvision launched Hikvision AI Cloud Open Platform at the 14th China International Exhibition on Public Safety and Security 2018. Based on concepts of openness, equality, innovation, and win-win, the platform provides partners with open infrastructure, open data resources, open platform services, and open application interfaces. Hikvision will work together with partners to build two ecosystems for products and services respectively via this platform. The platform brings together product providers and service providers from different parts of |
| the world and encourages them to work with each other, influence each other, and learn from each other to further integrate AI and IoT and create great value for public security, transportation, judiciary, education, energy, finance, building, real estate and other sectors. |
In 2018, Hikvision has successfully applied the AI open platform to empower intelligenceupgrading in multiple industries. In pharmaceutical companies, AI standardizes employeebehavior and reduces security risks. In food companies, AI ensures food safety, standardizesproduction and storage, and improves regulatory efficiency. As to seal management, AIstandardizes seal management and operational procedures to improve efficiency. As toweather forecasting, AI recognizes frost and clouds and monitors weather phenomenaautomatically.
3.5 Supply Chain Development
While providing high-quality security services to our suppliers, we are also committed tocreating a green supply chain to enhance the environmental awareness and abilities ofupstream and downstream suppliers and achieve win-win results. We instill the importance ofenvironmental protection, occupational health, safe production and some other factors toproduction by setting entry standards and assessment standards as well as offering promotionand training. We guide suppliers to do compliance management beforehand and attachstrategic importance to compliance management to realize a green supply chain.Supplier ManagementWe are dedicated to mutually beneficial long-term stable partnerships with suppliers. For theCompany to develop in a sound and fast manner, we are committed to creating a stable andhigh-quality supply chain. To this end, we established a quality index assessment system forthe entire supply chain management process, including material acceptance, production,
market, etc. Moreover, we perform assessment and examination at all levels and monitorwhere we are at regular intervals. Besides, we update our goal each year to ensure continuousimprovement in supply chain management.As of December 31, 2018, the Company has a total of 728 suppliers worldwide.
Introduction of New Supplier
As for existing suppliers, we draw up a plan each year to assess suppliers on a rolling basisand track how they deal with problems and make improvements. Supplier assessment iscarried out in strict accordance with our internal Supplier Assessment Procedures quarterlyand annually. We reward, punish and eliminate suppliers based on the assessment results tosustain high-quality supplier resources.
When we need anew supplier, we
combine oursupply chain
resourcedevelopmentstrategy anddemand plan tocollect information
about potential
suppliers throughvarious channels ;
We identify our
options after
evaluating
suppliers that
have strongcomprehensivestrength, operate
in line with
national lawsand regulationsand satisfy other
special
requirements.
Organize on-site
evaluation and
test their
samples;
Decide whether
a supplier willbe introduced
based onassessmentresults, sampletest results, and
other factors;
Create a supplier
profile, signcontracts, and
include thesupplier in thelist of qualifiedsuppliers once it
is confirmed.
Supplier Assessment Model
We take the social responsibility performance of suppliers into consideration and strive tocontinuously improve the awareness of responsibility and abilities of suppliers along the way.? Evaluate the environmental, social and governance system and practice of suppliers and
subcontractors in accordance with the Supplier and Subcontractor Social ResponsibilityAssessment Report and rate suppliers by the results;? As stipulated in Supplier and Procurement Management Procedures, a single violation
of laws and regulations related to environmental protection and social responsibilitydisqualifies a supplier;? Suppliers are required to sign a Supplier Social Responsibility Commitment, and agree to
legal employment, respect for human rights, protection of employees' health and safety,environmentally friendly operation, etc.? Suppliers are required to sign a Procurement Framework Agreement which includes
human rights guarantees.Conflict Minerals ManagementTo reduce the negative impact of supply chain on society, especially conflict minerals issueson society, the Company took the initiative to take risk management actions. The Companydoes not purchase or support the use of conflict minerals. We sign a Declaration of MetalConflict-Free with suppliers, requiring all suppliers to provide corresponding evidence andprove that they do not use minerals from conflict areas, and subject their suppliers to thesame requirements. Suppliers are responsible to do due diligence to ensure that the gold,antimony, tungsten, tin, etc. used are not obtained through trafficking from anarchy or illegalgroup from conflict zones.In the past few years, the Company has been working with industry trade groups to ensurethe transparency of raw material procurement. We will continue to pay attention to conflictminerals issues and work with business partners to seek sustainable solutions to suchproblems.
? Quarterly
assessmentmeasures materialquality, delivery,cost, technicalsupport, etc.
Quarterly
Assessment
? Annually
assessmentincorporates theresults of quarterlyassessments withinthe year.
AnnuallyAssessment
Chapter 4 Serve the Society to Create a Better Future
Upholding our initial aspiration to serve the society and create a better future for all, we havebeen taking actions to promote the sustainable development of society for years. We not onlyencourage and organize employees to participate in social activities to make contributions tothe public welfare, but also strive to help build a smart ecosystem and a harmonious socialsystem by giving full play to Hikvision's expertise with reliance on innovative technologiesand professional knowhow.
4.1 Dedicated to Public WelfareAs a responsible corporate citizen, the Company pays great attention to public welfare andcontinuously works to help more people and create more goodness to the world throughtechnological innovation. Based on the technology of “video plus AI”, the Company intendsto carry out a series of valuable projects of public benefit to continuously make newcontributions to the sustainable development of the society and the environment.
| Voluntary Blood Donation |
| We have long maintained good relations with the Zhejiang Blood Center and the Zhejiang Red Cross Society. With their support, the Company successfully established the Hikvision Red Cross Society to proactively practice and carry forward the red cross spirit of “Humanity, Devotion and Dedication”. The Company organizes hundreds of employees to participate in the blood donation every year. On July 1st 2018, the Company won the Excellent Organization Award in the event. “Donate blood for July 1st” jointly organized by seven authoritative departments including Hangzhou Spiritual Civilization Construction Committee Office, Hangzhou Health Commission , Hangzhou Culture Broadcasting and Television Group, etc. |
| Promote Fairness in Education and Development |
| For a long time, Ding'an County of Hainan Province had been confronted with many difficulties including insufficient qualified teachers and uneven educational development. To ameliorate the situation, the Company joins hands with local education authority, creating more than 60 “transmitting classrooms” to enable children with timely access to the high-quality educational resources of schools in urban areas, and synchronously enjoy quality courses such as music and art. Since the system was launch, it has been well playing its role as a bridge of friendship between schools in city centers and rural schools by organizing many featured teaching activities, thereby winning great popularity among local teachers and students. |
| EZVIZ Serving for Filial Piety |
| Talking to the camera has become a new habit of the old people in Dashan Village, Yaolin Town, Tonglu County, Hangzhou. In October 2018, Dashan Village Committee installed two surveillance cameras in the houses of all elderly people over 80 years old so that their children are able to keep in close touch with the elderly at home through the mobile phone app EZVIZ Cloud which even allows video call. We help shorten the distance among people through technologies and serve filial children in the world. Filial love will never be absent anymore. |
4.2 Help to Build Harmonious EcologyRelying on the products and technological edges accumulated by the Company over the years,we are also making great breakthroughs in adopting more high technologies in ourenvironmental protection actions, hoping to utilize science and technology to supportecological protection work. We are applying innovative products and technologies to supportecological research and conservation work, and to help maintain rich biodiversity of ourliving earth. During the reporting period, the Company invested a total of more than 1 millionRMB (estimated based on value) in ecological protection projects.
| Bring More Hope of Life to the World--Bar-headed Goose Protection Project |
| Located at the north bank of the Tuotuo River and at the foot of the Tanggula Mountain which is the source of the Yangtze River, the Lake Bande is a typical plateau lake with an altitude of over 4,700 meters in an arduous and unpopulated area on a hundred-mile radius. The lake, within the jurisdiction of the Sanjiangyuan National Nature Reserve, is an |
storage and transmission with technological innovation. The two sides also work toenhance the scope, timeliness and precision of monitoring, facilitate the effectiveutilization of animal protection data and data accumulation, and endeavor to protectbiodiversity through science and technology. All these efforts are intended to build asustainable eco-environment for the source regions of Yangtze River .
Hikvision PTZ camera 24-hour guiding wild bar-headed geese habitatsTiger Protection through AI
| Tiger Protection through AI |
| "It is a deed of great significance and honor to work together, grow together, take real responsibility, and guard our home planet via technology with a group of lovely people." ——A member of the Hikvision AI tiger protection team Siberian tigers are at the top of the natural food chain, therefore their living status presents to be an important indicator of the soundness of the entire ecosystem. Plagued by increased human activities, deforestation, habitat degradation and other factors, the population of wild Siberian tigers and their habitats are constantly shrinking. In 2017, only 24 Siberian tigers were detected alive through wild infrared cameras. In this regard, Hikvision works jointly with Intel to help the World Wide Fund for Nature (WWF), in the field of wildlife protection in China, utilize the design concept of edge computing combined with cloud computing to intelligently identifying Siberian tigers. It works to give assistance to wild animal protection and help promote the harmonious development between man and nature through digital technology and artificial intelligence. |
Hikvision's newly developed intelligent capture camera for wildlife protectionStraw Burning Prohibition, Intelligent Environmental Protection
| Straw Burning Prohibition, Intelligent Environmental Protection |
| Pollution from straw burning causes great damage to the quality of the atmospheric environment. Large-scale haze incidents occur frequently in every summer and autumn harvest season when straw is burnt in great amount. As an important technical means to prevent and control air pollution as well as to eliminate open area straw burning, the Company's straw burning control system has been widely applied in Hebei Province. During the reporting period, five regulatory agencies in Shijiazhuang, Langfang, Zhangzhou, Xingtai and Hengshui have installed Hikvision thermal imaging dual-spectrum surveillance cameras along high-speed rails, expressways and in key straw burning areas, initially realizing full coverage of straw incineration monitoring in agriculture-related areas and helping prevent haze more effectively to improve air quality. |
4.3 Build a Smart City TogetherAs an important technology and product provider for the construction of smart city, we havealways focused on fields closely related to social economy and people's life, such as publicsecurity, transportation, production, etc., and proactively provided innovative solutions tosuch ends. We use information technology to structure intelligent, efficient and convenientlife, exert our advantages to develop ecological cooperation, enabling the public to enjoyhappy life brought by scientific and technological progress.
| Safe Campus - Escort Campus Security |
| University is a part of the society. The method to ensure the safety of teachers and students when social personnel and vehicles are entering and exiting the university frequently has become an urgent problem for administrators of open universities. Take one of the domestic universities for example, we proposed and built a comprehensive solution for campus visual management in line with the customized needs of the security department, helping comprehensively upgrade the campus security level. The proposal includes the systems of monitoring suspected personnel, intelligent perimeter defence, vehicle management, intelligent operation and maintenance and more, on the basis of which it also sets up 2.5D maps, realizing the visualization of the whole process of business processing and contributing to safeguarding the campus security management. |
| Intelligent Transportation – a Dispatcher for Convenient Travel |
| Accompanied with the urban expansion, the urban population and the number of motor vehicles have been growing rapidly, resulting in traffic congestion, traffic accidents, air pollution and other issues which make people's daily life suffer. To improve the efficiency of traffic management, the Company is assisting a city in Zhejiang Province in building an intelligent traffic operation monitoring and dispatching center (“TOCC”). The platform is designed in accordance with “One Center, Five Systems”, including: We use big data technology to integrate the data and videos of various regulatory systems in the local transportation industry, visualize the abstract data and analyze the key data, greatly improving the operational efficiency of the transportation system, and alleviating the traffic congestion, thereby enabling people to travel more conveniently and safely. |
| Food Safety - Reassured and Transparent |
| Through in-depth market research and analysis, we have promoted the “Clean Transparent Kitchen” video networking supervision system solution catering for industry clients through our accumulated advantages of video technology in EZVIZ cloud Internet plus. The system can help solve problems in daily shop patrol, kitchen hygiene, emergencies, data operation and other issues in catering outlets, and fulfil the demand of post-event traceability and investigation. |
The “Clean Transparent Kitchen” project guarantees the rights of consumers to superviseand to be informed, and provides an open, transparent supervision bridge betweengovernment regulatory authorities, corporates and the public. Through the dustproof andwaterproof camera installed in the areas of warehouse, cleaning, cutting, cooking, specialroom, sample retention, etc.in the back kitchen, customers can monitor the real-timeoperation of the back kitchen anytime and anywhere through the Internet. Regulatorydepartments can also view videos in their jurisdictions for food safety management andsupervision.
Health Care - Empower the Construction of Safe Hospitals
| Health Care - Empower the Construction of Safe Hospitals |
| In order to help hospitals improve their capability of early warning and prevention of emergencies, rapid and appropriate handling in the event, and prompt tracing after the event, the Company built a full three-dimensional digital intelligent security management platform based on AI Cloud security system. Based on this system, the Company assisted a well-known hospital in Zhejiang Province in fulfilling a variety of safety prevention and control functions, providing a guarantee for the orderliness and stability of the hospital. |
4.4 Embrace Intelligent Manufacturing
Hikvision keeps pace with the new era and new technologies and considers intelligentmanufacturing as an important market. Hangzhou Hikvision Robotic Technology Co., Ltd.(hereinafter referred to as “Hikvision Robotics”), the holding company of Hikvision, ismainly engaged in intelligent manufacturing regarding the development of mobile robots,machine vision and industrial-level unmanned aerial vehicle (UAV), and persists inindependent design, R&D and production. Continuous innovation enables HikvisionRobotics to produce quality products that are recognized by the industry and widely used forvarious purposes including metal processing, industrial automation, and etc. These productsoffer stable and reliable operation. Moreover, customized development is available to helpusers greatly improve work efficiency and accuracy.
Mobile Robot
? Hikvision Robotics independently developed a robot system for smart warehousing with
product lines of AGV (Auto-Guided Vehicles), and subsequently launched smart transferAGVs that shuttle between production lines, smart sorting AGVs for small packages, smartforklift AGVs that reduce labor costs and improve automated warehousing logistics, andsmart parking AGVs that enhance the capacity of parking lots. These robots fulfill the needsof intelligent manufacturing and redefine logistic revolution.
Machine Vision
? Hikvison Robotics persists with independent design, R&D and production of machine vision
products, continues to innovate to launch well-recognized quality products and performsstrict testing to ensure the products present high-quality images. Hikvision Robotics ensuresthat each product provides high precision, high efficiency, and high environmentalperformance with examinations in design and R&D processes.
Industrial-level UAV
? The core technology of industrial-level UAV is video image processing. Industrial-level
UAVs are safe and smart products used in a wide range of scenarios including fire rescue,emergency command, counter-terrorism action, traffic management, facility inspection, andevent support, etc. Users may mount more than 10 kinds of devices on our UAVs, such asvisible light head, thermal imaging head, laser head, megaphone, release and drop device andgas detector, which greatly enriches the functionality of UAVs.
| The Wide Application of Intelligent Manufacturing in Various Business Fields |
| Mobile robots, machine vision and UAVs of industry-level have been deployed in various fields to help clients automatize factories and build intelligent factories as well as in domains of source tracing, investigation and evaluation. |
| Intelligent warehousing robots for automated delivery ? A company's production base launched a smart factory construction project, introducing Hikvision's intelligent warehousing and in-plant logistics solutions to automate logistics handling across the entire plant. In December 2017, the intelligent warehousing and in-plant logistics solutions were set up and ran with remarkable efficiency, as the number of logistics staff in the production workshops was reduced by 30%. Through this, logistics handling and delivery processes have been automated, the delivery efficiency increases by more than 35%, and the material delivery on-time rate increases by more than 95%. ? Five-sided barcode reading system application ? During the reporting period, the Company cooperated with customers to inspect the site and analyze the situation, and formulated a traceability solution named Hikvision five-sided barcode reading system in response to the problem of low barcode reading rate caused by the irregular barcode direction in the on-site parcel information collection. It can collect, bind and integrate the three types of basic information of express barcode, weight and volume. It has the characteristics of high system flexibility and strong robustness. It can guarantee ultra-high reading rate even on barcode with distortion, wrinkles and coat. ? UAV forest fire protection application ? The Hikvision UAV system is quick and easy to set up, and can reach the fire scenes for fire detection and evaluation in a timely manner. At the same time, the flight image and data can be transmitted back to the command center platform in real time for the command center personnel to view and facilitate the formulation of the forest area emergency handling plan. it can normalize the monitoring and early warning of forest fire prevention, wildlife regulation, anti-drug in forest area and ecological environment protection. All these functions are of great significance for protecting forest resources and enhancing the capbility in early warning and monitoring. |
Chapter 5 Talent-Focused, Growing Together
Human capital is an important strategic resource for a company. Hikvision is apeople-oriented company that protects the rights and interests of employees, providesdevelopment opportunities for employees, offers safe and healthy working conditions, andshows concern and care for employees. We encourage employees to realize their own worthand grow with the Company.
5.1 Protect the Rights and Interests of EmployeesThe basic rights and interests of employees are our top priority. We strictly abide byapplicable laws, regulations and local policies to protect the rights and interests of employees,and provide them with equal opportunities and competitive compensation and benefits. Weencourage employee engagement in decision making and share our development withemployees. During the reporting period, the number of newly hired employees increased by36.9% compared with 2017.
Legal HiringWe strictly abide by Labor Law of the People's Republic of China, Labor Contract Law of thePeople's Republic of China, labor Union Law of the People's Republic of China and otherlaws and regulations. We developed and implemented normative documents such asRecruitment Management System and Attendance Management Code. We recruit employeesof different races, nationalities, regions, ethnicities, and religious beliefs equally in the lightof our development needs. We sign a written labor contract with each employee.
We pay respect to the principles of international labor agreements such as InternationalLabor Organization Conventions and the Universal Declaration of Human Rights; wedeveloped an internal Social Responsibility Management Manual in accordance with SA8000:
2014 Social Responsibility Management System Requirements. We pay regard to the freedomof association and right to collective bargaining of employees in accordance with domesticlaw and out of free will. We pay attention to protecting the personal information and privacyof employees and prohibit illegal employment in all forms such as child labor, forced laborand deprivation of personal freedom. During the reporting period, 86% employees have beenthe members of Labor Union in China, and the Company did not engage in forced labor orchild labor.
As of December 31, 2018, the Company had a total of 34,392 employees. Employeedistributions are as follows.
Compensation and BenefitsWe advocate reward by value contribution and provide employees with competitivecompensation and all kinds of benefits. Employees receive remuneration in full and on time.The five social insurance and one housing fund (endowment insurance, medical insurance,unemployment insurance, employment injury insurance, maternity insurance and the HousingProvident Fund) are provided for employees in accordance with applicable national and locallaws and regulations. Besides, extra benefits such as supplementary medical insurance, freebreakfast and optional physical examination are also available for employees and their familymembers each year.
| Legal benefits | Additional benefits |
| ? Social insurance ? Housing Provident Fund ? Public holiday ? Paid leave | ? Optional physical examination for employees and their family members each year ? Commercial insurance for employees and their dependents covering personal accidents, critical illnesses, supplementary medical care, etc. Optional for employees' family members. ? Overseas business travel insurance, covering personal accidents, emergency medical treatment, financial loss, travel inconvenience, third-party liability, etc. ? Health workshop and themed free treatment ? Free nutritious breakfast, birthday benefits, team-building and recreational activities, meal allowance, transportation subsidies, communication subsidies, holiday benefits, high temperature |
Democratic ManagementWe embrace democratic management to protecting employees' right to information,participation and supervision. We set up a labor union and constantly improve our laborunion system. We provide communication channels for employees at different posts, differentdepartments and different levels to be heard. We listen to employees to understand what theyneed and help them with workplace problems and life issues.
During the reporting period, we held the series of "Dialogue” once per month that allowsentry/junior-level employees to meet face-to-face with executives. We held "Listen to theForefront" symposium quarterly, where department chiefs listened attentively to the views offrontline employees. In addition, we expanded communication channels for employees bysetting suggestions box, employee appeal mechanism, "Dabai Hotline", "I Have Something toSay" and so on, having discussions with new employees, interns, employees at key posts,experienced employees, employees on probation, employees that plan to quit, and doingsatisfaction surveys in an effort to arouse employees' enthusiasm and improve employeesatisfaction.
“Dialogue” Activity5.2 Talent TrainingWe make great efforts to train talents as we develop our businesses. We provide promotionchannels for technical staff and staff in the management sector. We have well-organized
professional development and training systems to help employees at all levels maximize theirvalues at their suitable positions.
Professional DevelopmentWe provide employees with dual professional development channels. We implement internalpromotion and post rotation mechanisms and follow three principles to help employeesachieve professional development goals. Employees can choose the Management orProfessional routine to achieve promotion and development.
? Principle of fairness and justice
Follow established procedures to select, remove, promote and demote employees.Ensure the fairness and validity of the procedures and provide each employee withequal promotion opportunities according to the rules.? Value both ability and integrity, promote employees on the basis of competitive
selectionConsider integrity as the bottom line, performance as an important factor and abilityas the key when selecting and promoting employees.? Promotion and demotion
Evaluate the duties, abilities, performance, and values of employees that meet thebasic requirements of selection or promotion.May break a rule to employ, promote, or skip a level to promote an employee that isparticularly capable or required by special circumstances.Incompetent employees will be transferred to different posts or demoted. Employeesshould be prepared for both promotion and demotion.
Training SystemBased on business development strategies, we established a training system, enrich andimprove the sytem through continuous demand analysis and research. We provide leadershiptraining, managerial staff training all over the Company. The systems and learning platformsare able to fully support talent development. During the reporting period, RMB 21.8 millionwas dedicated to employee training. Training hours
totaled 463,235 hours, equivalent to
“Training hours” refers to the hours of training organized by the Division of Learning and Development of the Department of HumanResources. It includes induction training, general capacity building, general managerial skill building and operational training organized
13.5 hours per employee.
Training CoursesWe establish a two-channel training course system based on the two-channel employee careerpath.
? For employees in the Management track, courses provided focus on fostering their
leadership. We help staff at different levels to shift their roles, fulfill managementresponsibilities and develop leadership;? For employees on the Professional track, coursed provided focus on upgrading their
expertise and trainings are provided to enhance their professional skills.? For new employees, we prepared a newcomer growth plan of introducing our
corporate culture, rules and regulations, and professionalism requirements, insomuch
that the newly employed can understand, recognize and fit in the Company and their
own positions.
by the Division of Learning and Development. Training programs organized by functional departments themselves are not included.
| LMS (Learning Management System) in Line with Our Global Talent Strategy |
| To further satisfy our strategic development needs of globalization, we developed and launched a Learning Management System (hereinafter referred to as "LMS") based on our organizational structure and in line with our global talent strategy. LMS aims to train talents for the Company and build it into a lifelong learning organization. LMS allows employees to attend online courses and have offline practice. It also enables mobile learning to provide more diverse and flexible training. During the reporting period, all employees of the Company, excluding entry-level staff, have registered LMS accounts. As of the end of the reporting period, there were 143 general courses, 1,586 business specific courses, 605 test papers, together with 24 learning and exchange communities in the system. |
In addition, we developed a lecturer training program and formulated the In-house TrainerManagement System to engage all employees in training. Everyone can apply to be a trainer.As of December 31, 2018, the lecturer training program trained a total number of 235lecturers, including 78 lecturers for management courses, 54 lecturers for competencycourses, and 103 lecturers in business specific courses.
Themed Salon for In-house Trainers5.3 Safeguard Health and SafetyClearly aware of the primary role of safety and health in maintaining employees' strongenthusiasm for work and enhancing work efficiency, holding the bottom line of ensuringproduction safety, we strive to protect employees' health and safety in practical means bycontinuously endeavoring to improve occupational health and safety system and occupationalhealth services.
Guarantee Occupational HealthWith the safety as well as physical and mental soundness of our employees always on our topagenda, we regularly conduct occupational hazard factor testing, provide qualified laborprotection articles for personnel involved in occupational hazards, and organize occupationalhealth examinations on regular basis, all of which are in strict compliance with the nationallaws and regulations and those in operation localities concerning occupational health,including the Law of the People's Republic of China on the Prevention and Control ofOccupational Diseases, Provisions on the Supervision and Administration of OccupationalHealth at Work Sites, the Regulations on Labor Protection in Workplaces Where ToxicSubstances, etc. During the reporting period, we passed the OHSAS 18001 OccupationalHealth and Safety Management System Certification, and no new cases of occupationaldiseases occurred during the year.
To enhance employees' self-protection awareness, we continue to provide employees with avariety of occupational health and safety education and training, helping them learn to wearand use all kinds of labor protection products. Alongside that, in order to provide employeeswith a safe and healthy working environment, we keep optimizing the production process andproactively promote intelligent production through intelligent transformation to improve thesafety of employees in operation. During the reporting period, our factory introduced anumber of intelligent transformation projects, including automatic machine palletizing,machine dispensing, and automatic mounting of electrical heat sink fins.
| Machine Automatic Palletizing to Improve Employees’ Work Safety |
| Traditional packaging pallets require manual lifting of products weighing up to 30 kg onto pallets or shelves, long-time work of which is not only costly for employees’ physical strength, but also has huge potential to injure employees during handling. During the reporting period, to better the status of manual palletizing, the Company introduced automatic palletizing equipment. which enables automatically palletizing to pallets or shelves through machines after manual packaging, significantly improving the safety of employees' working environment. |
Safety Production ManagementStrictly abiding by the Work Safety Law of the People's Republic of China andwholeheartedly adhering to the safety production policy of "safety foremost, prevention first,manage comprehensively", we implement at every level the safety production responsibilitysystem of "horizontally and vertically, all covering" and, with safety productionstandardization as the yardstick, establish and continuously improve the safety productionrules and regulations as well as management system. Apart from that, we implement safetymanagement objectives in accordance with the closed-loop working method, andcomprehensively take actions to investigate and handle hidden troubles to safety production.During the reporting period, the safety education coverage rate of the Company's on-the-jobpersonnel, the rate of employment of special operators with certificates and the testing rate ofoccupational hazard factors all reached 100% with no work-related fatalities throughout theyear.
During the reporting period, the Company lost a total of 111 workdays due to work-relatedinjuries. In terms of the types of accidents caused by work-related injuries, traffic accidentsand safety production accidents are in majority. In order to protect the legitimate rights andinterests of workers and employees, the Company intensified the implementation of theRegulation on Work-Related Injury Insurance to ensure that employees receive medicaltreatment and financial compensation after work-related injuries, and give due care to themand their families. At the same time, in order to prevent and eliminate the recurrence of suchwork-related accidents, the Company has increased security publicity through bulletin boards,security themed activities and internal mails to increase safety awareness of employees sothat they can not only pay attention to the safety behaviors in work sites, working time andtheir occupation, but also attach more heed to their safety of commuting and in businesshours.
| Before transformation After transformation |
Safety Culture ConstructionTo create a sound safety culture in the Company, we have carried out special safety educationactivities covering fire protection, electricity use, first aid, ascending, equipment, hazardidentification, and chemical use at various levels, in multiple channels, and in many forms,aiming to effectively enhance employees' safety awareness and improve their risk preventioncapabilities. Through the combination of knowledge contests and VR experiences along witha variety of such themed months as the safety production month and the fire protection month,the Company makes the safety production theory and knowledge concrete and attractive,aiming to enhance employees' safety awareness and ability through rich and colorful safetyculture.
Emergency DrillTaking into account occupational health and safety risks from all sides, we have developedten emergency plans. According to the emergency plan, we also continue to carry outcorresponding emergency drills to strengthen employees' safety awareness, improveemployees' abilities of self-protection, self-rescue, disaster prevention and escaping fromdanger, and accordingly minimize safety risks. During the reporting period, we organizednine fire emergency evacuation drills as well as more than ten other safety drills, includingelevator trapping exercises, group food poisoning drills, flood control drills, anti-terrorismdrills, natural gas leakage drills, power outage emergency drills, etc.
Fire emergency evacuation drill Chemical leakage drill
5.4 Empathize Employees’ Well-beingWe attach great importance to keeping work-life balance of employees, spare no effort toperfect the care mechanism for all staff, strive by all means to optimize the officeenvironment with more humanistic atmosphere, show the most empathy to employees with
their life, feelings, progress and all other aspects. All these efforts are meant to helpemployees pursue happy and healthy life .
Care to EmployeesFor the sake of our employees’ physical and mental soundness, we carry out vast and variedactivities out of concern to protect the rights and interests of female employees, to helpemployees in need so as to enhance employees' sense of belonging, identity and happiness inthe Company.
| Open access to fitness center |
| A fitness center is permanently open to employees free of charge, which accommodates various technical exercise venues, mechanical facilities, physical testing areas, dressing rooms, shower and spa rooms. Professional instructors who provide on-site training and fitness lessons are also accessible for employees with reservation. Fitness Center |
| Launch “Dabai” EAP Care Plan |
| During the reporting period, “Dabai” EAP care plan was launched to offer tailored psychological care to all staff with lectures on psychology and round-the-clock at-service psychic hotline. Dabai psychic hotline now allows a feedback mechanism with four channels, including |
consultation through phone calls, emails, skype as well as on-site consulting.For telephone and on-site consultation: An instant feedback mechanism is set up. Forhard-cracked nuts that entail coordination or fail to be solved immediately, constant effortand real-time feedback will be taken till they are solved. Besides, in terms of telephoneconsultation, voice self –service will be available during non-working hours.? For consultation through emails: A 24h feedback mechanism is established to give
concise and clear response to employees about their concerns in a uniform format.? For consultation through Skype: A mechanism that all consultation before 18:00 must
be replied by the end of the day is set up.? As of December 31 2018, Dabai Hotline had received a total of 14,399 consultations.Care to Pregnant Female Employees
| Care to Pregnant Female Employees |
| The Labor Union of the Company set up a sound care mechanism for pregnant female employees. To be specific, for their convenience, mother-and-baby rooms are provided, which are well equipped with a variety of necessary facilities including refrigerators, racks, disinfection cabinets, coat racks, and sinks. Mother-and-baby room |
While establishing a mechanism for visits and condolences to sick people, we have also setup a support fund for relatives of employees suffering from major accidents or suddendangerous diseases or illnesses.
| Set up Care Fund for Employees Relatives |
| We set up care fund for employees’ relatives, which was established by Mr. Gong Hongjia, one shareholder of Hikvision, and is now jointly managed by the Human Resources Department, the Labor Union, and the Supply Chain Management Center. The fund is targeted at caring the immediate family members of young and low-income employees who are not on the regular payroll. The fund is used for the rescue when those people mentioned above encounter major accidents or sudden dangerous diseases or illnesses, the subsidies for their college fees and their life skill training expenses, as well as aid for their daily life expenses. Since the launch of the fund, it has given aid to 6 employees with the amount of assistance totalled 630,000 RMB. |
Work-life BalanceWe have, as always, advocated happy work and happy life. To this end, a variety of culturaland sports activities are held to balance employees’ work and life. Six amateur clubs forfootball, basketball, badminton, swimming, dance yoga, photography are set up. Activitiesare carried out regularly every year among clubs for employees. Some sports games are alsothrew inside the Company. More often than that, employees outstanding in some sports aresent to participate in performances and competitions outside the Company. In addition, wealso hold a series of activities different themed topics such as “Happy New Year”, “Goddess”and “Happiness” to enhance interaction among employees, bolstering their well-being andsense of belonging.
4V4 basketball game Binjiang Youth football league
| “Happy New Year” Activities | “Goddess” Activities |
| Every year of Spring Festival Eve, we celebrate the festival, create and pass the festivity on to all people in the Company with fun activities such as Inter-floor New Year greeting, Collecting Wufu, Gathering good luck, New Year sports meeting, New Year garden party, Special reunion dinner and Executive Challenge. | During the Women's Day each year, we usually organize Female Excellence activities, and specifically carry out activities such as Goddess Welfare Society, Goddess Training Course, Goddess Lecture Hall and Goddess Lucky Star to promote the image of ladies in new era with enterprising spirit and sagacious mind. The intention is to enable everyone to make friends and enjoy themselves with joy as well as knowledge and growth amid relaxed afternoon tea time and fun science class. |
| “Happiness” Activities | |
| The Company's annual "Happiness" events include three themes of "parents", "partners" and "babies". Six to seven colorful and warm fun activities are held for the family members of employees, to get familiar with the office environment, understand the work content of the staff, and to enhance the sense of belonging and identity of the employees' family members through inserting parent-child classroom link into the activities. | |
Chapter 6 Pursue Green Operation, Empower SustainableEcosystem
As a leader in the industry, Hikvision keeps up with domestic and internationalenvironmental policies and trends. In this regard, it complies with related environmentalprotection laws and regulations, on the basis of which it puts environmental protection highon its agenda in pursuing sustainable development and incorporates it into the core values ofthe Company’s daily operation Since its inception, Hikvision has been committed to creatingan environmental-friendly management and development mode. To this end, it continuouslyendeavors to promote energy conservation, emission reduction and environmental greening,seize opportunities to develop and utilize clean technologies, and explore more energy-savingmethods and channels.6.1 Build Management SystemThe Company strictly abides by national, local and industrial environmental laws, regulationsand standards, including Environmental Protection Law of the People's Republic of China,Energy Conservation Law of the People's Republic of China, Water Pollution Prevention andControl Law of the People's Republic of China, Air Pollution Prevention and Control Law ofthe People's Republic of China", Law of the People's Republic of China on the Preventionand Control of Solid Waste Pollution. It compiles an internal management system in line withits conditions to clarify the roles, responsibilities and jurisdiction of managers, executives andsupervisory personnel in environmental management activities so as to continuously pushforward the Company's environmental protection work.System CertificationThe Company has obtained the ISO 14001 environmental management system certification,the SA 8000 social responsibility standard certification, the QC 080000 hazardous substancesprocess management system certification and the ISO 50001 energy management systemcertification, and a five-star assessment of its green supply chain.
ISO 14001 ISO 50001 SA 8000 QC 080000
Certificate of Green Supply Chain AssessmentIn accordance with the requirements of the ISO 14001 environmental management system,the Company evaluates the potential environmental risks in R&D phase, and has madecorresponding written formulation to manage the whole process of production to increaseinvestment in the construction of pollutant treatment facilities and strictly follow rules tohandle waste gas, wastewater and solid waste in the production process.Target SettingThe Company encourages all subsidiaries to proactively carry out environmentalimprovement projects on the one side and minimize the damage of business operations to theenvironment on the other side. To this end, it is encouraged to strive to reduce consumptionin energy, water and other resources through such measures as process optimization andsource control, to increase resource recycling rate.In order to ensure the effective implementation of environmental protection projects and thecontinued promotion of sustainable development concepts, the Company has set performanceindicators for waste, chemicals and environmental protection equipment.
Hikvision Environmental Indicators in 2018
In addition, the Company is working to minimize environmental risks by setting specific
targets for power consumption, water consumption, and gas consumption of the plant,continuing to increase investment in the construction of pollutant treatment facilities, andstriving to reduce discharge of wastewater, solid waste and emissions through compliancetreatment.6.2 Practice Green OperationThe Company adheres to the principle of sustainable development of enterprises andcontinuously strengthens the protection of the environment for building a low-carbon society.During the reporting period, we continued to promote equipment energy-saving renovationand process optimization, and gradually reduce consumption of energy and resources.Energy ManagementAfter years of exploration and attempts, the Company, by adopting a series of energymanagement measures, has formulated an Energy Saving and Consumption ReductionControl Procedure which clearly defines energy saving and control in the whole process ofutilizing electricity, natural gas and other energy in the main production process, auxiliaryproduction process and subsidiary production process. As a result, the Company has madegreat headway in enhancing energy use efficiency comprehensively and meticulously, frommacro to micro level, from management to implementation. The Company has also launchedthe establishment of an energy management system, putting in place refined energymanagement. All these endeavors of the Company are meant to regulate energy management,further improve energy management and reduce energy consumption in production andoperations.The Company has formulated and issued environmental and energy indicators, refined theenergy targets of each department based on the company-level energy consumption per RMB10,000 production value target, and set the 2017 value as the Company's energy benchmarkwhile selecting energy performance parameters after determining energy performanceparameters. During the reporting period, through unremitting efforts in energy conservation,we over fulfilled the energy target in 2018, and the Company’s energy consumption of RMB10,000 output value decreased by 3.8% compared to 2017.
| Energy Types | Unit | Consumption amount |
| Unleaded gasoline | ton | 617.3 |
| Diesel | ton | 52.8 |
| Natural gas | 10,000 cubic meters | 143.5 |
| Electricity | MWh | 105,643.3 |
| Energy consumption | Unit | Amount |
| Direct energy consumption | ton of standard coal | 2,728.7 |
| Indirect energy consumption | ton of standard coal | 12,983.6 |
| Total energy consumption | ton of standard coal | 15,712.3 |
| Energy consumption intensity | ton of standard coal per million revenue | 0.32 |
| Greenhouse gas emission | Unit | Emission amount |
| Scope one | ton of CO2 | 5,045.4 |
| Scope two | ton of CO2 | 72,602.6 |
| Total emission (only scope one and scope two included) | ton of CO2 | 77,648.0 |
| Emission intensity | ton of CO2 per million revenue (RMB) | 1.56 |
In addition, during the reporting period, the Company carried out a number of energy-savingrenovations and promoted intelligent production through intelligent transformation to createlight-free factories with the aim of improving energy efficiency and boosting the Company'sgreen development.
Water Resource ManagementThe Company has established a strict water resource management system in accordance withthe production technique level and relevant local laws, regulations and standards to promotescientific and rational use of water resources, and significantly enhance the efficiency ofwater use. We proactively adopt cutting-edge technologies for water conservation, choosewater-saving equipment and appliances and install water-saving and anti-overflow deviceswhile striving to reduce water consumption so as to increase the reuse rate of water resources.At the same time, we enthusiastically promote water-saving culture, create a water-savingatmosphere, and further intensify our efforts to conserve water resources.
| Types of Water Resources | Unit | Consumption amount | |
| Municipal water supply | ton | 895,000.9 | |
| Underground water(from overseas exclusively) | ton | 1,014.7 | |
| Total | ton | 896,015.6 | |
| Intensity | ton per million revenue (RMB) | 17.98 | |
Packaging Material ManagementThe packaging materials used by the Company in the production process are mainly paper,plastic, wood and metal.During the reporting period, the Company continued to optimize the packaging andpackaging materials, such as changing the packaging method, and replacing the polystyrenewith air column bags. In the process of purchasing packaging materials from suppliers, westrictly evaluate their environmental qualifications and take into evaluation whether theyhave EIA certificates, sewage discharge permits, noise test reports, etc. Only when allrequirements are assessed to be met, the suppliers are qualified to supply us with packagingmaterials.At the same time, we proactively promote the recycling of packaging materials. Therecyclable packaging materials are uniformly recycled by the departments which use thesematerials, stored at the warehouse at a fixed time, recycled or uniformly handled bysuppliers.
| Packaging materials | Unit | Consumption amount |
| Plastic | ton | 5,389.4 |
| Carton | ton | 171,015.9 |
| Wood | ton | 23,753.7 |
| Total | ton | 200,159.0 |
| Intensity of the packaging materials | ton per million revenue (RMB) | 4.02 |
Chemical ManagementIn order to standardize the procurement, transportation, loading and unloading, storage, useand disposal of chemicals, the Company has formulated the Regulations on the Managementof Supply Chain Chemicals, which clarifies relevant requirements and operationalspecifications, and requires employees to strictly follow the regulations.
6.3 Reasonably Reduce EmissionsThe Company continues to strengthen the control of pollutants and endeavor to reduceemissions of pollutants so as to minimize the pressure of its production and operation on theenvironment. At the same time, it strives to further put into practice the concept of
sustainable development when pursuing environmental-friendly design of products.
Solid Waste ManagementThe Company has established Waste Management Procedure in accordance with itsproduction technique level and relevant local laws, regulations and standards to manage thegeneration of waste more effectively. We classify waste into recyclable waste, non-recyclablewaste and hazardous waste.
| Recyclable waste | Unit | Amount |
| Plastic | ton | 1,126.8 |
| Wood | ton | 546.3 |
| Paper | ton | 4,767.6 |
| Metal | ton | 1,034.6 |
| Others (harness, oil paper, etc.) | ton | 653.7 |
| Total | ton | 8,129.0 |
| Intensity | ton per million revenue (RMB) | 0.16 |
| Non-recyclable waste | Unit | Amount |
| Kitchen waste | ton | 2,281.1 |
| Office garbage | ton | 5,929.3 |
| General industrial waste | ton | 1,387.7 |
| Total | ton | 9,598.1 |
| Intensity | ton per million revenue (RMB) | 0.19 |
| Hazardous waste | Unit | Amount |
| Total amount of hazardous waste | ton | 121.6 |
| Hazardous waste intensity | ton per million revenue (RMB) | 0.002 |
In order to control all types of solid waste generated in all activities, products and services ofthe Company, we have established Waste Management Procedure and Supply ChainHazardous Waste Management Regulations, which regulate the requirements for theclassification, collection, handover, temporary storage, processing of hazardous wastes.
Management of Electronics and Electrical AppliancesThe Company has developed a recycling plan to handle waste electronics and electricalappliances from products that has expired or fall short of quality, reduce the generation ofelectronic waste, thereby lowering operating costs. The Company has achieved full control ofthe recycling process by standardizing the whole five links in the process, namely materialreturn, material acceptance, disposal assessment, disposal execution and end-of-lifemanagement.
Environmental Design ConceptThe Company acts in line with the green design concept to design products and seeks to meetthe environmental-friendly requirements of products in as many links as demand analysis,design, verification, release, manufacturing and sales of products. Apart from this, it alsotakes action in a number of aspects including hazardous substance control, green energyconservation and resource recycling.
The Company constantly keeps updated with clean technology application and integratesenvironmental protection concepts into product design, product packaging and other aspectsin its endeavor to implement energy conservation and consumption reduction.
6.4 Create Environmental-friendly CultureThe creation of a green harmonious environment and the Company's sustainable developmentis closely bound up with raising employees' environmental awareness. Believing that aquality environment brings better work, we create an energy-saving and emission-reducingatmosphere and subtly increase employees’ awareness of environmental protection byreleasing energy-saving and consumption-reducing initiatives, optimizing equipmentoperating parameters, and appointing administrators in this regard.
In addition, the Company strives to create an environmental-friendly culture, maintain andcontinuously enhance employees' environmental awareness through various environmentalprotection activities, and encourage employees to translate environmental awareness intodown-to-earth environmental actions.
| Publicity and activities on environmental protection |
| In order to ingrain environmental protection concept deeply into the daily life of employees, during the reporting period, the Company launched a series of environmental protection themed activities, continuously deepening the environmental-friendly concept, publicizing environmental protection ideas, instilling the values of sustainable development to every employee, and actively creating green atmosphere. |
Appendix Report index: GRI Standards
| Disclosure issues/disclosures | Disclosure title | Chapter index | Page number index |
| GRI 101 Foundation 2016 | |||
| GRI 102 General disclosures 2016 | |||
| Organization Profile | |||
| 102-1 | Name of the organization | About This Report | 3-4 |
| 102-2 | Activities, brands, products, and services | 1.1 Company Profile | 9-14 |
| 102-3 | Location of headquarters | About This Report | 3-4 |
| 102-4 | Location of operations | 1.1 Company Profile | 9-14 |
| 102-5 | Ownership and legal form | Legal form: company limited | - |
| 102-6 | Markets served | 1.1 Company Profile | 9-14 |
| 102-7 | Scale of the organization | Chapter 1: Our Company at A Glance 5.1 Protect the rights and interests of employees | 9-25 63-65 |
| 102-8 | Information about employees and other workers | 5.1 Protect the rights and interests of employees | 63-65 |
| 102-9 | Supply chain | 3.5 Supply Chain Development | 46-48 |
| 102-10 | Significant changes to the organization and its supply chain | Not applicable, there were no major changes in the organization and its supply chain during the reporting period. | - |
| Strategy | |||
| 102-14 | Statement from senior decision-maker | Letter from the Management Letter from Chief Compliance | 5-6 7 |
| Officer | |||
| Morality and Integrity | |||
| 102-16 | Values, principles, standards and norms of behavior | 1.1 Company Profile | 9-14 |
| Governance | |||
| 102-18 | Governance structure | 1.3 Corporate Governance | 15-20 |
| Stakeholder Involvement | |||
| 102-40 | List of stakeholder groups | 1.4 ESG Management | 20-25 |
| 102-42 | Identifying and selecting stakeholders | 1.4 ESG Management | 20-25 |
| 102-43 | Approach to stakeholder engagement | 1.4 ESG Management | 20-25 |
| 102-44 | Key topics and concerns raised | 1.4 ESG Management | 20-25 |
| Reporting Practice | |||
| 102-45 | Entities included in the consolidated financial statements | About This Report | 3-4 |
| 102-46 | Defining report content and topic Boundaries | About This Report | 3-4 |
| 102-47 | List of material topics | 1.4 ESG Management | 20-25 |
| 102-48 | Restatements of information | Not applicable, this report is the first ESG report, no information restatement | - |
| 102-49 | Changes in the reporting | Not applicable, this report is the first ESG report | - |
| 102-50 | Reporting period | About This Report | 3-4 |
| 102-51 | Date of most recent report | Not applicable, this report is the first ESG report | - |
| 102-52 | Reporting cycle | About This Report | 3-4 |
| 102-53 | Contact point for questions regarding the report | About This Report | 3-4 |
| 102-55 | GRI content index | Appendix Report Index: GRI Standards | 88-99 |
| Material topic | |||
| Economy | |||
| GRI 201 Economic Performance 2016 | |||
| GRI 103 Management Approach 2016 | 103-1 Explanation of the material topic and its Boundary | 1.4 ESG Management | 20-25 |
| 103-2 The management approach and its components | 1.2 Operational Performance | 15 | |
| 103-3 Evaluation of management approach | 1.2 Operational Performance | 15 | |
| 201-1 | Direct economic value generated and distributed | 1.2 Operational Performance | 15 |
| GRI 202: Market Performance 2016 | |||
| GRI 103: Management Approach 2016 | 103-1 Explanation of the material topic and its Boundary | 1.4 ESG Management | 20-25 |
| 103-2 The management approach and its components | 1.2 Operational Performance | 15 | |
| 103-3 Evaluation of management approach | 1.2 Operational Performance | 15 | |
| GRI 204: Procurement Practices 2016 | |||
| GRI 103 Management Approach 2016 | 103-1 Explanation of the material topic and its Boundary | 1.4 ESG Management | 20-25 |
| 103-2 The management approach and its components | 3.5 Supply Chain Development | 46-48 | |
| 103-3 Evaluation of | 3.5 Supply Chain | 46-48 | |
| management approach | Development | ||
| GRI 205: Anti-corruption 2016 | |||
| GRI 103: Management Approach 2016 | 103-1 Explanation of the material topic and its Boundary | 1.4 ESG Management | 20-25 |
| 103-2 The management approach and its components | 1.3 Corporate Governance | 15-20 | |
| 103-3 Evaluation of management approach | 1.3 Corporate Governance | 15-20 | |
| 205-2 | Communication and training about anti-corruption policies and procedures | 1.3 Corporate Governance | 15-20 |
| 205-3 | Confirmed incidents of corruption and actions taken | 1.3 Corporate Governance | 15-20 |
| GRI 206: Anti-competitive Behavior 2016 | |||
| GRI 103: Management Approach 2016 | 103-1 Explanation of the material topic and its Boundary | 1.4 ESG Management | 20-25 |
| 103-2 The management approach and its components | 1.3 Corporate Governance | 15-20 | |
| 103-3 Evaluation of management approach | 1.3 Corporate Governance | 15-20 | |
| 206-1 | Legal actions for anti-competitive behavior, anti-trust, and monopoly practices | 1.3 Corporate Governance | 15-20 |
| Environment | |||
| GRI 301: Materials 2016 | |||
| GRI 103: Management Approach 2016 | 103-1 Explanation of the material topic and its Boundary | 1.4 ESG Management | 20-25 |
| 103-2 The management approach and its components | 6.2 Practice Green Operations | 78-81 | |
| 103-3 Evaluation of management approach | 6.2 Practice Green Operations | 78-81 | |
| 301-1 | Materials used by weight or volume | 6.2 Practice Green Operations | 78-81 |
| GRI 302: Energy 2016 | |||
| GRI 103: Management Approach 2016 | 103-1 Explanation of the material topic and its Boundary | 1.4 ESG Management | 20-25 |
| 103-2 The management approach and its components | 6.2 Practice Green Operations | 78-81 | |
| 103-3 Evaluation of management approach | 6.2 Practice Green Operations | 78-81 | |
| 302-1 | Energy consumption within the organization | 6.2 Practice Green Operations | 78-81 |
| 302-3 | Energy intensity | 6.2 Practice Green Operations | 78-81 |
| 302-4 | Reduction of energy consumption | 6.2 Practice Green Operations | 78-81 |
| 302-5 | Reductions in energy requirements of products and services | 6.2 Practice Green Operations | 78-81 |
| GRI 303: Water and Effluents 2018 | |||
| GRI 103: Management Approach 2016 | 103-1 Explanation of the material topic and its Boundary | 1.4 ESG Management | 20-25 |
| 103-2 The management approach and its components | 6.2 Practice Green Operations | 78-81 | |
| 103-3 Evaluation of management approach | 6.2 Practice Green Operations | 78-81 | |
| 303-1 | Water withdrawal by source | 6.2 Practice Green Operations | 78-81 |
| GRI 305: Emission 2016 | |||
| GRI 103: Management Approach 2016 | 103-1 Explanation of the material topic and its Boundary | 1.4 ESG Management | 20-25 |
| 103-2 The management approach and its components | 6.2 Practice Green Operations | 78-81 | |
| 103-3 Evaluationof management approach | 6.2 Practice Green Operations | 78-81 | |
| 305-1 | Direct (Scope 1) GHG emissions | 6.2 Practice Green Operations | 78-81 |
| 305-2 | Energy indirect (Scope 2) GHG emissions | 6.2 Practice Green Operations | 78-81 |
| 305-4 | GHG emission intensity | 6.2 Practice Green Operations | 78-81 |
| GRI 306: Effluents and Waste 2016 | |||
| GRI 103: Management Approach 2016 | 103-1 Explanation of the material topic and its Boundary | 1.4 ESG Management | 20-25 |
| 103-2 The management approach and its components | 6.2 Practice Green Operations | 78-81 | |
| 103-3 Evaluation of management approach | 6.3 Reasonably Reduce emissions | 81-85 | |
| 306-2 | Waste by type and disposal method | 6.3 Reasonably Reduce Emissions | 81-85 |
| 306-4 | Transport of hazardous waste | 6.3 Reasonably Reduce Emissions | 81-85 |
| GRI 307; Environmental Compliance 2016 | |||
| GRI 103: Management Approach 2016 | 103-1 Explanation of the material topic and its Boundary | 1.4 ESG Management | 20-25 |
| 103-2 The management approach and its components | Chapter 6 Pursue Green Operation, Empower | 76-87 | |
| Sustainable Ecosystem | |||
| 103-3 Evaluation of management approach | Chapter 6 Pursue Green Operation, Empower Sustainable Ecosystem | 76-87 | |
| GRI 308: Supplier Environmental Assessment 2016 | |||
| GRI 103: Management Approach 2016 | 103-1 Explanation of the material topic and its Boundary | 1.4 ESG Management | 20-25 |
| 103-2 The management approach and its components | 3.5 Supply Chain Development | 46-48 | |
| 103-3 Evaluation of management approach | 3.5 Supply Chain Development | 46-48 | |
| 308-1 | New suppliers that were screened using environmental criteria | 3.5 Supply Chain Development | 46-48 |
| Society | |||
| GRI 401: Employment 2016 | |||
| GRI 103: Management Approach 2016 | 103-1 Explanation of the material topic and its Boundary | 1.4 ESG Management | 20-25 |
| 103-2 The management approach and its components | Chapter 5 Talent-Focused, Growing Together | 63-75 | |
| 103-3 Evaluation of management approach | Chapter 5 Talent-Focused, Growing Together | 63-75 | |
| 401-1 | New employee hires and employee turnover | 5.1 Protect the Rights and Interests of Employees | 63-65 |
| 401-2 | Benefits provided to full-time employees that are not provided to temporary or part-time employees | 5.1 Protect the Rights and Interests of Employees 5.4 Empathize Employees’ Well-being | 63-65 71-75 |
| 401-3 | Parental leave | 5.1 Protect the Rights and | 63-65 |
| Interests of Employees | |||
| GRI 403: Occupational Health and Safety 2018 | |||
| GRI 103: Management Approach 2016 | 103-1 Explanation of the material topic and its Boundary | 1.4 ESG Management | 20-25 |
| 103-2 The management approach and its components | 5.3 Safeguard Health and Safety | 68-71 | |
| 103-3 Evaluation of management approach | 5.3 Safeguard Health and Safety | 68-71 | |
| 403-2 | Types of injury and rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities | 5.3 Safeguard Health and Safety | 68-71 |
| GRI 404: Training and Education 2016 | |||
| GRI 103: Management Approach 2016 | 103-1 Explanation of the material topic and its Boundary | 1.4 ESG Management | 20-25 |
| 103-2 The management approach and its components | 5.2 Talent Training | 65-68 | |
| 103-3 Evaluation of management approach | 5.2 Talent Training | 65-68 | |
| 404-1 | Average hours of training per year per employee | 5.2 Talent Training | 65-68 |
| 404-2 | Programs for upgrading employee skills and transition assistance programs | 5.2 Talent Training | 65-68 |
| GRI 405: Diversity and Equal Opportunity 2016 | |||
| GRI 103: Management Approach 2016 | 103-1 Explanation of the material topic and its Boundary | 1.4 ESG Management | 20-25 |
| 103-2 The management | 5.1 Protect the Rights and | 63-65 | |
| approach and its components | Interests of Employees | ||
| 103-3 Evaluation of management approach | 5.1 Protect the Rights and Interests of Employees | 63-65 | |
| 405-1 | Diversity of governance bodies and employees | 5.1 Protect the Rights and Interests of Employees | 63-65 |
| GRI 406: Non-discrimination 2016 | |||
| GRI 103: Management Approach 2016 | 103-1 Explanation of the material topic and its Boundary | 1.4 ESG Management | 20-25 |
| 103-2 The management approach and its components | 5.1 Protect the Rights and Interests of Employees | 63-65 | |
| 103-3 Evaluation of management approach | 5.1 Protect the Rights and Interests of Employees | 63-65 | |
| GRI 407: Freedom of Association and Collective Bargaining 2016 | |||
| GRI 103: Management Approach 2016 | 103-1 Explanation of the material topic and its Boundary | 1.4 ESG Management | 20-25 |
| 103-2 The management approach and its components | 5.1 Protect the Rights and Interests of Employees | 63-65 | |
| 103-3 Evaluation of management approach | 5.1 Protect the Rights and Interests of Employees | 63-65 | |
| GRI 408: Child Labor 2016 | |||
| GRI 103: Management Approach 2016 | 103-1 Explanation of the material topic and its Boundary | 1.4 ESG Management | 20-25 |
| 103-2 The management approach and its components | 5.1 Protect the Rights and Interests of Employees | 63-65 | |
| 103-3 Evaluation of management approach | 5.1 Protect the Rights and Interests of Employees | 63-65 | |
| GRI 409: Forced or Compulsory Labor 2016 | |||
| GRI 103: Management Approach 2016 | 103-1 Explanation of the material topic and its Boundary | 1.4 ESG Management | 20-25 |
| 103-2 The management approach and its components | 5.1 Protect the Rights and Interests of Employees | 63-65 | |
| 103-3 Evaluation of management approach | 5.1 Protect the Rights and Interests of Employees | 63-65 | |
| GRI 413: Local Communities 2016 | |||
| GRI 103: Management Approach 2016 | 103-1 Explanation of the material topic and its Boundary | 1.4 ESG Management | 20-25 |
| 103-2 The management approach and its components | Chapter 4 Serve the Society to Create a Better Future | 49-62 | |
| 103-3 Evaluation of management approach | Chapter 4 Serve the Society to Create a Better Future | 49-62 | |
| GRI 414: Supplier Social Assessment 2016 | |||
| GRI 103: Management Approach 2016 | 103-1 Explanation of the material topic and its Boundary | 1.4 ESG Management | 20-25 |
| 103-2 Management approach and its components | 3.5 Supply Chain Development | 46-48 | |
| GRI 416: Customer Health and Safety 2016 | |||
| GRI 103: Management Approach 2016 | 103-1 Explanation of the material topic and its Boundary | 1.4 ESG Management | 20-25 |
| 103-2 The management approach and its components | 2.2 Quality Assurance | 29-34 | |
| 103-3 Evaluation of management approach | 2.2 Quality Assurance | 29-34 | |
| 416-1 | Assessments of the health and safety impacts of product and service categories | 2.2 Quality Assurance | 29-34 |
| GRI 417: Marketing and Labeling 2016 | |||
| GRI 103: Management Approach 2016 | 103-1 Explanation of the material topic and its Boundary | 1.4 ESG Management | 20-25 |
| 103-2 The management approach and its components | 2.2 Quality Assurance 3.1 Provide Quality Service | 29-34 39-41 | |
| 103-3 Evaluation of management approach | 2.2 Quality Assurance 3.1 Provide Quality Service | 29-34 39-41 | |
| 417-1 | Requirements for product and service information and labeling | 2.2 Quality Assurance | 29-34 |
| 417-3 | Incidents of non-compliance concerning marketing communications | 3.2 Protect User Privacy | 42-43 |
| GRI 418 Customer Privacy 2016 | |||
| GRI 103: Management Approach 2016 | 103-1 Explanation of the material topic and its Boundary | 1.4 ESG Management | 20-25 |
| 103-2 The management approach and its components | 3.2 Protect User Privacy | 42-43 | |
| 103-3 Evaluation of management approach | 3.2 Protect User Privacy | 42-43 | |
| 418-1 | Substantiated complaints concerning breaches of customer privacy and loss of customer data | 3.2 Protect User Privacy | 42-43 |
| GRI 419: Socioeconomic Compliance 2016 | |||
| GRI 103: Management Approach 2016 | 103-1 Explanation of the material topic and its Boundary | 1.4 ESG Management | 20-25 |
| 103-2 The management | Letter from Chief Compliance | 7 | |
| approach and its components | Officer 1.3 Corporate Governance | 15-20 |
| 103-3 Evaluation of management approach | Letter from Chief Compliance Officer 1.3 Corporate Governance | 7 15-20 |
Note:
This document is a translated version of the Chinese version 2018 Environmental, Social andGovernance Report (“2018年环境、社会及管治报告”), and the published announcements inthe Chinese version shall prevail. The complete published Chinese 2018 ESG Report may beobtained at www.cninfo.com.cn.