2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report目录
CONTENTS
About This ReportAbout Zhende MedicalMessage from the Chairman: Working To-gether for a Sustainable FutureKey Performance on Sustainability in 2023
ESG Performance TablesReport Benchmarking Index TableAssurance Statement
Sustainable DevelopmentManagement
Improve GovernanceSystem
Governance-First Principle: Protect-ing Investors’ Rights and InterestsCompliance-Oriented Principle:
Creating a Clean and Clear CorporateEnvironment
【Topic I】Zhende MakesReforms in Processes toStimulate OrganizationalVitality
【Topic II】Zhende Makes
Innovations to Drive GreenDevelopment with LeanProduction
Care Employee Growth
Protecting Employees’ Rights andInterests, Guaranteeing Compliantand Equal EmploymentSharing Achievements of Devel-opment, Boosting Grow of TalentsFullling the Primary Responsibil-ity, Ensuring Occupational Healthand Safety
Promote Green Development
Green Operations: Protecting OurBeautiful HomeResource Conservation: Advanc-ing Sustainable DevelopmentZero Carbon Driven: AddressingClimate Change
To Be a Reliable Partner
Innovation Leadership: Providing ZhendeSolutions for Health ManagementQuality Service: Contributing ZhendeStrength to Customer SuccessWin-Win Cooperation: Sharing ZhendeExperience for Industry DevelopmentCommunity Engagement: FulllingZhende Responsibilities for a BetterSociety
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
About Zhende Medical
About This ReportAbout Zhende MedicalThis report is the second Sustainability Report and ESG Report of Zhende Medical Co., Ltd., which discloses toinvestors and other stakeholders our philosophy, established management methods, implemented work, andachieved results in terms of sustainable development issues in its operations.
Company ProfileZhende Medical, established in 1994, is an A-share listed company in China (stock code: 603301. SH). It isheadquartered in Shaoxing City, Zhejiang Province. Zhende is now one of China's leading manufacturers of productsincluding medical dressing, infection site control and infection protection, while ranking among the top 50 Chinesemedial device manufactuers.Our business operations span all 34 provinces of China and extend to over 70 countriesand regions worldwide..Zhende’s products have been certified by the Food and Drug Administration (FDA), the Communate Europpene (CE), ISO13485 Quality Management for Medical Devices, and the National Medical Products Administration (NMPA) of China.Our product line covers different usage scenarios such as compression treatment & fixation, traditional wound care,operating room infection control, basic care, isolation protection, pressure therapy and venous thromboembolism (VTE)prevention, stoma care, advanced wound care, personal healthcare, rehabilitation care, and intravenous therapy.
Report ScopeThe scope of this report covers Zhende Medical Co., Ltd.and its subsidiaries (referred to as “Zhende Medical”,“Zhende” or “we”). Unless otherwise specified, the scopeof this report is consistent with that of consolidatedfinancial statements for the same period of ZhendeMedical (stock code: 603301.SH）.Report PeriodThis report covers the period from January 1, 2023 toDecember 31, 2023. Unless otherwise specified, thedata in this report come from this period.
Preparation Basis
This report is based on the Guideline No. 1 for theApplication of Self-regulatory Rules for Companies Listedon the STAR Market of the Shanghai Stock Exchange– Standardized Operation, and has been preparedwith reference to the United Nations SustainableDevelopment Goals (SDGs). The preparation processconforms to the GRI Standards (2021).
Report Preparation Principles
This report is prepared in accordance with the principlesof importance, accuracy, balance, clarity, quantificationand consistency, completeness, timeliness, andveri?ability. It is approved for release by Zhende’s Boardof Directors on August 29, 2024. The Board of Directorsguarantees that the content of the report is free from falserecords, misleading statements, or signi?cant omissions.This report is published in Simpli?ed Chinese and English.Any inconsistency between the Chinese and Englishexpressions shall be subject to the Chinese version.
Data DescriptionThe data and cases in the report come from real recordsof Zhende’s actual operations.The financial data in the report are all in RMB. If thefinancial data is inconsistent with the Zhende’s annualfinancial report, the annual financial report shall prevail.Report AcquisitionThis report is released in electronic form on informationdisclosure platforms designated by the stock exchange,and can be viewed on or downloaded from our officialwebsite (http://www.zhende.com).Contact UsIf you have any suggestions for the report, you canreach us through the following ways:
Address: No. 55 Xiangji Road, Gaobu Town, YuechengDistrict, Shaoxing City, Zhejiang ProvinceEmail: dsh@zhende.com
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
About Zhende Medical
Investment in the factory in KenyaTo better align with the demands ofglobal supply chains, we have investedin the first phase of a project in Kenya,which encompasses the establishmentof production facilities for surgicalgowns, surgical packs, and other relatedproducts.Product carbon footprint certificationIn 2023, we conducted the carbon footprintcertication for four products, namely sur-gical drapes, surgical gowns, non-wovenretention adhesive tape and sterile gauzeswabs. We have continuously optimizedthe efficiency of our production process,from the acquisition of raw cotton tomanufacturing and waste disposal. Ourefforts include enhancing the use of greenenergy and broadening the scope of greenproduction practices, thereby increasing thesustainability of our low-carbon products.
Commitment to joining SBTiZhende Medical has proactivelyaddressed the challenge of globalwarming by developing a climatetransformation strategy aligned withthe 1.5°C temperature goal of the ParisAgreement. We have committed tosetting its emission reduction targets inaccordance with the standards of theScience Based Targets initiative (SBTi),fostering the creation of a new green andlow-carbon ecosystem in collaborationwith its value chain partners.Joined UNGCZhende Medical joined the UnitedNations Global Compact (UNGC) tofulfill its commitment to sustainabledevelopment.
Expansion of business linesIn April 2023, Zhende Medical acquiredJiangsu Embrace Science & TechnologyDevelopment Co., Ltd. whose primaryproducts include prefilled flush syringes.This acquisition effectively complementsour existing product portfolio and alignsclosely with the use scenarios of itscurrent intravenous therapy products.
Use of more renewableelectricityZhende continued to promote solarpower generation projects in Anhuimanufacturing base and Jiangsumanufacturing base, increasing the useof green energy.
Efficient wound careZhende has developed super-absorptivepolyurethane foam to offer moregentle protection for patients' wounds,enhancing healing efficiency and patientcomfort. Additionally, this innovationsupports clinical medical staff byreducing nursing workload, decreasingdressing change frequency, and loweringmedical costs, ultimately minimizing thewaste of medical resources.New Product InclusiveHealthcareIts waste liquid collection system hassignificantly reduced the risk of cross-infection during surgery, offeringadvanced and efficient infection controlfor medical workers.
Company Events in 2023
Honors and External Recognitions of Zhende Medical in 2023
Lightweight packagingZhende has established goals andaction plans to implement lightweightpackaging for its products, aiming toreduce unnecessary packaging andminimize waste of packaging materials.Products certified by ISCCPLUSIts surgical gowns have been certifiedby ISCC PLUS and are produced usingcircular value chains and certified rawmaterials, in accordance with ISCCPLUS standards.
Long-term financingsupportZhende collaborates with theWorld Bank to expand its financingchannels, a significant step inadvancing its international businessdevelopment and strengthening itsglobal operational capabilities. Thispartnership has provided crucialsupport for our strategic adjustmentsand accelerated the establishment ofits international platform.
Top
Chinese Manufacturing Enterprisesin Charity and Public Welfare in 2023The
th Place among Top
Chinese Medical DeviceCompanies during 2022-2023
“Gold Award” of CPEO Summit in
2023
Top
Chinese PrivateEnterprises in Charity and Public
Welfare in 2023
A Collective with Outstanding Donations to Red
Cross Society in Zhejiang Province
A Waste-Free Factory, Intelligent Factory, Waste-Free
City Cell in ShaoxingThe
rd Placeon 2023 Global MedTech Top 100
A Wasted-Free Factory, Green Factory in
Henan Province
“Outstanding Contribution Award” by Medical Device
Industry Association of Zhejiang Province
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Message from the Chairman
In August 2023, Zhende Medical released its first SustainableDevelopment and ESG Report to develop a sustainable developmentstrategy of “We Care”, which guided us from following thesustainable development policy of “care employee growth, promoteGreen Development, being a reliable partner” to walking on the pathof more sustainable and responsible development.In the era of severe challenges and changes in global supply chains,geopolitics, energy crisis and unbalanced regional developmenthave become increasingly prominent. Meanwhile, due to theimpact of trade protectionism and other factors, global economicdevelopment has been hit heavily, and global supply chains havebeen being restructured and challenged.However, it is important to note that despite internationaldifferences, there is broad consensus among governments,businesses, and social organizations on addressing environmental,social, and governance (ESG) issues, as well as the United Nations'
Sustainable Development Goals (SDGs). Responsible investment,procurement, and production have become widely accepted at bothnational and corporate levels, presenting a significant opportunityamid the restructuring of global supply chains.As a transnational company integrated into global supply chains,Zhende Medical has also faced the same challenges andopportunities.According to the Paris Agreement and the national dual-carbon
strategy, Zhende Medical has developed carbon reduction goalsand a clear implementation pathway. We have planned to conductthe carbon inventory verification every year. In 2023, we completedour first carbon inventory verification for 2022, covering Scope 1and Scope 2 emissions. Currently, we are conducting the 2023carbon inventory, which will include Scope 3 emissions. In terms ofemission reduction, we have actively pursued innovative strategies,significantly replacing traditional fossil fuels with renewable energysources. We are also engaged in the research and development oflow- and zero-carbon products, staying firmly on a path of energy-efficient, green, and low-carbon development. Key initiatives includethe installation of solar photovoltaic system on the factory roof,the active use of biomass steam, and the adoption of geothermalrenewable energy at our Kenya facility.Additionally, we haveconsistently increased investments in environmental protection,raised sustainability awareness across the workforce, and remaindedicated to protecting the environment through ongoing efforts.In terms of social responsibility, we uphold a positive attitude,support public welfare programs wholeheartedly, and developcorporate social responsibility plans, consistently giving back tosociety through meaningful and practical actions. We focuse onfinding values from our employees and improving their skills, whilefostering a family-friendly workplace that promotes a healthywork-life balance through various initiatives. We strive to create
a dynamic organizational culture, continuously empoweringemployees with diverse skills to help them realize their full potential.In addition, we actively contribute to the communities wherewe operate by leveraging our resources and expertise. Throughbuilding academic exchange platforms and participating in industryevents, we have strengthened our market influence, contributedto industry advancements, promoted the development of industrystandards, and improved quality and efficiency across the sector. Bydeveloping innovative and practical healthcare products, we aim tomake healthcare more efficient and convenient, providing patientswith safer, more portable solutions. We remain dedicated to socialwelfare initiatives, seeking to spread care and compassion throughour contributions and to help protect our shared environment.In terms of governance, we remain committed to compliance andstandardization, continuously improving our corporate governancestructure to enhance transparency through regular communicationwith stakeholders. We have strengthened our internal oversightmechanisms to prevent corruption and management malpractices,ensuring that business decisions are both scientifically sound andcompliant with regulations. Additionally, we have deeply integratedESG principles into our daily operations and management practices,incorporating them into the performance evaluations of seniorexecutives.In the future, we will further strengthen our commitment toESG, positioning ESG investments as a strategic priority andresource focus, rather than simply additional human and financialinvestments. We aim to make ESG an integral growth driver forour sustainable development, embedding its principles into ourbusiness processes and management. Our focus will shift fromrisk management to compliance management, ensuring theorganization's healthy growth.Additionally, we will transform ESGfrom a non-financial performance metric into a long-term financialperformance indicator, striking a balance between ESG costs
and benefits. Continuous investment in ESG will reflect Zhende’sresponsibility to society and the environment, while supporting thetransformation towards a long-term, sustainable profit model.Zhende Medical expects to connect with more stakeholdersthrough ESG, providing more efficient and safer products andservices to the society. We aspire to become a benchmark inactively supporting the national dual-carbon strategy and to makegreater contributions to public health and the development of socialhealthcare ecosystems. Unified as a team, we will remain focusedon driving innovation, sustainability, and excellence in all aspects ofour operations.I extend my heartfelt gratitude to every partner, medicalprofessional, and consumer for their continued support and trust.Zhende Medical remains committed to being the most reliablepartner in healthcare. In this evolving social environment, we willcontinue to strengthen our ESG practices by advancing businessinitiatives and expanding our capabilities. Leveraging scienceand technology, Zhende Medical will deliver safer, more efficientproducts to enhance medical efficiency and ensure patient safety.Together, let us work to safeguard medical safety, reduce healthcarecosts, and make healthy life more accessible for all in the nearfuture.
——Lu Jianguo, chairman of Zhende Medical
Message from the Chairman:
Working Together for a Sustainable Future
Note 1: Dual-carbon refers to the abbreviation for Carbon Peak and Carbon Neutral. Carbon peak refers to the point in time when a country orregion's carbon dioxide emissions reach their historical highest level and then gradually begin to decline. Carbon neutrality refers to achieving "netzero emissions" by reducing carbon emissions, increasing carbon absorption (such as through afforestation, carbon capture technology, etc.), orpurchasing carbon credits to offset the carbon dioxide emissions produced.
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Key Performance on Sustainability in 2023
Key Performance on Sustainabilityin 2023
Promote Green DevelopmentThe annual expenditure on environmental protection investment reached RMB
10.4814
millionThe use proportion of renewable electricity was
14.33%
Circulating water usage accounted for
56.40%
The proportion of environmentally friendly packaging materials used in ?nished products reached 65%
The total amount of waste recycled was
880.84
tonsTotal greenhouse gas emissions (Scope 1 + Scope 2) was76,262.92 tons of CO
equivalentTotal emissions decreased by
27.19%
compared with 2022To Be a Reliable PartnerAnnual R&D investment was RMB
138.95
millionZhende was granted 20 Class II medical device product registration certi?cates and 12 patents for inventionDomestic market customer net promoter score was
83.89%
Foreign market customer net promoter score was
52.80%
Zhende completed the formulation (revision) of
group standardsEnvironmental and social risk survey was conducted on 653 suppliers
employees participated in voluntary activitiesThe total duration of employee volunteer service was1,953 hoursTotal amount donated: RMB
3.2457
million
Reform and Innovation
Whole-process improvement of supply chains:
4,976 frontline proposals were improved, and6,654standard formulas were developed
TPI projects were completed, and RMB
24.55
million of costs were saved7,853people participated in improving the proposals, with total incentives of RMB960,500
Improvement of process management proposals:
A total of
proposals were collectedThe estimated tangible earnings were RMB
1.5492
millionCare Employee GrowthFemale employees accounted for 68.96%New employee satisfaction rate reached 93.3%, and employee net promoter score (E-NPS) was 69.33%
The coverage of employees receiving training was100%The average training time per employee was 64.77 hoursThe work-related injury rate per one thousand employees was
0.45
, and
working days lost due to work-related injuriesA total of
employees were sponsored, with a subsidy amount of RMB216,000Scholarships were granted to a total of
employees’ children
0910
Sustainable Development Management
In 2023:
Zhende incorporated the ESG work into the company-level key tasksUpgraded risk management to compliance managementShifted the ESG work from a non-financial performance indicator to a long-term financial performance indicatorCare
Care Employee Growth, Promote Green Development,
and To Be a Reliable Partner
CareWe
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
CareEmployeeGrowth
PromoteGreenDevelopment
To Be A ReliablePartner
Sustainable Development ManagementStrategy——We CareThe philosophy of sustainable development of Zhende Medical originated from its mission and vision. We believe that integratingthe philosophy of sustainable development into Zhende’s operations will help us grow steadily and constantly into the future. In 2022,based on the company business, the SDGs and the global governance philosophy proposed by the Chinese government, ZhendeMedical developed an ESG policy that included three major strategies: “Care employee growth,” “Promote green development,” and “Tobe a reliable partner”.We continue to incorporate SDGs into our long-term operation plans. In 2023, we will focus on We Care model, introducing thesustainable development concept into our development, leading future development from a forward-looking perspective.
Upgraded Sustainable Development-Related Strategies of Zhende Medical in 2023Before upgradingAfter upgradingUpgrading contentRisk management
Compliancemanagement
Strengthening the internal control system, taking initiative in management,actively meeting ESG standards, further standardizing corporate behaviors inaddition to risk avoidance, in order to enhance its market trust.Non-financialperformance
Long-term financialperformance
Incorporating the cutting-edge concept of global sustainable development, payingattention to the correlation between sustainable development performance andfinancial performance, trying to optimize the long-term financial performanceof Zhende by upgrading its sustainable development capability, which highlycoincide with SDGs and help achieve both economic and social benefits.
Sustainable Management Architectureand Responsibilities
To promote the integration of ESG policies into our strategy, we formed a top-down ESG management organizational structurein 2022, further optimizing relevant management processes. With the Board of Directors as the highest governing body, theconstruction of the ESG management system is promoted by the ESG Management Committee; the ESG Office serves as theexecutive office to coordinate relevant management, communication, and disclosure. A long-term management mechanism hasbeen put in place. The ESG Office regularly reports on work progress to the ESG Management Committee and receives guidance.
The Board of Directors serves as the highest ESG governance body of Zhende and the StrategyCommittee of the Board of Directors is responsible for ESG management resolutions on behalfof the Board of Directors, deliberating on the strategic plan for sustainable development, makingdecisions on ESG risks, and reviewing information disclosed to the public.The highest governing body
Board of Directors
The ESG Management Committee is chaired by the CEO, participates in the deliberation anddecision-making of major ESG issues, and provides decision-making support for ESG relatedmatters.Decision-making bodyESG Management Committee
The ESG Office includes relevant leaders of the Group with the Vice President of the Group acts asthe Executive Director, and is responsible for planning, executing, and monitoring ESG work.Executive office
ESG Office
Implement relevant ESG management measures in accordance with the requirementsof the ESG Office.Executing agencyEach department andproduction base
The long-term sustainable development of Zhende is closely linked with its social responsibilities. Zhende Medical profoundlyrealizes that only by deeply integrating the ESG concept into its corporate strategies and daily operations can it achieve botheconomic and social benefits. During the reporting period, we conformed to the trend of the times and took initiative in makingreforms. Specifically, we developed and issued the Management Manual for Social Responsibilities for all factories around the worldas a profound practice and specific action guideline for our commitment to sustainable development, demonstrating our forward-looking vision and management initiative as an industry leader, and responding to social expectations with our practical actions.
Care
Care Employee Growth, Promote Green Development,
and To Be a Reliable Partner
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
CareEmployeeGrowth
PromoteGreenDevelopment
To Be A ReliablePartner
ESG Strategyand Responsesto SDGs
Keydimensions
2030 GoalsCommitted
Key Actions in 2023Progress in 2023Promote
GreenDevelopment
Climatechangemitigation
andadaptation
In 2023, Zhendewas trying to jointhe SBTi, and willset target valuesas confirmed bythe SBTi.
Incorporated climate change into the ESG managementsystem and formed a top-down management mechanism.Analyzed climate risks and opportunities, and activelyimplemented response measures.Reduced greenhouse gas emissions through measuressuch as policy development, investment in energy-savingequipment and green office.Installed photovoltaic power generation facilities in thefactory area, and planned to use geothermal energy in thefactory in Kenya to reinforce the use of clean energy.Conducted factory carbon inventory verification based onISO 14064 standards.
Total greenhousegas emission(Scope 1 + Scope
2) reduced by 27%
than last year
Renewableelectricityaccounts forover 30% of totalelectricity
consumption.
14.33%
To Be aReliablePartner
Customerand productresponsibility
100% maintainedISO13485systemcertificationPassed CE/FDA
certification asrequired.
The products passed multiple domestic and foreign systemcertifications such as ISO 13485, CE and GMP.Completed many process improvements under “I CARE”.
100%
Customer netpromoter score(International>60 / Domestic>80).
52.8/83.9
Assisting
industrydevelopment
Environmentaland social riskresearch coversall key suppliers.
Participated in industry exchange activities such as the
th
/88thChina International Medical Equipment Fair;rolled out school-enterprise cooperation with ShaoxingVocational & Technical College.Participated in the formulation of 3 national standards,completed the formulation of 19 industry standards and12 group standards.Investigated environmental and social risks for 653suppliers by such means as questionnaires.
80.00%
Socialcontribution
Externaldonations aremade annually.
Developed efficient and intelligent medical managementsystems and auxiliary instruments to benefit patients andcare, and improve the medical quality.Created jobs in the operating location and assisted in localeconomic development; developed management systemson public welfare and charity; established mutual aid andpoverty alleviation foundations, talent scholarships, andvolunteer teams; carried out public welfare and charityprojects and volunteer services with awards granted.Improved local medical service accessibility by buildingfactories overseas.Actively donated，a total of RMB 3.245 million during thereporting period.
RMB 3.245million
ESG Strategyand Responses
to SDGs
Keydimensions
2030 GoalsCommitted
Key Actions in 2023Progress in 2023
CareEmployeeGrowth
Safety andhealth
100% of thefactoriesmaintained ISO45001 systemcertification.
Established an occupational health and safetymanagement system. As of the end of the reporting period,three new subsidiaries obtained ISO 45001 occupationalhealth and safety certification.The Board of Directors act as the highest decision-makingbody for our EHS management.Formulated the Management Rules for Hazard Identification,Assessment, and Control for comprehensive hazardidentification, assessment, control and updating.Regularly conducted EHS themed training for all employees.
Three more subsid-iaries passed theIS0 45001 occupa-tional health andsafety certication
The work-relatedinjury rate perone thousandemployees wasless than 0.5.
0.45
Employeerightsand benefits
The proportionof female seniorexecutives(above the levelof director)reaches 20%.
Continued to implement the talent introduction strategy.Implemented employee stock ownership plans to retain talents.Established communication channels for employees, such astrade unions, general meeting of worker representatives, andgeneral manager’s mailbox.Cared for female employees, increased the proportion of femalemanagers, and support special demands of female employees.Cared for employees with difficulties; subsidized 585 employeeswith mutual aid and poverty alleviation foundations by the end ofthe reporting period.Conducted the remuneration analysis, evaluated thecompetitiveness level to attract and retain talents.Conducted surveys on employee satisfaction and engagement.
23.8%
Employee NPSis greater than70 points.
69.33
Growingtogether
The averagetraining time ofemployees isgreater than 60hours.
Established a panoramic scheme for talent training and development.Established a job qualification system and conducted talentinspection.Encouraged cross-functional, interdisciplinary job rotation amongemployees, formulated job rotation plans for key positions, and carryout rotation practices.Supported employee to pursue higher education and skill certificationEstablished a clear, transparent, unobstructed dual-channel for careerdevelopment.
64.77
Promote
GreenDevelopment
Environmen-
tal respon-sibility man-
agement
All factoriesare certified byISO14001
Established an ISO 14001 environmental management system.Performed up-to-standard wastewater discharge and gas emission.Performed compliant disposal of waste.Conducted emergency exercises for environmental emergencies.
66.67%
Innovationandgreen prod-
uctdevelopment
The proportion ofenvironmentallyfriendlypackagingmaterials usedin finishedproductsexceeds 80%.
Achieved remarkable results in the operation of the IPD process,and formed a scientific decision-making system.Improved resource utilization efficiency through measures suchas waste heat and energy reuse, replacement of energy-savingequipment, optimization of production process and wastewaterrecycling.The self-developed surgical gowns obtained the ISCC PLUScertification.Four products passed the ISO 14067 carbon footprint certification.Achieved lightweight and green packaging upgrade.
65%
Progress in achieving ESG management goals in 2023
Progress in Sustainable Development Management
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
CareEmployeeGrowth
PromoteGreenDevelopment
To Be A ReliablePartner
Participation of Stakeholders
Main StakeholdersTopics of ConcernCommunication Methods/Channels
Government andregulatoryagencies
Compliant operationsAnti-corruption and business ethicsEmissions and wasteEnvironmental management system
Legal operationCompliant tax paymentAnti-corruption mechanismInspection by leaders and supervision authoritiesResponding to government policiesParticipation in government projects
Institutional investors
and individualshareholders
Protection of investors’ rights andinterestsCorporate governanceR&D and innovationIntellectual property protection
Exchanges’ information disclosure platformDisclosure of periodical reports and official websiteinformationInvestors exchange conferenceInvestors hotlineCompany visitGeneral Meeting of Shareholders
Customers and
consumers
Product quality and safetyCustomer serviceData security and privacy protectionAnti-unfair competitionClimate change mitigation and adaptationResource utilizationGreen packaging
Customer satisfaction surveyProfessional customer service teamEmail and service hotlineCustomer complaint channelsCustomer visit
Partners
Compliant operationsAnti-corruption and business ethicsSupply chain managementIndustry exchange andcooperation
Industry events (exhibitions, seminars, etc.)Industry-university-research cooperationSupplier conference
Employees
Employee recruitment and hiringEmployee training and developmentEmployee rights and benefitsOccupational health and safety
Internal mailInternal communication platformEmployee complaint channelsEmployee trainingGeneral meeting of worker representativesEmployee care mechanism(Mutual Aid Foundation, Talent Scholarship, etc.)
Community and thepublic
Community communication anddevelopmentMedical accessibilityEmissions and wasteGreen packaging
Volunteer service activitiesPublic welfare projectsCompany website and self-mediaInclusive products
ESG implementation strategy
Regional trade agreements such as EU/ASEAN/
RCEP/AURelevant acts of the US/UK/Germany and the EU
ESGcommissionopportunitySupply chaincollaborationopportunityTrade riskEHSS risk
The UN: SDGS、UNGC...
GRI/ISSB…ISO37301/37001/27001ISO14064/14067
Responsible Production:
ISO45001/14001/SA8000
Responsible sourcing:
RBA/Sedex/WRAP/Amfori…
EcoVadis/CDP/SBTi…
ESG strategyDual-carbon goals
Social audits:
BSCI/SMETA…System and standardRegulations and customer requirements
Stakeholder CommunicationZhende Medical expects to establish a long-term mutual-trust relationships with its stakeholders. With a regular communicationmechanism with stakeholders, We aim to gain a deeper understanding of their opinions, needs, and expectations. We maintaintwo-way communication with relevant parties and respond to their focuses in the field of sustainable development.
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
CareEmployeeGrowth
PromoteGreenDevelopment
To Be A ReliablePartner
DimensionsNoMaterial Topics
Environment
5Environmental management system6Resource management7Emissions and waste
Climate change mitigation andadaptation9Green packaging
Analysis of Material Topics
Zhende Medical has taken the identification and management of material topics as the basic reference of our ESGmanagement. We have conducted an analysis on material topics every year and a stakeholder questionnaire surveyevery two years, with special communications and surveys on multiple stakeholders to confirm the importance ofmaterial topics. In 2023, based on the results of the stakeholder survey and the importance evaluation of topics of lastyear, we conducted analysis on domestic and foreign industry policies and standards. This has allowed us to identifycurrent policy hotspots, conduct material topic that benchmarks with peer ESG topics, summarize ESG rating concerns,and establish an ESG topic library suitable for ourselves. In addition, we incorporated external expert opinions to reviewand confirm the identification and prioritization of material topics. The final material topics for 2023 were determinedand subsequently reported to the Board of Directors for confirmation.
After analysis and identification of this year’s topics, we added a new topic of concern to the industry, capital market andstakeholders. Additionally, we have adjusted one existing material topic to better align with Zhende’s actual businessoperation, including:
According to the focus of the capital market and the industry, we added the topic of "green packaging"; Environmentalfriendly materials, either recyclable or degradable, are used in our packaging solutions to reduce environmentalpollution, promote novel packaging concept, and encourage practices of resource conservation and recycling. Thistopic addition demonstrates Zhende’s innovative initiative in the entire eco-friendly packaging field.
Zhende adjusted the “responsible marketing” to the “anti-unfair competition” to disclose its anti-unfair competition,antitrust or anti-monopoly practices, which are more in line with Zhende’s current business characteristics.
Identification Process for Material TopicsEstablishment of ESG
topic library
Participation of
stakeholder
Formation of material topic
matrix
An ESG topic library that is appro-priate to Zhende is establishedbased on Zhende’s developmentstrategies, industry policies, peerbenchmarking and rating topiccomparisons.
The topics are optimized and ad-justed based on expert opinions.
A materiality assessment is con-ducted from two dimensions: “theimpact on stakeholder sustain-ability” and “the impact on ZhendeMedical’s sustainable develop-ment”, and the prioritization of top-ics is then adjusted accordingly.
The analysis matrix of material top-ics is built based on the evaluationresults.
The Board of Directors reviewsthem and makes the nal approval,and respond to highlighted materi-al topics in the report.
DimensionsNoMaterial Topics
Governance
1Corporate governance2Anti-corruption and business ethics3Compliant operations
Protection of investors’ rights andinterests
HighLow
High
Impacts on stakeholders’ sustainable development
Impacts on Zhende Medical’s sustainable developmentGovernance topicsSocial topicsEnvironmental topics
DimensionsNoMaterial Topics
Society
10R&D and innovation11Intellectual property protection12Industry exchange and cooperation13Product quality and safety14Customer service15Data security and privacy protection16Anti-unfair competition
DimensionsNoMaterial Topics
Society
17Employee recruitment and hiring18Employee rights and benefits19Occupational health and safety20Employee training and development21Supply chain management
Community communication anddevelopment23Medical accessibility
1920
In 2023:
1- Purchasing material control labor efficiency improved to nearly100%2- The number of per capita SKUs undertaken by the International Sales Division increased by
21%, and efficiencyimproved by
38%3- The Quality Control Department saved
73%
of paper consumed for reports, and working hours recorded bymanagement and technical personnel reduced by
70%
synchronously
Zhende established BPIT in 2023 to improve its core organizational competitiveness through process innovation for the first time.
[Topic I] Zhende Makes Reforms in Processesto Stimulate Organizational Vitality
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
To Be A ReliablePartnerCareEmployeeGrowth
PromoteGreenDevelopment
In this era of rapid development, process governance requires continuous innovations to adapt to market changes andcorporate strategies. By improving processes, optimizing designs, strengthening the implementation and monitoring,and cultivating the process management culture, we have guaranteed a swift response, promoted efficient internaloperation, reduced staff workload, and improved their satisfaction, enhancing our sustainable development capability.Leveraging digital and information technology, Zhende Medical has upgraded process governance, driven customer-centric reforms, made constant optimizations. We have strengthened cross-departmental collaboration to uphold ourcore values of customer orientation, innovation, and shared success, achieving efficient internal operations throughprocess improvement and standardization. Additionally, our process digitization governance emphasizes full employeeinvolvement and focuses on capacity building to alleviate employee workloads and enhance job satisfaction.
Zhende Medical’s process digitalization governance model demonstrates the three main aspects of TPI - TEAM, Processand IT. With customers at the center, all improvements are made around them. The TPI model shows the team’s continuousprocess improvement on the left, the process standardization construction under the support of IT technology on the right,and the reform culture for support on the bottom; the three integral parts are complementary to each other.
People-oriented approach, organization and
coordination, capability cultivation
Data basis, realistic basis, system thinkingBusiness-driven approach, integration of business
and finance, digital transformationT:
Team BasedTalk:
sincerity, personnel-affairs separationEvaluate:
accurate evaluation of current situationsand capabilities, determination of roles and goals,excellent and efficient delivery
Assist:
collaboration, removing the barriers amongdepartments, leadership, helping others succeedMotivate:
timely and effective incentives(materials, appreciation, gratitude)
BPM process management
LEAN managementSix sigma managementContinuous improvement
AI arti?cial intelligenceRPA robotBI business intelligenceIT process information technology
P:
Process Optimization
I:
IT Driven Customer-centric
The only thing never changed is change.
In 2023, the BPIT (the Board of Process Information Technology) determined the process construction strategy of Zhende:
a comprehensive process management system was established through four-class projects based on Zhende's strategiesand its employees’ opinions. Among the four-class projects, class A refers to strategic projects derived from end-to-endstrategic demands, namely VOB, VOC for customer demands and VOP for key process pain points; class B refers to quick-win projects sourced from first-level process leaders’ internal & I CARE upgrading demands; class C refers to process analysisprojects based on the process framework analysis demands and the urgency for building the business capability; and classD refers to “I CARE”, namely all-staff proposal improvement projects with the aim to focus on small optimizations in currentbusinesses through bottom-up improvements, enhancing employees’ awareness of independent optimization, and creating anatmosphere which employees can make improvements.
Process 1Process 5Process 3Process 7Process 2Process 6Process 4Process 8......
BPIT Office
Director of BPIT
A
— Strategic projectsEnd-to-endDerived from VOB for strategic demands, VOC forcustomer demands and VOP for key process pain points
C
— Process analysis projects
based on the processframework analysis demandsand the urgency for buildingthe business capability
B
— Quick-win projectsSourced from first-level process leaders’internal & I CARE upgrading demands
D
— I CARE
All-staff improvement,the internal income ofdepartments was aboveRMB5,000, with allocation-based incentives
In August 2023, we formulated an overall plan for I CARE projects. From September to November, we enhanced the awarenessof our employees by various means, such as promoting employee advocacy, holding online E-Learning lectures and arrangingposters for on-site activities. During the activities, all departments took an active part, and submitted a total of 178 proposals.After rounds of proposal screening and counseling, a total of 30 outstanding proposals were selected, in which 8 proposalswere shared and 22 proposals were commended. The above 8 outstanding proposals, such as the Proposal for RefinedManagement over Packaging Materials, the Proposal for Energy Conservation and Consumption Reduction in The Office Area inShaoxing, and the Proposal for Optimization of Product Variety Record of Xuchang Zhengde, produced a total of 33 quick-winprojects, covering 4 improvements in implementation and 11 improvements in planning. Some of the improvement proposalshave made achievements in terms of quality, cost, efficiency and customer satisfaction, while the remaining proposals havebeen still in continuous improvement.
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Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
To Be A ReliablePartnerCareEmployeeGrowth
PromoteGreenDevelopment
Improving Batch Recording Optimization ProcessXuchang Zhengde is capable of manufacturing a variety of products with complicated processes. Some product batch recordsextend to over 100 pages, making organization and management challenging. With the introduction of AGV line-side warehousesand automated equipment, the production model changed, making the batch record process more complex. Consequentlyorganizing these records became labor-intensive. For instance, from July to September 2023, there were approximately 120,000records from the initial production to the final product inspection. During this period, the time spent organizing batch recordsaccounted for about 30-40% of the production supervisors' and 20% of the QC personnel's daily work hours, which has impactedthe effective execution of key on-site management tasks.The Quality Control Department of the factory analyzed and recorded the reasons for the complexity in five aspects, namelyproduction mode, form design, product structure, regulatory requirements and process, as to sort out the processes and find outthe way to make improvements. By means of process optimization, form integration, cancellation and consolidation, and recordwork streamlining, they finally saved 87,527 pieces of report paper or 73% of paper consumption, while the recording workinghours of production shift leaders and QC workers were also reduced by 70%. The batch recording optimization process wasimproved to increase the work efficiency of workers and save the paper consumption.
Optimizing Material Control Integration Process for Purchase WorkAs Zhende Medical continues to expand, integrating newly acquired companies, we discovered significant disparities inprocurement efficiency across different factories and among employees within the same factory. Variations in procurementprocesses and standards between the headquarters and individual factories have led to uneven workload distribution andinsufficient material expertise among staff. Additionally, multiple employees interfacing with the same supplier have resulted ininefficient communication.To address these issues, we have implemented process improvements as a corrective measure. We introduced the Rule forStandardized Material Purchasing Delivery Management, achieving an 88.2% rate of orders, with JIT materials also exemptedfrom review. We have refined our process management system by releasing documents such as the Rules for Material DemandManagement, the Standardized Material Purchasing Cycle Management, and the Regulations for Order Execution Management.These measures have established a standardized procurement workflow. During the reporting period, process improvementsreduced material control workload by 0.5 hours per day and accelerated order reviews by 0.5 hours, allowing procurement staff tofocus on advance delivery management and optimize product delivery times. As a result, the procurement department efficiencyhas nearly doubled.
Optimizing Processes for Reducing Staff Labor IntensityIn response to the increasing data and processes need to be processed in various business environments, as well as a greatdeal of repetitive and mechanical work, Zhende Medical improved the work efficiency of employees and reduce their workloadusing digitalization process tools. The international sales division took the lead in introducing the digital intelligent model throughthe automation process, which simulates human business operations, completes target-specific, and regular and repetitiveoperations automatically, in order to free workers from daily repetitive work effectively, reduce their labor intensity, optimizework processes, and improve work efficiency. Based on the demands of actual business scenarios, the model replaced manualstatement adjustment with software, substituted employee operations with processes and data, adjusted work allocationreference points, balanced staff workload, optimized process and system nodes, and shortened the review and approval flow.After the process optimization, the number of per capita SKUs undertaken by employees of the Operation Department increasedby 21%, and the efficiency enhanced by 38%, which further reduced the repetitive workload of grassroots employees and helpedZhende improve its quality and efficiency, achieving sustainable development.
A total of
proposals were collected
The estimated tangible earnings wereRMB
.5492 million
I CARE Process Improvement Sharing Conference
2526
From 2021 to 2023:
Improvement of labor efficiency: production labor efficiency increased by28%Saving of raw materials: Through technical transformation and staff quality improvement, a total of 1,385tons ofnon-woven fabrics were saved, which was equivalent to about
2.01
million general-purpose disposable surgicalbags that can be used by about
medium-sized Chinese hospitals for one yearSaving of energy consumption:
3,655.56MWH of electricity was saved over three years, which was equivalentto157,188 new saplings
Zhende started the lean process innovation in 2019 to promote production efficiency and production quality assurance.
[Topic II] Zhende Makes Innovations to DriveGreen Development with Lean Production
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Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
To Be A ReliablePartnerCareEmployeeGrowth
PromoteGreenDevelopment
“Rooting out all ineffective work and waste”
Reforms and innovations, as part of Zhende Medical’s core values, are spiritual elements that guide common behaviorsthroughout the company. The spirit of changes and innovations inspires and guides every employee of Zhende to improveproduction technology, on-site management, production efficiency and production quality through innovations, allowing Zhendeto better adapt to modern competitions with other enterprises, and to lay a solid foundation for sustainable development.
Our spirit: Pursuing reforms and innovations
We have encouraged all-staff participation from senior executives to grassroots employees. In order to fully mobilize the enthusiasmand wisdom of all employees, we have delegated power to all levels of the organizational structure through teamwork, eliminatingdefects and wastes in every position in a timely manner.We have encouraged various improvements in any processes and links, including techniques, methods, equipment, processes, layout,work fixtures, molds, alternative materials or other daily or strategic improvements in cost control, efficiency, safety, and quality.
Our implementation scope: whole-process coverage and all-staff participation
TPI project implementation process
Our action path: TPI Lean improvementIn pursuit of continuous improvements and innovations, we carried out the TPI (Total Production Improvement) Project in allfronts in 2023. In the rectification of safety hazards, the adjustment of employees’ work intensity, and the improvement of theirwork environment, we constantly looked for opportunities for improvements and took actions.
We expect to eliminate all ineffective labors and wastes by implementing the TPI project, and set the goals for excellence. We willguarantee our core advantages in market competitions by continuously reducing costs, improving quality and making productionmore flexible.
IdentificationImprovementConsolidation
Established the methodol-ogy for lean improvementactivities, identified wastelinks in the processes bymeans of value flow map-ping, process analysis andon-site observation.
Developed concrete im-provement plans for wastesidentied, such as optimiza-tion of processes, introduc-tion of new tools or changeof operation modes.
Provided relevant trainingfor employees, so that theycan understand and mas-ter new work styles andmethods to consolidatethe achievements of leanimprovement activities, andimprove work efficiencyand quality assurance.
Throughout the year, the lean improvement project made remarkable achievements in improving productionefficiency, reducing costs and optimizing product quality. For one thing, it reduced resource consumption andenvironmental pollution, and promoted sustainable development of Zhende. For another, it achieved significantresults in deepening the understanding of customer demands, and improving the service process, work efficiency,and customer satisfaction.
During the reporting period, our TPI projects achieved a series of fruitful results:
Completed
TPI projects
4,976proposed improvementsFormulated6,654standard working hours
7,853peopleparticipated in proposal improvementsIntroduced the man-machine integration line for surgical drapes to tackle the technical difficulty in no automatedproduction in the industry, greatly improving production efficiency and quality stabilityIntroduced automatic lean line-side warehouses to shorten the delivery cycle by 50%, greatly improving thecustomer service capability50%
Saving of raw materials: Through technical transformation and staff quality improvement
Through 3 years of technical reforms:
Improvement of labor efficiency:
Production labor efficiency increased by
28%A total of 1,385 tons of non-woven fabrics were savedA total of1,385
tons of non-wovenfabrics were saved
Which was equivalent to about
2.01
million general-purposedisposable surgical bags
And can be used by about
medium-sized Chinesehospitals for one yearSaving of energy consumption:
3,655.56MWHof electricity was saved over three years
Which was equivalent to157,188 new saplings
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
To Be A ReliablePartnerCareEmployeeGrowth
PromoteGreenDevelopment
Introducing Human-machine Integration Line for Energy Conservation
In the medical dressing industry, surgical drapes have high requirements in equipment accuracy and compatibility due to theirpurpose, features and order structure, which causes a big technical bottleneck for the research and development of equipment.In 2021, Zhende independently developed and designed the human-machine integration line for surgical drapes. Afterdiscussions, attempts and verifications of technical solutions, we successfully solved technical difficulties in large-width cutting,punching for removing waste scraps, online pre-folding in various ways, zero-distance edge spraying, automatic pasting ofstrengthening sheets and online hot pressing.Through systematic production planning and designs, such as staff position design, process optimization and layoutoptimization, the human-machine integration line successfully replaced some processes, like manual cutting, cut-parts materialhandling, manual pre-folding, manual adhesive spraying and punching, improving production efficiency, reducing manufacturingcosts, and saving energy consumption of workshops. After put into operation, it reduced 18% of electricity consumption, saved7,000m? of usable area of workshops, and increased 28% of production efficiency.
Introducing Automatic Sewing Equipment for Improving Efficiency and Reducing Staff Work IntensityIn the link of product sewing, there were a lot of breakpoints, wastes and management work in the manual sewing productionprocess. The average speed of the manual product sewing was 100 pieces/hour, with a low production efficiency. In manualsewing, employees had to bend over for a long time and sew products by hands with a high concentration. The high laborintensity made them easy to get tired. Besides, new employees had to spend as long as 3-6 months to learn the skills.After introducing the automatic sewing equipment, we achieved the continuous production mode, shortening production cycleto about 2 days, increasing the average speed of product sewing to 800 pieces/hour, and enhanced production efficiency by7 times. Moreover, the automatic sewing equipment greatly lowered staff labor intensity and professional skill requirements.Employees only needed to handle small equipment exceptions, such as broken lines, threading and replacement of bottomshuttles. The labor intensity was significantly reduced, and new employees only spent 6 days to become skilled workers.In the meantime, the improvement in automation was accompanied by the adjustment of the production process. Westreamlined some original machines, reduced the turnover area of semi-finished products, saved 1,200m
of site area, andlowered the energy consumption per unit output by 19%.
Introducing Automatic Lean Line-side Warehouses
Based on the cyber-physical system, Zhende Medical’s AGV smart logistics system connects supply chains, production processand warehousing logistics intelligently through Industrial Internet, thereby minimizing production, warehousing, operation andmaintenance costs, automating the production process, giving a quick response to demands, making products flexible, ensuringproduction safety, and improving production efficiency.Flexible AGV solved Zhende Medical’s problems in multi-variety and small-batch production (of customized products).It lowered logistics costs by reducing manpower and forkliftequipment, realized the unmanned operation process toincrease operation efficiency and distribution accuracy rate,and improved storage space for systematic management andcontrol, playing a significant role in enhancing both operationaccuracy and production efficiency.
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Governance-First Principle: Protecting Investors’ Rights and InterestsCompliance-Oriented Principle: Creating a Clean and Clear Corporate Environment
Female directors accounted for
33.33%
investor exchange conferences
internal audits
anti-corruption theme training sessions were held
Improving Governance System
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
To Be A ReliablePartnerCareEmployeeGrowth
PromoteGreenDevelopment
Corporate Governance StructureZhende Medical has formulated the Articles of Association to continuously improve the corporate governance structure andstandardize its operations. Zhende has established a corporate governance structure consisting of the General Meeting ofShareholders, Board of Directors, and Board of Supervisors. We have formulated systems such as the Rules of Procedurefor Shareholders’ General Meeting, Rules of Procedure for Board of Directors, and Rules of Procedure for Board of Supervisors,ensuring that the General Meeting of Shareholders, the Board of Directors and the Board of Supervisors exercise decision-making and supervisory power, with an increasing level of independent operation.The Board of Directors consists of four specialized committees: Strategy Committee, Audit Committee, NominationCommittee, and Compensation and Assessment Committee. All members of the specialized committees are directors.Independent directors hold the majority and serve as the chairmen of the Audit Committee, Nomination Committee, andCompensation and Assessment Committee. To improve the scientific decision-making of the Board of Directors, eachcommittee strictly fulfills its responsibilities in accordance with relevant regulations, and fully utilizes its professionaladvantages.
During the reporting period, Zhende held the General Meeting of Shareholders and meetings of the Board of Directors andBoard of Supervisors in accordance with legal procedures. Each specialized committee of the Board of Directors performedtheir responsibilities and improved the level of enterprise management and risk prevention capabilities. The maximuminterests of Zhende and all its shareholders were safeguarded.
Composition of the Board of Directors and Board of Supervisors and Operation of Shareholders’ General Meeting
and Meetings of the Board of Directors and Board of Supervisors in 2023
Corporate Governance StructureGeneral Meeting of Shareholders
Board of SupervisorsBoard of Directors
Strategy CommitteeAudit CommitteeNomination Committee
Remuneration andAssessment Committee
Composition of theBoard of Directors
directorsincluding
female directors and
independent directors
Compositionof the Board ofSupervisors
supervisorsincluding
employee supervisor
Convening of theGeneral Meeting ofShareholders andMeetings of theBoard of Directorsand Board ofSupervisors
General Meeting of Shareholderswith a total of
proposals deliberated
Board of Directors meetings, witha total of
proposals deliberated,including
meetings of specializedcommittees of the Board of Directors
Board of Supervisors meetings, witha total of 24 proposals deliberated
Governance-First Principle: ProtectingInvestors’ Rights and Interests
Protection of Investors’ rights and interestsIn strict accordance with the provisions of the Company Law of the People’s Republic of China, the Securities Law of the People’sRepublic of China and other relevant laws and regulations, Zhende has formulated the Investor Relations Management System, theInformation Disclosure Management System, the Internal Reporting System for Major Information and other systems to manageinvestor relations, ensure truthful and complete information disclosure, and safeguard the rights and interests of small and medium-sized investors.In equal treatment of small and medium-sized shareholders, Zhende has followed the principle of equality when carrying out investorrelation management activities, and treated all investors equally, creating opportunities and providing convenience particularly for smalland medium-sized investors to participate in activities, and organizing on-site visits and communication meetings.In related party transactions, Zhende not only established effective operation and supervision mechanisms for related partytransactions, but confirmed and implemented the expected annual related-party transactions. These measures considered theindependent directions' careful decision, the General Meeting of Shareholders' deliberation, and the Board of Directors' majority vote,ensuring that all daily related party transactions were required by Zhende’s daily production and operation, with fair transaction pricing,no adverse impacts on Zhende’s financial condition and operation results, no impacts on Zhende’s independence and no harm to therights and interests of Zhende and its shareholders, especially small and medium-sized shareholders.
Investor Communication Channels
During the reportingperiod, Zhende held
investor exchangeconferences
Zhende Medical has formulated systems, such as the Investor Relations Management System.Multiple channels have been set up for investor communication in order to maintain the legitimaterights and interests of investors, especially small and medium-sized investors, and enhance theirunderstanding and identification with Zhende. We listen to investors’ opinions and suggestions toimprove our corporate governance.
0575-88751963
Official website of Zhende, website of ShanghaiStock Exchange, e-interaction platform of the
Shanghai Stock Exchange, etc.
dsh@zhende.com
General Meeting of Shareholders, investorexchange conferences, roadshows, etc.
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
To Be A ReliablePartnerCareEmployeeGrowth
PromoteGreenDevelopment
Zhende Medical has established and improved its sustainable and stable dividend policy and supervision mechanism, effectivelysafeguarded the legitimate rights and interests of investors and distributed dividends to all shareholders according to the dividendreturn plan.
Cash Dividend Distribution of Zhende Medical over the Past Three Years
Compliant OperationsZhende Medical has formulated systems such as the Internal Audit Regulations and the Implementation Rules for ContractApproval Management. Under the guidance of the Audit Committee of the Board of Directors, the Internal Audit and RiskControl Department of the headquarters are responsible for internal audit, risk management, and other related work. TheInternal Audit Risk Control Department has conducted routine audits and special audits, regularly identified and evaluatedvarious risks in daily work, collected risk management opinions, and reported risk control to the Board of Directors.During the reporting period, we conducted 9 routine audits and 2 special audits, including audits of procurement, cost,assets, engineering, remuneration, and safety production modules. Through the “audit + rectification” model, Zhende madecontinuous improvement in its business processes and operational mechanisms.
Compliance-Oriented Principle: Creating aClean and Clear Corporate Environment
During the reportingperiod, a total of1,287peopleparticipated in the trainingWe has attached great importance to improving employees’ legal awareness anddesigned targeted training courses covering “all employees”, “professional positions”,and “management” on the E-learning platform based on the unique natures ofdifferent positions.
Routine and Special Audits of Zhende Medical in 2023CategoryAudit ModuleAudit ScopeAudit Results
Routine Audit
Internal controlassessment (1 item)
23 business processes
A total of 11routine and specialaudits werecompleted, itemsto be improvedwere identifiedand subsequentlyrectified as planned.
Subsidiary (7 items)
Key systems, process construction and implementation evaluation,costs, procurement, assets, labor, engineering, safety production, etc.Sales (1 item)Freight management, sales management, expense verification, etc.Special Audit
Compliance (1 item)Internal audits based on AEO standardsCosts (1 item)
Cost information, cost management, cost input and output,systems and processes, etc.During the reporting period, we conducted an internal control effectiveness assessment, finding no significant defects in itsinternal control over financial reports.
Anti-corruption and Business EthicsAnti-corruption policyZhende Medical puts in effort to not only establish a comprehensive anti-corruption management system but shapea clean and honest corporate culture. The Board of Directors of Zhende has an Audit Committee responsible formanaging and making decisions on anti-corruption and business ethics. Zhende’s Internal Audit and Risk ControlDepartment is designated as a standing institution for audit and supervision, whose responsibilities is to organizeand implement daily anti-fraud work throughout Zhende.Zhende has continued to improve anti-corruption and business ethics management systems and consolidated anti-corruption management achievements through various measures, such as system construction, audit supervision,due diligence , and training.
During the reportingperiod, Zhende releaseda total of
announcementsand documents
Zhende Medical has formulated systems such as the Information Disclosure Management System and the Internal ReportingSystem for Major Information to truthfully, accurately, completely, and timely fulfill information disclosure obligations, making surethe information is kept confidential before disclosure to ensure the openness, fairness, and impartiality of information disclosure.Zhende designates Shanghai Securities News, Securities Times, Securities Daily, ChinaSecurities Journal, and the website of the Shanghai Stock Exchange as the newspapersand website for information disclosure. During the reporting period, we did not keep anyinformation that should have been disclosed, and there was no selective informationdisclosure behavior. We have properly fulfilled the information disclosure obligations ofan A-share listed company and effectively protected the legitimate rights and interests ofinvestors.
YearDividend distributed per 10 shares (RMB) (tax inclusive)
20212320226202315Note: The table above is based on the actual distribution time
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
To Be A ReliablePartnerCareEmployeeGrowth
PromoteGreenDevelopment
Anti-corruption management measures and progress of Zhende Medical
MeasuresAchievements
Systemconstruction
Zhende has signed the Commitment Letter for ProfessionalEthics and the Commitment Letter for Honest and Clean Practicewith employees. Employees have the duty to prevent corruptbehaviors, such as accepting bribes, organizing or participating inentertainment and consumption activities, and soliciting bribes.All employees are expected to strictly keep business secrets,observe professional ethics, enhance the awareness of integrityand self-discipline, and safeguard the legitimate rights andinterests of Zhende.Zhende has formulated the Management System for Biddingand other systems for external parties. It has issued the “Anti-Commercial Bribery, Adherence to Integrity” proposal for suppliersand distributors, and signed the Integrity Agreement with them toprevent money exchanges with employees, payment of kickbacks,pursuit of private interests and other corrupt behaviors, andestablish honest, trustworthy, reciprocal and win-win cooperation.
The signing rate of the Commitment Letter forProfessional Ethics with employees was 100%,and the signing rate of the Commitment Letter forHonest and Clean Practice with employees was100%.The signing rate of the Integrity Agreement withsuppliers and distributors was 100%.
Supervisionand review
Internal reviewZhende has established channels and published telephone numbersfor monitoring and reporting, while also conducting internalsupervision and audits at each factory and marketing center.External auditEvery year, Zhende has accepted audits from independent thirdparties at the request of customers, demonstrating its transparencyand compliance. In addition to financial audits, Zhende has alsoaccepted ethic reviews from independent third parties every year,with business ethics as one of the main topics.
All factories of Zhende conducted annualinternal audits and accepted regular audits fromindependent third parties, finding no problems inbusiness ethics.
Awarenesstraining
Zhende has continued to provide customized business ethicstraining courses, covering employees in all key positions. Thetraining has recorded and tracked the training effect throughthe E-learning platform, improving employees’ awareness ofbusiness ethics.
Zhende provided anti-fraud case training, and analyzedfraud cases, including duty-related misappropriation,embezzlement of funds, and briberies of non-government workers to enhance the vigilance ofemployees. A total of 3,102 people participated throughthe E-learning platform.During the reporting period, Zhende organized 20 anti-corruption themed training sessions. The coveragerate of anti-corruption related training for directors was100%, with an average duration of 4 hours. The coveragerate of anti-corruption related training for employeeswas 46%, with an average duration of 1.85 hours.
Supervisionandreporting
Zhende maintains a zero-tolerance policy towards corruption, fraud,and money laundering. It has implemented the Regulations on Anti-Commercial Bribery, Complaints, and Reporting and established adedicated reporting hotline and email to ensure transparent andaccessible reporting channel. At the same time, Zhende takes protectivemeasures for complainants and whistleblowers. Those who violate theregulations by disclosing information about whistleblowers or retaliatingagainst whistleblowers will be dismissed with their labor contractsterminated. In case of violations against the law, related personnel willbe transferred to the judicial authorities.Reporting channelsHotline: 18658516729Email: tousu@zhende.comMailing address: Zhende Medical Headquarters (Internal Audit andRisk Control Department), Yuecheng District, Shaoxing City, ZhejiangProvince
During the reporting period, the number of corruptionreports received by Zhende was 0.
Anti-Unfair CompetitionZhende Medical strictly observes the Anti-Monopoly Law of the People’s Republic of China, the Anti-Unfair CompetitionLaw of the People’s Republic of China, the Price Law of the People’s Republic of China, the Advertising Law of the People’sRepublic of China and other relevant laws and regulations. Guided by these principles, Zhende has standardized theemployee confidentiality system in the Employee Handbook, and refused to seek competitive advantages throughunethical and illegal business practices.We have established a reporting mechanism to encourage employees to report acts of unfair competitions, handled inaccordance with relevant laws and regulations and Zhende’s internal regulations after investigations and verifications, andstrictly protected the information of whistleblowers to avoid retaliations.By establishing anti-unfair competition systems and organizing awareness campaigns and training, we have built arobust anti-unfair competition management framework and strengthened its corporate culture. In 2023, we held 6 onlineand on-site lectures and training courses, involving legal education on the Anti-Unfair Competition Law, common acts ofunfair competition, and how to avoid unfair competition, attracting more than 2,000 participants, effectively strengtheningZhende’s self-prevention capability.Intellectual Property Protection
Zhende Medical has attached significant importance to the protection of independent intellectual property rights and respected theintellectual property rights of others. We have established a sound intellectual property management system and passed the intellectualproperty management system certification of the China National Intellectual Property Administration for the first time in 2016.Zhende has initiated a top-down organizational structure for intellectual property management. We have formulated systems suchas Intellectual Property Management Regulations, Patent Value Evaluation Rules, and Patent Application Management Rules forNew Products. We also engage in planning, implementation, inspection, and improvement of intellectual property management ,guaranteeing Zhende’s technological innovations and sustainable development.
Meanwhile, Zhende has held intellectual property publicity and training activities for employees. In 2023, we launched the “IntellectualProperty Rights Bring Innovations and Wealth” themed activity on our Intellectual Property Day. In order to protect our own intellectualproperty rights without infringing others', Zhende strengthens employees' understanding of these concepts through on-site activities, onlineand on-site classes, science training, fun games, and other forms of activities. In 2023, we held 7 relevant training sessions with a total of1,050 participants.
In 2023, Zhende obtained
It was awarded the title of “National Intellectual Property Demonstration Enterprise”
Class II medical deviceregistration certificates
Class III medical deviceregistration certificates
patents for inventionAs of the end of 2023, Zhende has had
patents for invention
Class II medical deviceregistration certificates
Class III medical deviceregistration certificates
In addition, Zhende has endeavored to protect our core competitiveness, strictlyinspected counterfeits of our brands, regularly monitored trademark infringement. Weclosely monitor our trademark registration information in the market, search engines,professional trademark databases, official trademark announcements and otherchannels to determine whether there is unauthorized use of our trademarks. In 2023'sreporting period, many companies registered similar products with the trademark"Zhende", while no violations relation to intellectual property rights were reported. Toresolve these transgression, we filed complaints about these trademarks relating ourmain product in order to maintain the reputation of the trademark “Zhende”.
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Care Employee Growth
Protecting Employees’ Rights and Interests, Guaranteeing Compliant and Equal EmploymentSharing Achievements of Development, Boosting Grow of TalentsFulfilling the Primary Responsibility, Ensuring Occupational Health and Safety
Contribution to the SDGs
KPI and target value by 2030
Target value for
2024
Actual valuefor 2022
Actual value
for 2023
Progress
The work-related injury rate per onethousand employees is less than 0.5
<0.50.590.45The proportion of female senior executives(above the level of director) reaches 20%
>20%16%23.8%The employee net promoter score (E-NPS)exceeds 70%
>6462.8569.33The average training time of employees isgreater than 60 hours
>5666.1064.77
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[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
CareEmployeeGrowth
PromoteGreenDevelopment
To Be A ReliablePartner
Employee Recruitment and HiringZhende Medical has adhered to legal employment, committed to building an equal, diverse, and inclusive workplaceculture. We have observed the Labor Law of the People’s Republic of China, Labor Contract Law of the People’sRepublic of China, and other laws and regulations. Abided by these legal guidance, we formulated regulations suchas the Management Rules for Signing Labor Contracts and the Recruitment Management Rules for General Workers,defined relevant provisions in the Corporate Social Responsibility Management Handbook, clearly prohibited childlabor and forced labor, and prevented workplace discrimination and harassment.Zhende’s employee types include contract employees, rehired employees who have retired, and interns. In recentyears, we have implemented a talent introduction strategy. Talents are reserved through targeted recruitment fromuniversities and cooperation with universities.
Zhende adheres to the principles of equality and diversity, complies with local policies, develops a diversity system,and conducts management.In 2023, Zhende has been conducted 15 second-party and third-party social audits, all of which were passed.
Protecting Employees’ Rights and Interests,Guaranteeing Compliant and Equal Employment
Employee Recruitment and Hiring of Zhende MedicalProhibition of child labor
Strictly implement the ID card-based assessment system before employment;
If child labor is found to be recruited by mistake, we will notify their parents to take them back, bear their travel expensesfor returning home , and all fees for them to finish the compulsory education.
Prevention of workplace discrimination and harassment
Make it clear that we shall not engage in any discriminatory behavior against employees due to their race, social class,nationality, religion, disability, gender, or gender orientation, etc.;
Establish a multi-channel complaint mechanism consisting of the complaint box, internal email, hotline (0575-88082530)and union representatives, through which employees can have their complaints heard;
After receiving the complaint, we will respond by investigating into and verifying the matter as soon as possible withproper progress updates and disclosures for the complainant. If the case is true, we will handle it in accordance with thesystem and publicize the treatment; in serious cases, we will assist employees who have been discriminated against orharassed to report to the relevant government department. If the case is not true, or if it is a misunderstanding, we shallintervene for mediation.
Prohibition of forced labor
If forced labor is found, employee representatives should investigate into the matter and ask for opinions from the forcedworkers. Within a week, a meeting with the management will be set to seek solutions together or report to the relevantgovernment department.
Meng Hongjuan, Director of aworkshop of Shaoxing Zhende,was elected as a deputy to the
thNational People’s Congressof the People’s Republic of China.
Li Yuhong, an employee ofZhende Medical, entered the“Agricultural Business Cup”Women’s Innovation andEntrepreneurship Competitionsponsored by the provincialwomen’s federation on behalf ofZhende Medical Co., Ltd.
Shen Zhenfang, ViceChairwoman, was elected asa deputy to the 13
thNationalWomen’s Congress of China.
Employee Equality and Diversity Measures of Zhende Medical
Outstanding Female Employees of Zhende Medical
Employee diversity
Zhende has treated employees of various nations. Currently, it has employees from the US, Kenya, Brazil,Malaysia and the UK, with 7.92% of non-Chinese employees.
Protection of women’s rights and interests
Zhende has paid great attention to the proportion of female employees in various positions, board members,senior executives, research and development personnel and new female employees, to ensure that femaleemployees are treated equally in recruitment and work.
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
CareEmployeeGrowth
PromoteGreenDevelopment
To Be A ReliablePartner
Employee Rights and Benefits
Zhende Medical has adhered to the management principle of “caring employee”. A comprehensive remuneration system,the Employee Handbook, the Welfare Management Rules, and the Regulations for Medical Assistance Foundation have beenestablished to safeguard the legitimate rights and interests of every employee. In addition, Zhende has also set up internalhonors and awards to recognize employees with outstanding performance and contributions.
Basic GuaranteesInclusive Policies
Medium-term
Incentives
Long-termIncentives
SpiritualMotivation
Care PlanShort-term Incentives
Comprehensive Remuneration System of Zhende Medical
Comprehensive Reward System of Zhende Medical
A Training System Basedon Learning Paths
Safety and HealthEnvironment System Basedon Work Environment
Improvement
Performance Management
Based on StrategicCollaboration
Internal ImprovementPlan Based on EmployeeDedication and CulturalIdentity
Authorization SystemBased on Trust andRespect
Challenging Work TasksBased on EmployeeDevelopment
Core CompetencyBuilding Based on theStrategy
Zhende values humanistic care for every employee and helps those in need. We have set up a mutual assistancefund to give support to employees in difficulties and their families. In addition, we have also provided various formsof support and help for employees in their work and life.
Employee Welfare System of Zhende Medical
Mandated benefitsHealth planOther benefitsLiving subsidies
Social insurance
Housing provident fund
Staff health examination
Commercial insurance
Staff dormitory
Food subsidiesStaff canteen
Regular buses
Subsidies for festivals
Annual vacationGroup tour
Visits for employees withmarriage, funeral, injury andillness, childbirth, or majorfamily accidents
During the reporting period, Zhende conducted a comprehensive comparative analysis on renumeration in the market toassess the competitiveness of our renumeration system and put forward suggestions to effectively optimize the attractionand retention of key talents. Meanwhile, we the relevant government department to market changes, which significantlyreduced unnecessary brain drains, building a solid talent base for Zhende’s long-term development.In the management principle of “caring employees”, Zhende Medical has established a comprehensive employee welfaresystem, including mandated benefits, living allowances, health plans, and other benefits.
Zhende Medical Provided Child Care Services for Employees to Create a Family-Friendly WorkplaceTo solve the difficulty of taking care of employees’ children during holidays, enriching children’s lives, and promoting theirdevelopment, we have offered winter (summer) vacation care services six times. We provide homework assistance and aseries of interest-based courses, such as painting, poetry appreciation, clay modeling, and cupcake making, strengthening andenhancing the understanding and friendships among children through interactive games.In 2022, a total of 70 children received such services. In the future, we will continue to work hard in caring for the families of ouremployees, building a “harmonious and beautiful” home of Zhende.
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
CareEmployeeGrowth
PromoteGreenDevelopment
To Be A ReliablePartner
Expressing Attitudes and Conveying EnergyWe have continued to organize TED sharing activities in the principle of “expressing attitudes and conveying energy”, inviting four of our ownemployees from different positions as guests to share their personal experiences around the theme.In 2023, we held three sessions themed "Spring Days", "Midsummer" and "Metamorphosis". There were about 80 on-site guests in eachactivity. The recordings were pushed to all employees, with over 2,000 views for of each session.
Zhende Medical Set Up a “Love Mother-Baby Room” to Meet Special Demands of Female Employees
Zhende Medical’s Labor Union has established the “Love Mother-Baby Room", significantly alleviating the challenges new mothersface with breastfeeding in the workplace. The room is thoughtfullydesigned with human-centered details and equipped with facilitiessuch as baby beds, crawling mats, baby wipes, back cushions,dolls, and storage boxes. This warm, comfortable, tidy, and privatespace not only ensures privacy for breastfeeding mothers but alsoprovides convenience for those needing to express milk, allowingthem to focus on their work with peace of mind. In addition, we haveprovided books on parenting experience for the mothers and toysfor children.
Zhende Medical Established the Talent Scholarship to Assist in the Study and Development of Employees’ ChildrenTo care for employees and their families, we established the TalentScholarship Foundation into being in 2019 to help employees’children further their studies and develop. Our core value of “sharingsuccess” was therefore put into practice. In 2023, we distributedthe Talent Scholarship to 45 students for the fifth time, with atotal amount of RMB135,000. As of the end of 2023, we haveaccumulatively awarded scholarships to 169 employees’ children,with a total amount of RMB507,000.
A group photo of the children with the Talent Scholarship
With the excellent amenities in place, Zhende organizes cultural and sports activities as well as holiday celebrationsto enrich employees' lives, foster organizational unity, and showcase Zhende's strength. We held a total of 20recreational and sports activies, including cultural, sports, and volunteer events, enhancing employees' culturalexperiences and physical fitness. Additionally, Zhende encourages employee participation in various clubs, such asYoga, Badminton, Table Tennis, and Reading. In 2023, these associations organized 68 events with approximately1,200 participants.
Zhende listens to the voices of employees, accepts their supervision, and takes their suggestions into consideration.We further safeguard their rights and interests through coordinating organization, mechanisms, and measures. We willcontinue to implement improvement measures to enhance employee satisfaction and work efficiency.
Factory affairs are made public. Hot issues of concern to employees, such as companyregulations and employee benefits, are publicized on the OA intranet.
We widely solicit employee opinions and needs through meetings, CEO suggestionboxes, satisfaction surveys, and other channels. Feasible measures therefrom areput into practice. For those that cannot be adopted or are difficult to implement, wepromptly explain the reasons to employees to obtain their understanding.
Supportive Measures
During the reportingperiodthe satisfaction towardsadministrative services ofZhende exceeded84%
and that with the tradeunion’s performance was
78.8%
the new employeesatisfaction was
93.3%
and the employee NPSreached
69.33%
meet of general meetingof worker representativeswas helda total of
effectiveproposals were collectedand
of them wereclosed in the year
Zhende’s headquarters and each subsidiary establish separate trade unions coveringall employees.
Organizational Support
The Regulations on General meeting of worker representatives is formed with ageneral meeting of worker representatives held every year. During the reportingperiod, one general meeting of worker representatives was held, with a total of127 employee representatives participated. They updated the general meetingof worker representatives system and discussed the proposals put forward bythe workers’ representatives, guarantying the assessment rights of the workers’representatives.
A collective contract is signed with all employees every year, in which the minimumsalary standards, payment dates, and other related matters are negotiated.
Mechanism Support
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
CareEmployeeGrowth
PromoteGreenDevelopment
To Be A ReliablePartner
A Comprehensive Talent Development SystemZhende Medical adheres to the "We Care" philosophy. Based on the self-developed E-learning platform and supportedby the internal trainer system and curriculum structure, we have established a talent development system that covers allemployees. This can comprehensively improve their know-how skills, and boost every employee to achieve success.Zhende has continuously improved the Training Management Regulations, set up a series of supporting systems whichcover the management of lecturers management, courses, expenses, external training, new employee, and job transfertraining, learning credits, and training administrators. These systems ensure the effective implementation of training andthe realization of Zhende’s talent development strategy.
In 2023, we launched a process governance project to sort out all processes, including business and support processes. Incooperation with Sequoia System, we have built a process-based pilot course system. The project has come to completionby the end of the year with 22 process based courses for the DEFS product line in domestic marketing centers. In addition,we have launched a number of training camp programs oriented to middle and senior management cadres and grassrootsmanagers respectively, empowering and training reserve talents.We continues to spontaneously mentor and train new employees, reserve cadres and college students in various areasand departments. The Human Resources Department determines mentor selection dimensions and requirements basedon the situations of systems and mentors and organizes annual appraisal for excellent mentors. Furthermore, we plan tocollect key behaviors of the selected excellent mentors based on the mentor appraisal, extracting their behaviors and traitswith Zhende’s genes, forming a portrait of Zhende’s mentors, and improving the mentor management mechanism.
Sharing Achievements of Development,Boosting Grow of Talents
Internal Trainer SystemCurriculum Structure
Develop the Management Rules for Part-time InternalTrainers;
Each September, we hold an annual internal trainerconference to review the achievements of the trainingsystem over the past year, recognize the contributionsof trainers in teaching and course development, andpresent awards to outstanding internal trainers;
So far, the internal trainer team has developed to over240 members, including junior, intermediate, andsenior lecturers.
Develop the Detailed Rules for Curriculum Developmentand Curriculum Structure Management;
Fabricate the annual course development plan throughannual training research, develop the curriculumaccording to the plan, and invite high-level lecturersand executives to participate in course reviews everyquarter;
Based on the empowerment needs of businessdepartments, establish secondary colleges for eachstructure through the E-Learning platform, and use it asthe foundation to build
In addition to internal training and learning activities, we strongly supports employees to participate in external trainingand pursue higher education. Through measures such as introducing external resources and subsidizing tuition fees,we further enhances employees’ skills and abilities. As of the end of the reporting period, more than 60 employees tookexams for a higher education degree.In 2023, we implemented a talent introduction strategy. Through plans for targeted recruitment from universities andcooperations with universities, we work with many universities on campus recruitment and internship recruitment. Besides,we have established a post-doctoral research workstation in collaboration with key provincial research institutes, continuallyexpanding and optimizing our talent pool. This ongoing effort enhances our core competencies in technological innovation,ensuring our leading position in market competition.In the fourth quarter of 2023, we planned the construction of staff job qualification system. This initiative involves allstaff members and includes the creation of a job map, identification and evaluation of competencies for each position,and establishment of evaluation methods and organization. The process will produce annual competency scores for allemployees. Additionally, based on the talent review process, it will determine promotions for eligible staff members forthe year.Zhende has paid attention to cultivating inter-disciplinary talents and encouraged cross-functional, interdisciplinary jobrotation among employees. During the reporting period, we have revised the Job Rotation Management Rules, proposedkey positions for the job rotation plan, and tracked the process. This project is focused on job rotation for three typesof people, namely university graduates, employees in key positions, and senior executives. Then job rotation sharingmeetings are then organized according to the actual situation.Meanwhile, in order to encourage employees in active self-learning and improvement, we took Xuchang Zhende No.1Factory as a pilot unit, and cultivated multi-skilled workers in 11 key positions to improve their overall level, optimize postallocation, and enhance their work efficiency, aiming to meet our employment demands and realize the strategic talentreserved for development.
During the reporting periodZhende provided training for6,717employeesThe total training duration was435,076hours
With a training coverage rate of100%With an average training duration of
64.77
hours perperson
Second Young Master-Hand Rating in 2013
To carry forward the spirits of dedication, innovation, contribution and persistent improvement, discover and cultivate excellentyoung skills talents within Zhende and cultivate knowledgeable, innovative and inter-disciplinary young skilled talents, we selected18 skilled employees with innovations and a high effectiveness in their positions.
Smooth Career Development ChannelsZhende Medical adheres to the "We Care" philosophy. Based on the self-developed E-learning platform, supported by theinternal trainer system and curriculum structure, we have made available a transparent and smooth career developmentchannel, including development paths for management and profession. On top of that, we support, encourage, and guideemployees to continue their upward development by establishing a comprehensive reward system.To attract and retain core talents and promote the common growth of the company and employees, we have put incentivemeasures in place.In 2023, we have conducted an assessment for all employees in dimensions of capability, performance and value. Theassessment conclusion were then presented through a grid-view tool in calibration meetings. The result determines theSABCD talent pool for 2024 (reserves for general manager, directors, senior managers/functional managers, managerassistants/sales managers, supervisors/workshop directors), covering more than 300 employees in total.
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
CareEmployeeGrowth
PromoteGreenDevelopment
To Be A ReliablePartner
Major Measures for Occupational Health and Safety Protection of Zhende Medical
Hierarchical security controlDevelop 1-5 classes of accident control indicators and cascade the objectives at all levels in the form of signing EHSresponsibility letters.
Safety production month activitiesOrganize safety production month activities every year.
Hazard identification, assessment and control
Formulate the Management Rules for Hazard Identification, Assessment and Control to comprehensively identify, assess,control and update hazards in production activities and daily management of Zhende.
Regular inspections and hazard rectifications
Conduct quarterly, monthly, and daily inspections.Relevant personnel carry out daily inspections, regular inspections, special inspections, comprehensive inspections, andrequire to make rectifications for the hazards within a fixed period of time.
Detection and prevention of occupational hazards
Regularly conduct occupational hazard factor testing to determine the affected positions and employees;Formulate the Occupational Health Examination Management System, conduct regular occupational health examinations;Formulate the Labor Protection Equipment Management System, distribute labor protection equipment to employees inspecific positions;Establish a special archive for every employee of occupational hazard positions.
Zhende Medical places high value on the safety and health of our employees. We have established a sound occupationalhealth and safety management system and formulated the EHS Incident Management Rules, the EHS Change ManagementRules, the EHS Supervision, Inspection and Hazard Rectification Management System, the EHS Training and EducationManagement Rules and other internal systems. We have initiated an occupational health and safety managementorganizational structure that covers the headquarters and all subsidiaries. The President’s Office of Zhende has an EHSManagement and Decision-Making Committee, which shoulders the ultimate responsibility; the Management Committeehas a EHS Office, which is responsible for the construction and operation of Zhende’s EHS management system. Eachdepartment of Zhende’s headquarters has assigned EHS contacts. Each subsidiary has also instituted relevant departmentsresponsible for the implementation of Zhende’s EHS related systems and policies.
Fulfilling the Primary Responsibility,Ensuring Occupational Health and Safety
Staff incentives measures of Zhende MedicalEquity incentiveAs of the end of the reporting period, Zhende implemented two phases of employee stock ownership plan. The first phaseof the employee stock ownership plan met the unlocking conditions in July 2023, with a company level unlocking ratio of
28.529%; The second phase of the employee stock ownership plan met the unlocking conditions in December 2023, with a
company level unlocking ratio of 20%.Other cash incentives
During the reporting period, Zhende granted RMB 12.89 million of incentives to employees, including RMB 6 million ofstrategic coordination mechanism rewards, RMB 3 million of project rewards, and RMB 3.89 million of research anddevelopment rewards.
To enhance employees’ safety awareness and improve their relevant skills, we provide occupational health and safetythemed training, covering all employees, especially those in specific positions. During the reporting period, we haveorganized 186 training sessions themed on occupational health and safety, with a total of 7,680 participants and 5,120training hours. In addition, we also hold fire-fighting competitions, skill competitions, and other activities which furtherstimulate employees’ interest in learning and increase their sense of participation.
Zhende has reduced work risks by means of technological innovations to ensure employees’ safety and health. Wecarry out the lean logistics project, the robot arm project and the FB001 project to build an automated productionprocess and liberate labor forces.
As of the end of the reporting period, Zhende’s 3 new subsidiaries have been certified by ISO 45001 occupationalhealth and safety management system.
Occupational Health and Safety Themed Training of Zhende MedicalNew employeeEmployees in specific positionsAll employees
Safety education and trainingat three levels (factory level,workshop level, team level)
Certification training forspecial operation personnel,safety management personneland responsible persons,occupational health training
Festival safety, mechanical safety,electrical safety, fire safety, trafficsafety, hazardous chemicals,special equipment, etc.
Technical Upgrading for Occupational Health and Safety of Zhende MedicalLean logistics projectRobot armFB001 automatic
sewing equipment
AGV unmanned self-drivingvehicles were used to replacemanual operations, reducing thework intensity of sorting andpicking workers. Meanwhile, theAGV driving area and the staffwalking area were separated toensure personnel safety.
Robot arms were used to replaceworkers to perform some high-risk and repetitive productiontasks, improving productionsafety, reducing fences and othersafety facilities, and enhancingthe utilization efficiency ofproduction space.
FB001 automatic sewingequipment was introducedto achieve the continuousproduction mode, reducinglabor intensity, and preventingemployees from bending overfor a long time.
During the reporting period
Zhende had a work-related injury rate of
0.45
per onethousand
resulting in
lost working days due to work-related injuries
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Green Operations: Protecting Our Beautiful HomeResource Conservation: Advancing Sustainable DevelopmentZero Carbon Driven: Addressing Climate Change
Promote Green Development
Contribution to the SDGs
KPI and Targets for 2030Targets for 202420222023Progress100% of factories maintain ISO14001 certification
1.Maintain 100% compliance of existing certification
2.New factories (e.g., in Kenya) have obtained
certification
3.Improvements in Shaoxing and Huainan
50%66.67%Over 80% of finished productsuse eco-friendly packaging
68%55%65%Zhende is joining SBTi in 2023and will set targets based onSBTi’s goals
Down by 10%Submit the SBTi commitment
104,743.61tCO
e76,262.92tCO
eRenewable electricity accountsfor over 30% of total electricityconsumption
>15%
1.32%14.33%
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
CareEmployeeGrowth
PromoteGreenDevelopment
To Be A ReliablePartner
Environmental Management System
Institutional StructureZhende Medical holds fast to the concept of green development and establishes a sound environmentalmanagement system. Zhende institutes an environmental management organizational structure covering theheadquarters and all subsidiaries, with the EHS Department as the top authority for environmental management. Wehave formulated systems such as the Environmental Protection Facility Management System, providing regulationsfor waste gas emission, wastewater discharge, and waste management. We also conducted environmentalsupervision and management on the headquarters and subsidiaries through statements and other forms. In 2023,we invested RMB 10.4814 million in environmental protection.During the reporting period, all environmental protection facilities operated normally. New investment projectsadhered to local laws, regulations, and policy standards regarding environmental management at their operationalsites. There were no incidents of violating environmental protection laws or regulations.Environmental Protection ApproachTo implement the environmental management system, Zhende has established a comprehensive and multi-dimensional environmental protection approach, which covers various aspects, including environmental protectiontraining, 5S inspections to standardize electricity usage across all modules, and the development of environmentalemergency response mechanisms. Through meticulous management practices, we aim to continuously enhanceour environmental awareness and environmental management capabilities.
Green Operations: Protecting Our Beautiful Home
We actively organize environmental training covering topics such as relevant laws and regulations, emission standards,analysis of key provisions, standardized environmental management, and case studies. During the reporting period, weoffered 12 online and offline environmental training sessions for all employees, with 2,678 participants.
Environmental Training
We analyze current environmental pain points based on proposals for improvements. With the initial focus on energyconservation and consumption reduction, we continue to standardize electricity usage in offices and factory areasand conduct 5S (Sort, Set in Order, Shine, Standardize, Sustain) inspections of energy consumption to enhance allemployees’ water and electricity conservation awareness.
5S Inspections
We have developed the Environmental Emergency Response Plan and the Comprehensive Emergency Rescue Plan forSafety Production Accidents, along with specialized emergency plans. These plans detail management measures andhandling procedures for environmental emergencies, based on environmental risk assessments and internal emergencysupply investigations. Additionally, we conduct annual emergency training and drills for various environmental incidents,which effectively enhance our emergency response capabilities. During the reporting period, we carried out 10environmental emergency drills.
Emergency Plans and Drills
As of the end of the reporting period, 66.67% of Zhende and its subsidiaries have been certified by ISO 14001environmental management system review and received the certificate. Additionally, two subsidiaries have beenhonored with provincial-level "Green Factory" and municipal-level "Zero-Waste Factory" titles.
Zhende requires every workplace to conduct at least one type of routine safety drill each year, covering commonscenarios such as fire, major safety incidents, and chemical spills. These drills provide employees with hands-onexperience in real-life situations, thereby enhancing their ability to respond to various emergencies and improvingtheir first aid skills and adaptability.
Provincial and Municipal-level Honors for Zhende Subsidiaries
CompanyHonorXuchang Zhende Surgical Dressing Co., Ltd.Provincial-level “Green Factory” of Henan ProvinceXuchang Zhengde Environstar Medical
Products Co., Ltd.
Provincial-level “Green Factory” of Henan Province “Zero-Waste Factory” of XuchangZhende Medical Co., Ltd.“Zero-Waste Factory” of Shaoxing
No.Drill UnitDrill TypeContent
Number ofParticipants
Photo
ZhendeMedical’sheadquarters
Fire drill
1. Evacuation
2. Use of fire
extinguishing equipment
XuchangZhengde
Drill onmajor safetyincidents
1.Correct evacuation
routes
2. Self-rescue measures
in the event of anaccident
Sharing Sessions on Environmental Protection
Zhende organized internal sharing sessions on environmental protection to enhance employee understanding and awareness ofenvironmental protection and promote environmental protection practices through examples of corporate and individual effortsin this regard. Held at all production bases and workplaces of Zhende the sharing sessions helped participating employees torealize the significance of environmental protection for Zhende, themselves, and the society, and encouraged them to incorporateenvironmental protection into their daily work and life. As a result, our employees demonstrated increased awareness andeagerness towards office 5S management. They would turn off lights and air-conditioning when leaving and sort office wasteinto appropriate bins.
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
CareEmployeeGrowth
PromoteGreenDevelopment
To Be A ReliablePartner
Wastewater Discharge Standards and Key Control Indicators
Waste Gas Discharge Standards and Key Control Indicators
CategoryApplicable StandardsKey Control IndicatorsWastewater
Comprehensive Wastewater Discharge Standard(GB 8978-1996)Indirect Emission Limits of Nitrogen and PhosphorusPollutants in Industrial Enterprise Wastewater (GB8978-1996)
pH, ammonia nitrogen, suspended solids, chemical oxygendemand (COD), five-day biochemical oxygen demand (BOD5)
Wastewater Treatment Facilities in Some Factory Areas of Zhende Medical
CategoryApplicable StandardsKey Control Indicators
Waste gas
Comprehensive Emission Standard for AirPollutants (GB 16297-1996)Emission Standard for Boiler Air Pollutants (GB13271-2014)
Non-methane total hydrocarbons, nitrogen oxides,particulate matter, sulfur dioxide, ethylene oxide, and odor
Waste Gas ManagementZhende's operational activities mainly generate waste gas from processes such as printing, coating, sterilization,and boiler combustion. Zhende adopts washing, purification, and activated carbon adsorption purification facilities,multi-level (sulfuric acid) washing tower purification facilities, etc. to treat different types of waste gas. For certaincotton dust-containing waste gas, Zhende uses dust removal units to eliminate the cotton dust.
Cotton Dust Treatment Facilities
Examples of Waste Gas Handling Measures
Ethylene oxide waste gas
treatment
RTO system
Ethylene oxide wastegas treatment facilitiesare introduced to thesterilization workshop,ensuring that ethyleneoxide from the steriliza-tion cabinets is filteredand treated before dis-charge.
RTO (RegenerativeThermal Oxidizer) isadopted for industrialwaste gas treatment,offering efficient, en-ergy-saving, and en-vironmentally friendlyperformance.
Ammonia gas recoveryand treatment
Cotton dust treatmentAmmonia gas recoveryand treatment systemsare introduced to en-sure that non-methanehydrocarbons, nitrogenoxides, and smokeopacity in the wastegas meet dischargestandards.
Dust removal units areused to ensure compli-ant discharge of wastegas containing cottondust.
Emissions and Waste ManagementZhende Medical has developed systems such as the Water Pollution Prevention and Control Management System,Air Pollution Prevention and Control Management System, and Solid Waste Pollution Prevention and ControlManagement System. These can manage the entire process of Zhende's pollutant discharge and waste treatment.During the reporting period, the headquarters and all subsidiaries adhered to discharge standards for wastewate,waste gas, and waste disposal.Moreover, a third-party testing agency was commissioned to test pollution sourcesincluding wastewater, waste gas and boundary noise. The testing results showed that all metrics met relevantdischarge standards and there was no significant impact on the surrounding environment.Wastewater ManagementZhende’s wastewater mainly comes from production and domestic sources. Production wastewater mainly comesfrom the bleaching process, while domestic wastewater arises from office activities, cafeteria cooking, and othersimilar sources. All wastewater enters the sewage treatment station in the factory area, undergoes physicochemicaland biochemical treatment processes, and is then discharged into the municipal sewage pipeline network.
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
CareEmployeeGrowth
PromoteGreenDevelopment
To Be A ReliablePartner
Waste Reduction and Resource Recovery Initiatives
Medical Waste Disposal MeasuresCategoryDisposal MeasuresHazardous waste
Hazardous waste is handled by a qualified third-party hazardous waste disposal unitin accordance with the National Catalogue of Hazardous Wastes, the Measures on theManagement of Hazardous Waste Manifests and other related regulations.General solid waste
Recyclable materials such as waste cardboard are sent to a third-party recycling unit for reuse.Leftovers and defective products are handled by a third-party general solid waste disposal unit.
Henan Zhende - PE GloveScraps Recycling Project
Xuchang Zhengde - Cast FilmTrimmings Recycling Project
Shaoxing Zhende - BleachedFabric Edge Cutting Project
The production of PE glovesmay generate a significantamount of scraps. Thisproject involves recycling andgranulating these scraps,turning potential waste intoreusable plastic pellets. Thesepellets can then be used toproduce new PE gloves andother plastic products, therebyincreasing resource utilizationand reducing waste.
Cast film is a non-toxic, colorless,and odorless green material. Therecycling project converts castfilm trimmings into high-qualityregenerated plastic pellets,which are then used to producenew film products. This processreduces waste, promotesresource recovery, and ensureseffective resource circulationand reuse.
Originally, both edges of thedegreased fabric were cut off,which resulted in significantwaste of raw materials andgenerated a lot of waste. Afterthe improvement project isimplemented, one edge of thebleached fabric is folded insteadof being cut off. This increasesthe utilization of raw materialsand reduces waste. Moreover,the new method minimizesproblems such as loose threadsand small fabric fragments,thereby enhancing the finalproduct quality.
Water Conservation Measures and Results (Major)
Water Resources ManagementThe water resources used in Zhende's operation process include municipal water supply, surface water, and recycledwater. For the use of surface water, Zhende applies for a water intake permit in accordance with regulations. We paywater fees on time and have no significant impact on the environment in terms of obtaining water sources.Water conservation is integrated into every aspect of production and operations. We implement measures acrossproduction, office, and residential areas to conserve water at the source. Meanwhile, we promote water recyclingthrough rainwater collection, river water utilization, and wastewater treatment and reuse, thereby improving theutilization of water resources.
Resource Conservation: AdvancingSustainable Development
Water Recycling FacilitiesThe proportion of recycled water in use reached
56.40%
at Zhende
.Note 1: The data involves all operational sites in China.
Green officeWastewater recycling
Advocate for waterconservation amongemployees and re-quire them to turn offthe faucet immediate-ly after use.
Through a wastewa-ter recycling treat-ment system, waterresource recyclingis achieved. Thepurified regeneratedwater is used for toiletflushing, water tanksfor fire protection,and other purposes,saving 5,000 tons ofwater per month.
Rainwater recyclingOptimizing production
processPlan and constructrainwater recyclingfacilities to promotethe sustainable use ofwater resources.
Collect and store theremaining conden-sate water from thebleaching process,and use a water pumpto channel the waterto the living area ofthe new base. Thiscan save about 2,000tons of hot water permonth.
Waste ManagementZhende's operational activities generate hazardous waste and general solid waste. Hazardous waste mainly includeswaste acrylic adhesive generated during the coating process, waste activated carbon generated during the waste gaspurification process, and chemical packaging barrels generated during the use of chemicals. General solid waste, includingrecyclable materials, leftovers, and unqualified products, mainly comes from production, office, and other processes.To comprehensively standardize the management process for solid waste, we have established the Solid Waste PollutionPrevention and Control Management System, which defines the responsible departments and work procedures. We havealso set up a disposal management ledger system. These efforts ensure that solid waste is handled safely, environmental-friendly and efficiently, providing strong support for environmental management and compliance audits.
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Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
CareEmployeeGrowth
PromoteGreenDevelopment
To Be A ReliablePartner
Energy Management
The energy sources expended in Zhende's operation include natural gas, gasoline anddiesel, consumed by company-owned vehicles, electricity and steam, wherein, electricityincludes those come from municipal facilities, self-built solar panels, and purchasedrenewable electricity. We adhere to relevant regulations for energy management and haveestablished procedural documents, such as the Energy Management System, the PowerManagement System, the Resource and Energy Management, and the Energy ManagementAssessment System, to standardize the construction of our energy management system.Zhende has comprehensively reviewed its energy structure and implemented measures,such as using clean energy, adopting energy-saving equipment, and recovering waste heatand energy, to optimize the energy structure and enhance overall energy efficiency.
During the reportingperiod，electricityfrom renewable energysources accounted for
14.33%
of Zhende’s total energyuse
Promoting green office
Using clean energy
Through the "I Suggest" energy-saving and consumption reduction proposal program, Zhende continuously optimizes electricityconsumption control and resource integration in office areas, canteens, dormitories, and factories. By adopting sensor lights,setting timers for electrical appliances, reducing streetlights, and consolidating scattered offices and dormitories, we saved1,634.93 MWh of electricity in 2023.
We promote energy conservation among employees, requiring that the lights and energy consuming equipment such as airconditioners in the office area to be turned off when people leave the area.
Optimizing production process
Optimizing spunlace process parameters, such as pressure and water jet configuration, ensures product quality while achievingenergy savings.
Upgrading the weaving loom from a single layer to a double layer saves over 160 MWh of electricity annually.
Use of renewable electricity: In 2023, the Anhui facilitycompleted a new 1,599.4 KWP photovoltaic power project,and the first phase of the factory in Kenya newly built a1,600 KWP photovoltaic power project. Construction iscurrently underway for photovoltaic power projects at theShaoxing Phase II facility and the Jiangsu base, as well asa renewable energy project at the Kenya base.
Energy Conservation and Carbon Reduction Measures and Results(part)
To date, photovoltaic power projects have been completed with capacities of 6.9 MWP at the Shaoxing base, 11.66 MWP at theXuchang base, and 498.945 KWP at the Yiwu base.
Natural gas is used to heat pressurized steam boilers. In 2023, a total1 of 1,252,191 m? of natural gas was used.
In 2023, Xuchang Zhende procured 121,872 tons of biomassenergy steam, primarily used for production processes suchas steam sterilization and gauze bleaching. Biomass energysteam, derived from agricultural waste like crop straw andlivestock manure, is a renewable resource. Its use helpsalleviate the pressure on traditional fossil fuels and aligns withsustainable energy development goals. Additionally, biomassenergy steam produces relatively low emissions of carbondioxide and other pollutants, reducing environmental impactand carbon emissions. As a sustainable, eco-friendly, andefficient energy form, the application and study of biomassenergy steam will contribute to global sustainable energydevelopment and the transformation of energy structures.
Adopting energy-saving equipment
Horizontal steam boilers are upgraded to vertical boilers, reducing the average natural gas consumption per ton of steam from approximately87 m? to about 75 m?, improving energy efficiency by 16%. Each machine could save about 200,000 m? of natural gas annually.
Technological modification of the cooling pump system significantlyreduces its energy consumption. After implementation of the projectin 2023, a total of 53.79 MWh of electricity was saved.
For the spunlaced nonwoven fabric drying system, a drumdryer is selected to enhance both energy efficiency and thephysical properties of the product. Additionally, the existingdrying exhaust pipes are rerouted to utilize residual heat forprogressive drying, which not only improves product qualitybut also achieves energy saving and emission reduction.
All equipment whose electric power exceeds 11 KW areequipped with variable frequency motors. Adjusting thefrequency of the motor can reduce the operating speed ofthe equipment, with more than 20% of the electricity saved.
A humidifier is used instead of a steamer, which saves electricity and steam required for boiling water. Approximately 105.18MWh of electricity can be saved per month.
Replacing fluorescent lights with LED energy-saving ones saves approximately 2.875 MWh of electricity per month at theShaoxing headquarters, Xuchang base and Anhui base.
Note 1: The data involves all operational sites in China.
Note 1: The data involves alloperational sites in China.
Recovering waste heat and energy
Collecting the steam water generated by pressurized steam boilers for thermal energy recovery achieves energy savings ofover 20% and water conservation of over 50%.
Steam waste heat recovery facilities
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
CareEmployeeGrowth
PromoteGreenDevelopment
To Be A ReliablePartner
Green building
Awareness training
The Shaoxing high-performance medical device production base innovatively employs modular construction, shortening theconstruction period by 25%-30%, reducing water usage by approximately 50%, and saving up to 80% of timber. The projectalso significantly decreases construction waste by over 70% and effectively controls dust and noise pollution. Additionally, thethermal performance of the building envelope exceeds national standards by 20%, providing effective insulation in summerand winter, thus significantly enhancing energy efficiency and reducing energy consumption for heating and cooling.
Zhende actively promotes energy-saving practices through comprehensive training and awareness programs. Energyconservation and emission reduction topics are incorporated into onboarding training, and specialized sessions are regularlyorganized for all employees. Zhende also standardizes electricity usage habits in both factories and offices and encouragesenergy-saving and consumption reduction practices across all roles. These initiatives have enhanced employee competency,raising their awareness and practical skills in energy conservation and consumption reduction.
Raw Material and Packaging ManagementThe raw materials used in Zhende's production chiefly include non-woven fabrics, cotton fabrics, and melt-blownfabrics. The packaging materials mainly include plastic and cardboard. Zhende standardizes the transportationand use of raw materials and packaging materials. We continue to reduce the loss and waste of raw materials andpackaging materials and improve resource utilization through measures such as lean management and upgradingwarehouse management systems.In addition, driven by the concept of green development, Zhende promotes the development of low-carbon products,selects green and environmental friendly production raw materials and packaging materials. These reduce theimpact of material use on the environment.
In its exploration and practice of recyclable and eco-friendly materials and packaging, Zhende is committed toleading the industry's green transformation. Progress has been made in reducing carbon emissions across theentire life-cycle of our products through continuous breakthroughs and innovations.
Packaging LightweightingDevelopment of Eco-Friendly Packaging
We optimize the design of paper boxes and
cartons with the goal of reducing packaging weight
by 5%, achieving both energy savings and cost
optimization.
The project will involve multiple types of testing
to ensure quality and promote new standards for
green packaging.
In response to customer demands forenvironmental sustainability, we continuouslyinnovate eco-friendly packaging materials, focusingon aspects such as high temperature resistanceand biodegradability.
By conducting in-depth analyses of materialperformance, we ensure a balance betweenenvironmental benefits and practicality. We alsorigorously monitor testing progress to ensure theproject advances efficiently.
Pathway to Green Packaging
Achieving ISCC PLUS
Certification
Actively Developing Eco-Friendly Alternatives to PFAS
Zhende Medical actively explores new ways towards energy conservation, efficiency enhancement and environmental protection.In 2023, our Xuchang facility received ISCC PLUS certification. Its surgical gown products use a circular value chain and certifiedmaterials to ensure a sustainable production process and minimize environmental impact. This certification underscores ourcommitment to environmental and social responsibility. Looking ahead, we will further our dedication to product circularityand traceability by promoting sustainable materials, advancing low-carbon production, and leading the industry in value chainsustainability. We are also committed to providing global sustainable solutions to help our customers achieve their green goals.
In response to the environmental challenges posedby per- and polyfluoroalkyl substances (PFAS) and theincreasingly stringent global scrutiny on PFAS, ZhendeMedical is actively developing eco-friendly PFAS-freeproducts. We are systematically reducing chemicalsin the supply chain that could pose potential risks tothe environment and human health, aiming to achievezero use and zero discharge of hazardous chemicalsin our supply chain. Through technological innovationand R&D, we are exploring environmentally friendlyand health-conscious alternatives, such as bio-basedcompounds and silane compounds.
【 Dasen Xu, CEO of Zhende Medical】
Note 1: ISCC is an independent multi-stakeholder initiative and a leading certification system that supports sustainable, fully traceable,deforestation-free, and climate-friendly supply chains. It covers all sustainable raw materials, making it one of the largest certificationsystems in the world.
“As an industry leader, we are duty-bound toadvance our sustainability goals and ensure ourproduct solutions can help our customers achievetheir own sustainability objectives.”"To fulfill this commitment, we will continuouslyenhance our efforts and work closely with oursuppliers to develop innovative and sustainablesolutions that align with the 'dual carbon' andcircular economy strategic goals. Certificationslike ISCC PLUS will strengthen our commitmentto customers by providing crucial third-partyverification, ensuring the integrity and highperformance of our global supply chain."
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Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
CareEmployeeGrowth
PromoteGreenDevelopment
To Be A ReliablePartner
Using FSC-Certified
Packaging and Labels to Support Carbon Reduction throughout the Product LifecycleZhende sources cartons, labels, and inner box packaging from FSC-certified suppliers. In 2023, we utilized 13.05 million FSC-certified packaging and labels, contributing to carbon reduction across the entire product life-cycle.Note 1: As the leader in sustainable forestry, FSC is trusted by NGOs, businesses, and consumers worldwide. Its purpose is to promoteresponsible forestry so forests and people can thrive together. It is guided by a vision for a world where the true value of forests is recognizedby all. FSC is the leader in sustainable forest management, operating the world's most rigorous and trusted forest certification system.
Note 2: The data involves all operational sites in China.
Photo of Inner Box Packaging FSC Certificate
During the reporting periodTarget for 2024
65%
of Zhende’s finished products usedrecyclable packaging materials.
68%
In packaging lightweighting, Zhende has promoted a green upgrade of product packaging through detailed designand material optimization. This effort has enabled a reduction in packaging weight and contributed significantly tothe development of a green supply chain in the medical field.
Lightweighting of Surgical Gown Hang Tag
Green Upgrade of Mask Packaging Composite Film
Surgical gown hang tag is an essential component of surgical gowns. ZhendeMedical's R&D team reduced the weight of the white cardstock used for surgical gownhang tags by 14.3%, achieving a reduction in weight without affecting productionefficiency or the wearing experience for medical staff, while ensuring no impact on thefunctionality of the product. This optimization saves about 3 tons of white cardstockannually, reducing resource consumption at the source and effectively loweringcarbon emissions. It not only cuts production costs but also demonstrates ourcommitment to embracing low-carbon and environmentally friendly principles fromthe early stage of product design. It is a tangible example of our efforts to promotegreen healthcare and achieve sustainable development.
For the widely used disposable masks in 10-mask packs, Zhende Medical has implemented a green upgrade of the packagingmaterial.We have reduced the thickness of packaging film by 12% while maintaining packaging strength, product safety, andquality. This initiative not only conserves material usage from the source but also decreases waste generation, improving boththe environmental and economic aspects of the product. It promotes effective resource use and recycling, contributing to thereduction of resource consumption and environmental pollution.
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
CareEmployeeGrowth
PromoteGreenDevelopment
To Be A ReliablePartner
Zhende Medical has made constant and proactive efforts to improve its climate change response mechanismsin alignment with relevant policies and guidelines. In 2023, Zhende enhanced its climate change responsemechanisms in the dimensions of governance, strategy, risk management, and metrics and targets by referencingthe requirements of the International Financial Reporting Standard for Sustainability Disclosure No. 2—Climate-relatedDisclosures (IFRS S2).
Climate GovernanceClimate change is incorporated into our ESG management system. The Board of Directors, as the highest authorityfor climate governance, formulates and coordinates climate change response strategies, reviews climate-related management targets, such as greenhouse gas emissions, and assesses progress. The ESG ManagementCommittee, as the decision-making and supervisory body in ESG management, identifies, prioritizes, analyzes, andmanages climate risks and opportunities, sets climate-related goals, and oversees and supports specific initiatives.The Committee regularly reports on climate change response activities to the Board. The ESG Office, as theexecutive body of ESG management, implements and advances climate-related management tasks. It collaborateswith relevant functional and business departments to integrate climate management into daily operations. Throughenergy-saving technological upgrades, transition to clean energy, and awareness training, the office aims to enhanceclimate management performance and achieve climate change management goals.Besides, Zhende integrates greenhouse gas emissions performance into the long-term incentive plans for seniorexecutives to encourage sustained economic and shareholder value creation.
Strategy
Analysis of Climate Risks and Opportunities
Zero Carbon Driven: Addressing ClimateChange
HighLow
High
Impact level of risks and opportunities
Probability of risks and opportunities
Risk: Acute riskRisk: Reputational risk
Opportunity: EnergytransitionOpportunity: MarketopportunityRisk: Chronic riskOpportunity: ResourceefficiencyOpportunity: Climateresilience
Risk: Policies and laws
Climate Risk and Opportunity Matrix of Zhende
Major Climate Risks and Opportunities for ZhendeClimate Risks andOpportunities
Description
Potential ImpactDurationFinancial Impact
Risk: Acutephysical risk
Extreme weather events triggered by climate change, such as frequenthurricanes and floods, may lead to severe consequences for Zhende,including asset damage, casualties, and disruptions to business operations,forcing Zhende to take immediate response measures and invest substantialresources to restore normal R&D and production as quickly as possible.
Short-midterm
Operatingrevenue↓
Operating costs↑
Risk: Reputational
risk
With the release of China's 'dual carbon' goals and growing focus on low-carbon transformation both domestically and internationally, Zhende risksreputation damage if we do not take proactive and effective climate actionsand timely disclose relevant information to meet external stakeholderdemands.
Short-midterm
Operatingrevenue↓
Risk: Chronicphysical risk
Long-term climate changes, including persistent high temperatures, mayimpact Zhende’s daily operations and lead to rising sea levels or ongoingheatwaves. For facilities near coastal areas, these changes could result inasset damage and may force Zhende to consider relocating or adjusting workhours to adapt to changes in the coastline and sustained high temperatures.
Long termOperating costs↑
Risk: Policies andlaws
Domestic and international climate policies and regulations are increasinglyfocused on encouraging companies to take proactive measures to addressclimate change and imposing restrictions on activities that may worsenit. To adapt, Zhende must promptly adjust its strategies related to energyconsumption, emissions, and climate information disclosure; otherwise,we may face legal action and liability for failing to meet environmentalmanagement standards.
Short-midterm
Operating costs↑Operatingrevenue↓Opportunity:
Energy transition
With advancements in green energy technologies and the introduction ofsupportive policies, renewable energy sources are becoming more accessibleand their prices are expected to steadily decrease. Proactively adjusting theenergy consumption structure will not only help Zhende reduce energy costsbut also effectively address the low-carbon challenges posed by regulatoryrequirements and end-market demands.
Mid-longterm
Operating costs↓
Opportunity:
Market opportunity
With growing global attention to climate issues and the release of the "dualcarbon" goals, green and sustainable products and services will be increasinglyexpected by the market and the public. Therefore, focusing on developingand providing climate and environmental-friendly products will inject newmomentum into Zhende's business development and revenue growth.
Mid-longterm
Operatingrevenue↑
Opportunity:
Resourceefficiency
By improving the efficiency of energy, water, and raw material usage, vigorouslyimplementing green production practices, and establishing a comprehensiveresource management system, Zhende can effectively reduce resource waste,lower operational costs, and achieve steady low-carbon development.
Mid-longterm
Operating costs↓
Opportunity:
Climate resilience
By selecting environmentally friendly suppliers and strengthening carbonemissions measurement and control capabilities, we can adapt more quicklyto climate change. This will lay a solid foundation for us to seize climate-relatedbusiness opportunities and further enhance the stability of our assets anddaily operations, thereby positioning Zhende advantageously in future industrycompetition.
Long termOperating costs↓
Climate Risk and Opportunity Management
Zhende Medical incorporates climate risk and opportunity management into its corporate strategy and decision-making. We are committed to achieving carbon neutrality in our operations and value chain through measures such aslow-carbon product development, clean energy use, equipment and process optimization, and green office practices,while seizing new market opportunities. Responding actively to global climate change challenges, Zhende has initiatedthe SBTi process and reports value chain greenhouse gas emissions in accordance with the Greenhouse Gas Protocol.
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Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
CareEmployeeGrowth
PromoteGreenDevelopment
To Be A ReliablePartner
Promotion of Carbon Reduction AwarenessGreen Products
Zhende actively develops environmental-friendly products and engages third-party organizations to calculate the carbonfootprint of our products based on international standards, thus providing customers with comprehensive product information,including carbon footprints. As of the end of the reporting period, we have achieved ISO 14067 certification for four products.
Zhende also develops smart products to address the growing demand for carbon reduction. We optimize the environmentalfootprint of our products to help customers reduce carbon emissions during use.
Green Office
Disposable plastic cups and bottled water are eliminated from offices to reduce plastic waste.
For newly renovated offices, we use high-quality materials and replace chemical treatments for formaldehyde gas withindoor plants.
We have consolidated office areas to minimize the use of small, individual offices. At the Shaoxing headquarters, thisconsolidation saved eight office spaces, resulting in reduced electricity consumption for lighting and air conditioning.
We have phased out high-energy-consuming office equipment and promoted the use of energy-efficient technologies andproducts, prioritizing those that are energy-saving, water-saving, environmentally friendly, and renewable.
Our canteen sources organic or low-carbon vegetables with Zero Carbon certification.
During lunch breaks and overtime, some lights are turned off, and computers are turned off or set to power-saving modes.Meeting room lights are turned off promptly, with reminders placed at entrances, reminding employees of turning off lights. Alllights, computers and other electrical appliances are turned off after work hours.
We adjust the switching time for factory area streetlights and compact water heaters.
Natural lighting is used on sunny days to reduce the use of electric lighting.
We utilizes National Energy Conservation Week, National Low-Carbon Day, and other key events to promote carbon reductionawareness by various means.
We conduct internal and external training on energy conservation, carbon reduction, and climate change response, andencourage our supply chain partners to transition towards a low-carbon economy.
We post signs and slogans promoting the conservation of food, electricity, and water to create an atmosphere of practisingfrugality and opposing wastefulness.
Energy-saving Technological Transformation
Zhende adopts high-efficiency and energy-saving equipment and implements technological upgrades to reduce carbonemissions in production and operations.
Actions to Address Climate Change
Clean Energy
We actively work to increase our use of clean energy by purchasing green power and utilizing self-built solar panels, geothermalenergy, and other methods, thereby reducing carbon emissions.
In 2023, our photovoltaic systems at the Shaoxing, Xuchang, and Yiwu bases generated a total of 1,016.50 MWh.
Our Kenya factory plans to use renewable geothermal energy with an anticipated annual consumption of 144 MWh, set to beginin 2024.
Our Xuchang base procured 121,872 tons of biomass energy steam in 2023.
Risk ManagementZhende Medical regularly identifies and assesses potential climate-related risks and opportunities in operationsbased on regional characteristics, industry attributes, and other factors, creating a climate risk and opportunityassessment matrix. By evaluating the likelihood and impact of these risks and opportunities, Zhende prioritizesthem as the basis for decision-making in climate change response strategies and action plans, which supports itsprogress in a complex and changing climate environment. Additionally, we communicate regularly with stakeholdersincluding customers, suppliers, and investors to gather their opinions and suggestions on climate-related risks andopportunities.Climate-related risks are integrated into our overall risk management framework. We have established a cross-departmental climate risk management and coordination mechanism led by the ESG Office, aiming to enhanceclimate risk managements through annual performance data tracking and target evaluation.Metrics and TargetsIn 2023, we reviewed our carbon emission targets based on current energy use and carbon emissions, andadjusted management measures flexibly to align with development trends and industry best practices. Additionally,we conducted greenhouse gas accounting covering Scope 1 and Scope 2 emissions. As of the report’s release,Xuchang Zhende has completed its ISO 14064 greenhouse gas inventory.
Targets：
During the reporting period, Zhende has initiated the process of joining the Science BasedTargets initiative (SBTi) and is setting new greenhouse gas reduction targets in accordance withSBTi requirements. The new greenhouse gas targets will be disclosed after SBTi verification.
Note 1: The data involves all operational sites in China.
GHG Emissions in 2023
Emission TypeSourcesGHG Emissions
(Unit: tCO
e)Scope 1Natural gas, gasoline, diesel2,969.77Scope 2Purchased electricity, steam73,293.15
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Innovation Leadership: Providing Zhende Solutions for Health ManagementQuality Service: Contributing Zhende Strength to Customer SuccessWin-Win Cooperation: Sharing Zhende Experience for Industry DevelopmentCommunity Engagement: Fulfilling Zhende Responsibilities for a Better Society
To Be a Reliable Partner
Contribution to the SDGs
KPI and Targets for 2030Targets for 202420222023Progress100% maintain ISO 13485 certification"Obtain CE/FDA certification as needed
1.100% compliance of existing certification
2.New factories (e.g., in Kenya) pass certification
100%100%Customer net promoter score(International >60 / Domestic >80)
>60/>8030.51/88.152.8/83.9/Environmental and social riskassessments cover 100% of keysuppliers
1.100% of qualified suppliers have signed the Supplier Code
of Conduct and committed to social responsibility standardsFor key suppliers unable to provide third-party socialresponsibility reports, 100% will receive ESG or socialresponsibility training or communication
-80.00%Compliance management100% of factories receiving human rights audits100%100%Continue annual external donationsContinue annual external donations
RMB5,274,000
RMB3,245,700
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
To Be A ReliablePartnerCareEmployeeGrowth
PromoteGreenDevelopment
R&D and Innovation
R&D System Construction
Zhende upholds an innovation-driven development strategy while ensuring compliance throughout the R&D process.We have established a comprehensive product R&D management system that covers all stages, from demandanalysis to market launch. This system, with clearly defined goals and standards at each stage, aims to accelerateproduct innovation, shorten time-to-market, and enhance product quality, thereby meeting customer demands andincreasing corporate competitiveness.Zhende has implemented the Integrated Product Development (IPD) consulting project, established a product linemanagement mechanism, and formed a matrix management structure. This has led to the formation of a market-oriented, data-driven decision-making system. By conducting market research, managing requirements, andscientifically initiating projects, we advance product design and testing in parallel. These efforts, with a focus onstrategic projects, have significantly improved R&D efficiency and efficiently addressed market demands.
In addition to the ongoing optimization of the product development process, we also emphasize the construction ofR&D platforms and the development of R&D talents. We have established four enterprise R&D centers at home andabroad, which have received a number of national and provincial honors.
Zhende actively engages in "industry-university-research cooperation" and continuously promotes industrialpartnerships. Leveraging the provincial-level key enterprise research institute, we collaborate with academicinstitutions to establish postdoctoral research workstations, attract high-level talents, and enhance our technologicalinnovation capabilities.Innovation Leadership: Providing ZhendeSolutions for Health Management
Product Development ProcessFeasibility
Study
ProjectApproval
AchievementTransformationProject Review
ProductLaunchProjectAcceptance
Summarization
andEvaluation
Industry-University-Research Cooperation ProjectsWe launched strategic technological cooperationwith the Shaoxing Institute of Zhejiang Universityto address common technical issues in areasincluding polymer materials, adhesives, andfilms for modern wound care products, therebydriving new material applications and productperformance upgrades.
We collaborated with Zhejiang Sci-TechUniversity on the development and applicationof high-end medical protective film compositematerials. The project has secured a place inthe provincial "Leading Goose" program.
We cooperated with Professor WangJian, an expert in sports kinesiology, fromZhejiang University to upgraded the pressuresupport and impact protection systems, andlaunched a series of next-generation bodyprotection products after more than twoyears’ research and development.
Our joint project with Donghua University,titled "Functional Forming Technology ofTextile Based High-end Dressings and ItsApplication on Complex Wounds", passedthe achievement assessment by the ChinaNational Textile and Apparel Council. Thetechnology is of internationally advanced level.
R&D Platform Construction
Enterprise R&D centers inShaoxing, Xuchang, Shanghai,
and the UK
Provincial EngineeringTechnology Research Center
National Hi-tech Enterprise
Collaboration with Well-knownDomestic Universities such asZhejiang University and HubeiUniversity, as well as MedicalInstitutions such as Beijing Hospitalof Traditional Chinese Medicine
The First Provincial-level KeyEnterprise Research Institutein the Industry
......
R&D Investment and Achievements in 2023R&D Investment:
In 2023, Zhende invested RMB
138.95
million in R&D, and was awarded
Class II and
Class III medical device productregistration certificates, and
patents for invention.
R&D Project Progress:
The optimized skin-compatible hydrocolloid has received the expected user satisfaction in clinical trials and is now in production.Breakthrough progress has been made in the process and equipment development for dual-component hydrocolloid.
Antibacterial dressings containing iodine analogs, PHMB, and hypertonic saline have completed laboratory research and enteredthe pilot and validation stages.
Research on the release, antibacterial effectiveness, and safety (animal testing) of silver ions and PHMB in foam dressings has beencompleted. Study on the application of silver ion antibacterial technology to alginate and hydrophilic fiber dressings is established.
Honors and AwardsProjectIntroductionAwardKey Technology for Form-ing Highly Absorbent Bio-mass Fiber Dressings
The project improves the quality of wound care and the accessibilityand affordability of functional dressing products in China. It also pro-vides clinicians with diverse solutions for clinical wound care.
The 10th
“China Top 10 Tex-tile Technologies” EmergingTechnology AwardFunctional Forming Tech-nology of Textile BasedHigh-end Dressings andIts Application on Com-plex Wounds
The project is innovative in its development of atomization-enhancedsoftening pretreatment, multi-thread parallel web laying technologyand equipment, and graded gradient needle-punching structure for-mation technology. These advancements overcome the limitationsof existing needle-punching processes and result in highly absorbentbiomass dressings, such as alginate and chitosan.
First Prize of the Scienceand Technology Award ofthe China National Textileand Apparel Council
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Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
To Be A ReliablePartnerCareEmployeeGrowth
PromoteGreenDevelopment
Sustainable Product R&DZhende integrates the We Care sustainability strategy into every stage of product development, aiming to reduce theenvironmental impact throughout the life-cycle of products while ensuring product health and safety.
To promote Zhende's deep involvement in the global medical device value chain and enhance its globalcompetitiveness, we have also continued to deepen our overseas factory building strategy. More efforts are made inour overseas business landscape. We also prepare to build overseas production bases in Africa and other regions.
Developing Biodegradable Latex Medical Examination Gloves
Innovative Development of PFAS-Free AS&AR Surgical Gowns
Zhende Medical’s natural latex gloves are made from rubber tree latex, a renewable resource, and are produced through anenvironmentally friendly, pollution-free process that involves low energy consumption and no harmful chemicals, making themsuitable for medical use and ensuring the safety of both medical workers and patients. Additionally, these natural latex glovesare biodegradable, meaning they will gradually decompose into harmless substances in the natural environment withoutrequiring substantial energy or special processing. Compared to gloves made from synthetic materials, the natural latex glovesrequire less energy during production and do not involve complex chemical reactions or high-temperature processes, thus lessenergy consumption and lower greenhouse gas emissions.
In response to the REACH restriction proposal on perfluoroalkyland polyfluoroalkyl substances (PFAS) issued by the EuropeanChemicals Agency (ECHA), Zhende Medical endeavors todevelop PFAS-free AS&AR (anti-alcohol, anti-blood, and anti-static) surgical gowns. We are currently developing PFAS-free AS&AR oil agent suppliers, and have partnered with aleading supplier to conduct sample trial production in thelaboratory phase. Based on technological innovation and in-depth research, we actively explore and introduce eco-friendlyand health-conscious alternative materials, such as bio-basedcompounds and silane compounds, to create a safer andhealthier wearing experience for consumers.Medical Accessibility
Expanding the Breadth and Depth of Medical ServicesZhende Medical actively promotes our healthcare business by creating professional and comprehensive productsolutions tailored for home use, aiming to bring the expertise and quality honed over 30 years of serving hospitals toindividual consumers.We fully promote the operation of the big health category by optimizing product structure and competitiveness.Through multi-dimensional consumer research and resource integration based on Zhende's product advantages, wehave comprehensively examined our retail business, and strengthened the construction of customer and consumercentered product efficiency integration. Tools such as SCRM, CRM, and E sales system are utilized to enhancedigital marketing capabilities, and to continuously improve customer and consumer satisfaction.Meanwhile, we continue to expand our product coverage, which makes it easy for consumers to purchase the homehealth care products they need.Online Retail Channels
Offline Retail Channels
Through various modes such as self-operation and cooperation, key sales channels such as Taobao, JD, Pinduoduo, Douyin,Kuaishou, 1688 and Amazone have been covered.
In 2023, the online fans of Zhende e-commerce shops exceeded 9 million.
We continue to improve the market development and cooperation stickiness of national and regional chain drugstores, individualpharmacies, and supermarket convenience stores through a variety of measures. These include dealer classification and gradingmanagement, key customer operation system, as well as IP cooperation, dual brand product construction, and model market creation, etc.
As of 2023, Zhende’s coverage rate of top 100 chain pharmacies has reached 98%, totally over 170,000 pharmacies.
Measures and Achievements for Retail Business Enhancement
Developing Low Carbon Footprint Products for Cotton Gauze Pads and Abdominal PadsGauze pads and abdominal pads are made from cotton, a natural fiber that is biodegradable and renewable. The products alignwith green, low-carbon emission practices throughout their life-cycle from the use of sustainable raw materials and processingtechnologies to the final product’s degradation.In 2023, we conducted carbon footprint certification forseveral products. The cradle-to-gate carbon footprint of gauzeswabs NA241010000103-31 is 1.18 kg CO
e, and that ofabdominal pad NA241010000103-31 is 7.40 kg CO
e. Weclosely monitor the carbon footprint of these product lines andcontinuously optimizes efficiency across the entire productionprocess from raw material sourcing and manufacturing towaste disposal. We are committed to improve the use of greenenergy and green production practices and drive sustainableimprovements in our products’low-carbon emissions.
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
To Be A ReliablePartner
CareEmployeeGrowth
PromoteGreenDevelopment
Providing Safe and Efficient Medical ProductsUpholding patient-centered values, Zhende is dedicated to creating a more humane and convenient medicalexperience through innovative technologies. We continuously develop medical devices and consumables toprecisely address patient needs, offer more convenient services and greater comfort during treatment, and enhancepatient recovery efficiency from multiple perspectives.
Medical Knowledge PopularizationZhende Medical has launched the “Zhende Station” WeChat account as a health advisory platform for the generalpublic. The platform features contents like product knowledge, nursing guides, expert lectures, patient experiencesharing, and product trial applications, and provides reliable nursing information and services. Additionally, Zhendehas set up the Perfectleg information station on Xiaohongshu to disseminate knowledge about varicose veins andprevention. We have also implemented a regular release mechanism for healthcare knowledge, with our postsreceiving over 100,000 views annually. Our goal is to spread more healthcare knowledge to countless homes tosupport their health anytime, anywhere.
Super Absorbent Polyurethane Foam: Reducing the Hassle of Dressing Changes for Patients
Smart Surgical Waste Liquid Collection System: Reducing the Risk of Cross-Contamination in Surgery
Bionic Construction of Alginate-Based Composite Hydrogels and In Situ Induction of Skin Wound Repair
Chronic wounds are often colonized by various types ofbacteria. Zhende Medical’s polyurethane foam dressings caneffectively capture bacteria and internalize them into the coreof the dressing, thereby reducing the number of living bacteria.For wounds with a lot of exudate, the dressings are designedto maximize their duration of use, decreasing the frequency ofchanges. This helps to minimize additional damage, protectthe surrounding skin, and enhance wound healing efficiency.Additionally, fewer dressing changes can reduce the economicburden and psychological stress on patients, improving theiroverall comfort.
The collection and handling of surgical waste liquids in the operating room are crucial for hospital infection control andpreventing occupational exposure for medical staff. Many hospitals still rely on traditional waste collection methods, whichpose higher infection risks. Zhende Medical’s smart surgical waste collection system offers an advanced solution formanaging surgical waste liquids. It enhances hospital infection control and reduces occupational exposure risks by providingclosed management of surgical waste fluids from collection to disposal, separating operators from surgical waste fluids, andstrengthening safety protection of operating room personnel.
Zhende Medical is committed to addressing industry painpoints through innovative product development. Embracingthe concept of natural protein-polysaccharide compositeswith multifunctional properties, we are developing protein-polysaccharide composite multifunctional hydrogel dressingsbased on sodium alginate, chitosan, and gelatin, using anenvironmentally friendly solvent system. The products areexpected to offer high flexibility, excellent infection resistance,good biocompatibility, and enhanced wound healingcapabilities. They will address the limitations of traditionalhydrogel dressings, such as restricted expansion performanceand lack of biological activity, meeting the needs of chronicwounds and better serving wound care and recovery.Meanwhile, we fully understand the pressures and challenges faced by healthcare professionals. We focus ondeveloping efficient and intelligent medical management systems and auxiliary tools. By introducing advancedtechnologies and products, we aim to help medical staff streamline workflows, ensure safety, enhance efficiency,and drive comprehensive improvements in medical quality.
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
To Be A ReliablePartner
CareEmployeeGrowth
PromoteGreenDevelopment
Product Quality and SafetyProduct quality stays at the core of Zhende Medical's long-term development. Holding fast to the quality policyof "providing safe, effective, and competitive medical products is the responsibility of everyone at Zhende". Weemphasize on the quality strategy of "precision, changes under control, seeking truth and being practical, andcustomer first". We have established and improved the quality management system, and passed certifications suchas ISO 9001, ISO 13485, EU MDR, EU MDD, US FDA QSR, ISO 13485 Sterilization, PPE UKCA/CE, etc. During thereporting period, all certificates of Zhende were within their validity period.
Zhende has established a Quality and Regulations Center at the primary level, led by the Chief Quality Officer. Thecenter includes the Quality Management Department, the CQS Department, and the Regulatory Affairs Department.It overseas the establishment and maintenance of our quality management system. During the reporting period,Zhende implemented a series of measures to enhance product quality management.
Zhende has established a product recall system. In line with the Measures for the Administration of Medical DeviceRecalls issued by the National Medical Products Administration (NMPA) and relevant recall regulations from the U.S.FDA, we have developed internal regulations such as the Management Measures for Medical Device Recalls in Chinaand the Management Regulations for Medical Device Recalls in the U.S., which define the responsible parties, recallcategories, and procedures. Additionally, regular mock recalls are conducted. During the reporting period, no productrecalls occurred.
During the reporting period, we received administrative punishment from Shaoxing Administration for MarketRegulation due to issues with advertising on e-commerce platforms. Subsequently, we conducted specializedtraining sessions to enhance employees' awareness of legal and regulatory requirements.
Quality Service: Contributing ZhendeStrength to Customer Success
Quality CertificationsCertificatesCoverage
ISO 13485 Certificate
Zhende Medical, Xuchang Zhende, Xuchang Zhengde, Henan Zhende andother subsidiariesISO 13485 Sterilization CertificateZhende Medical, Xuchang Zhende, Xuchang Zhengde and other subsidiaries
Product Quality Management Measures
Product Recall Process
Quality InspectionIn 2023, we conducted inspections and supervision of incoming materials, production and all other stages in strictcompliance with internal quality management requirements, thereby increasing finished product acceptance rate.For outsourced testing, we select institutions with CNAS or CMA accreditation according to CNAS-CL-01 (ISO/IEC17025:2017). We regularly evaluate these service providers, update their qualifications, and maintain a directory ofoutsourced testing service suppliers.
Quality Audit
During the reporting period, we conducted two comprehensive internal audits in accordance with the Regulations for theQuality Management in the Production of Medical Devices, ISO 13485, EU MDR and U.S. FDA regulations, to enhance itsquality management system.Additionally, we underwent several external audits, including unannounced inspection by Zhejiang Medical ProductsAdministration, GPM audit by the Inspector Management Center of Zhejiang Medical Products Administration, third-partyaudits by TUV and Intertek, and multiple client audits, all of which were successfully passed.
Process Optimization
During the reporting period, leveraging the “I CARE” process improvement initiative launched in 2023, we completed severalquality management-related process improvements. These improvements covered areas such as general new products,novel products, change control, risk management, registration processes, UDI procedures (both at home and abroad),batch record processes, supplier management, customer complaint handling, corrective and preventive actions, CNAS-related processes, and document control. These efforts aimed to improve and strengthen our quality management system,ensuring its effectiveness and suitability.Quality Awareness TrainingWe have consistently valued employee training in customer service-related knowledge and skills. Based on legal regulations,quality management system requirements, and market and customer concerns, we have organized and planned 15 trainingsessions on topics such as quality management systems for medical devices, medical regulations in the EU, the U.S. andthe U.K., risk management, and basic microbiology. These sessions, including internal training and external training, involved1,000 participants in total.
Non-conforming Product Control
Zhende strictly controls non-conforming products according to its non-conforming product control procedures. Any productthat fails to meet the specified inspection requirements will be classified as non-conforming and must be handled throughrework, concession acceptance, rejection, or scrap.
Health Hazard
Assessment
SeverityGrading
Developing aRecall Plan
Issuing aRecall Notice
Executinga Recall
Implementand ValidateCorrectiveMeasures
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
To Be A ReliablePartnerCareEmployeeGrowth
PromoteGreenDevelopment
Customer ServiceZhende's customers mainly include domestic and foreign corporate customers and individual consumers. OurQuality and Regulations Center has established the Customer Quality Service (CQS) and After-Sales Quality Servicedepartments. A series of management procedures have been developed, including the Process Control ProcedureRelated to Customers, the Design and Development Control Procedure, the Alert System Management Procedure, theAfter-Sales Supervision Control Procedure, the Medical Device Adverse Event Management Procedure, the CustomerComplaint Control Procedure, the Customer Satisfaction Survey Control Procedure, and the Risk ManagementProcedure. We have set up a pre-sales and post-sales customer service framework, providing support through variouschannels such as customer service hotline, corporate email, and internal OA processes.During the reporting period, we optimized the customer complaint process by establishing a linkage mechanismbetween customer service personnel and manufacturing facilities. This effort improved customer complaint handlingefficiency, allowing for quicker responses to and resolution of customer feedback and complaints.In 2023, we achieved a 100% complaint handling rate. Customer complaints were primarily related to productappearance, and our factories have initiated targeted correction to address these issues.Meanwhile, we conducted customer satisfaction surveys, distributing questionnaires to previous clients, distributorclients, and retail customers. The overall Net Promoter Score (NPS) reached 83.89%.To further enhance our customer service capabilities, we conducted training sessions for relevant personnel ontopics such as “Customer Service", "Provision of Additional Customer Services", and "Customer Service ManagementExpert." These efforts strengthened employees' awareness of customer service, improved their professional skills, andincreased overall customer satisfaction.
Data Security and Privacy ProtectionTo protect our data security and customer privacy, Zhende has implemented data security protection measures instrict compliance with relevant laws and regulations.Zhende has established regulations such as the Information Security Management Regulations, and takenmultiple measures to safeguard data security and customer privacy. During the reporting period, Zhende achievedCybersecurity Classified Protection 2.0 certification.
During the reporting period, there were no incidents where Zhende was punished by relevant authorities for violatinglaws and regulations related to information security and privacy protection.
Information Security Management MeasuresRisk identification and assessmentZhende introduced Sangfor's MSS (Managed Security Service) and conducted a pre-operation security assessment.This assessment involved identifying security flaws in areas such as strategy management, security protection, assetmanagement, vulnerabilities, attack threats, and security incidents and developing improvement plans accordingly. Thesemeasures have significantly enhanced the overall security protection level of Zhende.
Supplier information security management
Zhende has established an audit team to assess the risks of proposed or adopted computer systems and to audit potentialsuppliers.Emergency response
Zhende has established the Procedure for Managing Computer System Emergency Incidents to standardize the responseprocedures for issues such as system crashes, freezes, blue (or black) screens, communication interruptions, and systemfailures. This ensures that in the event of emergencies like system failures, security breaches, or data loss, there will be aprompt and accurate response, and that these issues will be addressed quickly and effectively.Information security awareness training
To foster an information security culture, we offered employee training on information security awareness. Topics includedcommon information security risks and response strategies, and our information security management regulations andrequirements. 3,102 employees participated in such training sessions.
Information security technology
Zhende conducts remote application level backup for disarster recovery in data centers in Shaoxing and Xuchang.We have established a data backup system that backs up date every two hours.Viruses are automatically detected and removed weekly through Endpoint Detection & Response (EDR).Zhende's electronic file encryption is achieved through the Green-Shield terminal security management system.Additionally, we conduct system permission management which ensures that employees in different positions can onlycheck system information within their corresponding authority.
Information security audit
Zhende underwent third-party vulnerability assessments and performed targeted remediation based on the vulnerabilityscan reports provided by the third party.
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
To Be A ReliablePartnerCareEmployeeGrowth
PromoteGreenDevelopment
Industry Exchange and CooperationPartners are one of the important stakeholders of Zhende Medical. Adhering to the corporate value of "sharingsuccess", we continue to advance mutual benefit and win-win results in the industry by participating in industryplatform construction, joint training of industry talents, standard formulation, industry exchange activities.Zhende actively engages in industry platform construction, taking the lead in establishing industry technologyalliances and the Consumables Branch of the Zhejiang Medical Device Industry Association, to promote healthy andorderly industry growth. Additionally, Zhende strengthens industry-university-research cooperation, partnering withvocational institutions in Shaoxing, Henan and other regions to jointly develop industry professionals through “orderclass”, framework agreement and other means. Furthermore, we have participated in the formulation (revision) ofindustry and group standards multiple times, facilitating overall advancement of the industry and product qualityenhancement.
Supply Chain ManagementZhende Medical categorizes suppliers from multiple perspectives to achieve comprehensive management. Basedon category positioning and the relationship with suppliers, and in view of our actual business situation, suppliersare divided into three levels: core, important, and general. According to the annual performance evaluation ofsuppliers and other factors, suppliers are divided into grades of A, B, C, and D. Over and above, Zhende formulatesdifferentiated procurement management strategies for suppliers of different levels to maximize the effectiveness ofsupplier management resources.Sustainable Supply ChainSupply chain quality management and stability together constitute the core of our supply chain sustainability, supportingus to maintain competitive advantage when facing market fluctuations and uncertainties.In supplier quality management, adhering to the idea of “shared concept, value collaboration, process compliance, andplatform coordination”, we have established a life-cycle management system that covers every stage from suppliersourcing to elimination. We have also formulated rules such as the Qualified Supplier Admission Management Rules, theQualified Supplier Assessment Management Rules, the Supplier Quota Management Rules, and the Supplier Rectificationand Elimination Management Rules to standardize life-cycle management of suppliers.We actively take part in or organize industry exchange activities to gain genuine feedback from clinical practicethrough in-depth interactions with medical professionals.
Win-Win Cooperation: Sharing ZhendeExperience for Industry Development
Participation in Standard Formulation in 2023
Participation in Industry Exchange Activities in 2023
Zhende led and participated in the formulation (revision) of
national standards.
GB-19082-2023 Disposable Protective Clothing for Medical UseGB19083-2023 Protective Face Mask for Medical UseGB/T 42770-2023 Stoma Plugs
Zhende completed the formulation (revision) of
industrystandards, of which 5 were mainly drafted by us.
Medical Elastic Bandage - Characteristics and Test Methods forBasic PerformanceMedical Thrombosis Prophylaxis HosieryMedical Compression Hosiery for VaricesSterile Surgical Films for Single UseContact Wound Dressing - Part 1: Paraffin GauzeZhende completed the formulation (revision) of
groupstandards, of which
were completed during the reporting period.
Transparent DressingsEvaluation and Grading of Mask BreathabilityZhende is currently engaged in the drafting of
industry standards and
group standards.
Spring/Fall China International Medical Equipment Fair
(CMEF)
The 6th China Nursing Quality ConferenceThe 17th Congress of Chinese Society of Critical Care
Medicine
Annual National Venous Infusion Therapy Conference
of the Chinese Nursing AssociationThe 20th National Academic Conference on Stoma,
Wound and Incontinence Care
The 6th Session of the 4
thAnnual Conference onOperating Room Nursing in the Six Provinces and One
City of East ChinaThe 19thNational Disinfection Supply CenterDevelopment Forum
The 27thNational Conference on Operating Room
NursingCardiovascular Health Conference
2023 Annual Academic Conference of the Chinese
Burn AssociationFourth-Management Meeting - Zhende NursingManagement Experts Exchange Seminar
Zhende National Finals of Typical VTE Nursing and
Prevention CasesZhende Stress Treatment and VTE Prevention Seminar
Summit on Long-Term Care for Ostomy, Wounds, and
Incontinence
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
To Be A ReliablePartner
CareEmployeeGrowth
PromoteGreenDevelopment
Life-cycle Supplier Quality Management
Qualified Supplier
Admission
Qualified SupplierAssessment
Supplier QuotaManagement
Supplier Rectification
and Elimination
After a procurementor change requestis initiated by therequesting unit, reviewthe shortlist of suppliers;procurement engineersare responsiblefor collecting andmaintaining supplierqualifications andinformation.
The ProcurementDepartment then initiatesthe introduction ofshortlisted suppliers, andconducts written and on-site supplier audits.
For suppliers thatpass the audit,conduct material/service certificationaccording to theMaterial ConfirmationManagementRegulations. Signcooperation agreementwith qualified suppliers,and rate them.
Conduct supplierperformanceassessmentaccording to thesupplier relationshipmanagement plan.
Calculate supplierperformance by theinformation system,calibrate the results,and generate theQualified SupplierPeriodic AssessmentForm and the Summaryof Periodic Assessmentof Qualified Suppliers.
Organize performanceinterview withsuppliers.
Work out suppliermanagementmeasures based onthe assessment andinterview results, andconduct annual audits.
Formulate and adjustmonthly and annualquota plans based onsupplier assessmentresults, latest materialprices, and supplierquality/deliveryperformance.
Execute ordersaccording to theapproved quota plans,monitor performancemonthly, make timelyadjustments, andgenerate cause analysisand improvementplans.
Require rectification forsuppliers with supplyabnormalities andpoor performance, andtrack their rectificationprogress.
Propose supplierelimination andrisk control plan forsuppliers that fail topass the review, andeliminate suppliersaccording to the plan.
The Quality Management Department of the Quality and Regulations Center conducts periodic on-site audits ofsuppliers and completes the Supplier Audit Report to ensure the suppliers meet our quality control requirements.Additionally, we encourage supplier quality improvement by setting up a Quality Progress Award at the annualsupplier conference to recognize suppliers that have demonstrated outstanding performance in quality.In terms of supplier stability, to meet the needs of multiple parties and ensure sufficient reserves of suppliers,Zhende has formulated detailed rules such as Supply Market Research and Supplier Shortlisting Management Rulesand Potential Supplier Admission and Management Rules. These can fully meet the R&D, production and supplyneeds of new and old products, and continuously optimize supplier structure. We have improved the SRM digitalplatform with effective implementation, ensuring the sustainable development of the supply chain.
Furthermore, Zhende has incorporated supplier environmental and social responsibility targets into the performance evalu-ations of procurement personnel to support the effective development of a sustainable supply chain.
In addition, Zhende has established the At-risk Supplier Management Rules to regularly identify and assess supplierrisks, and to promptly and effectively monitor and address any issues that arise during cooperation. This helpssafeguard project progress and ongoing supply needs while protecting our interests. Furthermore, Zhende hasdeveloped the Supplier Survey Form to systematically collect and review information on suppliers’ capabilities andsystem development. This keeps us informed about supplier trends and ensures the stability and efficiency of ourcollaborative relationships.
Shared conceptAutomationInformatizationManagement abilityProfessional ability
ProcesscomplianceSupplier lifecyclemanagement
Behavioralcompliance
Platformcoordination
Using the SRMplatform to linkZhende with suppliers
Valuecollaboration
Information sharingTechnical cooperation
Cost collaboration
Xuchang Zhende No.1 Factory Developed Coated Paper for Dressing Boxes to Enhance Supply Chain StabilityXuchang Zhende Factory I previously used PS55 coated paperand Tyvek for its dressing box products. However, coating forPS55 has to be done abroad, while Tyvek 2FS faces extremelyhigh supply challenges, with a risk of supply disruption in 2021,thus poor supply chain stability. To address this issue andreduce the risk of material shortages, Zhende has independentlydeveloped coated paper for dressing boxes by combiningpurchased base paper with in-house coating. This new approachreduced reliance on external raw materials and enhanced thesustainability of the supply chain.Responsible Supply ChainWhile strengthening our own ESG management, we are aware that environmental and social risks in the supply chain canalso increase our ESG risks.In 2023, we conducted environmental and social risk assessments on 653 suppliers through a questionnaire survey. The re-sults showed that 32.16% of the suppliers had conducted assessments of their environmental and social impacts. Addition-ally, 12 suppliers underwent third-party human rights audits, and 2 suppliers achieved REACH certication for chemicals.We have signed the Social Responsibility Commitment with over 470 suppliers. Additionally, social responsibility require-ments are outlined in the Procurement Agreements, specifying our expectations for suppliers' environmental and social per-formance.At Zhende's 2023 annual supplier conference, we held a special session to raise supplier awareness about environmentaland social responsibilities. We encouraged compliance in supplier behavior, introduced our ESG system, and communi-cated our requirements for suppliers regarding environmental and social responsibilities. Additionally, we conducted ESGinformation exchange meetings online and oine, where we shared details about our ESG management and human rightsaudit processes.
2023 Zhende Supplier ConferenceESG Information Exchange Meeting
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Progress in SustainableDevelopmentManagement
[Topic II] Zhende MakesInnovations to DriveGreen Developmentwith Lean Production
[Topic II] Zhende MakesInnovations to Drive GreenDevelopment with LeanProduction
ImproveGovernanceSystem
To Be A ReliablePartnerCareEmployeeGrowth
PromoteGreenDevelopment
Zhende Medical engages in various charitable activities to give back to society to the best of its ability. We haveestablished the Management of External Donations to oversee our donation activities in a unified manner. Duringthe reporting period, Zhende made donations to support relief efforts in the Beijing-Tianjin-Hebei flood and theearthquake in Linxia, Gansu Province, students taking the college entrance exam, and the Asian Games.Upholding the idea of giving back to society, Zhende actively participates in community volunteer activities.Formulated the Management Rules for Volunteer Teams and other regulations that cover both the headquarters andour subsidiaries, we have standardized and improved the organization of volunteer teams, enhancing the qualityand efficiency of volunteer services. During the reporting period, we donated RMB 3.245 million, and 320 employeesoffered 1,953 hours of volunteer services.
Community Engagement: Fulfilling ZhendeResponsibilities for a Better Society
Volunteer Activities in 2023
Plant a Tree for the Asian Games·Spring Fitness Walk at Yunsong Village
Zhende Cares for “Children of the Stars”
Sending Warmth to Front-line Workers to Support the Asian Games
In April 2023, Zhende Medical’s volunteer team, in collaboration with the Youth League Committee of Yuecheng District,organized a volunteer activity themed "Plant a Tree for the Asian Games·Spring Fitness Walk at Yunsong Village" in PotangYunsong Village, Jianhu Sub-district. We expect to raise public awareness of environmental protection and encourage greenactions to foster a better future.
In May 2023, Zhende Medical, in partnership with Haichang Ocean Park and JD Health, hosted a "Park Adventure with Pets"event to raise awareness for autistic children, also known as "children of the stars", and provide them with companionship andhealth support. With ongoing attention to these children, we expect early, accurate, and persistent interventions to help themintegrate into society and lead independent lives.
In 2023, as the Asian Games approached, the construction sites of the venues and various infrastructure projects in Shaoxingwere bustling with outdoor workers. To help the front-line volunteers stay cool, in July 2023, Zhende Medical, in partnership withthe Shaoxing Red Cross Society, donated cooling vests worth over RMB 1.93 million to front-line units.
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
ESG Performance Tables
ESG Performance Tables
Employee-related Performance
DisclosuresUnit202120222023
Employee Recruitment and Hiring
Number of incidents punished for violatingemployment and labor laws and regulations
#000Total number of employees
Person8,0278,4856,717By employmentform
Full-time employees under alabor contract
Person8,0278,4856,717Full-time employees under labordispatch
Person581676621By gender
MalePerson2,7592,9162,085FemalePerson5,2685,5694,632By work area
Chinese MainlandPerson7,6558,1826,185Hong Kong, Macao, Taiwan, andoverseas
Person372303532By age
>50Person18920137330-50Person6,4416,8075,133<30Person1,3971,4771,211By managementlevel
Front-line employeesPerson7,7108,1486,422Mid-level managementPerson248268232Senior managementPerson696963Percentage of female employees%65.6365.6368.96Percentage of female senior executives (abovedirector level)
%20.2920.2923.80Percentage of ethnic minorities%0.160.150.19Percentage of ethnic minorities and/or vulnerablegroups in senior management team
%1.71.71.9Coverage of diversity-related training%100100100Total number of new hires
Person1,7001,4101,886
DisclosuresUnit202120222023
By employmentform
Full-time employees under alabor contract
Person1,7001,4101,886Full-time employees under labordispatch
Person465412248By gender
MalePerson431589485FemalePerson1,2699781,401By work area
Chinese MainlandPerson1,7001,4101,886Hong Kong, Macao, Taiwan, andoverseas
Person000By age
>50Person21251930-50Person9127841,094<30Person767601773Percentage of new hires%21.1816.6228.08By gender
Male%15.6220.2023.26Female%24.0917.5630.25By age
>50%11.1112.445.0930-50%14.1611.5221.31<30%54.9040.6963.83By work area
Chinese Mainland%22.2117.2330.49Hong Kong, Macao, Taiwan, andoverseas
%0.000.000.00Employee turnover rate
Person9559523,654By gender
MalePerson3474321,316FemalePerson6085202,338By age
>50Person352918230-50Person6195672,375<30Person3013561,097Employee turnover rate
%11.9011.2254.40By gender
Male%12.5814.8163.12Female%11.5409.3450.47By age
>50%18.5214.4348.7930-50%09.6108.3346.27<30%21.5524.1090.59
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ESG Performance Tables
DisclosuresUnit202120222023
Employee Rights and BenefitsLabor contract signing rate%100100100Employee compensation and benefits expenses
RMB10,000
70,15298,65082,296New hire satisfaction
%86.092.093.3Employee Net Promoter Score (E-NPS)
%60.0262.8569.33Unadjusted average gender pay gap%108.2106.6105.3Ratio of highest annual salary to median annual salary%16.3613.7613.40Number of trade union membersPerson8,0278,4856,717Percentage of employees who are trade union members%100100100Percentage of employees covered by collectivebargaining agreements
%100100100Percentage of operational sites assessed for humanrights impacts or risks
%81.8254.55100.00Percentage of operational sites with labor andhuman rights certification
%50.0050.0063.64Number of employees eligible for parental leavePerson807159By gender
MalePerson242019FemalePerson565140Number of employees taking parental leavePerson807159By gender
MalePerson242019FemalePerson565140Number of employees returning to work afterparental leave
Person807159By gender
MalePerson242019FemalePerson565140Parental leave return rate%100100100By gender
Male%100100100Female%100100100Number of employees still employed 12 monthsafter returning from parental leave
Person817469
DisclosuresUnit202120222023By gender
MalePerson302833
FemalePerson514636Parental leave retention rate
%/92.5097.18By gender
Male%/75.00100Female%/82.1470.59Number of employee discrimination incidents#000
Employee Training and DevelopmentNumber of male employees receiving trainingPerson2,7592,9162,085Number of female employees receiving trainingPerson5,2685,5694,632Employee training coverage%100100100Total hours of employee trainingHour630,120560,859435,076Average duration of employee training
Hours/Person
78.5066.1064.77By gender
Male
Hours/Person
85.1858.6563.60Female
Hours/Person
75.0070.0065.30Total training hours for front-line employeesHour605,311.5537,130.5404,586.0Number of front-line employees receiving trainingPerson7,7108,1486,422Average training hours per front-line employee
Hours/Person
78.5165.9263.00Total training hours for mid-level management
Hour19,84018,76025,954Number of mid-level management receiving trainingPerson248268232Average training hours per mid-level management
Hours/Person
80.0070.00111.87
Total training hours for senior managementHour4,9684,9684,536Number of senior management receiving trainingPerson696963Average training hours per senior management
Hours/Person
72.0072.0072.00Percentage of employees receiving regularperformance and career development appraisals
%100100100By gender
Male%100100100Female%100100100
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ESG Performance Tables
DisclosuresUnit202120222023
By managementlevel
Percentage of seniormanagement receiving regularperformance and careerdevelopment appraisals
%100100100Percentage of mid-levelmanagement receiving regularperformance and careerdevelopment appraisals
%100100100Percentage of front-lineemployees receiving regularperformance and careerdevelopment appraisals
%100100100Coverage of employee training
%100100100Average training hours per employee
Hours/Person
796665Occupational Health and Safety
Number of incidents punished for violatingoccupational health and safety laws and regulations
#000Number of employees with occupational diseasesPerson000Injury rate per thousand employees
%1.000.590.45Number of workplace injuriesPerson853Number of safety incidents#853Number of injury incidents#853Number of lost-time incidents#853Number of severe injury incidents#000Number of deaths due to work-related health issuesPerson000Number of recordable work-related health issues#000Total working hoursHour15,604,48816,494,84013,057,848Recordable injury rate per million working hours
Cases/Hour
0.510.300.23Total work hours lost due to injuriesHour1,1281,272624Number of deaths due to work-related injuriesPerson000Percentage of deaths due to work-related injuries%000Number of workdays lost due to injuriesDay14115978
1. The total number of employees and the total number of new hires are consistent with data disclosed in our annual report and include full-time
labor contract employees from both the parent company and major subsidiaries. Part-time and other types of employees are not included.
2. In 2023, Zhende adjusted its product structure and streamlined personnel in certain departments, leading to an increase in employee turnover.
3. Employee turnover rate = (Number of employees who left / Total number of employees) * 100%
4. Including salaries, bonuses, allowances, subsidies, and other benefits provided to employees.
5. Based on the results of new hire satisfaction survey.
6. Employee Net Promoter Score (E-NPS) = Percentage of employees willing to recommend Zhende to friends and family - Percentage of employees
unwilling to recommend - Employee voluntary resignation rate.
7. Parental leave retention rate = (Number of employees who returned to work and remained employed for 12 months after parental leave / Number
of employees who returned to work after parental leave in the previous year) * 100%
8. In 2023, Zhende strengthened training for mid-level management to improve their leadership.
9. Coverage of employee training = (Number of employees who received training / Total number of employees) * 100%
10. Average training hours per employee = Total training hours / Total number of employees
11. Injury rate per thousand employees = Number of workplace injuries / (Total number of employees / 1,000)
12. Recordable injury rate per million working hours = Number of workplace injuries / Total number of working hours * 1,000,000
13. Percentage of employees receiving occupational health and safety training = (Number of employees receiving occupational health and safety
training / Total number of employees) * 100%
R&D and Innovation Performance
DisclosuresUnit202120222023
R&D and Innovation
R&D investment
RMB10,000
15,31422,70013,895Number of R&D personnelPerson622656546Number of R&D projects#438578512
Intellectual Property ProtectionNumber of trademark applications during thereporting period
#1039159Number of trademarks granted during the reporting period#3374717Number of patent applications during the reporting period#16713332Number of patents granted during the reporting period#21212179Total number of patent applications#1,0771,1201,152Total number of patents granted#537635871
DisclosuresUnit202120222023
Percentage of operational sites with health andsafety risk assessments
%100100100Percentage of employees receiving occupationalhealth and safety training
%66.3368.2375.21
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
ESG Performance Tables
Products and Customer Services PerformanceEnvironmental Performance
Community Public Welfare Performance
DisclosuresUnit202120222023
Quality Management of Products and ServicesNumber of incidents punished for violating productand service related laws and regulations
#111Number of products recalled due to safety andhealth issues
#000Number of legal and regulatory violations related tohealth and safety in products and services provided
#000Customer Relationship ManagementCustomer NetPromoter Score(C-NPS)
Domestic market%80.2388.1183.89International market%35.1230.5152.80Total number of complaints received about productsand services
#1,7161,569976Handling rate of complaints received about productsand services
%100100100Data Security and Customer Privacy ProtectionNumber of people covered by personal informationsecurity training for employees
Person8,0278,4856,717Number of incidents punished for violatinginformation security laws and regulations
#000Number of confirmed incidents of leakage, theft orloss of client information
#000
DisclosuresUnit202120222023
Environmental Management System
Number of employees participating inenvironmental protection training
Person3,0823,1543,102Percentage of employees who have receivedtraining on specific environmental issues
%5.35.75.6Percentage of workplaces that haveundergone environmental risk assessment
%909090Percentage of operational sites withenvironmental certification
%50.0050.0066.67Number of incidents punished forviolating environmental protection lawsand regulations
#100Total fines imposed for violations ofenvironmental protection laws and regulations
RMB10,000
25.8200Annual investment in environmentalprotection
RMB10,000
558.281,504.001,048.14
Energy Management
Total purchased electricityMWh81,285.7891,169.3960,796.85Purchased electricity from non-renewablesources
MWh81,285.7890,928.4460,796.85Purchased electricity from renewablesources
MWh0240.950Self-generated solar photovoltaic electricityMWh0966.8510,165.05Natural gas consumptionm
1,241,7081,156,3161,252,191Purchased steam consumptionGJ434,887.8465,487.5358,558.8Gasoline consumption for official vehiclesLiter80,000.9972,575.3572,940.00Diesel consumption for official vehicleLiter34,198.2026,462.6422,191.01Diesel consumption for fixed sourcesTon4.004.004.15LPG consumptionTon4.295.593.76Renewable energy consumption
MWh01,207.8010,165.05Total energy consumptionMWh216,675.71234,977.01175,875.29Percentage of renewable energy in totalenergy consumption
%00.515.78Packaging materialusage by type
PaperTon42,00037,30025,000PlasticTon14,30010,500600
DisclosuresUnit202120222023Total investment in public welfare and charity
RMB10,000
294.20527.40324.57
Number of employees participating in voluntaryactivities
Person160184320Total time of employee volunteer serviceHour8009261,953
1. This pertains to the sales of Zhende's products in the domestic market. In 2023, we had one regulatory violation related to non-compliant medical
device advertising. Following the incident, we promptly removed the advertisement, redesigned the content, and submitted it for review. Futureadvertisements will strictly adhere to relevant regulations.
2. Based on the results of customer satisfaction survey, including data from both domestic and international markets. Starting from 2022, we
adopted the Customer Net Promoter Score (C-NPS) method, replacing the customer satisfaction survey method used in 2020 and 2021. CalculationFormula: Customer Net Promoter Score (C-NPS) = Percentage of promoters - Percentage of detractors.
3. Handling rate of complaints received about products and services = (Number of complaints about products and services that have been handled /
Total number of complaints received about products and services) * 100%.
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
ESG Performance Tables
DisclosuresUnit202120222023Total usage of finished productpackaging materials
Ton56,30047,80025,600Usage of environment-friendly packagingmaterials for finished products
Ton28,15026,29016,640Percentage of environment-friendlypackaging materials for finished products
%505565Total usage of non-renewable materialsTon14,30010,500600Total usage of renewable materialsTon42,00037,30025,000Percentage of recycled products and theirpackaging materials
%74.6078.0397.66Total usage of recycled packaging materialsTon27,80025,60016,000Percentage of reusable and recyclable materials%49.3853.5662.50Water Resources ManagementWaterconsumption bysource
Surface water
Cubicmeters
744,857715,042884,940Municipal watersupply
Cubicmeters
345,801416,263436,568Total water consumption
Cubicmeters
1,090,6581,131,3051,321,508Total recycled water usage
Cubicmeters
733,855.5659,592.7745,372.9Percentage of recycled water%67.2958.3056.40
Wastewater Management
Industrial wastewater dischargeTon293,916.8384,321.7483,204.5
Chemical oxygen demand (COD) dischargeTon47.5965.1765.77Biological oxygen demand (BOD) dischargeTon55.1552.2345.1NH
-N dischargeTon1.151.831.75
Waste Gas ManagementTotal emissions of waste gases
Cubicmeters
209,965,214.3209,965,214.3187,788,814.9Particulate matter (PM) emissionskg11314498Nitrogen oxides (NOx) emissionskg243310212Sulfur oxides (SOx) emissionskg124140130
Waste Management
Quantity ofnon-hazardouswaste bydisposal method
Incinerated withenergy recovery
Ton590.69495.59394.44Recycled/reusedTon3,624.254,690.784,314.03Other
Ton18.219.827.3
DisclosuresUnit202120222023
Total non-hazardous wasteTonTon5,206.24,735.8Non-hazardous waste density (per unit ofrevenue)
Ton/RMB10,000
0.0080.0080.011Quantity ofhazardous wasteby disposalmethod
Incinerated withenergy recovery
Ton18.177.5129.74Other
Ton41.6032.3235.84Total hazardous wasteTon59.7739.8365.58Hazardous waste density (per unit ofrevenue)
Ton/RMB10,000
0.000120.000060.00016Total waste generatedTon4,292.915,246.004,801.35Total waste recycledTon1,465.261,094.48880.84Percentage of total operational wastetransferred from landfills
%0.34 0.21 0.18Climate Change Mitigation and Adaption
Scope 1 GHG emissionsTon of CO
e2,995.652,776.90 2,969.77Scope 2 GHG emission (location-based)Ton of CO
e93,097.57101,966.74 73,293.15Total GHG emission (Scope 1 + Scope 2)(location-based)
Ton of CO
e96,093.22 104,743.64 76,262.92GHG emission density (Scope 1 + Scope
2) (per unit of revenue) (location-based))
Ton ofCO
e/RMB
10,000
0.19 0.17 0.18
1.In 2021, Zhende’s Suzhou manufacturing base received an administrative penalty from the Suzhou Industrial Park Ecological and Environmental
Bureau for violating relevant regulations. After receiving the notice of the penalty decision, we took the matter very seriously. We promptly paid the finein full, established a special rectification team, and completed the rectifications.
2.The energy management-related data covers all operational sites in China.
3.Renewable energy includes self-generated solar photovoltaic electricity and green power certificates.
4.The waste management-related data covers all operational sites in China.
5.Uniformly transported by third-party solid waste disposal units, and the treatment method is unknown.
6.Notes:
(1) The GHG emission data covers all operational sites in China.
(2) Reference standard: The calculation of Scope 1 and Scope 2 greenhouse gases refers to the GHG Protocol Corporate Accounting and Reporting
Standard (Revised Edition), the ISO14064-1:2018 Greenhouse Gases - Part 1: Specification with Guidance at the Organization Level for Quantificationand Reporting of Greenhouse Gas Emissions and Removals, and the General Guideline of the Greenhouse Gas Emissions Accounting and Reporting forIndustrial Enterprises (GB/T32150-2015), the Guidelines for Accounting Methods and Reporting of Greenhouse Gas Emissions of Enterprises - PowerGeneration Facilities and other accounting standards.
(3) Emission factors: The greenhouse gas types calculated in this report include CO
, CH
, and N
O in Scope 1,and CO
in Scope 2. The selected GWPvalue comes from IPCCAR6, where CH
corresponds to a GWP value of 27.9 tCO
e/tCH
, and N2O corresponds to a GWP value of 273 tCO
e/tN
O.The default values of emission factors used in Scope 1 are derived from the Guidelines for Accounting and Reporting Greenhouse Gas Emissionsfrom Land Transport Enterprises (Trial) (2015), China Energy Statistical Yearbook (2021), and Guidelines for Accounting and Reporting GreenhouseGas Emissions from Enterprises of Other Industries (Trial) (2015). The emission factors used in Scope 2 are calculated based on relevant documentsissued by Ministry of Ecology and Environment of China. Among them, the emission factor of the power grid is 0.5568 tCO
e/MWh, as published in theAnnouncement on the Release of the 2021 Power Sector CO
Emission Factor.
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
ESG Performance Tables
DisclosuresUnit202120222023
Number of corruption lawsuits filedand concluded against the issuer or itsemployees during the reporting period
#000Total number of confirmed incidents(in which employees were dismissed ordisciplined due to corruption)
#000Total number of confirmed incidents(where contracts with business partnerswere terminated or not renewed owing tocorruption-related irregularities)
#000Anti-unfair CompetitionNumber of cases in which Zhende wassanctioned by the relevant authoritiesfor unfair competition practices in itsoperations or violations of the antitrustand anti-monopoly laws
#000
Governance Performance
Economic Performance
DisclosuresUnit202120222023
Corporate Governance
Number of board membersPerson999Number of female directorsPerson333Number of independent directorsPerson333Percentage of female directors on theboard of directors
%33.3333.3333.33Number of employee supervisorsPerson111Number of shareholders' meetings#433Number of board of directors' meetings#9126Number of supervisory board meetings#796
Anti-corruption and Anti-briberyNumber of directors participating in anti-corruption training
Person999Percentage of directors covered by anti-corruption training
%100100100Total hours of anti-corruption trainingreceived by directors
Hour363636Hours of anti-corruption training perdirector
Hours/Person
Number of employees participating inanti-corruption training
Person3,0823,1543,102Percentage of employees covered byanti-corruption training
%38.4037.1746.18Total hours of anti-corruption trainingreceived by employees
Hour12,32812,61612,408Hours of anti-corruption training peremployee
Hours/Person
1.541.491.85Number of suppliers participating in anti-corruption training
#507696684Percentage of operational sites that haveundergone corruption risk assessments
%100100100Percentage of sites audited for specificbusiness ethics issues
%100100100Percentage of at-risk trading partnerscovered by the corruption and informationsecurity due diligence process
%100100100Number of reported incidents ofcorruption and bribery received
#
DisclosuresUnit202120222023
Economic Performance
Social contribution per share
RMB 6.257.725.19Basic earnings per shareRMB/Share2.642.870.74Operating income
RMB10,000
509,157613,763412,704Net profit attributable to ordinary shareholdersafter extraordinary gains and losses
RMB10,000
50,20470,19718,958Total tax payments
RMB10,000
9,90026,63033,172Total employee salaries and benefits paidby Zhende
RMB10,000
70,15298,65082,296Interest on borrowings from banks andother creditors
RMB10,000
1,6903,3542,893Value created for other stakeholders,such as donations to external parties
RMB10,000
294527324Other social costs due to environmentalpollution, etc.
RMB10,000
25.8200Total shares issued by ZhendeShare227,204,736266,451,202266,451,202
1.Social contribution per share = Basic earnings per share + (Total tax payments + Salaries paid to employees + Interest on borrowings from banks
and other creditors + Value created for other stakeholders, such as donations to external parties - Other social costs due to environmental pollution,etc.)/Total shares issued by Zhende.
99100
2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Report Benchmarking Index Table
Supply Chain Performance
DisclosuresUnit202120222023
Supply Chain ManagementNumber of suppliers in the ChineseMainland
#478667653Number of suppliers in Hong Kong,Macao, Taiwan and overseas
#292931Total number of suppliers#507696684Percentage of target suppliers that havesigned the Supplier Code of Conduct
%//100Percentage of suppliers signing contractswith environmental, labor, and humanrights provisions
%//10Number of suppliers assessed forenvironmental, labor, and ethical aspects
#/165653Percentage of suppliers assessed forenvironmental, labor, and ethical issuesamong all suppliers
%/23.7195.47Percentage of target suppliers that haveundergone on-site CSR audits
%/53.3380.00Number of suppliers assessed forenvironmental, labor, and ethical aspectsand failed
#
Percentage of suppliers assessedfor environmental, labor, and ethicalaspects and passed
%100100100Number of suppliers identified ashaving actual and potential significantnegative social and environmentalimpacts and receiving support inimplementing corrective action plans
#
Percentage of suppliers agreeing toimprovements after environmental andsocial impact assessments
%/7666Percentage of procurement staffwho have completed sustainableprocurement training
%100100100Percentage of procurement spending onlocal suppliers
%96.9498.9696.39
1.During the reporting period, Zhende strengthened ESG management of key suppliers. Suppliers with higher procurement amounts were included
in the target scope of on-site assessments in areas such as environmental impact, labor practices, and ethics, and were evaluated through on-siteinspections and comprehensive scoring. The total procurement amount from these key suppliers included in the ESG on-site audits accounted forover 50% of Zhende’s total procurement.
2.The procurement spending on local suppliers is specifically for those located in the same area as Zhende's key operational sites.
Report Benchmarking Index TableBenchmarking Index Table of the Guidelines No.1 for Self-Regulation of ListedCompanies on the Shanghai Stock Exchange: Standardized Operations (RevisedDecember 2023)
Terms and Disclosure ContentReport Chapter
8.1 Overview
Sustainable Development Management
8.2 Operating principles
Anti-corruption and Business EthicsAnti-unfair CompetitionIntellectual Property Protection
8.3 Social responsibility planning and working mechanism
Sustainable Development Management
8.4 Social contribution per share
ESG Performance Tables
8.5 Disclosure in CSR reports
About This Report
8.6
：
(I) Construction of social responsibility system
Zhende has disclosed its systems, measures,and performance in environmental, social, andcorporate governance aspects in this report.The speci?c content is detailed in the relevantchapters of the report.
8.6
：
(II) Deficiencies and problems in the fulfillment ofcorporate social responsibility
8.6
：
(III) Improvement measures and detailed schedule
8.7 Employee rights and interests
Protecting Employees’ Rights and Interests,Guaranteeing Compliant and Equal EmploymentFulfilling the Primary Responsibility, EnsuringOccupational Health and Safety
8.8
：
(I) Compliance with environmental protection laws andindustry standards
Environmental Management SystemEmissions and Waste Management
8.8
：
(II) Environmental protection plansEnvironmental Management System
8.8
：
(III) Use of natural resources
Water Resources ManagementEnergy Management
8.8
：
(IV) Disposal of pollutantsEmissions and Waste Management
8.8
：
(V) Pollution control facilitiesEmissions and Waste Management
8.8
：
(VI) Environmental protection-related taxes and feesNot applicable
8.8
：
(VII) Environmental safety in the supply chainSupply Chain Management
8.8
：
(VIII) Other environmental protection responsibilitiesZero Carbon Driven: Addressing Climate Change
8.9
：
(I) Environmental protection policies, goals, and resultsEnvironmental Management System
8.9
：
(II) Total annual resource consumptionESG Performance Tables
8.9
：
(III) Investment in environmental protection andenvironmental technology development
Emissions and Waste ManagementESG Performance Tables
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2023 Sustainability ReportAnd ESG (Environmental, Socialand Governance) Report
Report Benchmarking Index Table
Terms and Disclosure ContentReport Chapter
8.9
：
(IV) Types, quantities, concentrations, and destinationsof pollutants emitted
Emissions and Waste Management
8.9
：
(V) Construction and operation of environmentalprotection facilities
Environmental Management System
8.9
：
(VI) Waste treatment and disposal, and waste productrecycling
Emissions and Waste Management
8.9
：
(VII) Voluntary agreements signed with environmentalprotection authorities
Not applicable
8.9
：
(VIII) Rewards from environmental protection authoritiesNot applicable
8.9
：
(IX) Other voluntary disclosure information
Environmental Management SystemEmissions and Waste ManagementWater Resources ManagementEnergy ManagementZero Carbon Driven: Addressing Climate Change
8.10
：
(I) New, modified, or expanded construction projects orsignificant investments
Environmental Management System
8.10
：
(II) Violations of environmental laws and regulationsand resulting penalties
Not applicable
8.10
：
(III) Major environmental lawsuits or assets beingseized, frozen, detained, pledged, or mortgaged
Not applicable
8.10
：
(IV) Key pollutant discharge unitsNot applicable
8.10
：
(V) Impact of newly enacted laws and regulations onthe company
Environmental Management System
8.10
：
(VI) Major environmental protection eventsNot applicable
8.11 Environmental inspectionEnvironmental Management System
8.12Information disclosure by key pollutant discharge unitsNot applicable
8.13
：
(I) Product safety laws and regulations, and industry standardsProduct Quality and Safety
8.13
：
(II) Production environment and processesProduct Quality and Safety
8.13
：
(III) Product quality safety assurance mechanisms andemergency response plans
Product Quality and Safety
8.13
：
(IV) Other production and product safety responsibilitiesProduct Quality and Safety
8.14
：
(I) Employee management systems and violationhandling measures
Employee Recruitment and HiringEmployee Rights and Benefits
8.14
：
(II) Prevention of occupational hazards and associatedsafety measures
Fulfilling the Primary Responsibility, EnsuringOccupational Health and Safety
8.14
：
(III) Employee training
A Comprehensive Talent Development SystemSmooth Career Development Channels
8.14
：
(IV) Other employee rights protection responsibilities
Employee Recruitment and HiringEmployee Rights and Benefits
8.15 Scientific ethicsR&D and Innovation
GRI Standards (2021)Note
From January 1, 2023 to December 31, 2023, Zhende Medical prepared thereport in compliance with the GRI Standards.GRI 1 usedGRI 1: Foundation 2021Applicable GRI industry standardsNo applicable industry standardsZhende Medical has developed the Benchmarking Index Table based on the GRI principles combined with thematerial topics identified and the information disclosed in the 2023 Sustainability Report and ESG Report. Zhendehas determined that the following topics are non-material and thus will not be included in the Benchmarking IndexTable: GRI 202 (Market Presence), GRI 207 (Tax), GRI 301 (Materials), GRI 304 (Biodiversity), GRI 410 (SecurityPractices), GRI 411 (Rights of Indigenous Peoples), GRI 415 (Public Policy), and GRI 417 (Marketing and Labeling).
GRIStandards
DisclosureLocation
Notes to OmissionRequiredOmissions
ReasonExplanationGeneral Disclosures
GRI 2:
GeneralDisclosures(2021)
2-1 Organizational detailsAbout Zhende Medical
Not applicable for “omission”2-2 Entities included in theorganization’s sustainabilityreporting
About This Report2-3 Reporting period, frequencyand contact point
About This Report2-4 Restatements ofinformation
ESG Performance Tables2-5 External assuranceAssurance Statement2-6 Activities, value chain andother business relationships
About Zhende Medical2-7 Employees
Employee Recruitment and
Hiring
ESG Performance Tables2-8 Workers who are notemployees
ESG Performance Tables2-9 Governance structure andcomposition
Governance-First Principle:
Protecting Investors’ Rights
and Interests2-10 Nomination andselection of the highestgovernance body
Governance-First Principle:
Protecting Investors’ Rights
and Interests
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Report Benchmarking Index Table
GRIStandards
DisclosureLocation
Notes to OmissionRequiredOmissions
ReasonExplanation
GRI 2:
GeneralDisclosures(2021)
2-11 Chair of the highestgovernance body
See the 2023 Annual Reportof Zhende Medical for details（http://www.cninfo.com.cn/new/disclosure/detail?stockCode=603301&announcementId=1219879722&orgId=9900035299&announcementTime=2024-04-27）2-12 Role of the highestgovernance body inoverseeing the managementof impacts
Governance-First Principle:
Protecting Investors’ Rightsand InterestsSustainable ManagementArchitecture andResponsibilities2-13 Delegation ofresponsibility for managingimpacts
Governance-First Principle:
Protecting Investors’ Rightsand InterestsSustainable ManagementArchitecture andResponsibilities2-14 Role of the highestgovernance body insustainability reporting
Sustainable ManagementArchitecture andResponsibilities2-15 Conflicts of interest
Protection of investors’ rightsand interestsAnti-corruption and BusinessEthics2-16 Communication ofcritical concerns
Stakeholder Communication2-17 Collective knowledge ofthe highest governance body
Sustainable Development
Management2-18 Evaluation of theperformance of the highestgovernance body
Omitted
2-18-a2-18-b2-18-c
Conden-tiality re-strictions
This informa-tion will notbe disclosedfor the timebeing, due tocondentialityrequirements.2-19 Remuneration policiesOmitted
2-19-a2-19-b
Conden-tiality re-strictions
This informa-tion will notbe disclosedfor the timebeing, due tocondentialityrequirements.GRI 2:
GeneralDisclosures(2021)
2-20 Process to determineremuneration
Omitted
2-20-a2-20-b
Conden-tiality re-strictions
This informa-tion will notbe disclosedfor the timebeing , due tocondentialityrequirements.
GRIStandards
DisclosureLocation
Notes to OmissionRequiredOmissions
ReasonExplanation
GRI 2:
GeneralDisclosures(2021)
2-21 Annual totalcompensation ratio
ESG Performance Tables2-22 Statement onsustainable developmentstrategy
Sustainable Development
Management Strategy
Message from the Chairman2-23 Policy commitments
Anti-corruption and Business
Ethics2-24 Embedding policycommitments
Compliant Operations
Anti-corruption and Business
Ethics
Anti-Unfair Competition
Intellectual Property Protection2-25 Processes to remediatenegative impacts
Employee Recruitment and
Hiring2-26 Mechanisms for seekingadvice and raising concerns
Anti-corruption and Business
Ethics2-27 Compliance with lawsand regulations
Improve Governance System
Care Employee Growth
Promote Green Development
To Be A Reliable Partner2-28 Membershipassociations
About Zhende Medical-
Company Events in 2023
Industry Exchange and
Cooperation2-29 Approach to stakeholderengagement
Sustainable Development
Management-Participation of
Stakeholders2-30 Collective bargainingagreements
Employee Rights and BenefitsMaterial TopicsGRI 3:
MaterialTopics(2021)
3-1 Process to determinematerial topics
Sustainable Development
Management-Analysis of
Material Topics3-2 List of material topics
Sustainable Development
Management-Analysis of
Material Topicsnomic PerformanceGRI 3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainable Development
Management-Analysis of
Material Topics
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GRIStandards
DisclosureLocation
Notes to OmissionRequiredOmissions
ReasonExplanation
GRI 201:
EconomicPerformance(2016)
201-1 Direct economic valuegenerated and distributed
ESG Performance Tables201-2 Financial implicationsand other risks andopportunities due to climatechange
Zero Carbon Driven:
Addressing Climate Change201-3 Defined benefitplan obligations and otherretirement plans
Omitted
201-3-a201-3-b201-3-c201-3-d201-3-e
Informationmissing/incomplete
This informa-tion has notbeen collected,so it cannot bedisclosed forthe time being.201-4 Financial assistancereceived from government
Omitted
201-4-a201-4-b201-4-c
Informationmissing/incomplete
This informa-tion has notbeen collected,so it cannot bedisclosed forthe time being.
Indirect Economic ImpactsGRI 3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainable Development
Management-Analysis of
Material Topics
Community Engagement:
Fulfilling Zhende Responsibilities
for a Better SocietyGRI 203:
IndirectEconomicImpacts(2016)
203-1 Infrastructureinvestments and servicessupported
Community Engagement:
Fulfilling Zhende Responsibilities
for a Better Society203-2 Significant indirecteconomic impacts
Community Engagement:
Fulfilling Zhende Responsibilities
for a Better SocietyProcurement PracticesGRI 3:
MaterialTopics (2021)
3-3 Management of materialtopics
Supply Chain ManagementGRI 204:
ProcurementPractices(2016)
204-1 Proportion of spendingon local suppliers
ESG Performance TablesAnti-corruptionGRI 3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainable Development
Management-Analysis of
Material Topics
Anti-corruption and Business
Ethics
GRIStandards
DisclosureLocation
Notes to OmissionRequiredOmissions
ReasonExplanationGRI 205:
Anti-corruption(2016)
205-1 Operations assessedfor risks related to corruption
ESG Performance Tables205-2 Communication andtraining about anti-corruptionpolicies and procedures
Anti-corruption and Business
Ethics205-3 Confirmed incidents ofcorruption and actions taken
ESG Performance TablesAnti-competitive BehaviorGRI 3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainable Development
Management-Analysis of Ma-
terial Topics
Anti-Unfair Competition
GRI 206:
Anti-competitiveBehavior(2016)
206-1 Legal actions for anti-competitive behavior, anti-trust, and monopoly practices
ESG Performance Tables
Energy
GRI 3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainable Development
Management-Analysis of Ma-
terial Topics
Energy Management
GRI 302:
Energy(2016)
302-1 Energy consumptionwithin the organization
Energy Management
ESG Performance Tables302-2 Energy consumptionoutside of the organization
Omitted
302-2-a302-2-b302-2-c
Informationmissing/incomplete
This informa-tion has notbeen collected,so it cannot bedisclosed forthe time being.302-3 Energy intensity
Energy Management
ESG Performance Tables302-4 Reduction of energyconsumption
Energy Management302-5 Reduction in energyrequirements of products andservices
Energy ManagementWater and EffluentsGRI 3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainable Development
Management-Analysis of
Material Topics
Water Resources Management
Emissions and Waste
Management
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GRIStandards
DisclosureLocation
Notes to OmissionRequiredOmissions
ReasonExplanation
GRI 303:
Water andEffluents(2018)
303-1 Interactions with wateras a shared resource
Water Resources ManagementEmissions and WasteManagement303-2 Management of waterdischarge-related impacts
Emissions and WasteManagement303-3 Water withdrawalESG Performance Tables303-4 Water dischargeESG Performance Tables303-5 Water consumptionESG Performance Tables
Emissions
GRI 3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainable DevelopmentManagement-Analysis ofMaterial TopicsEmissions and WasteManagementZero Carbon Driven:
Addressing Climate ChangeGRI 305:
Emissions(2016)
305-1 Direct (Scope 1) GHGemissions
Zero Carbon Driven:
Addressing Climate Change
ESG Performance Tables305-2 Energy indirect (Scope
2) GHG emissions
Zero Carbon Driven:
Addressing Climate Change
ESG Performance Tables305-3 Other indirect (Scope 3)GHG emissions
Omitted
305-3-a305-3-b305-3-c305-3-d305-3-e305-3-f305-3-g
Informationmissing/incomplete
This informa-tion has notbeen collected,so it cannot bedisclosed forthe time being.305-4 GHG emissionsintensity
Omitted305-5 Reduction of GHGemissions
ESG Performance Tables305-6 Emissions of ozone-depleting substances (ODS)
Zero Carbon Driven:
Addressing Climate Change
305-6-a305-6-b305-6-c305-6-d
Informationmissing/incomplete
This informa-tion has notbeen collected,so it cannot bedisclosed forthe time being.305-6 Emissions of ozone-depleting substances (ODS)
Omitted
GRIStandards
DisclosureLocation
Notes to OmissionRequiredOmissions
ReasonExplanationWasteGRI 3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainable DevelopmentManagement-Analysis of Ma-terial TopicsEmissions and Waste Man-agement
GRI 306:
Waste(2020)
306-1 Waste generation andsignificant waste-related impacts
Emissions and WasteManagement306-2 Management ofsignificant waste-relatedimpact
Emissions and WasteManagement306-3 Waste generatedESG Performance Tables306-4 Waste diverted fromdisposal
ESG Performance Tables306-5 Waste directed to disposalESG Performance Tables
Supplier Environmental Assessment
GRI 3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainable Development
Management-Analysis of
Material Topics
Supply Chain ManagementGRI 308:
SupplierEnvironmentalAssessment(2016)
308-1 New suppliers thatwere screened usingenvironmental criteria
Omitted308-1-a
Informationmissing/incomplete
This informa-tion has notbeen collected,so it cannot bedisclosed forthe time being.308-2 Negative environmentalimpacts in the supply chainand actions taken
ESG Performance Tables
EmploymentGRI 3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainable DevelopmentManagement-Analysis ofMaterial TopicsEmployee Recruitment andHiringGRI 401:
Employment(2016)
401-1 New employee hiresand employee turnover
ESG Performance Tables401-2 Benefits provided tofull-time employees that arenot provided to temporary orpart-time employees
Employee Rights and Benefits401-3 Parental leaveESG Performance Tables
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GRIStandards
DisclosureLocation
Notes to OmissionRequiredOmissions
ReasonExplanationLabor/Management Relations
GRI 3:
MaterialTopics (2021)
3-3 Management of materialtopics
Sustainable DevelopmentManagement-Analysis ofMaterial TopicsEmployee Rights and Benefits
GRI 402:
Labor/ManagementRelations(2016)
402-1 Minimum noticeperiods regarding operationalchanges
Omitted
402-1-a402-1-b
Informationmissing/incomplete
This infor-mation istemporarilyunavailable, soit cannot befully disclosed.Occupational Health and SafetyGRI 3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainable DevelopmentManagement-Analysis ofMaterial TopicsFulfilling the PrimaryResponsibility, EnsuringOccupational Health and Safety
GRI 403:
OccupationalHealthand Safety(2018)
403-1Occupational healthand safety managementsystem
Fulfilling the PrimaryResponsibility, EnsuringOccupational Health and Safety403-2 Hazard identification,risk assessment, and incidentinvestigation
Fulfilling the PrimaryResponsibility, EnsuringOccupational Health and Safety403-3 Occupational healthservices
Fulfilling the PrimaryResponsibility, EnsuringOccupational Health and Safety403-4 Worker participation,consultation, and communicationon occupational health and safety
Fulfilling the PrimaryResponsibility, EnsuringOccupational Health and Safety403-5 Worker training onoccupational health andsafety
Fulfilling the PrimaryResponsibility, EnsuringOccupational Health and Safety
GRI 403:
OccupationalHealthand Safety(2018)
403-6 Promotion of workerhealth
Fulfilling the PrimaryResponsibility, EnsuringOccupational Health and Safety403-7 Prevention andmitigation of occupationalhealth and safety impactsdirectly linked by businessrelationships
Fulfilling the PrimaryResponsibility, EnsuringOccupational Health and Safety403-8 Workers covered byan occupational health andsafety management system
Fulfilling the PrimaryResponsibility, EnsuringOccupational Health and SafetyESG Performance Tables403-9 Work-related injuriesESG Performance Tables403-10 Work-related ill healthESG Performance Tables
GRIStandards
DisclosureLocation
Notes to OmissionRequiredOmissions
ReasonExplanationTraining and EducationGRI 3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainable DevelopmentManagement-Analysis of Ma-terial TopicsA Comprehensive Talent De-velopment System
GRI 404:
TrainingandEducation(2016)
404-1 Average hours oftraining per year per employee
ESG Performance Tables404-2 Programs for upgradingemployee skills and transitionassistance programs
A Comprehensive Talent
Development System404-3 Percentage ofemployees receiving regularperformance and careerdevelopment reviews
ESG Performance Tables
Diversity and Equal OpportunityGRI 3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainable DevelopmentManagement-Analysis of Ma-terial TopicsEmployee Recruitment andHiringGRI 405:
Diversityand EqualOpportunity(2016)
405-1 Diversity of governancebodies and employees
ESG Performance Tables405-2 Ratio of basic salaryand remuneration of womento men
ESG Performance TablesNon-discriminationGRI 3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainable Development
Management-Analysis of Ma-
terial Topics
Employee Recruitment and
HiringGRI 406:
Non-discrimi-nation (2016)
406-1 Incidents ofdiscrimination and correctiveactions taken
Employee Recruitment and
HiringFreedom of Association and Collective BargainingGRI 3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainable Development
Management-Analysis of Ma-
terial Topics
Employee Recruitment and
Hiring
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GRIStandards
DisclosureLocation
Notes to OmissionRequiredOmissions
ReasonExplanation
GRI 407:
Freedom ofAssociationand Collec-tive Bargain-ing (2016)
407-1 Operations andsuppliers in which the right tofreedom of association andcollective bargaining may beat risk
Omitted
407-1-a407-1-b
Informationmissing/incomplete
Thisinformationis temporarilyunavailable，so it cannot befully disclosed.Child Labor
GRI 3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainable DevelopmentManagement-Analysis ofMaterial TopicsEmployee Recruitment andHiring
GRI 408:
Child Labor(2016)
408-1 Operations andsuppliers at significant riskfor incidents of child labor
ESG Performance TablesEmployee Recruitment andHiringForced or Compulsory LaborGRI 3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainable DevelopmentManagement-Analysis ofMaterial TopicsEmployee Recruitment andHiringGRI 409:
Forced orCompulsoryLabor (2016)
409-1 Operations andsuppliers at significant riskfor incidents of forced orcompulsory labor
ESG Performance TablesEmployee Recruitment andHiringLocal CommunitiesGRI 3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainable DevelopmentManagement-Analysis ofMaterial TopicsEnvironmental ManagementSystem
GRI 413:
LocalCommunities(2016)
413-1 Operations with localcommunity engagement,impact assessments, anddevelopment programs
Omitted413-1-a
Informationmissing/incomplete
Thisinformationis temporarilyunavailable，so it cannot befully disclosed.413-2 Operations withsignificant actual andpotential negative impacts onlocal communities
Omitted413-2-a
Informationmissing/incomplete
Thisinformationis temporarilyunavailable，so it cannot befully disclosed.
GRIStandards
DisclosureLocation
Notes to OmissionRequiredOmissions
ReasonExplanationSupplier Social AssessmentGRI 3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainable DevelopmentManagement-Analysis ofMaterial TopicsSupply Chain Management
GRI 414:
SupplierSocialAssessment(2016)
414-1 New suppliers thatwere screened using socialcriteria
Omitted414-1-a
Informationmissing/incomplete
Thisinformationhas not beencollected，soit cannot bedisclosed forthe time being.414-2 Negative socialimpacts in the supply chainand actions taken
ESG Performance Tables
414-2-c414-2-e
Informationmissing/incomplete
Thisinformationhas not beencollected，soit cannot bedisclosed forthe time being.Customer Health and SafetyGRI 3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainable DevelopmentManagement-Analysis ofMaterial TopicsProduct Quality and SafetyGRI 416:
CustomerHealthand Safety(2016)
416-1 Assessment of thehealth and safety impactsof product and servicecategories
Omitted416-1-a
Informationmissing/incomplete
Thisinformationis temporarilyunavailable，so it cannot befully disclosed.416-2 Incidents of non-compliance concerning thehealth and safety impacts ofproducts and services
Product Quality and SafetyESG Performance TablesCustomer PrivacyGRI 3:
MaterialTopics(2021)
3-3 Management of materialtopics
Sustainable DevelopmentManagement-Analysis ofMaterial TopicsData Security and PrivacyProtectionGRI 418:
CustomerPrivacy(2016)
418-1 Substantiatedcomplaints concerningbreaches of customer privacyand losses of customer data
Data Security and PrivacyProtectionESG Performance Tables
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Report Benchmarking Index Table
Benchmarking Index Table of SDGsSDGsTargetsReport Chapter
1.1 By 2030, eradicate extreme poverty for all people everywhere,
currently measured as people living on less than $1.90 a day.
1.2 By 2030, reduce at least by half the proportion of men, women
and children of all ages living in poverty in all its dimensionsaccording to national definitions.
Innovation Leadership:
Providing Zhende Solutionsfor Health ManagementCommunity Engagement:
Fulfilling ZhendeResponsibilities for a BetterSociety
3.8 Access to safe, effective, quality and affordable essential
medicines and vaccines for all.
Innovation Leadership:
Providing Zhende Solutionsfor Health ManagementCommunity Engagement:
Fulfilling ZhendeResponsibilities for a BetterSociety
4.4 Substantially increase the number of youth and adults who
have relevant skills, including technical and vocational skills, foremployment, decent jobs and entrepreneurship.
Sharing Achievements ofDevelopment, BoostingGrow of Talents
5.5 Ensure women’s full and effective participation and equal
opportunities for leadership at all levels of decision-making inpolitical, economic and public life.
Protecting Employees’Rights and Interests,Guaranteeing Compliantand Equal Employment
6.3 By 2030, improve water quality by reducing pollution,
eliminating dumping and minimizing release of hazardouschemicals and materials, halving the proportion of untreatedwastewater and substantially increasing recycling and safe reuseglobally.
6.4 By 2030, substantially increase water-use efficiency across
all sectors and ensure sustainable withdrawals and supply offreshwater to address water scarcity and substantially reduce thenumber of people suffering from water scarcity.
Emissions and WasteManagementWater ResourcesManagement
7.2 By 2030, increase substantially the share of renewable energy
in the global energy mix.
7.3 By 2030, double the global rate of improvement in energy
efficiency.
Energy ManagementZero Carbon Driven:
Addressing Climate Change
SDGsTargetsReport Chapter
8.5 By 2030, achieve full and productive employment and decent
work for all women and men, including for young people andpersons with disabilities, and equal pay for work of equal value.
8.7 Take immediate and effective measures to eradicate forced
labour, end modern slavery and human trafficking and securethe prohibition and elimination of the worst forms of child labour,including recruitment and use of child soldiers, and by 2025 endchild labour in all its forms.
8.8 Protect labour rights and promote safe and secure working
environments for all workers, including migrant workers, inparticular women migrants, and those in precarious employment.
Protecting Employees’Rights and Interests,Guaranteeing Compliantand Equal EmploymentSharing Achievements ofDevelopment, BoostingGrow of Talents
12.5 By 2030, substantially reduce waste generation through
prevention, reduction, recycling and reuse.
12.6 Encourage companies, especially large and transnational
companies, to adopt sustainable practices and to integratesustainability information into their reporting cycle.
R&D and InnovationEmissions and WasteManagementEnergy ManagementZero Carbon Driven:
Addressing Climate Change
13.3 Improve education, awareness-raising and human and
institutional capacity on climate change mitigation, adaptation,impact reduction and early warning.
Zero Carbon Driven:
Addressing Climate Change
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Assurance Statement
Assurance Statement