Suzhou Dongshan PrecisionManufacturing Co., Ltd.2023 Environmental, Social and Governance
(ESG) Report
April 2024
Table of Contents
Reporting Instructions ...... 1
Message from the CEO ...... 4
1. About Dongshan Precision ............................................................................................................ 6
2. Sustainable Development Governance ......................................................................................... 8
3. Excellent Governance for Stable and Efficient Operations ......................................................... 15
3.1. Corporate Governance ..................................................................................................... 15
3.2. Business Ethics ................................................................................................................ 21
3.3. Digital Intelligence Transformation ................................................................................. 25
3.4. Information Security and Privacy Protection ................................................................... 31
4. Collaboration for Mutual Benefit to Build a Sustainable Supply Chain ..................................... 35
4.1. Establishment of a High-quality Supply Chain ................................................................ 35
4.2. Supply Chain Risk Management and Control .................................................................. 37
4.3. Responsible Mining Procurement .................................................................................... 42
5. Continuous Improvement of Product Quality and Competitiveness by Insisting on Quality ..... 455.1. Driven by Innovation ....................................................................................................... 45
5.2. Quality Priority ................................................................................................................ 49
5.3. Professional Services ....................................................................................................... 62
6. Building a Clean and Low-carbon Production System for Environmental Friendliness ............ 67
6.1. Environmental Impact Management ................................................................................ 67
6.2. Expansion of Green Energy ............................................................................................. 71
6.3. Addressing Climate Change ............................................................................................. 72
6.4. Water Resources Management ......................................................................................... 78
6.5. Emissions and Waste Management .................................................................................. 80
6.6. Biodiversity Conservation ................................................................................................ 84
7. Working Together for a Better Future Based on People-Oriented Philosophy ............................ 86
7.1. Talent Development ......................................................................................................... 86
7.2. Community Construction ............................................................................................... 119
8. Appendix ................................................................................................................................... 122
Appendix I: Key Performance Table ...... 122
Appendix II: Index of Indicators ...... 125
Note:
This document is a translated version of the Chinese ESG Report 2023 ("2023 年ESG报告"). In caseof any discrepancies, the ESG Report 2023 published in the Chinese version shall prevail. The fullChinese ESG Report 2023 is available at www.cninfo.com.cn.
2023 Environmental, Social, and Governance (ESG) Report of Suzhou Dongshan Precision Manufacturing Co., Ltd.
Reporting InstructionsThe 2023 Environmental, Social and Governance Report of Suzhou Dongshan PrecisionManufacturing Co., Ltd. (the “Report”) aims to disclose the Company’s philosophy, managementpractices, and key performance in sustainable development to stakeholders, responding tostakeholders’ expectations and concerns adequately.Report BoundaryThe Report mainly discloses information and key performance of Suzhou Dongshan PrecisionManufacturing Co., Ltd. and its branches and subsidiaries in the fulfillment of economic, social, andenvironmental responsibilities in 2023.ReferenceFor ease of presentation and readability, Dongshan Precision and its branches and subsidiariesare referred to by the abbreviations listed in the table below throughout this Report.
| Company Name | Abbreviation |
| Suzhou Dongshan Precision Manufacturing Co., Ltd. | Dongshan Precision, the Company, we, us or our |
| Multi-Fineline Electronix, Inc. | MFLEX |
| Multek Group (Hong Kong) Limited | Multek |
| MFLEX Suzhou Co., Ltd. | MFLEX Suzhou |
| MFLEX Yancheng Co., Ltd. | MFLEX Yancheng |
| Multek Industries Limited | Multek Industries |
| Multek Electronics Limited | Multek Electronics |
| Multek Zhuhai Limited | Multek Zhuhai |
| Multek China Ltd. | Multek China |
| Yancheng Dongshan Precision Manufacturing Co., Ltd. | Yancheng Dongshan |
| Mutto Optronics Technology Co., Ltd. | Mutto Optronics |
| Suzhou RF Top Electronic Communication Co., Ltd. | RF Top Electronic |
| DSBJ Pte.Ltd. | DSG |
| Suzhou JDI Electronics Inc. | JDI Electronics |
| Suzhou Chengjia Precision Manufacturing Co., Ltd. | Suzhou Chengjia |
| Dongguan Dongshan Precision Manufacturing Co., Ltd. | Dongguan Dongshan |
| Suzhou Dongyue New Energy Technology Co., Ltd. | Suzhou Dongyue |
| Yancheng Dongshan Communication Technology Co., Ltd. | Yancheng Communication |
| Yancheng Dongchuang Precision Manufacturing Co., Ltd. | Yancheng Dongchuang |
| Suzhou Yongchuang Metal Science and Technology Co., Ltd. | Yongchuang Tech |
Reporting Period
The period is from January 1, 2023, to December 31, 2023, and extends appropriately toprevious and subsequent years.Basis for PreparationGRI Sustainability Reporting Standards (GRI Standards) from Global Sustainability StandardsBoard; Guidelines No.17 on Self-Regulation of Listed Companies – Sustainability Report (Trial)from Shenzhen Stock Exchange (SZSE); Guidance on Social Responsibility Reporting(GB/T36001-2015) from the National Standard of the People’s Republic of China; and SustainableDevelopment Goals of the United Nations (SDGs).Principles for Preparation
This Report is subject to the following four principles, namely, “Materiality ”, “Impartially”,
“Quantification”, and “Consistency”.? Materiality. The Company conducts materiality assessment to identify and assess ESG topics
that are material to our business and internal and external stakeholders, ensuring that the Report
focuses on relevant disclosure. For a more detailed overview of the materiality assessment
process and results, please refer to the ESG Topics Management section of the Report.? Impartiality. The content of this Report reflects objective facts, providing unbiased disclosure
of both positive and negative information related to the Company, and impartially stating the
Company’s efforts across various aspects of ESG. During the reporting period, we have
identified no significant negative events that should have been disclosed but were not to do so,
and that had a major impact.? Quantification. In this Report, the Company discloses ESG quantitative performance
indicators and establishes quantitative performance targets where applicable. The measurement
standards, methods, assumptions, and/or calculation tools for key performance indicators in
this Report, as well as the sources of conversion factors used, have been explained in the
respective sections, where applicable.? Consistency. This Report maintains consistency in the statistical and disclosure methods of
the same indicators across different reporting periods. Any changes in statistical and disclosuremethods will be fully explained in the report notes, facilitating meaningful analysis andevaluation by relevant parties.Source of Information
All information data used in this Report are derived from the Company’s official documents,statistical reports, financial reports, and sustainable development practice information of differentunits summarized and reviewed by the Company’s responsible management department. In case ofany discrepancies between the relevant financial data and the Company’s annual report, the annualreport shall prevail. Unless otherwise specified, the currency amounts mentioned in this Report aredenominated in Renminbi (RMB).Reliability Assurance
The Company undertakes that the content of this Report contains no false records, misleadingstatements, or major omissions, and the Company is responsible for the truthfulness and accuracyof the content.Access to the Report
Welcome to visit the Company’s official website at www.dsbj.com to access the electronicversion of the Report.
2023 Environmental, Social, and Governance (ESG) Report of Suzhou Dongshan Precision Manufacturing Co., Ltd.
Message from the CEO2023 was an extraordinary year for Dongshan Precision. We upheld our passion with proactiveattitudes, navigating through a timeline filled with memories of challenges and unwavering in ourquest for excellence. Continuously bolstering our capacity for sustainable developmentmanagement, we are committed to creating value for our customers and society.With the corporate spirit of “Breakthrough, Diversity, Simplicity and Journey”, we stay true tothe founding principles of the manufacturing industry. Dongshan Precision has transitioned fromlocalization to internationalization and, ultimately, to globalization, meeting the demands of thetimes and forging a distinctive path of development.
The mega-trend of accelerated industrial change, coupled with the restructuring of the globallandscape, is once again reshaping the value landscape for enterprises, particularly manufacturingones. Today’s enterprises are no longer mere combinations of “one factory + one factory” as in thepast; they have evolved into “industrial clusters” integrating various elements such as the innovationchain, industry chain, capital chain, and talent chain. Society’s criteria for evaluating enterprisevalue are also evolving, transitioning from singular financial indicators like revenue and profit toencompass the sustainable development capabilities of enterprises. In navigating the clash betweensocietal values and short-term financial objectives, enterprises must strive for a win-win situationand establish a sustainable path for business development.We believe that the essence of ESG extends beyond the mere act of producing a report. Itinvolves seamlessly integrating sustainable development principles into corporate strategies,intricately woven into the very fabric of business operations. To achieve this, we must align ourdevelopment strategies with our management ethos and daily operations, identifying pivotal areasfor the systematical reshaping of our entire framework. This commitment not only upholds andcreates long-term corporate values but also serves as the cornerstone for achieving the sustainabledevelopment of the Company and the entire industry chain. Dongshan Precision actively analyzeskey industry topics and their relationship with existing businesses, while also planning for futurespaces available for sustainable development. We convert ESG practices into a long-term, strategic
development philosophy and continuously pursue our phased goals through ongoing tracking andinvestment in ESG-related indicators.
We are committed to upholding compliant operations while continuously enhancing corporategovernance. Guided by principles of green development, we have seamlessly integrated carbonreduction strategies into our corporate strategy and operations. Advocating continuous innovation,we actively engage in long-term practices. With strong support from all stakeholders and therelentless efforts of our employees, we have successfully implemented and accelerated our newenergy strategy. This strategy not only propels our future development but also spearheads ourtransition to clean energy processes. Moving forward, we remain dedicated to contributing to thegreen transformation of the energy sector, which entails innovating cutting-edge technologyproducts, promoting green manufacturing, and striving to reduce resource consumption.As we dedicate ourselves to corporate innovation and business development, we leverage ourcapabilities and strengths to fulfill our societal responsibilities. We prioritize the welfare of specialemployee groups and extend full support to public welfare causes such as livelihoods, education,and environmental conservation. We are also honored to receive recognition and accolades fromindustry institutions, media platforms, and the general public, continuously enriching the foundationof our corporate development.Despite encountering numerous challenges, our original aspiration remains unwavering. Weare committed to continually moving forward with the times and aligning ourselves with the globallandscape.
2023 Environmental, Social, and Governance (ESG) Report of Suzhou Dongshan Precision Manufacturing Co., Ltd.
1. About Dongshan Precision
Headquartered in Suzhou, Jiangsu Province, Suzhou Dongshan Precision Manufacturing Co.,Ltd (stock code: 002384.SZ) is committed to developing into a core component supplier forintelligent interconnection and global connectivity. With the mission of “building a better connectedworld for tomorrow”, and the vision of “building a 100-billion advanced and intelligentmanufacturing platform”, the Company has gradually formed three major segments, namely,electronic circuit, photoelectric display, and precision manufacturing, by expanding and optimizingits main businesses through internal development and external acquisition. According to Prismark’srevenue estimate for global PCB companies, the Company ranked among the top three in the worldin 2023. Additionally, in the same year, the Company was ranked 413th among the top 500 privateenterprises in China and 267th among the top 500 private manufacturing enterprises in China,boasting over 70 wholly-owned and holding companies.In recent years, leveraging its technological advantages in the consumer electronics andcommunication equipment industries, the Company has actively explored new tracks in the newenergy vehicle industry. We have established a dual-wheel drive strategy with consumer electronicsand new energy as the two core tracks, seizing the new market opportunity brought by new energywhile continuously improving the quality and efficiency of the consumer electronics business. TheCompany strongly believes that clean technology is crucial for developing a sustainable future. Byadopting new energy as its primary strategic focus, the Company is embarking on a new journeytowards green and high-quality development.
| Electronic circuit | The Company is dedicated to providing comprehensive electronic circuit (PCB) products and services for industry-leading customers. We offer our customers one-stop solutions involving design, R&D, and manufacturing of electronic circuit (PCB) products according to customized requirements for different downstream end products. Our products are widely used in mobile phones, computers, AR/VR, wearable devices, energy storage, servers, communication equipment, new energy vehicles and energy storage, industrial control equipment, etc. |
| Photoelectric display | The Company is a well-known manufacturer of touch display modules and LED display components in the industry. Among our products, the touch panel products are mainly used in the medium and large-size display field, including products such as laptops, tablets, smart home systems, and on-board displays; the LCM products are mainly used in the small and medium-size display field, including products like smartphones and tablets; and the LED products are widely used in indoor and outdoor small-pitch high-definition display screens. The Company is actively expanding the application of photoelectric display products in the vehicle domain. |
| Precision manufacturing | The Company mainly provides precision metal structural parts and components for customers from new energy vehicles, energy storage, and communication equipment fields. The main products include functional structural parts for new energy vehicles, such as heat sinks, domain control/electronic control housings, body in white, battery structural parts, etc., and structural parts and components for mobile communication base stations, such as antennas, filters, etc. |
| 2021 | 2022 | 2023 | |
| Operating revenue (RMB 100 million) | 317.93 | 315.80 | 336.51 |
| Total assets (RMB 100 million) | 379.51 | 405.31 | 443.71 |
| Net assets (RMB 100 million) | 145.77 | 163.59 | 181.90 |
| Net profit attributable to the parent company (RMB 100 million) | 18.62 | 23.68 | 19.65 |
2. Sustainable Development Governance
2.1. Framework of Sustainable Development GovernanceBy integrating sustainable development management with corporate development strategies,Dongshan Precision continuously improves the environmental, social, and corporate governancesystems. The Company has clarified management concepts and principles, authority scope, worktasks, decision-making processes, and parliamentary procedures, incorporating sustainabledevelopment management into the Company’s governance framework, thereby establishing asustainable development management system covering the Board of Directors, management,functional departments, and business segments. The Company has focused on strategicallydeploying ESG management work to continuously enhance the Company’s risk control and value
creation capabilities in sustainable development.The Company’s Board of Directors is the highest authority and decision-making bodyresponsible for managing economic, environmental, and social topics. The professional skills andcapabilities of the Board of Directors in supervising ESG-related impacts, risks, and opportunitiesare detailed in the “Strengthened Corporate Governance/Diversified Structure of the Board ofDirectors” chapter of this Report. The Board of Directors authorizes the operating management toestablish an ESG management organizational structure at three levels, including the SustainableDevelopment Administration Committee, the Sustainable Development Administration Office, andthe ESG Working Group. The Sustainable Development Administration Committee, as theexecutive body for ESG management, is responsible for assessing and managing ESG opportunitiesand risks, determining the materiality of ESG issues and incorporating them into businessconsiderations, establishing ESG strategies, goal plans, and regular reviews, supervising andguiding the implementation of ESG topics by the Company, etc. The Sustainable DevelopmentAdministration Office, as the coordinating body for ESG management, is mainly responsible fordaily communication and conference organization between the Sustainable DevelopmentAdministration Committee and the ESG Working Group, the coordination and promotion of ESGtopic management and implementation, as well as ESG-related information disclosure, etc. The ESGWorking Group, the specific executive body for ESG work, is composed of relevant personnel fromvarious departments, branches, and subsidiaries, mainly responsible for promoting theimplementation and execution of ESG topics. The performance of relevant departments is linked toESG performance indicators, and reward and penalty measures will be implemented according tothe results of annual assessments.
Framework of Sustainable Development Management
| Governance/Supervision | ? Participate in the deliberation and decision-making of major ESG issues of the Company | Board of Directors |
| Management | ? Identify, assess, and manage ESG risk opportunity ? Determine the materiality of ESG issues and incorporate them into business considerations | Sustainable Development Administration Committee |
| ? Deliberate and approve the Company’s ESG-related strategies, policies, and systems, objectives, plans, and programs, etc. ? Evaluate overall ESG performance and provide recommendations | ||
| ? Coordinate the management and implementation of ESG issues ? Coordinate ESG-related information disclosure | Sustainable Development Administration Office | |
| Executive | ? Conduct centralized management of various topics and promote their implementation ? Monitor the implementation of ESG topics and report information | ESG Working Group (Composed of relevant personnel from various departments and branches and subsidiaries) |
2.2. Communication with Stakeholders
Attaching importance to the expectations and demands of various stakeholders, DongshanPrecision has established a smooth communication mechanism for all stakeholders, under which weconduct regular communication with stakeholders and respond to them with an open attitude,thereby establishing long-term cooperative relationships with all parties based on mutual trust.
| Key stakeholders | Expectations and demands | Communication methods |
| Government and regulatory agencies | ? Compliance and risk management ? Business ethics and anti-corruption ? Service to national major strategies ? Support for local development | ? Special meetings or reports ? Policy consultation feedback ? Official visit ? Compliance regulatory inspections ? Information disclosure |
| Shareholders and investors | ? Sustainable and stable returns ? Open and transparent information ? Investor relations management | ? General meeting of shareholders ? Financial reports and interim announcements ? Investor surveys, hotlines, online Q&A, etc. ? Performance presentation meetings and other communication activities |
| Employee | ? Protection of employees’ rights and interests (including occupational health and safety) | ? Trade unions and workers’ congress ? Employee training, activities, |
| Key stakeholders | Expectations and demands | Communication methods |
| ? Employee training and development ? Employee equality and diversity | and communication ? Internal information exchange platform ? Employee complaint channel | |
| Customer | ? Product quality and safety ? Product and service innovation ? Business continuity ? Information and data security | ? Customer relationship management ? Customer review ? Customer satisfaction survey |
| Suppliers and partners | ? Sustainable supply chain ? Responsible mining ? Industry collaboration and development | ? Supply chain audit ? Open cooperation ? Communication ? Industry exchange conference |
| Community and public |
? Product quality and safety? Environmental impactmanagement? Public welfare and charity? Community communication anddevelopment
? Media interaction? Information disclosure? Charitable projects? Volunteer activities
2.3. ESG Topic Management
Effective identification and management of important material topics are crucial to enterprises’effective management for sustainable development. In rigorous adherence to the analysis process ofmaterial topics, Dongshan Precision meticulously identifies paramount ESG topics under theprinciple of “double materiality” with a focus on “the materiality to the Company’s developmentand operations” and “the materiality to stakeholders”. This identification is grounded in the analysisof internal and external trends, with reference to sustainable development guidelines from stockexchanges, insights from capital markets, evaluations from both domestic and internationalmainstream ESG rating systems, esteemed international frameworks for information disclosure, andsustainable development topics concerned by peer companies. With these efforts, we screen out anddetermine key ESG topics to be highlighted in the Report, so as to continually enhance our ESGmanagement practices to better meet the expectations and demands of our stakeholders.
Analysis Process of Material Topics
| Identification of | The Company compiles a list of ESG topics based on its business operations and analysis of internal and external development trends. Main |
| ESG topics | reference materials for identifying ESG topics include key issues concerned by internal and external stakeholders, ESG reporting framework standards, such as guidelines for sustainable development from the Shenzhen Stock Exchange, International Sustainability Standards Board (ISSB), Global Reporting Initiative (GRI) standards, etc., domestic and international mainstream ESG rating systems, as well as sustainable development topics concerned by peer companies. |
| Research among stakeholders | The Company conducts research on topics among internal and external key stakeholders, where the Company invites stakeholders to fill out the research questionnaire and analyzes the effective questionnaires to understand the attention and influence of different stakeholders on the Company’s ESG topics. The analysis results are an important reference for the Company’s materiality assessment and prioritization. |
| Materiality assessment and prioritization | The Company assesses materiality under the principles of “double materiality” (financial materiality and influence materiality), building a material topics matrix with dual focuses on the “materiality to the operation and development of Dongshan Precision” and the “materiality to stakeholders” to determine the prioritization of ESG topics. |
| Topic determination and disclosure | The Company’s Sustainable Development Administration Committee determines the substantive topics of high importance by reviewing the screening and analysis results with reference to suggestions from internal management and external experts. For key ESG topics, the relevant management, practices, and performance will be highlighted in the Report. |
| Material topics matrix of Dongshan Precision | Corporate governance |
| Materiality to stakeholders | Customer relationship management |
| Materiality to the operation and development of Dongshan Precision | Chemical management |
| Governance | Labor management (including occupational health and safety) |
| Environment | Business ethics and anti-corruption |
| Society | Three wastes management and circular economy |
| Low | Employee training and development |
| High | Serving national major strategies |
| Addressing Climate Change | Water resource management |
| Responsible mining | Industry collaboration and development |
| Innovative management and protection of intellectual property rights | Employee equality and diversity |
| Sustainable supply chain | Clean technology opportunities |
| Product quality and safety | Environmental protection in biodiversity |
| Safety production and operation | Digital transformation |
| Compliance and risk management | Community engagement (including public voluntary service) |
| Information and data security |
2023 Environmental, Social, and Governance (ESG) Report of Suzhou Dongshan Precision Manufacturing Co., Ltd.
3. Excellent Governance for Stable and Efficient OperationsSustainable Development Goals (SDGs) of the United States
3.1. Corporate Governance
3.1.1. Standardized Governance System
In strict accordance with the requirements of laws, regulations, and normative documents, suchas the Company Law of the People’s Republic of China, the Securities Law of the People’s Republicof China, the Shenzhen Stock Exchange Guideline No.1 on Self-regulatory Supervision of ListedCompanies - Standardized Operation of Companies Listed on the Main Board, the Code ofCorporate Governance for Listed Companies, the Company has established a complete legalgovernance structure and modern organizational management system. We have formed agovernance system and mechanism with a clear division of powers and responsibilities among thepower, decision-making, supervision, and execution bodies that can ensure coordinated operationeffective checks and balances, and continuous optimization of management documents and internalprocesses at all levels. Through these initiatives, the Company is constantly improving thegovernance standardization and effectiveness to strengthen the foundation for stable development.
? Governance structure
The Company has established a corporate governance structure consisting of the GeneralMeeting of Shareholders, the Board of Directors, the Board of Supervisors, and the Management.The General Meeting of Shareholders exercises the voting rights on major issues such as theCompany’s business policies, investment plans, and the election of directors and supervisors inaccordance with laws. The Company convenes and holds the general meeting of shareholders in
strict accordance with relevant laws and regulations and the requirements of the Company’s Articlesof Association and the Parliamentary Procedures for the General Meeting of Shareholders to ensurethat all shareholders enjoy equal status and have equal right to be informed and make decisions onmajor issues, hence effectively safeguarding the legitimate rights and interests of all shareholders.The Board of Directors is responsible for the General Meeting of Shareholders and exercises theCompany’s management rights in accordance with the laws. The Board of Directors has fourspecialized committees, namely, the Strategy Committee, the Audit Committee, the NominationCommittee, and the Remuneration and Appraisal Committee, which perform their duties inaccordance with the Company’s Articles of Association and the authorization from the Board ofDirectors to provide professional opinions and reference suggestions for decisions of the Board ofDirectors. All of the four specialized committees have employed independent directors, and in theAudit Committee, the Nomination Committee, and the Remuneration and Appraisal Committee, theindependent directors have constituted the majority of committee members and serve as thechairman. The Board of Supervisors, as the supervisory body, is responsible for the General Meetingof Shareholders and strictly fulfills its duties in accordance with the Company’s Articles ofAssociation, the Parliamentary Procedures for the General Meeting of Shareholders, and othersystems. The Board of Supervisors is responsible for supervising the Company’s financial positionand fundraising management and the performance of the Company’s directors and senior executives,as well as expressing opinions on major issues, so as to guarantee the Company’s standardizedoperation. The Board of Supervisors consists of 3 supervisors, including 2 employee representativesupervisors. For detailed information on the corporate governance structure, governance mechanism,equity structure, controlling shareholders, and de facto controllers, please refer to the 2023 annualreport of Suzhou Dongshan Precision Manufacturing Co., Ltd.
| Structure of Corporate Governance | ||
| Board of Supervisors | General Meeting of Shareholders | Strategy Committee |
| Board of Directors | Audit Committee | |
| Management | Remuneration and Appraisal Committee | |
| Nomination Committee | ||
? Diversified structure of the Board of Directors
Dongshan Precision acknowledges and firmly believes that the increasingly diversifiedstructure of the Board of Directors is a crucial factor in maintaining the Company’s competitiveadvantage and sustainable development. The Company values diversity among members of theBoard of Directors and has implemented a diversity policy aimed at the members, committed tobuilding a diversified structure of the Board of Directors. When recommending candidates to jointhe Board of Directors, the Nomination Committee will fully consider the diversity factors tomaintain an appropriate and balanced structure of the Board of Directors in terms of capabilities,skills, experience, gender, age, and cultural and educational backgrounds, thereby ensuring that theBoard of Directors can make decisions in a scientific and effective manner.The Company currently has 9 members of the Board of Directors, including 1 female director.As the current directors possess professional capabilities and practice experience in fields such asoperating management, financial accounting, law, and international operations, one independentdirector in the Audit Committee is an accounting professional and some board members haveextensive experience in risk prevention and control, the directors can effectively assist the Companyin identifying, preventing, mitigating, and managing risks. Each member of the Board of Directorshas performed their duties to the best of their abilities, actively promoting the efficient andstandardized operation of the Company.
3.1.2. Enhanced Risk Control
In strict accordance with the requirements of the Company Law of the People’s Republic ofChina, the Basic Norms of Enterprise Internal Control, and supporting guidelines, DongshanPrecision continuously promotes the construction, evaluation, and supervision of the internal controlsystem and has established systematic internal control and necessary internal supervisionmechanisms spanning from the corporate governance structure to various business process levels.We have strengthened the self-assessment of the design and implementation effectiveness of theinternal control system, ensuring the orderly conduct of various special audits and key project audits.Moreover, we also identify and investigate internal control defects and risks to continuouslyimprove the effectiveness of the Company’s internal control mechanisms. In addition, we haveenhanced employees’ awareness of internal control risks and strengthened internal controlmanagement capabilities through internal control training, continuously improving the Company’sstandardized operation capabilities.By establishing a sound risk prevention mechanism, the Company has formed a stable riskmanagement structure and work system that meets the Company’s business scale and operationalmanagement demands. Through continuous optimization of the risk management assessmentprocess, we could timely identify and assess risk sources existing in the Company’s operations, andimprove and supervise risks closely related to the Company’s operations such as investment risks,business risks, operational risks, and risks relative to sustainable development, thereby achieving aclosed-loop management to control the overall risks at an acceptable level. By promptlyincorporating major ESG risks and opportunities into the risk review and business planning processfor taking full consideration of them in the Company’s operational plan, the Company has controlledor mitigated risks in a better way and sought growth and transformation opportunities accordingly.At the same time, the Company actively cultivates a risk management culture through training,promotion, and other approaches, enhancing employees’ awareness and understanding of riskmanagement and forming a risk prevention framework with full participation, so as to lay a solidfoundation for the Company’s risk management.
From December 11 to 17, 2023, the subsidiary JDI Electronics conducted the “ComplianceEmphasis Week” campaign, where it organized all employees to study the Business Ethics Normand specialized compliance knowledge including safety environment and information security,and promoted employees to conduct self-inspections according to the Self-Check ConfirmationForm to ensure that employees fully understood and consciously complied with ethical standards.In addition, JDI Electronics also carried out the “Legal Compliance KYT (Kiken-YochiTraining)” campaign to review the legal compliance risks of each department and proposepreventive measures. These activities effectively promoted the implementation of businessethical norms, enhanced the awareness of legal compliance among all employees, and ensuredthat each department indeed conducted business activities in accordance with laws andregulations in their daily operations.
3.1.3. Protection of Investors’ Rights and Interests
In strict accordance with regulatory documents such as the Securities Law of the People’sRepublic of China, Measures for the Administration of Information Disclosure by Listed Companies,as well as the Articles of Association and Information Disclosure Management System, the Company,under the principle of “truth, accuracy, completeness, and timeliness” in information disclosure, hasdiligently fulfilled its information disclosure obligations and continuously presents information ofthe Company’s operations to investors from multiple levels, perspectives, and angles based oninvestors’ demands, in order to enhance the quality and effectiveness of information disclosure. In2023, the Company disclosed information on the operation of the Board of Directors, Board ofSupervisors, and General Meeting of Shareholders, regular reports, significant events, etc. in atimely manner. During the reporting period, the Company’s disclosed information has contained nofalse records, misleading statements, significant omissions, or other improper disclosures. At thesame time, the Company has also kept a close eye on the public opinion environment and markettrading conditions to effectively protect the legitimate rights and interests of investors.
Attaching great importance to investor relations management, the Company continuouslyimproves internal systems such as the Regulations for Investor Relations Management and expandscommunication channels with investors. Through activities such as performance presentation
meetings, conference calls, organized visits, and research, the Company has maintained timely andeffective communication with investors on corporate governance, operating conditions, sustainabledevelopment, etc., which further deepens investors’ understanding of the Company’s productionand operation and enhance the interaction and mutual trust between the Company and investors.The Company sincerely listens to the opinions and suggestions of shareholders and potentialinvestors and provides timely replies and explanations to them, so as to build a good interactiveecosystem with investors and render high-quality services to investors. We equally treat allshareholders and continuously standardize the procedures for convening, holding, deliberating, andvoting on the general meeting of shareholders, to ensure that investors, especially small andmedium-sized shareholders, can enjoy the right to be informed and participate in major matters ofthe Company. We have adopted modern information technology with full consideration of time,place, and convening approach of the general meeting of shareholders to increase the proportion ofshareholders to participate in the general meeting of shareholders, so as to facilitate moreshareholders, especially small and medium-sized shareholders, to participate. For major matters thatmay affect the rights and interests of small and medium-sized investors, the Company has countedand disclosed the votes from small and medium-sized investors separately. Through channels suchas the platform of “EasyIR”, the Company has communicated with investors, fully listening to theopinions and demands of small and medium-sized shareholders and timely responding to issues ofconcern to small-and-medium-sized shareholders.While focusing on our development, the Company adheres to an investor-oriented approach.Since listing, the Company has been strictly formulating a cash dividend policy that combinescontinuity and stability in accordance with the Articles of Association to create a “long-term, stable,and sustainable” shareholder value return mechanism, thereby continuously sharing the Company’sdevelopment achievements with investors. During the reporting period, the Company, based onactual operating conditions and development plans, has formulated an annual profit distribution planon the premise of ensuring normal operations and long-term development. Independent directorshave fulfilled their duties and responsibilities to express clear independent opinions on thepreparation and decision-making process of the profit distribution plan. The relevant proposals, afterbeing reviewed by the Board of Directors and the Board of Supervisors, are submitted to the General
Meeting of Shareholders for deliberation, thereby effectively safeguarding the legitimate rights andinterests of shareholders. In 2023, the Company implemented the 2022 profit distribution plan,distributing a cash dividend of RMB 1.10 per 10 shares, totaling RMB 187,315,200 in cashdividends.
3.2. Business Ethics
3.2.1. Building a Defense Line of Business Ethics
With adherence to integrity operation and business ethics, Dongshan Precision strictlycomplies with laws and regulations such as the Company Law of the People’s Republic of China,the Anti-Unfair Competition Law of the People’s Republic of China, the Anti-Monopoly Law of thePeople’s Republic of China, and the Anti-Money Laundering Law of the People’s Republic of Chinaand industry codes. The Company has been continuously establishing and improving the system ofbusiness ethics and anti-corruption management and formulates guidelines such as the Anti-Corruption Administration Rules, to prohibit any form of fraud, commercial bribery, and othersimilar behaviors. The Company has strengthened the defense line of business ethics throughinternal audit and reporting mechanisms and reinforced training and cultural construction onbusiness ethics and anti-corruption. During the reporting period, the Company was involved in nomajor litigation cases related to corruption, bribery, or unfair competition.
| Institutional development | The Company implements a business ethics management system focused on the Policy for Management of Business Ethics and Integrity Efforts. The Board of Directors is the responsible and decision-making body for business ethics and anti-corruption management while the Board of Supervisors, the Audit Committee under the Board of Directors, and the audit department are the supervisory bodies responsible for overseeing and regulating the implementation and duty performance of the business ethics management system. The Company has continuously improved the Company’s business ethics and anti-corruption system to safeguard the high-quality development of the Company. At the same time, the Company also vigorously promotes the |
| construction of a clean and transparent supply chain, requiring the Company’s directors, all employees (including part-time employees), and all supply chains and partners to comply with regulations of anti-fraud, anti-money laundering, anti-corruption, fair competition, anti-monopoly, and anti-conflict of interest. ? For employees: The Company has established regulations such as the Gift Acceptance and Entertainment Management Norms and the Reporting System for Conflict of Interest to regulate employees’ behaviors, requiring all employees to sign the Anti-Fraud and Anti-Bribery Commitment Letter and submit the Reporting Form of the Policy for Preventing Conflict of Interest for the proactive report of conflicts of interest, so as to ensure that every employee complies with anti-corruption and integrity requirements. ? For suppliers: The Company has established centralized procurement management methods and processes and has clearly defined the requirements of supplier integrity and business ethics in the Supplier Notification Letter, requiring all suppliers to sign the Integrity Cooperation Agreement, the Anti-Fraud and Anti-Commercial Bribery Commitment Letter (or Anti-Commercial Bribery Agreement), to ensure that suppliers continuously improve their business ethics management systems. | |
| Audit supervision | The Company is responsible for coordinating, supervising, and guiding different divisions to establish an overall control program and mechanism at the group level, while each business segment is responsible for implementing specific anti-fraud practices. Audit results are reported directly to the Audit Committee under the Board of Directors in order to maintain independence. ? For employees: The Company establishes an audit and inspection department independent from the business operation system, which exercises investigation rights independently and is responsible for receiving fraud reports, conducting investigations, and reporting and providing handling suggestions. The Company also develops a targeted audit program annually and conducts internal audits relative to business ethics that should cover all of the Company’s operating locations and businesses every three years. Moreover, the Company develops a continual improvement plan based on audit findings to enhance the business ethics and anti-corruption framework. |
| ? For suppliers: The Company conducts audits on the suppliers’ performance of the code of conduct and management of business ethics, as well as due diligence investigations, project audits, and compliance checks to partners based on cooperation projects when necessary, to ensure continuous supervision of supply chain compliance risks. Serious suppliers with serious violations will be blacklisted and punished according to the Company’s relevant regulations. | |
| Cultural construction | The Company actively fosters a culture of integrity, ensuring that its requirements in business ethics are communicated to employees, suppliers, and other internal and external stakeholders. It also calls for the practical fulfillment of integrity commitments across all levels of the organization. ? For employees: The Company internally conducts effective business ethics promotion through employee handbooks, rules, and regulations, newsletters, etc., and regularly provides anti-fraud training and integrity and ethics education to the management and all employees, so as to ensure that all employees maintain integrity and honesty, and diligence in work and actively prevent corrupt behavior. ? For suppliers: The Company requires suppliers to maintain good professional ethics and practices. |
Key Performance
The Company achieves 100% coverage of anti-corruption training for directors and employeesat the company level, with an average training duration of 3 hours per person.
3.2.2. Ensuring Smooth Channels for Reporting
The Company tolerances no behavior that violates business ethics, and has formulated theMisconduct Reporting Mechanism and Handling Measures to continuously improve the reportingand handling mechanism. Employees of the Company at all levels and all parties of the society withdirect or indirect economic relationships with the Company can report actual or suspected violationsof business ethics by the Company and its employees through various reporting channels such asreporting hotlines, emails, and letters. The Company’s internal audit department is responsible for
handling complaints and reports related to employees’ misconduct, and dedicated personnel aredesignated to receive, process, and provide feedback on complaints and reports, as well asinvestigate disciplinary cases. If it is confirmed that there are facts of corruption, the Company willtake actions against the individuals involved based on the severity of the facts, including but notlimited to position transfer, demotion, downgrade, salary reduction, termination of employmentcontracts, and referral for legal action.In accordance with relevant provisions on protecting whistleblowers, the Company strictlymaintains the confidentiality of the whistleblowers’ personal information and the reporting materialsthey provide throughout the process of acceptance, registration, and investigation. At the same time,the Company rigorously safeguards the personal safety of whistleblowers and harshly punishes anyretaliatory actions. Individuals found to violate confidentiality rules or engage in retaliatory actionsagainst whistleblowers will be held accountable in accordance with the relevant provisions of theCompany, with severe penalties imposed on those involved in retaliatory actions. Individualscommitting criminal acts will be referred to judicial authorities for prosecution. Whistleblowers whoprovide credible reports and can recover significant losses for the Company will be rewarded basedon the amount saved.
| Key Performance The effective handling rate of reporting has reached 100%. |
| Reporting channel |
| Dongshan Precision reporting email: jubao@dsbj.com MFLEX reporting email: jubao@mflex.com Multek reporting email: fxgl@Multek.com |
The anonymous reporting hotline was set up by Multek.
3.3. Digital Intelligence Transformation
The essence of digitalization is innovation, with integration at its core. The Company hasproactively embraced technological changes, aligning various business segments to enhance thedevelopment of a comprehensive technical framework and implementation strategy for intelligentmanufacturing. We have established a data-centric, multi-platform, and multi-system interactiveintegration system that fosters deep synergy between digital technology and the manufacturingsector. This initiative not only advances the integration of artificial intelligence with new industrialprocesses but also injects fresh momentum into the Company’s development.
HonorThe Company’s subsidiary MFLEX Yancheng was awarded the titles of “National IntelligentManufacturing Demonstration Factory” and “Jiangsu Province 5G Factory”.The Company’s subsidiary Yancheng Dongshan was awarded the title of “DemonstrationEnterprise for Implementing Management System for Integration of Informatization andIndustrialization in Jiangsu Province in 2023”.The Company’s subsidiary JDI Electronics was awarded the title of “Intelligent ManufacturingDemonstration Workshop in Jiangsu Province”.
Intelligent Manufacturing Strategic Planning of Dongshan PrecisionEmpowering Innovation and Development with Digital Engines
| Five-year plan | |
| Releasing the Group’s KPI sales big data report system | Formulating and implementing the Group’s Big Data Platform Management Norms |
| Releasing the Group’s procurement big data system (first edition) | Improving the Group’s KPI management dashboard |
| Completing the first AI project of the Center of Excellence (CoE) | Promoting AI empowerment and accelerating AI implementation |
| Conducting AI democratization and training | Conducting research on digital twin |
| 2023 | 2024 |
| Building data marts for multiple business domains | Building an enterprise-level comprehensive data warehouse |
| Deeply integrating intelligent manufacturing with AI | Building AI-based professional knowledge database |
| Empowering and promoting AI/BI self-service big data services | Empowering intelligent manufacturing through digital twin and AI |
| Piloting digital twin scenarios | 2026-2028 |
| 2025 | |
| Research & Development | |
| Promotion & Empowerment | |
| Cooperation & Co-construction | |
| Intelligent Manufacturing - Phase 1 | Intelligent Manufacturing - Phase 2 |
| Integrated Platform | Data-Driven Culture |
| Data Governance | Decision Intelligence |
| AI Democratization | AI Platform Engineering |
| AutoML Platform | Digital Twin |
? Digital intelligence empowering industrial upgrading
By advancing industrial digitalization with the “Intelligent Matrix”, the Company creates arobust manufacturing system that integrates automation, digital, and intelligence technologies toassist in enhancing product quality, optimizing process flows, and reducing production costs. TheCompany has accelerated its digital transformation across various business segments, successfullyimplementing an array of digital management platforms. These include the ERP Enterprise ResourcePlanning System, PLM Product Lifecycle Management System, MES Manufacturing ExecutionSystem, WMS+WCS Warehouse Management and Control System, EAM Equipment AssetManagement System, QMS Quality Management System, and SRM Procurement Supply ChainSystem. By continuously integrating advanced detection technologies and intelligent equipment, wehave established an intelligent manufacturing system that centers around an intelligent businessplatform and is underpinned by a robust data middle platform, in order to ensure seamlessintegration of human, material, financial, procedural, informational, and technological flows. Thisintegration significantly enhances operational efficiency and fosters industrial upgrading.
| ERP Enterprise Resource Planning System | It establishes a unified, standardized, and rigorous ERP system centered on financial management and accounting with an integration bus covering various business processes including sales, procurement, warehousing, and production to achieve the integration of core business data. |
| PLM Product Life-cycle Management System | With enhanced comprehensive management of the product lifecycle, this system supports product innovation and continuous improvement through process automation and visualization, thereby promoting cross-team collaboration and achieving high quality, efficiency, and value of products. |
| MES Manufacturing Execution System | Through real-time collection and analysis of production data, this system helps timely discover and solve quality issues to provide support for scientific decision-making, so as to dynamically adjust daily production plans according to actual production conditions. |
| WMS+WCS Automated Warehousing System | This system integrates warehouse management with intelligent warehousing equipment clusters to achieve informatization, intelligent, paperless, quick-response, and efficient traceable management of |
| warehouse logistics, thereby improving warehouse operation efficiency and inventory accuracy. | |
| EAM Equipment Management System | The established EAM equipment management system has integrated with a series of functions, including strong equipment management, outsourcing management, spot check management, patrol inspection management, equipment maintenance, asset management, and lubrication management. |
| QMS Quality Management System | This system covers functions such as incoming material control, quality traceability, inspection patrol, process control, etc., which spans the entire lifecycle management of products to connect the quality data chain of various business management processes, thereby achieving refined quality control and improvement. |
| SRM Procurement Supply Chain System | This system realizes the full-process and integrated management involving supplier development access, assessment, quotation comparison, bidding, purchase orders, delivery, and performance evaluation. |
Case: MFLEX Yancheng Building a National-level Intelligent Manufacturing PilotDemonstrationThe flexible printed circuit boards smart manufacturing demonstration factory of MFLEXYancheng, which depends on intelligent industrialization, has implemented multiple intelligentscenarios in 12 processes by fully adopting lean manufacturing mode after the achievement ofautomation and informatization, significantly bolstering collaborative capabilities in smartmanufacturing, digitalized degree of the entire manufacturing process, and efficiency of remotecontrol functionalities. Through these endeavors, the factory swiftly and effectively meetscustomer demands with top-tier quality and performance, thereby serving as a demonstration forintegrating informatization and industrialization within the domestic discrete flexible printedcircuit board manufacturing sector.
? Data governance
The Company remains committed to advancing its data governance special project, whichinvolves establishing and refining a scientifically efficient management system. By prioritizing data
governance from its inception and placing data security as a foundational principle, we havemaximized and enhanced the value of the Company’s data assets. This approach has propelled theCompany’s digitalization and intelligence development to unprecedented levels.
Data Governance Planning
| Platform establishment and data collection | Platform expansion and processing capabilities | Data security and privacy protection | Enhanced data analysis and application |
| ? Demand analysis and planning ? System design and development | ? Expansion of data sources, enhancement of processing capabilities, and improvement of data quality ? Addition of cockpit and dashboard | ? Enhanced measures on privacy protection, data backup and recovery, information security monitoring and auditing, training, and awareness enhancement | ? Data analysis and application expansion ? Data model and algorithm optimization ? Data product, service platformization, and artificial intelligence |
3.4. Information Security and Privacy Protection
The Company strictly abides by the Data Security Law of the People’s Republic of China, thePersonal Information Protection Law of the People’s Republic of China, and other laws andregulations. Moreover, we have also developed a series of information security norms andprocedures, including the Confidentiality and Information Security Management System,Information Security Risk Management Procedures, and Information Asset Security ManagementProcedures, which are aligned with internationally recognized standards such as the ISO 27001Information Security Management System and the ISO 27701 Personal Privacy InformationManagement System. Through these initiatives, the Company has established a comprehensiveinformation and data security system, effectively safeguarding the Company’s information and datasecurity and ensuring strict protection of customer information. In 2023, the Company’sheadquarters and division jointly built an information security management platform to coordinate
the planning of “Information Security Management + Technology + Emergency Response” toenhance the overall information security level of the Company.? Data management and control. The Company has classified its information data by different
categories and levels and adopted targeted protection measures in accordance with informationdata hierarchical classification management norms as provided by policies. Moreover, theCompany has also taken prevention measures with different security control granularityaccording to the level of confidentiality, such as file encryption, transmission channel control(direct blocking, pop-up alerts, auditing, and release), limited user groups, and outboundapproval.? Prevention from accidental data deletion or modification and data loss. The Company hasinstituted a policy and mechanism for server backup in accordance with the ISO 27001standard, establishing clear requirements for backup content, methods, frequency, and more.We conduct regular sampling checks to verify backup practices are made in line with theserequirements and carry out data restoration drills focusing on data reliability to guarantee swiftdata recovery in the event of loss or damage. To prevent data loss, we implement data lossprevention measures and control related operations through email and file sensitivity labels. Inaddition, we also centralize our database management through bastion hosts, implementingapproval management for high-risk operations such as deletion and employing defaultmeasures to prevent accidental data deletion.? Technical protection. The Company is committed to building a more secure and reliablenetwork protection system. By deploying situational awareness devices to monitorunconventional traffic in the network in real-time, the Company blocks and alerts abnormallarge traffic at the firewall end to prevent malicious attacks and virus spread. We block directaccess to servers from terminals and require operations to be conducted through bastion hostsby default and to be recorded in videos for post-event audits, so as to discover and addresspotential security risks in a timely manner. By deploying independent security information andevent management systems, the Company centrally collects log data from various securitydevices, applications, and network devices, which are correlated and analyzed to detectpotential security events, thereby enhancing system security and reducing potential threats.
? Information security audit. The Company conducts comprehensive internal information
security audits and engages certification bodies to carry out annual external audits inaccordance with the ISO27001 standard to identify existing risks and propose mitigation andresolution measures. Thanks to these measures, we have passed strict information securityaudits of customers.
Key PerformanceThe official website of the Company and that of Yancheng Dongshan have passed thenational II-level protection certification (registered in public security organs).MFLEX Division, Multek Division, Precision Manufacturing Division, Singapore OverseasHeadquarters (DSG), and MFLEX USA Company (MFI) have all been certified withISO27001.The Company and its subsidiaries and branches have experienced 0 incidents of informationleakage.
? Emergency management. Through the establishment of a complete information security
incident response and emergency disposal mechanism and an off-site disaster recovery system,the Company ensures that information security is safeguarded in a timely and effective manner.In 2023, the Company conducted a series of information security emergency drills, includingregular phishing simulation drills of information security based on emergency plans,emergency response to ransomware attacks, and data leakage incidents, as well as datarecovery testing drills, in order to enhance the ability to respond to and dispose of emergencyevents.? Information security training and promotion. The Company regularly conducts training for
all employees (e.g. monthly training for overseas employees) to enhance their informationsecurity awareness and improve their information security skills, and tests employees’information security awareness through various technical means. Employees in variousbusiness segments can also take information security courses on online learning platforms. TheCompany encourages employees to learn by themselves and obtain information security-
related certifications.
Key PerformanceThe information security training has covered 100% of employees.
? Supplier information security management. In accordance with the Supplier Relationship
Management Procedure formulated by the Company, it is necessary to assess the informationsecurity risks brought by supplier services before cooperating with suppliers to prevent the lossof Company information assets. The Company has also formulated the Supplier InformationSecurity Verification Plan and the Supplier Information Security Verification Form andconducts on-site assessments on key suppliers to determine if their information securitymanagement meets requirements. Suppliers should execute the Supplier ServiceConfidentiality Agreement and strictly comply with information security requirements. In 2023,DSG updated the Supplier Policy by adding requirements for information security and privacyinformation management in the supplier selection process, according to which its existingsuppliers were re-evaluated based on the new requirements for personal informationmanagement.
Case: DSG passed the ISO 27701 Personal Privacy Information Management SystemCertificationIn order to better respond to and comply with domestic and overseas personalinformation protection laws and regulations, the Company’s subsidiary DSG promoted andimplemented the privacy information management system (PIMS) in 2023. Theimplementation of PIMS has enhanced the organization’s ability to manage data securityand privacy risks as it can effectively help the organization manage personal identityinformation, thereby minimizing the leakage risk of personal privacy information. At thebeginning of 2024, DSG successfully passed the audit certification and was certified by theISO 27701 Personal Privacy Information Management System.
? Customer information protection. The Company has established a sound information and
data security system, limiting access to customer data and tracking and recording employees’access to customer data according to the contract and concluded confidentiality requirements
with an emergency response plan available, so as to ensure that customer information is notleaked.
2023 Environmental, Social, and Governance (ESG) Report of Suzhou Dongshan Precision Manufacturing Co., Ltd.
4. Collaboration for Mutual Benefit to Build a SustainableSupply ChainSustainable Development Goals of the United Nations(SDGs)
4.1. Establishment of a High-quality Supply Chain
The Company strictly complies with relevant national laws and regulations such as the Law ofthe People’s Republic of China on Bid Invitation and Bidding and the Regulation on theImplementation of the Law of the People’s Republic of China on Bid Invitation and Bidding. It hasformulated norms and guidelines related to bid invitation, procurement, and supplier management,such as the Supply Chain Management System, Supplier Management Process and Norms, SupplierAdmission and Approval Process Management Norms, and Procurement Management Process andNorms to continuously improve the entire lifecycle management of suppliers and standardizesupplier admission, evaluation, and exit management processes, thereby actively building asustainable supply chain.The Company is committed to improving the transparency of the entire supply chain cycle,covering production processes, procurement bid invitation, logistics management, supplierrelationships, etc., to create a fair, just, and open procurement atmosphere for the supply chain. TheSupply Chain Management Center is responsible for formulating supplier management guidancepolicies and coordinating the admission standards and certification norms for suppliers in variousbusiness segments, while various supply chain management departments of each business segmentneed to approve new suppliers according to standardized norms, thereby improving the pool ofqualified suppliers and continuously optimizing supplier resources.
? Supplier lifecycle management
The Company has established a supplier lifecycle management system and mechanism tostandardize the process mechanism for supplier admission, assessment, evaluation, and exit, therebybuilding a high-quality, safe, and stable supplier team.
Supplier Lifecycle Management
| Supplier admission | The Company has formed an inspection team composed of multiple departments (including procurement departments, quality departments, R&D engineering departments, etc.) to inspect suppliers’ information and qualifications according to the established supplier admission thresholds. Qualified suppliers are included in the Qualified Supplier List after receiving the inspection. |
| Assessment and evaluation | The Company develops an annual supplier audit plan and conducts regular monitoring and comprehensive evaluation in terms of supplier performance, product quality, EHS management, business ethics, and anti-corruption through qualification review, document audit, on-site audit, annual assessment, etc. In addition, the Company provides timely feedback to suppliers based on audit results, assisting suppliers in continuous improvement to ensure the safety and compliance of overall business operations. |
| Hierarchical classification management | The Company conducts hierarchical classification management on suppliers. We classify suppliers into three categories (A, B, C) horizontally and each of these categories is further classified into three levels (excellent, good, qualified) based on the impact of suppliers on the Company’s final products and establish management requirements and standards for each category and level. We adjust the categories and levels dynamically per year based on evaluation results, procurement scale, material characteristics, and other factors. |
| Supplier exit | When a supplier has significant issues related to quality, delivery, price, service, etc., or improper behaviors involving business ethics, significant environmental incidents, etc., the Company will eliminate the supplier from the supplier pool properly and claim against the supplier for relevant responsibilities and losses based on the actual situation. |
4.2. Supply Chain Risk Management and Control
The Company has incorporated supply chain sustainability into its supply chain managementsystem and promoted each business segment to formulate the requirements for suppliers’ social codeof conduct in accordance with the Electronic Industry Code of Conduct (EICC), the SocialAccountability Standard (SA8000), and a series of standards issued by the International LaborOrganization (ILO). When selecting suppliers, the Company’s business segments deeply understandthe performance of suppliers in sustainable development with great attention paid to ESGassessment factors, ensuring that suppliers’ performance in governance, social, and environmentalaspects meets the requirements. At the supplier admission stage, the Company requires suppliers tosign the Supplier Commitment Letter for Social Responsibility to make commitments foroccupational health and safety, environmental protection, business ethics, etc. In addition, theCompany identifies, assesses, and controls potential risks, inclusive of ESG risks, in the supplychain according to internal checklists such as the Supplier Environmental and Social ResponsibilityAudit Form and the Supplier Green Product Management System Evaluation Form, to actively builda competitive, resilient, and sustainable supply chain. For detailed content on supply chain businessethics and anti-corruption management, please refer to the “Excellent Governance for Stable andEfficient Operation/Business Ethics” section.
4.2.1. Quality Risk Control
The Company has established internal management systems such as the Supply ChainManagement Policy and the Supplier Management Control Procedures to set up requirements forthe quality qualifications of suppliers. According to the requirements, suppliers should have boastedprofessional qualifications of the services or products they provide and established a sound qualitymanagement system complying with current laws and regulations, including the ISO 9001 qualitysystem certification and the IATF 16949 quality system certification (for suppliers that produceautomotive parts). Suppliers must continuously meet these requirements and are required to sign theSupplier Quality Assurance Agreement.
The Company communicates in a timely manner with suppliers to ensure that suppliers fullyunderstand the quality requirements for the materials they supply. Furthermore, the Company
manages suppliers through supplier audits, incoming material inspections, performance evaluations,and continuous improvement to ensure product safety and quality. Supplier quality audits areconducted in accordance with the Supplier Audit Management Procedures, encompassing audits onquality management systems, product design and development, material and supplier management,manufacturing process management, change management, non-conformity control, improvementand after-sales service, hazardous substance management, etc. The Company formulates an annualsupplier audit plan and strictly implements it, with dynamic audits conducted in case of qualityissues or other abnormalities. The procurement, quality, and other departments of the Company’sbusiness segments conduct regular reviews and analyses focusing on supplier quality audits andevaluations. For any non-conformity items identified during the process, the Company will requirethe suppliers involved to rectify the items within a specified period in the form of writtenimprovement reports, provide quality training, and conduct technical cooperation and exchanges asnecessary to jointly improve the quality.Based on the results of supplier quality assessments and the issues identified during the auditprocess, each business segment is required to collaborate with relevant departments to conductregular quality management capability improvement training tailored to suppliers to meet thespecific product requirements of each segment. Additionally, each business segment needs toprovide targeted guidance and assistance to suppliers, including support for technologicaltransformation, upgrading, and optimization efforts. Through these collaborative initiatives, we seekto assist suppliers in enhancing their quality standards and collectively promote product upgradesacross our supply chain.
4.2.2. Human Rights Risk Management
Dongshan Precision drives various business segments to develop supplier codes of conductaccording to the requirements of the International Labor Organization (ILO) and the Code ofConduct for Responsible Business Alliances (RBA). The content of the code of conduct shouldinclude human rights and non-discrimination, anti-child labor and anti-forced labor, working andrest hours, occupational health and safety requirements, etc. Suppliers are required to sign acommitment letter (social responsibility ) to ensure that products or services from them are producedor provided in a manner that complies with human rights requirements and ethical standards.
| Human rights and anti-discrimination | All employees enjoy the rights and interests of free and equal consultation and collective bargaining; Any form of coercion is prohibited; Any form of prejudice and discrimination is prohibited |
| Prohibition of forced labor | It is prohibited to employ forced laborers; It is prohibited to require employees to pay deposits or provide identity documents as collateral. |
| Employment conditions | Child labor is prohibited; Wages must comply with national laws or industry standards and employees should be paid equally for equal work; Forced labor is prohibited. |
| Occupational health and safety | It is required to provide a healthy and safe working environment and protective measures; It is required to provide appropriate health and safety information and training |
By formulating the Supplier Commitment Letter for Social Responsibility, Multek hasclarified the environmental and social responsibilities that suppliers should undertake in terms oflabor, health, and safety in accordance with the Code of Conduct for Responsible BusinessAlliances and the requirements of relevant national laws and regulations. Moreover, it effectivelyembeds the sustainable development concept into every aspect and process of suppliermanagement, driving the entire supply chain to fulfill the sustainable developmentresponsibilities together.
4.2.3. Enhancing Supply Chain Resilience
Establishing a resilient supply chain and ensuring business continuity are important guaranteesfor the Company’s stable operations. To ensure a stable supply of strategic resources, the Companyhas formulated a Business Continuity Plan for the Supply Chain Management Department andcontinuously optimized the supply chain structure to ensure that suppliers have diversifiedbackgrounds and come from multiple channels. The Company has also conducted enhanced
preventive control measures against factors such as supply chain disruptions, price increases, andunexpected events, effectively preventing potential risks in the supply chain and strengtheningsupply chain resilience. In 2023, the Company’s raw material supply remained stable, andproduction was not affected by raw material shortages.? Establishment of multiple channels for raw material supply. To prevent delivery delays orinsufficient supply caused by factors such as climate, distance, and policies, the Companyprocures materials through multiple channels, deeply explores resource markets, and analyzesdevelopment trends to continuously optimize supplier resources. Through these initiatives, theCompany has reduced exclusive and intermediary purchases, thereby mitigating the risk ofsingle sourcing while lowering procurement costs and maintaining raw material supplystability.? Promotion of localization procurement. The Company encourages localization sourcing. It
identifies material supply risks overall based on historical delivery and inventory reservesituations, actively exploring and selecting products that meet production requirements fordomestic substitution and local procurement from technical, commercial, production capacity,and accessibility perspectives and cooperating with reliable trading partners. Through theseendeavors, the Company has shortened transportation cycles and supply times, enhancedcontrol and transparency, and improved the supply chain’s risk resistance and rapid responsecapabilities, thereby promoting economic development of the place where the Company islocated.? Cultivation of good cooperative relationships. The Company maintains timelycommunication with suppliers through multiple ways such as email, phone, remote meetings,face-to-face discussions, etc. To avoid price increases and ensure post-sales service quality, theCompany conducts strategic discussions with suppliers and signs strategic cooperationagreements with core suppliers to ensure optimal reserves and a stable supply of materials. Itestablishes a benign and effective supplier competition and protection mechanism to create agood atmosphere for supply chain cooperation and persist in joint development and growthwith a wide range of qualified suppliers to build a harmonious supply chain ecosystem.
? Enhancing emergency management. The Company has developed differentiated plans,procedures, and key actions based on the severity level of production activities, the likelihoodof supply shortages, etc., and implemented focused tracking of high-risk and medium-riskmaterials to eliminate the risk of material shortages. The Supply Chain Management Centercoordinates and plans the necessary resources for various business segments, subsidiaries, andbranches through the Supply Chain Resource Coordination Contact Letter to enhanceemergency management. To ensure normal operations, the Company constantly monitorspotential supply chain disruption risks and strengthens supply chain risk assessment andcontrol to ensure that daily supplies are not affected.
4.2.4. Driving the Green Transformation of the Supply Chain
As driven by the Company, each business segment actively implements green procurement andsigns the Green Product Guarantee Statement with suppliers. They require suppliers to use limitedresources prudently and responsibly, guarantee all production processes of the products comply withthe requirements of environmental laws and regulations, and minimize the impact of the businessactivities on the environment, so as to jointly promote the green development of the supply chain.
The Company’s subsidiary Yancheng Dongshan requires suppliers to fill out the StakeholderEnvironmental Management Performance Evaluation Questionnaire, through which it assessessuppliers’ certification and construction of environmental management system, progress ofenvironmental topics such as three-wastes emissions and waste management, environmentalcompliance, environmental emergency management, etc. In these assessments, suppliers with ascore equal to or more than 60 points are considered qualified while those with a score less than60 points are considered unqualified. The unqualified suppliers are required to makerectifications. If they fail to respond or improve, Yancheng Dongshan will terminate businessdealings with them.
4.3. Responsible Mining Procurement
The Company has formulated the Conflict Minerals Procurement Policy in accordance with
the Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected andHigh-Risk Areas of the Organisation for Economic Cooperation and Development (OECD) andother applicable standards, to establish a sound responsible mining due diligence managementsystem. We have developed clear and transparent management procedures for the use of mineralresources in the production and operation process to identify and manage potential risks, committingto using no minerals from conflict-affected and high-risk areas, to tracing the sources of gold (Au),tantalum (Ta), tin (Sn), tungsten (W), etc. in all products, and to insisting on ethical procurement.
? Promotion and implementation of conflict minerals procurement policyAs driven by the Company, each business segments communicate the conflict minerals policyto direct suppliers through multiple channels. The Company has required suppliers to sign theCommitment Letter for Not Using Conflict Minerals and incorporated mineral resource managementregulations into contracts and agreements signed with suppliers. Moreover, the Company alsoconducts responsible mining supply chain due diligence and requires all relevant suppliers to strictlyadhere to the commitment of not using mineral resources from conflict-affected areas. In addition,the Company’s various business segments encourage suppliers to establish policies for conflictminerals and require them to pass on this principle to their upstream suppliers.
Key PerformanceThe Company’s Conflict Minerals Procurement Policy and Commitment Letter for Not UsingConflict Minerals have been communicated to 100% of our suppliers.The responsible mining special training has covered 100% of relevant suppliers.
? Responsible supply chain management
The Company’s various business segments have formulated the conflict minerals investigationmanagement procedure to conduct responsible mining due diligence on suppliers. Suppliers arerequired to truthfully fill in and respond to the Conflict Minerals Reporting Template (CMRT)regarding the usage and sources of relevant minerals in the delivered products, and providesupporting materials to ensure the compliance and traceability of the procurement sources. TheCompany has established a supplier risk assessment and management process. It draws a supply
chain map based on the KYC information collected from suppliers and identifies conflict-affectedand high-risk areas (CAHRA) risk based on information related to suppliers and supply chainsretrieved from public sources, formulating due diligence plans and carrying out supply chain duediligence investigations. Through these initiatives, the Company has promoted improvementmeasures and strengthened risk control. If a supplier is at risk of conflict minerals, the supplier mustimmediately notify the Company in writing and the Company will terminate the development orreplace the supplier involved in the conflict minerals.
Key PerformanceDuring the reporting period, the Company completed responsible Mining due diligence on allsuppliers, with 100% of the supply chain enterprises not using illegal conflict minerals.
| Screen all products of the Company | Assess the sources of 3TG in the product and the conflict purchase status |
| Determine if the products contain 3TG | Conduct due diligence on suppliers |
| Identify products containing 3TG and their corresponding suppliers | Respond to CMRT and other questionnaires |
| Collect relevant information from suppliers | Take improvement on high- and medium-risk suppliers |
| Evaluate suppliers’ risk levels | Suspend or terminate business relationships with these suppliers |
The Company’s Responsible Mining Due Diligence Management Process
2023 Environmental, Social, and Governance (ESG) Report of Suzhou Dongshan Precision Manufacturing Co., Ltd.
5. Continuous Improvement of Product Quality and
Competitiveness by Insisting on QualityUnited Nations Sustainable Development Goals (SDGs)
5.1. Driven by Innovation
5.1.1. R&D and Innovation
Technological innovation is the core competitiveness of the Company. As insisting on long-termism, the Company drives development with innovation. We enhance independent innovationcapabilities and increase R&D investment to improve production process levels and processcapabilities and accelerate the cultivation and development of new productive forces, therebyenhancing the core competitiveness of the industry.
? Strengthened innovation and R&D management.
Upholding the “market-oriented from start to finish” R&D strategy, the Company hasestablished a dedicated R&D center to conduct innovative research covering various aspects,including material development, structural design, electronic design and product applicationresearch, and continuously improves innovation management systems and capabilities to effectivelyensure R&D efficiency and quality and solidify the foundation for high-quality development.? Improved mechanisms. By developing and implementing the R&D Cycle Management
Procedures and establishing a sound R&D project lifecycle management system, the Company
continuously standardizes and optimizes key R&D stages such as quotation, design, sample,
trial production, mass production to strengthen R&D quality control, thereby developing the
products in a more reasonable process and accelerating the development process of innovative
products.? Forward-looking layout. With continuously increased investment in science and technology
innovation, the Company is exploring the cutting-edge manufacturing technology of the core
devices in the field of intelligent interconnection and interoperability through ongoing
investment in the R&D of new materials, new technologies, new processes, etc., in order to
lay a solid foundation for serving the future innovative business.? Enhanced incentives. Insisting on people-oriented innovation, the Company had combined
innovative management with incentive mechanisms. We have provided R&D personnel with
daily assessment incentives and technology-specific incentives and implemented equity
incentive plans covering core management personnel and technical talents, so as to encourage
employees to participate in technological innovation and to stimulate the vitality of the talent
and the organization.
Key PerformanceThe amount of R&D investment in 2023 totaled RMB 1.161 billion, accounting for 3.45% ofrevenue.
? Optimization of innovative talent team
Building an innovative talent team is the cornerstone of technological innovation. Takingadvantage of leading talents’ leading role, the Company has established a global R&D teamcomposed of technical experts with outstanding professional skills, rich industry experience, andstrong innovation capabilities and created an open, inclusive, and pragmatic research and innovationenvironment, continuously enhancing core technology R&D and independent innovationcapabilities to inject innovative energy into the Company’s development.
With more efforts continuously paid to the employment of high-end technology talents, theCompany has selected R&D talents who align with the Company’s values and possess excellentqualities, solid professional backgrounds, and high potential, to build professional R&D teamscovering three major business segments, namely, electronic circuit, photoelectric display, andprecision manufacturing. In addition to regular technical training organized by the Company, we
invite suppliers, famous experts, and scholars to come to the Company for technical exchanges andlectures through internal training, seminars, and other forms and encourage employees to strengthenacademic exchanges to help them grasp innovative technologies and industry trends. We alsoemploy external industry experts to be our R&D consultants to help improve the professional levelof the technical staff, thereby achieving independent research and development of innovative coretechnologies. Furthermore, the Company actively conducts various forms of technical innovationactivities such as skills competitions, technical training, etc. to encourage employees to innovate intheir positions and fosters an innovative culture that encourages experimentation and embracesfailure throughout the Company to employees maintain the best state of continuous innovation anddevelopment.
? Establishment of a technology innovation platform
The Company has established a high-level and open technology innovation platform alongwith a comprehensive innovation system. Through proactive integration of research and technicalresources from domestic and overseas research institutions and universities, we engage intechnological innovation research and have successfully achieved key technology breakthroughs,promoting research into key technologies and facilitating their transformation into practicalapplications, so as to provide continuous driving force for the Company’s innovative development.Leveraging its extensive corporate technical expertise, the Company has undertaken scientificresearch on key and challenging process technologies within the industry. This effort has yieldednumerous advanced results, patents, and standards, all bearing independent intellectual propertyrights. Through proactive promotion and application, the Company has successfully transformedthese scientific and technological achievements into enhanced productivity. This ongoing endeavorleads to a continuous improvement in production efficiency and quality levels, thereby generatingsignificant value for the advancement of the industry as a whole.
Key Performance
Multek, Mutto Optronics, and RF Top Electronic have been selected as specialized andsophisticated enterprises that produce new and unique products with the title of “little giant”.
In the first Suzhou High-tech Zone Staff Innovation and Efficiency Competition in 2023, twoemployees of the Company won the first and the second prize respectively, and the subsidiaryJDI Electronics received the Innovation Quality Award in the event.
? Technology ethics
The Company complies with ethical norms in technology and advocates for cultivating socialresponsibility values. Drawing upon independent innovation and emphasizing the significance ofintellectual property rights, the Company prioritizes key technologies while upholding excellentquality standards. We are committed to refraining from developing or utilizing scientific andtechnological products that pose harm to the natural environment, human health, public safety, orethical standards. Through the development of innovative and practical new products, technologies,and processes, we spare our efforts to contribute positively to social progress.
5.1.2. Protection of Intellectual Property Rights
The Company attaches great importance to the protection of intellectual property rights. Westrictly abide by the relevant laws and regulations such as the Intellectual Property Law of thePeople’s Republic of China and the Patent Law of the People’s Republic of China and haveformulated management systems such as the Intellectual Property Management Procedure and theConfidentiality Agreement to comprehensively strengthens the protection and management ofintellectual property rights and protects the related structural design, preparation methods, andprocess of core technologies. While safeguarding our intellectual property rights, we fully respectthe intellectual property rights of others. We commit to avoiding infringement of others’ intellectualproperty rights and conscientiously fulfilling confidentiality obligations, especially in technical andbusiness cooperation with partners. Without written permission, we disseminate no experimentalsamples, professional data, or technical indicators to any third parties. Through these initiatives, wehave maintained fair competition in order to ensure the healthy development of the market.? Prevention and control of intellectual property infringement risks. To address the risk of
intellectual property infringement, the Company has established a mechanism for identifying
and warning intellectual property infringement risks and conducted comprehensive
assessments of potential infringement risks related to the Company’s innovative technologies.
If it is detected that the potential risks are significant, the Company will mitigate potentialpatent infringement risks in R&D projects by adjusting other process technologies orcharacterization methods.? Enhancing intellectual property training. The Company places significant emphasis onenhancing employees’ awareness of intellectual property protection. We conduct regularintellectual property training sessions to educate employees about the importance ofintellectual property and to provide them with the necessary knowledge on how to effectivelyutilize and protect it. We strengthen the management and promotion of the Company’s patentapplications, encouraging employees to protect the Company’s new technologies, processes,inventions, etc., through patent applications and other means.
5.2. Quality Priority
5.2.1. Strict Quality Control
As excellent product quality is the cornerstone of industrial development, the Companycontinuously strives to deliver products of the utmost quality and reliability. Upholding the qualitypolicy of “meeting and exceeding customer needs”, the Company continuously cultivates a qualityculture and implements comprehensive quality assurance and quality prevention. The Company iscommitted to enhancing the effectiveness of quality management and the level of qualitycompetitiveness on the basis of full compliance with regulatory supervision or certificationstandards.
? Reinforced quality management
The Company has established a robust quality management system through qualitymanagement practices in accordance with international standards such as ISO 9001, IATF 16949,AS 9100, IS0 13485, VDA 6.3, and IS0 9004. and ensures the continuous enhancement of ourquality management system through a combination of various means such as internal audits,external audits, and management reviews. Through a series of quality management systems such asthe Research and Development Cycle Management Procedure, the Incoming Material InspectionProcedure, the Final Quality Inspection Procedure, the Non-conforming Product Control Procedure,
the Corrective and Preventive Action Procedure, the Customer Quality Complaint HandlingProcedure, etc., we have established a full life cycle quality control system covering project qualitymanagement, process quality management, supplier quality management, and other managementdimensions to ensure the high reliability and high consistency of products throughout their life cycle.
Key Performance
The Company’s main production and operation bases have all obtained ISO 9001 qualitymanagement system certification and IATF 16949 quality management system certification.
Full Life Cycle Quality Management
| Research and development quality management | The Company standardizes the research and development management process and carries out new product development design in accordance with the Research and Development Cycle Management Procedure in order to prioritize controlling important nodes throughout the new product development process to enhance the quality of our research and development efforts. | Digital quality management Through the establishment of an intelligent information fusion production system centered on data with deep interaction across multiple platforms and systems, the Company leverages systems such as Lesson Learn, E-Audit, QMS, SRM, and MES to strengthen statistical analysis of quality information data throughout the entire process, thereby promoting the construction of smart factories and systematically improving product quality. |
| Project quality management | With a more accurate understanding of customer requirements, the Company develops project control plans and clarifies project control standards to ensure project management quality strictly through scientific methods. | |
| Manufacturing process quality control | The Company comprehensively identifies the key processes and elements of the manufacturing process management from the perspectives of “people, machines, materials, methods, environment, and measurement” to strengthen the process quality control through quality control processes, thereby ensuring the reliability and consistency of product quality. | |
| Supplier quality management | The Company requires suppliers to pass quality management system certifications such as ISO 9001, and IATF 16949, and conducts new supplier certification, new material certification, incoming material inspection, and supplier performance |
| management according to system documents such as the Incoming Material Inspection Procedure. For detailed information, please refer to the chapter “Excellent Governance for Stable and Efficient Operations/Sustainable Supply Chain” in this report. | |
| Customer demand response | The Company has established an efficient customer response mechanism according to the Control Procedures for Processes Related to Customers to ensure that customer needs can be agilely responded to and clearly reflected and implemented in all aspects of the business chain while guaranteeing the high quality of products, thereby delivering high-quality products that satisfy customers. |
? Quality risk management
Quality risk management is an important element and activity in product quality management.The Company has established a set of scientific and comprehensive quality risk managementsystems, which includes assessing, controlling, communicating, and reviewing quality risksthroughout the product lifecycle to ensure product quality.
? Product inspection and non-conforming product management
In order to better prevent potential product safety and quality issues, the Company hasestablished a product and process reliability testing process and evaluation standards to achieve full-process product reliability risk management for technical elements, product development, and massproduction processes. We continuously improve quality standards and inspection procedures andconduct strict inspections on products in strict accordance with the requirements of the IncomingMaterial Inspection Operation Management Measures, the Process Inspection OperationManagement Measures, and the Product Inspection Control Procedures throughout the entirequality management process including incoming material inspection, intermediate productinspection, packaging material inspection, and product inspection. Through real-time trend analysisand monitoring of product inspection, we ensure that strict quality control is carried out at everystage from the entry of raw materials to the exit of products, so as to prevent potential product safety
and quality problems. For new or potential quality problems, we prioritize preventive testingsolutions such as error prevention and equipment automation to ensure that key quality elements areproperly controlled.The Company has set up multiple laboratories equipped with advanced research anddevelopment equipment and testing instruments to conduct adhesion tests, solvent resistance tests,hardness tests, impact resistance tests, salt spray tests, etc., to provide long-term services for newproduct development, mass production product quality control, and after-sales service. For specialtests, the Company will arrange for samples to be sent to third-party testing institutions. Productsmust pass through product safety and reliability tests before mass production and those failure topass through the tests shall receive continuous improvement until they are qualified. Any problemsfound in the reliability testing process should be fed back to the production department forcontinuous review and improvement to ensure product quality and stability.
| Key checkpoints for material and product inspection | |
| Incoming material inspection | The Company conducts quality inspections on materials during the material incoming stage to ensure that the production materials and packaging materials meet requirements. |
| Manufacturing process patrol and sampling inspections | The Company conducts patrol inspection on the manufacturing process while monitoring the working process to ensure that intermediate products meet the requirements during the production process. |
| Finished product inspection | The Company conducts strict inspections of finished products to ensure that only products meeting the qualified standard requirements can be delivered and the finished products have met the shipping requirements. |
The Company has established the Non-conforming Product Control Procedure and the ProductRecall Procedure to standardize the management procedures for non-conforming products andclarify the responsible departments for each process to strictly control quality. If any defective
product causes an accident, the Company will immediately take damage control measures to identifythe cause of the defect and eliminate the problem, and carry out review work in a timely manner tomake continuous improvements from both technical and management aspects to prevent therecurrence of quality incidents.
| Inspect and identify suspicious or unqualified products | |||
| Label the identified suspicious or unqualified products (unqualified product tags) | |||
| Place unqualified products in designated isolation areas, and ensure proper segregation | |||
| The quality department organizes reviews and judgments to confirm the disposal method | |||
| The relevant departments shall rework, repair, and scrap the unqualified products or dispose of them in other ways based on the determination results | |||
| Analyze the data of unqualified products for improvement and continuous monitoring | |||
| End of management process | |||
? Quality culture for all employees
As quality culture is crucial for the Company’s quality management and business development,the Company carries out various quality improvement activities and treats quality management as acompulsory course for employees. The Company formulates an annual quality training plan for allemployees, strictly implementing various quality training activities as planned to enhance theawareness and capabilities of all employees in quality management through performanceevaluations, knowledge sharing, recognition, and other methods. At the same time, through variousquality management promotion campaigns such as quality months, Quality Control Circles (QCC),
etc., the Company encourages employees to actively participate in quality management, cultivatinga cultural atmosphere of “everyone cares about high quality, everyone creates high quality, andeveryone enjoys high quality”.
| Key Performance Quality training covers 100% of all quality-related employees. |
| Case: Multek Implements Quality Culture of “Prioritizing Quality Everywhere and Believing Every Individual can be a Craftsman” In order to implement the quality culture policy of “Prioritizing quality everywhere and believing every individual can be a craftsman”, Multek launched the “Quality Empowerment Creation Camp” project in 2023. By developing and training quality courses, cultivating an internal team of quality trainers, and creating a culture of quality learning, Multek cultivated quality talents, enhanced the professional level of quality personnel, and helped improve the Company’s quality management level. In June 2023, Multek initiated QCC quality management campaigns. The QCC teams selected topics that align with the Company’s strategic goals and quality indicators around aims of increasing product yield, enhancing customer satisfaction, reducing waste and damage, etc. Subsequently, these teams carried out various quality improvement activities through a variety of quality management tools and methods, and effectively implemented the principle of “everyone participating in continuous quality improvement” by virtue of the “bottom-up” organizational structure. Each cycle of activities concluded with a thorough summary, which helped in consolidating the lessons learned and passing on the knowledge gained, thereby fostering the next iteration of the Plan-Do-Check-Act (PDCA) cycle. This process ensures continuous improvement with “clear objectives, identified starting points, and verified outcomes”. QCC quality management activities, which are characterized by “small, practical, dynamic, and innovative”, have fully embodied the spirit of “Prioritizing quality everywhere and believing every individual can be a craftsman”, mobilizing a broader force to promote quality improvement, create quality results, and advance the Company’s quality culture construction work from theoretical to |
5.2.2. Chemical Safety
5.2.2.1. Product Chemical Safety
The Company is dedicated to minimizing environmental impacts associated with ouroperations. To address this, we have established a chemical safety working group responsible foradvancing chemical safety management issues such as chemical risk identification, hazardprevention, emergency response strategies, and the development of phase-out plans for hazardouschemicals. We have systematically cataloged and formulated a comprehensive list of chemicalsrequired for and resulting from our production processes. Additionally, we have implementedwhole-process management for the use of chemical substances throughout the entire process fromprocurement to the final stages of usage, so as to strictly manage hazardous chemical substancespresent in raw materials, products, and throughout the manufacturing processes. At the same time,the Company has also set chemical safety-related targets and regulated the completion of thesetargets as an important part of management’s performance evaluation, to ensure the reduction ofchemical substances that affect human health and the environment in the Company’s productionoperations to a minimum.
? Commitment and declaration
The Company complies with the requirements of the EU Directive on the Restriction ofHazardous Substances in Electrical and Electronic Equipment (RoHS) (including extended
directives), the EU Regulation on the Registration, Evaluation, Authorisation and Restriction ofChemicals (REACH), the Norwegian Prohibition on Hazardous Substances in Consumer Products(PoHS), the International Electrotechnical Commission’s Standard on Material Declaration forProducts of and for the Electrotechnical Industry (IEC 62474), the Canadian Prohibition of CertainToxic Substances Regulations (SOR/2012-285), etc. We insist on producing excellent products inline with green environmental protection norms and promise that the content of hazardoussubstances in raw materials, parts, assemblies, and finished products in the Company has met therequirements of RoHS, REACH, and other HSF laws and regulations as well as customerspecifications. We also carry out investigations and third-party testing for hazardous substancecompliance according to the relevant standards, so as to ensure that the products produced andmanufactured by us are all in compliance with the requirements. In 2023, Multek conducted third-party hazardous substance testing on a total of 19 types of products with different surface treatmentsfrom 5 factories, achieving a 100% pass rate.
| Restricted Substance Commitment 100% of our products are in compliance with the latest regulations on restricted substances in products and customer specifications |
| ? The Company carries out investigations and third-party testing for hazardous substance compliance on products to ensure that the content of harmful substances in the products is below the limits specified by laws, regulations, and customer specifications. The hazardous substances include but are not limited to: ? EU RoHS Directive 2011/65/EU (RoHS 2.0) and its amended directive (EU) 20151863: lead and its compounds (Pb), cadmium and its compounds (Cd), mercury and its compounds (Hg), hexavalent chromium and its compounds (Cr~6+), polybrominated biphenyls (PBB), polybrominated diphenyl ethers (PBDE), bis(2-ethylhexyl) phthalate (DEHP), butyl benzyl phthalate (BBP), dibutyl phthalate(DBP), and diisobutyl phthalate (DIBP) ? EU (EU) Directive 2019/1021 (EU Persistent Organic Pollutants Directive): hexabromocyclododecane (HBCDD) ? Halogen-free material management requirements: fluorine (F), chlorine (Cl), bromine (Br), iodine (I) ? REACH substances of very high concern |
? Improvement of hazardous substance control list
In accordance with laws and regulations, industry standards, and international conventions onhazardous chemical substances such as RoHS and REACH, the Company, combined with hazardoussubstance control specifications and management documents received from clients, has formulateda detailed and dynamically updated Hazardous Substance Control List to specify the restrictedchemical substances in use and production. At the same time, the Company has establishedelimination, replacement, or reduction plans for prohibited and restricted chemicals in theHazardous Substance Control List, strictly prohibiting the re-importation of phased-out substancesinto any production and non-production stage.
Hazardous Substance Control List
| RoHS 2.0 Revised | REACH Regulations | New National Standard for VOC | Hazardous Substances |
| POPs Regulations | Annex XIV | PAH Regulations | Control list |
| TSCA Act | Annex XVII | Customer Requirements | |
| California Proposition 65 | SVHC |
? Chemical substance control management throughout the product lifecycle
For chemicals involved in product design and manufacturing processes, the Company hasestablished a series of toxic and hazardous substance and chemical management systemspecifications and management processes, including the Chemical Management Procedure and theHazardous Substance Risk Management Procedure, to prevent and control potential risks ofhazardous substances in products and strengthen the management of chemical safety. When thereare significant adjustments in relevant laws and regulations or company policies, the Company willupdate and adjust the hazardous substance management regulations in a timely manner and sendthem to all suppliers synchronously. The suppliers are required to fill in the Hazardous SubstanceEvaluation & Declaration Report again and the Company will manage and audit the suppliers
according to the latest standards. The Company maintains a continual assessment of the hazardsassociated with chemicals used across various stages of the product manufacturing process. Weintegrate environmental and health standards throughout all phases, from product developmentdesign to production, to establish a management mechanism together with implemented actionmeasures to prevent the use of hazardous substances. This initiative enables us to build acomprehensive hazardous substance management system to achieve comprehensive oversight andcontrol.
The Company regularly conducts chemical safety training. Employees are required to attendcorresponding training on environmental hazardous substance control to systematically learn RoHSbasic knowledge and customer requirements, internal procedures for environmental hazardoussubstance control, chemical safety, and other knowledge. In addition, the Company activelymaintains close communication with suppliers and partners, providing hazardous substancemanagement training for suppliers to ensure that they understand and comply with applicablestandards and requirements.
Key PerformanceDongshan Precision and its subsidiaries Yongchuang Tech, Suzhou Chengjia, Mutto Optronics,MFLEX Suzhou, MFLEX Yancheng, Multek Industries, Multek China, Multek Zhuhai have allpassed the IECQ QC 080000 Hazardous Substance Process Management System Certification.
| Product Lifecycle Management | |
| R&D and design | The Company has established a complete process specification for chemical product design, development, and use. We review new products according to the R&D cycle management procedure combined with design drawings, inspection standards, clients’ HSF requirements, and HSF laws and regulations. We assess our designs according to the RoHS design control procedure and specify that it is prohibited to use the Company’s level I hazardous substances in the design of all material control drawings. Materials selected during the assessment phase must pass RoHS certification and provide third-party test reports such as MSDS/SGS simultaneously. |
| Green procurement | The Company continues to carry out green procurement and requires products provided or processed to comply with the Environmental Hazardous Substance Control Standard and the requirements of relevant laws, regulations, and government directives. Suppliers are required to provide declaration reports annually (e.g. Multek suppliers are required to provide the Hazardous Substance Review & Declaration Report annually), third-party hazardous substance test reports (including RoHS test reports/REACH reports), and updates. Only chemicals that have passed compliance audits can be allowed for use. |
| Manufacturing process management | In order to ensure that chemicals are purchased, handled, stored, dispensed, used, discarded, and disposed of in an emergency in a safe manner, avoiding hazards to human health as well as preventing pollution accidents, each business segment has formulated the Chemical Management Procedures, Guidelines for Safe Work in Chemical Storage and other systems and norms to improve the on-site management of hazardous chemicals throughout the entire process. |
| Delivery management | In strict accordance with product design management specifications and related shipping management procedures, the Company has confirmed that the components and materials constituting the products are in line with the Hazardous Substance Control List under shipping inspection items or customer-specific requirements. We entrust third-party testing institutions to conduct inspections on hazardous substances under customer requirements to ensure that the hazardous substances contained are below the limits required by laws, regulations, and customer specifications. Qualified products should be labeled with environmental compliance labels or attached with the necessary test reports and conformity declarations, etc. according to relevant requirements. |
5.2.2.2. Chemical Management
The Company formulates the Dangerous Chemical Safety Management System and theManagement Measures for Easy-to-Make Drugs and Explosives in accordance with relevantnational laws and regulations, industry standards, and requirements of relevant parties on dangerouschemicals. We supervise and manage the entire process covering procurement, loading andunloading, use, production, storage, transportation, and packaging of dangerous chemicals, organizeregular training for relevant personnel on dangerous chemicals, and conduct annual chemicalleakage emergency response drills to enhance the ability to respond to chemical leaks. Throughthese initiatives, we maximize the elimination, reduction, or control of the impact of hazardous
chemicals on the health and safety of persons.
| Entire Process Management of Chemicals | |
| Procurement | All procurement needs must be reported uniformly according to work requirements, and purchases must be made strictly in accordance with the procurement procedures after approval (highly toxic substances are required to be approved by the project department and the municipal public security bureau). |
| Acceptance and warehousing | When accepting highly toxic substances for warehousing, personnel from the procurement department and EHS department must be present to supervise the entire process of warehousing. |
| Handling and storage | Dedicated vehicles are used to transport chemicals to prevent leaks and splashes, thereby ensuring safety during transportation. Chemicals are pasted with safety labels after the safe handling and storage to ensure correct classification. Hazardous chemicals are properly stored under different categories and inspected by designated personnel every day for management. |
| Material allocation and requisition | The Company requires units with demands to fill out the chemical requisition form and apply hazardous chemicals as needed. Hazardous chemicals allocated to the production site are stored in explosion-proof cabinets with special locks equipped. In addition, the Company keeps detailed records of chemical inventory changes and installs a networked alarm system and infrared detection system on-site. All these measures can contribute to ensuring the safety of the requisition process. |
| Emergency protection | Appropriate protective equipment should be provided in accordance with the MSDS requirements when handling chemicals and effective firefighting equipment should be available in the chemical temporary storage area for emergency use. |
| Usage | The Company guarantees the safe use and management of easily producible chemicals. Personnel handling chemicals should wear proper personal protective equipment to ensure compliance with operating procedures. When supplying materials, we use double-layered tubes to prevent leakage and transparent tubes for timely inspection and maintenance in case of problems. We install monitoring systems and other equipment on the production site to detect toxic and flammable gases. |
| Discard | We properly handle various types of chemical waste in accordance with the Waste Management Procedure and entrust qualified purchasers to recycle and dispose of hazardous waste. |
| Multek conducts emergency drills for chemical spillage | RF Top Electronic conducts exercises for chemical spillage |
5.3. Professional Services
5.3.1. Customer Relationship Management
Guided by a customer-centric approach, the Company strives to provide customers withcomprehensive, one-stop, and technologically advanced solutions to meet their customized needs.We establish norms and a clear, orderly, timely, and efficient customer service management system,actively promoting the standardization of customer service processes to continuously improvecustomer satisfaction, so as to build good long-term relationships with customers.
? Optimization of customer service
The Company remains dedicated to enhancing its customer service system by deeplyunderstanding customer expectations and needs. We provide personalized solutions tailored tocustomers and are committed to responding to customers with reliable services promptly throughoutthe entire customer service process covering pre-sale, in-sale, and after-sale stages. We also conductregular customer satisfaction surveys and continuously optimize our service content and processesto better align with evolving customer needs and expectations.
| Improving service system | ? By establishing service management systems such as the Control Procedures for Processes Related to Customers and the Customer Satisfaction Management Procedures, we clarify customer service standards such as service processes, service content, response time, and handling reports for after-sales services. ? We have enhanced the service awareness and skills training of the |
| customer service team to provide customers with accurate and comprehensive product information and technical support, thus improving overall service levels. | |
| Ensuring Smooth Channels for Communication | ? We communicate with customers through multiple channels such as emails, phone calls, video conferences, and offline visits to fully understand and meet the diversified needs of customers. |
| Timely response to demands | ? After receiving customers’ service requests, we respond efficiently and arrange personnel to provide service support in a timely manner. We regularly visit customers to listen to their opinions and feedback on the Company and its products and promptly address any issues raised by customers, thus establishing a good trust relationship with customers. |
| Digital customer service | ? We adopt digital technologies such as automation and artificial intelligence to expedite the order processing speed and the confirmation of customer order-related information, enhancing the efficiency and accuracy of customer service. |
? Customer complaint management
The Company values customers’ opinions and feedback and has established the CustomerComplaint Handling Process to continuously optimize the customer complaint handling mechanismand process. We have designated personnel responsible for handling customer complaints andresponding to and resolving customer feedback in a timely manner according to the actual situationof the product or service. For customers’ feedback, we have carried out an analysis and made activerectification to ensure that our solution can meet the requirements of the customers.
Key PerformanceThe Company’s customer complaint response rate and customer complaint resolution rate areboth 100%.
| Complaint Handling Process | |
| Receipt and recording | Customers can file complaints or provide feedback through the 24-hour toll-free service hotline. The Company will promptly handle customer complaints with a focus on understanding the issues thoroughly, and maintain detailed records of |
| customer complaints and solutions. | |
| Investigation of issues | The Company will investigate the defective products and related issues based on customer feedback. |
| Interim resolution | The Company will draft interim solutions to determine how to handle relevant matters, ensuring that the cooperation is not affected. |
| Follow-up and enhancement | The Company will analyze the reasons and provide timely feedback to customers, clarifying corrective and preventive measures for such events with prompt correction and prevention of related problems. |
? Customer satisfaction survey
The Company regularly conducts customer satisfaction surveys, which include procurement,quality, engineering, technical support, customer service, etc. According to the results of the surveys,the Company makes return visits to customers to identify problems and deficiencies in a timelymanner, so as to formulate corresponding improvement measures to enhance customer satisfaction.
5.3.2. Responsible Marketing
Upholding a responsible marketing promotion philosophy, the Company provides accurate andcomprehensive information on market development, customer sales, product label management, andother links in strict compliance with laws and regulations such as the Consumer Rights ProtectionLaw of the People’s Republic of China, the Anti-Unfair Competition Law of the People’s Republicof China, and the Advertising Law of the People’s Republic of China and relevant rules, to promoteproducts in an ethical, scientific, and objective manner. The Company integrates complianceawareness into business expansion and contract management to effectively protect the legitimaterights and interests of customers.
? Marketing compliance management
The Company continues to improve the responsible marketing compliance managementsystem and clarifies marketing compliance responsibilities and processes to ensure accuratedisclosure of product information. In the marketing promotion process, with strict adherence to anti-unfair competition and anti-monopoly requirements, exaggerated or false information andmisleading statements are strictly prohibited. All promotional information should be accurate,
clarified, and transparent, and any violations in marketing activities should be promptly addressed.In accordance with the Code of Business Ethics and other documents, it is clearly provided that,when employees expand business and engage in commercial activities, they should comply withrelevant national laws and regulations and the Company’s code of ethics and conduct externalbusiness activities in accordance with the Company’s procedures and disciplines.
? Responsible marketing training
The Company develops annual responsible marketing training programs to regularly providesales personnel with special training on responsible marketing, customer communication, and anti-corruption training to ensure that employees know, understand, and comply with the relevantprinciples and regulations, thereby achieving ethical, scientific, and precise communication.
2023 Environmental, Social, and Governance (ESG) Report of Suzhou Dongshan Precision Manufacturing Co., Ltd.
6. Building a Clean and Low-carbon Production System forEnvironmental Friendliness
United Nations Sustainable Development Goals (SDGs)
6.1. Environmental Impact Management
Under the principle of prioritizing environmental protection, the Company integrates theconcept of green development into its operations to minimize the impact on the environment whileenhancing the Company’s competitiveness, so as to achieve a win-win situation between economicbenefits and environmental protection.
? Environmental management system
The Company strictly complies with environmental protection laws and regulations such as theEnvironmental Protection Law, the Air Pollution Prevention and Control Law, the EnergyConservation Law, the Water Pollution Prevention and Control Law, and the Solid Waste PollutionPrevention and Control Law, and continuously improves the environmental management system inaccordance with the requirements of standards such as ISO 14001 Environmental ManagementSystem and ISO 50001 Energy Management System. The Company has established an EHSdepartment, which is responsible for coordinating, promoting, and supervising various businesssegments to plan and implement EHS programs and objectives. The EHS management systemcovers 100% of all relevant business segments of the Company. Each business segment formulatesenvironmental management objectives based on specific needs and requirements. These objectivesare then cascaded down to relevant departments, the completion of which is linked to theperformance evaluation of relevant management personnel.
| Organizational structure | Institutional system | Management objectives |
| The Company has established an EHS department to coordinate and manage overall affairs while each business segment has established an EHS management committee/EHS management department. | Each business segment has established a “1+N” system: 1: Environmental Management/EHS Manual; N: Environmental/EHS-related management procedure documents. | Each business segment sets environmental management objectives based on its development stage, such as “zero environmental accidents,” pollutant emissions meeting standards, carbon reduction targets, etc., and links the achievement of these objectives to the performance evaluation of relevant management personnel. |
Key PerformanceTotal environmental investment for the year amounted to RMB 228,684,200.There are 0 environmental accidents throughout the year.The Company’s main production and operation entities have all passed the ISO 14001environmental management system certification.Mutto Optronics and MFLEX Electronics have passed the clean production audit certification.
Honor
Dongshan Precision was awarded the title of Green Factory (Provincial Level)MFLEX Suzhou was recognized as a leading green development enterprise and a green factoryin Jiangsu Province (Provincial Level)
? Environmental risk prevention and control
The Company actively promotes environmental impact assessments and hidden dangerinspections in key plants, clarifying environmental factors that can be controlled and influenced inactivities, products, and services, and supervising, following, and managing their environmentalimpacts from a lifecycle perspective. We promote various production and operation entities toenhance environmental emergency management, formulate special plans for emergencyenvironmental incidents, and conduct special emergency drills, in order to improve their emergencyresponse capabilities for environmental incidents to minimize environmental impacts.
Multek Hazardous Waste Liquid Leakage Emergency Drill
? Environmental audit
The Company’s key plants regularly carry out internal reviews of the environmentalmanagement system and cooperate with external regulatory agencies and related parties to conductenvironmental audits to ensure the effectiveness and compliance of the environmental managementsystem through internal and external inspections.
entities have paid fees based on actual discharge situations and whether there are any arrears.Third, we inspect the main pollutant emission indicators and control measures to understandpollutant emission concentrations and compare them with the standards.? Clean production audit: A clean production audit team led by the General Manager of thedivision has been established to promote the clean production audit work. In November2023, Yancheng Dongshan and MFLEX Yancheng passed the clean production audit.
? Environmental protection training
The Company regularly conducts special environmental protection training activities to timelylearn and master the environmental management requirements of the operating sites, helping toenhance employees’ awareness and capabilities in environmental protection.
Key PerformanceIn 2023, the environmental protection training covered 100% of the main operating bases.
“Dual Carbon” Training of MFLEX Suzhou
| “Dual Carbon” Training of MFLEX Suzhou | Multek’s Energy-saving Promotion Activities |
6.2. Expansion of Green Energy
Due to increasingly serious problems in global climate change, energy crisis, andenvironmental pollution, topics such as green, energy conservation, and environmental protectionhave been highly valued. Upholding the concept of green development, the Company integrates
clean technology innovation into its strategy, increasing investment in industries such as corecomponents of new energy vehicles to continuously explore to create a green technology innovationengine, so as to contribute to the green transformation of the industry.
6.2.1. Layout of Green Industries
Dongshan Precision, on the basis of years of deep-rooted advantages in the field of consumerelectronics, has prioritized new energy as one of the key directions for future development. TheCompany focuses on the field of new energy vehicle components to conduct continuous innovationand R&D and enable the new energy vehicle component business to become a new growth point forthe high-quality development of the Company.
6.2.2. Innovative Green Technology
While expanding into the green industry, the Company is also committed to providing moreenvironmentally friendly high-quality products. By increasing the R&D and promotion of cleantechnologies, the Company actively applies new materials, new equipment, new processes, and newtechnologies to provide more environmentally friendly solutions for the industry.
6.3. Addressing Climate Change
6.3.1. Enhancing Climate Resilience
The Company has incorporated addressing climate change into its management strategy inaccordance with policies, regulations, international initiatives, and trend requirements, continuouslyenhancing its ability to manage climate risks and opportunities and its climate resilience.
| Governance The Company has integrated sustainable development requirements into its governance structure. The Sustainable Development Administration Committee is responsible for supervising climate change-related action strategies, policy guidelines, goal setting, annual plans, performance index, etc. The EHS department is responsible for developing climate change response strategy objectives and implementation plans, and promoting related work implementation through a closed-loop management model. | |||
| Strategy Following the background trends of climate change, the Company advances the analysis of climate-related impacts, risks, and opportunities, and gradually promotes short-term, medium-term, and long-term management strategies and plans to enhance climate resilience. | |||
| Risk management The Company identifies various risks and opportunities and assesses their potential impacts on the Company’s operations and finances. We incorporate significant risks and opportunities into the Company’s risk management, continuously strengthening risk response strategies to ensure alignment with policy trends, market developments, customer needs, etc. | |||
| Indicators and targets The Company continuously conducts an inventory and review of greenhouse gas emissions and formulates a carbon reduction pathway to clarify targets and implementation programs. | |||
| Types of risks | Risks, opportunities, and potential impacts | Addressing measures | |
| Physical risks | Extreme weather | With climate change, the increase in extreme weather such as extreme heat, extreme cold, heavy rainfall and flooding, typhoons, etc., may have an impact on the | ? Strictly control EHS risks and supply chain risks, develop emergency plans, and strengthen emergency drills. ? Consider regional climate risks when |
| Company’s business continuity. | selecting and planning projects; ? Improve production efficiency through energy-saving technological upgrades and energy structure optimization. |
Temperaturerise
| Temperature rise | The rise in average temperatures poses significant challenges for the Company, including increased operating costs for infrastructure and potential health risks for employees. | ||
| Transition risk | Policy and regulatory risks | As national policies and requirements become increasingly stringent, adapting to policy changes may lead to increased costs and tighter operational constraints. | ? Take the initiative to communicate with local policy authorities to study, follow up, and publicize policy changes in a timely manner, and strengthen compliance management with consideration of policy adaptability in a forward-looking manner; ? Pay attention to the carbon market development trends and make preparations. |
| Market and technological risks | As customers’ requirements for carbon emission reduction in the value chain are becoming increasingly stringent, entering into green industries and adopting green technologies will enhance the Company’s product competitiveness, but the cost of low-carbon transformation investment will also increase. | ? Strengthen R&D of low-carbon technologies, development of low-carbon products, and industrial layout, and accelerate green and intelligent transformation to seize clean technology opportunities; ? Plan the carbon reduction path and comprehensively assess the return on investment and feasibility before implementing low-carbon transformation projects, adopting the optimal solutions based on practicality. |
6.3.2. Energy Management
In active response to the national “dual carbon” initiative, the Company promotes energymanagement according to the requirements of the ISO 50001 energy management system. Weactively formulate carbon neutrality goals and path planning and gradually promote each subsidiary
to establish a sound energy management structure, formulate energy-saving target plans, andconduct energy-saving inspections, so as to continuously improve the Company’s energymanagement level.
Key PerformanceDongshan Precision passed the ISO 50001 energy management system certificationMFLEX Suzhou passed the ISO 50001 energy management system certification and the ISO14064 carbon certification audit.Multek Industries, Multek China, and Multek Zhuhai all passed the ISO 14064 carboncertification audit.
6.3.2.1. Energy Management Goals
The Company vigorously promotes the management of energy consumption and energyefficiency and continuously improves the system requirements relevant to energy management byaligning with the construction requirements of the ISO50001 energy management system. Weactively plan the greenhouse gas inventory work based on ISO14064 and other standards, clearlydefining carbon reduction targets and paths, and establishing and improving energy saving andemission reduction index system, monitoring system, and appraisal system to achieve greatercontrol and manageability of energy. By the end of 2023, MFLEX Suzhou has completed the carboninventory work.
Carbon peaking and carbon neutrality goals for MFLEX Suzhou:
Achieving carbon peaking by 2024, reducing carbon emissions by 50% by 2025, and achievingoperational-level carbon neutrality by 2030.
6.3.2.2. Energy Conservation and Carbon Reduction Management
The Company conserves energy and reduces emissions from three perspectives, namely,energy structure optimization, technological energy conservation, and management energyconservation, to continuously improve the management level of energy consumption and efficiency.
We establish an energy-saving team and conduct energy-saving inspections, continuously trackingenergy-saving effects to ensure the effective implementation of energy management measures.
| 01 On-site audit |
| 02 Report submission |
| 03 Improvement plan submission |
| 04 Improvement tracking |
| 05 Improvement confirmation |
| 06 Continuous improvement |
The energy-saving team conducts on-site audits every day
| Energy structure optimization | The Company increases the consumption proportion of clean energy and renewable energy and gradually raises the proportion of green electricity through measures such as expanding photovoltaic power generation and purchasing green electricity. Photovoltaic power generation equipment is installed in all effective places of the plants. |
| Photovoltaic Equipment on the Plant Rooftop | |
| Technological energy conservation | The Company replaces old, high-energy-consuming, and inefficient equipment and adopts more efficient production technologies and processes to improve energy efficiency and achieve operational emission reduction. |
| Management energy conservation | The Company promotes key operating entities to gradually establish a smart energy online monitoring system. We achieve real-time monitoring and analysis of energy consumption by virtue of information technology and big data analysis and control energy use through digital means. We also continuously optimize energy use strategies to further improve the Company’s energy efficiency. ? Real-time energy consumption monitoring: Through the power monitoring platform, the Company collects and analyzes the energy consumption of major equipment in real-time with granularity refined to every hour, to promptly identify abnormal consumption patterns. ? Visual analysis of energy consumption: The Company conducts an in-depth analysis of energy consumption data to reveal trends and changes in energy consumption at different workstations and periods, in order to identify energy-saving improvement opportunities and develop more effective energy-saving strategies. MFLEX Suzhou Intelligent Monitoring System |
| Case: MFLEX Suzhou: Refined Management of Shuttle Buses Creates a New Energy-saving Mode | |
For the convenience of employees commutingand to reduce private car fuel emissions, MFLEXSuzhou has been providing free shuttle services foremployees for many years. In the past three years, theCompany has implemented a series of energy-savingmeasures, such as continuous optimization andcombination of routes to reduce the number ofvehicles, replacement of fuel vehicles with electric vehicles, etc. to further reduce carbon dioxideemissions. Through three years of efforts, the Company has successfully implemented refinedmanagement practices for shuttle buses, yielding a significant result of an annual fuel saving of178,560 liters in the future.
6.4. Water Resources Management
The Company primarily sources its water from municipal supplies. The main production andoperation sites with large water consumption are located in areas with lower water resource risklevels. The Company promotes the establishment of water-saving teams/water-saving specialists inkey plants and formulates annual water-saving plans and implementation schemes to minimizewater consumption and promote the sustainable use of water resources. During the reporting period,the Company experienced no major violations related to water resources.? Water conservation. We formulate a water consumption quota plan and monitor and follow up
on the monthly water consumption situation to find out the weak links and strengthen the daily
water conservation management. We regularly maintain and manage the water consumption
equipment through water-saving facilities and appliances to eliminate the phenomenon of
water leakage, drip, and spill. We also carry out water conservation publicity activities with
enhanced water conservation publicity efforts to advocate the water conservation trend.? Water recycling. The Company actively promotes water recycling technology in production
operations. We renovate and upgrade recycling water treatment facilities for collecting treating,
and reusing production wastewater to improve water resource utilization efficiency and reduce
the impact of wastewater discharge on surrounding water bodies. We retrofit or constructrainwater reuse irrigation systems on production and operation sites, purifying and treatingcollected rainwater for greening, cleaning, and other non-potable uses, so as to reduce thereliance on municipal water supply.? Water risk reduction. During the selection process for new project investments, we, with fullconsideration of water resource risks, constantly monitor the risk of water shortages and assesswater use strategies to ensure that the water supply can guarantee necessary productionoperations.
Case: Reusing Reclaimed Water Effectively Quenches Our Production NeedsThe Company continuously explores new water management methods and ideas that suitits actual situation and improves water utilization rate through multiple water reuse measures.RO concentrate water is efficiently utilized, with a preference for toilet flushing. Furthermore, awater reuse system has been installed within the plant to collect and treat RO concentrate water,ensuring its safe return to the pure water system for use in water production processes andultimate return to various production sections for reuse. This innovative approach enables theCompany to achieve a 100% reuse rate for RO concentrate water.
6.5. Emissions and Waste Management
The Company complies with relevant laws and regulations such as the Law of the People’sRepublic of China on the Prevention and Control of Water Pollution, the Law of the People’sRepublic of China on the Prevention and Control of Environmental Pollution by Solid Waste, andthe Law of the People’s Republic of China on the Prevention and Control of Air Pollution, as wellas local emission standards. We have established the Environment, Health and Safety (EHS)Management Manual and EHS-related management procedures, etc., and a comprehensive “threewastes” emission monitoring and control system involving various business segments. We minimizethe impact of emissions on the environment under the principle of “reduction, recycling, and re-utilization” on the basis of ensuring compliance with emissions standards.
Key Performance
| Indicators | Goal | Progress in 2023 |
| Compliance rate of “three wastes ” emissions | 100% | 100% |
| Environmental pollution incidents | 0 | 0 |
| Hazardous waste compliance disposal rate | 100% | 100% |
6.5.1. Wastewater Discharge Management
The Company’s wastewater mainly originates from domestic sewage and industrial workshopeffluents. The Company strictly complies with the laws, regulations, and standards such as the Lawof the People’s Republic of China on the Prevention and Control of Water Pollution, the IndustrialWastewater Discharge Standards, the Integrated Wastewater Discharge Standards, etc. We haveestablished targeted system guidelines such as the Water Pollution Control Management Benchmarkto regulate wastewater discharge control, treatment processes, monitoring, emergency management,etc. Domestic sewage is discharged into the municipal sewage network, while productionwastewater undergoes processes such as coagulation, precipitation, biochemical treatment, MBRmembrane filtration, etc., before being discharged into the effluent pools after meeting the requiredstandards. Wastewater discharge at major operating bases is monitored by internal managementpersonnel and third-party personnel. The Company continuously optimizes the wastewatertreatment processes to enhance the effectiveness of pollutant treatment. We install online pollutantmonitoring systems at discharge outlets to connect with national, provincial, and municipalenvironmental protection departments for joint monitoring of wastewater discharge parametersincluding flow rate, pH value, chemical oxygen demand, ammonia nitrogen, etc.
6.5.2. Exhaust Emission Management
Types of exhaust emissions mainly include volatile organic compounds, hydrogen chloride,sulfuric acid mist, hydrogen cyanide, nitrogen oxides, particulate matter, etc., generated during theproduction process. The Company strictly complies with relevant laws, regulations, and standardssuch as the Law of the People’s Republic of China on the Prevention and Control of Air Pollutionand the Emission Control Standard for Volatile Organic Compounds of Industrial Enterprises. Allexhaust emission outlets are designed and installed in accordance with national standards. The
exhaust gases are emitted into the atmosphere through high exhaust pipes after being treated byhigh-efficiency air filters. Exhaust emissions at major operating bases are monitored by internalmanagement personnel and third-party agencies to ensure emission compliance. We continuouslyoptimize environmental treatment processes and upgrade high-efficiency end treatment devices tofurther reduce exhaust emissions on the basis of emission compliance.
| Case: Efficient Processes Facilitate Prevention and Control of Air Pollution Multek’s exhaust gases are mainly sourced from processes such as solder mask, silk screen printing, etching, and acid washing. The Company actively implements measures for prevention and control of air pollution. We introduce advanced treatment technologies to adopt targeted exhaust gas treatment technologies for different types of exhaust gases for effective treatment. For organic exhaust gases, we adopt the “zeolite molecular sieve adsorption desorption + combustion” treatment process with an exhaust gas removal rate of over 90%, significantly reducing pollution to the atmosphere. For acidic and alkaline exhaust gases, we adopt the “acid-base neutralization” treatment process, which treats the exhaust gases by adding neutralizing agents to convert hazardous components in acidic and alkaline exhaust gases into neutral substances, achieving purification and harmlessness of exhaust gas emissions. For particulate matter, we adopt the “bag filter” treatment process, which filters the exhaust gases through a bag filter to effectively capture and remove particulate matter. | |||
| Exhaust Gas Absorption Device in Multek’s Electronics Workshop | Absorption Towers Outside of Workshops of Multek Industries and Multek China |
6.5.3. Waste Emission Management
The waste generated by the Company is divided into two categories: solid waste and hazardouswaste. Non-hazardous waste mainly includes household garbage, waste plastics, waste paper, wastetextiles, etc., while hazardous waste mainly includes sludge, waste printed circuit boards and scraps,dry film residue, and contaminated waste (filter cores, empty barrels, ink cans, etc.). The Companystrictly complies with relevant laws and regulations such as the Law on the Prevention and Controlof Environmental Pollution by Solid Wastes and the Measures for the Administration of the Transferof Hazardous Waste. In accordance with guidelines such as the Waste Management Benchmark andthe Hazardous Waste Management Plan, we have established strict waste treatment processes andsafety operating procedures and regularly organize EHS personnel to assess the operation of wasteto ensure its harmlessness, minimizing the impact of waste on the environment and human health.
| Hazardous waste | The Company has established hazardous waste warehouses equipped with waterproof and leak-proof measures, where hazardous wastes are strictly classified, stored temporarily, and managed by designated personnel according to the Standard for Pollution Control on Hazardous Waste Storage (GB18597-2023). We also submit warehousing applications to the governments’ electronic systems of hazardous waste management and regularly entrust agencies with professional treatment qualifications to remove and dispose of hazardous wastes. |
| Non-hazardous waste | Non-hazardous wastes in the plants are prioritized for recycling. They are transferred to designated storage points within the specified time. General production solid waste is collected and processed by qualified agencies |
for comprehensive utilization while household solid waste and garbageare collected uniformly and then removed by the sanitation departmenton a regular basis under entrustment. Waste oils are stored in dedicatedcontainers and regularly recycled by qualified agencies underentrustment.
Adhering to the principle of “reduction, reutilization, and harmlessness of solid waste”, theCompany promotes the process of solid waste reduction and minimizes the generation of wastethrough the optimization of production processes and resource recycling.
| Priority for recycling and reuse |
| ? By using kraft paper and pads multiple times in production, we can cut down the amount of kraft paper and pads used each year from the source; |
| ? By introducing equipment such as a dry film weight reduction machine and centrifugal dehydrator to dehydrate hazardous waste dry film residue and waste filter cores, we could effectively reduce the generation of dry film residue and waste filter cores by about 50%; |
| ? By introducing sludge dryers for low-temperature drying of hazardous waste copper-containing sludge and nickel-containing sludge, we could reduce the moisture content of sludge and the amount of sludge generated, with a cumulative reduction of 34% compared with the amount generated at the same period; |
| ? ...... |
| Entrusting a third party that does not dispose of solid waste by landfilling to dispose of our waste |
| Achieving zero landfilling of waste |
6.6. Biodiversity Conservation
In strict accordance with national and local laws and regulations on biodiversity conservation,the Company carries out a series of practical initiatives that emphasizing the concept of biodiversityconservation throughout all phases of projects, including planning, design, construction, andoperation to protect the ecological stability and biodiversity of the operation site. During the projectplanning and design phase, the Company conducts comprehensive investigations and assessments
of the surrounding ecological environment under environmental protection requirements, fullyunderstanding the characteristics and distribution of local biodiversity to avoid selecting sites thatmay have adverse effects on the environment, with an environmental impact assessment reportawarded for the project in accordance with regulations. During the project construction phase, theCompany minimizes the impacts on local vegetation, soil, and water by establishing constructionprotection measures and restricting construction areas. During the project operation phase, theCompany conducts continuous environmental monitoring and regularly collects and analyzesenvironmental indicators such as air quality, water quality, and soil quality to identify and solvepotential problems in a timely manner and actively engages in ecological restoration and protection.
2023 Environmental, Social, and Governance (ESG) Report of Suzhou Dongshan Precision Manufacturing Co., Ltd.
7. Working Together for a Better Future Based on People-
Oriented PhilosophyUnited Nations Sustainable Development Goals (SDGs)
7.1. Talent Development
7.1.1. Diversified and Inclusive Workplace
Upholding a “people-oriented” philosophy, the Company strives to create a diversified,inclusive, healthy, and vibrant workplace environment to attract more talented people to grow withthe Company and release their enthusiasm and ability, jointly creating a good workplace ecology.
7.1.1.1. Talent Attraction
The Company attaches great importance to talent recruitment, actively recruiting moreoutstanding talents on the basis of compliance and fair employment to provide solid talent supportfor long-term development.
? Adherence to compliant employment
In accordance with international human rights norms such as the International Bill of HumanRights, the International Labor Conventions, the International Labor Organization Declaration onFundamental Principles and Rights at Work, and the UN Guiding Principles on Business andHuman Rights, as well as local laws and regulations where the Company operates, the Companyhas established a complete recruitment process and system to regulate the entire talent introductionprocess. In the recruitment and hiring process, we insist on respecting the basic rights and interestsof each applicant and implementing the principles of open recruitment, equal competition, andselection of the best candidates based on moral integrity and professional competence. All applicants
who meet the requirements for the corresponding positions are eligible for interviews, withoutdiscrimination on gender, education, age, race, family status, religion, or cultural background. TheCompany prohibits child labor and forced labor, ensuring compliance and fairness in talentrecruitment. We strictly inspect the recruitment and hiring processes and encourage employees andapplicants to report any violations of company policies or regulations through public channels. Allreported violations will be seriously investigated and dealt with, and corrective measures will betaken if necessary. During the reporting period, the Company experienced no major labor disputesor incidents of child labor or forced labor, achieving a 100% employment contract signing rate.
? Inclusion of diversified talent
The Company remains dedicated to enhancing its talent development and management strategy.We conduct regular assessments of organizational needs and talent capabilities in alignment withthe Company’s strategic planning and business development direction, in order to plan a forward-looking talent layout and anticipate the recruitment demands proactively. Furthermore, we activelydiversify our talent recruitment channels to ensure accurate matching of recruitment resources.Through these initiatives, we have built a high-quality talent pool for the Company’s developmentin an all-round and multi-dimensional way.
| Forward-looking layout | The Company builds the talent pool based on needs and requirements. We predict recruitment needs in advance and formulate recruitment plans in line with the Company’s strategic planning and business development trends to reserve relevant talents to support the Company’s future stable operation. |
| Professional assessment | The Company reviews job competency models to enhance talent profiles and adopts professional talent assessment tools for comprehensive evaluations and screenings of talents, so as to attract high-quality talent widely under the principle of fairness and impartiality. |
| Diversified channel | The Company actively diversifies recruitment channels, such as online recruitment, offline recruitment, campus recruitment, headhunting, internal referrals, internal job competitions, internal job transfers, etc., and collaborates with universities to cultivate professional master students to establish a core team with high academic qualifications and technical expertise. In addition, the Company also cooperates with multiple universities to jointly cultivate key talents for production positions, achieving a win-win situation for all parties. |
Case: Deep Collaboration Between Universities and Enterprises to Cultivate ProfessionalTalentsIn order to improve the quality of talent development, Multek, Multek China, and MultekZhuhai have conducted deep collaborations with relevant colleges and universities. The Companydispatches senior management and technical personnel as part-time teachers to tutor students andrecommends relevant personnel to join the professional construction guidance committee of thecolleges and universities for collaboratively promoting the development of talent trainingprograms and curriculum planning that meet the Company’s talent needs, thereby innovativelycultivating professional talents required in the electronics and information industry.
With the active promotion of internship programs, DSG collaborates with NanyangTechnological University (NTU), National University of Singapore (NUS), Nanyang Polytechnic(NYP), and Ngee Ann Polytechnic (NP) to jointly cultivate and nurture talents in the fields of ITbig data, artificial intelligence and information security, human resource management, andmarketing analysis, preparing for its future growth.
2023 Environmental, Social, and Governance (ESG) Report of Suzhou Dongshan Precision Manufacturing Co., Ltd.
During the reporting period, the Company’s employment situation can be described in the following:
| Number of the parent company’s employees in service at the end of the reporting period (person) | 1,848 |
| Number of major subsidiaries’ employees in service at the end of the reporting period (person) | 20,710 |
| Total number of employees in service at the end of the reporting period (person) | 22,558 |
| Total number of employees receiving compensation in the current period (person) | 22,558 |
| Professional composition | |
| Professional composition category | Number of professionals in each category (person) |
| Production personnel | 16,413 |
| Sales personnel | 412 |
| Technical personnel | 4,148 |
| Finance personnel | 140 |
| Administrative personnel | 495 |
| Management personnel | 950 |
| Total | 22,558 |
| Education level | |
| Education level category | Number (people) |
| Doctor | 3 |
| Master | 155 |
| Bachelor | 2,923 |
| Junior college | 4,375 |
| Below junior college | 15,102 |
| Total | 22,558 |
7.1.1.2. Diversity and Inclusion
The Company is committed to building a diverse, equal, and inclusive (DEI) workplace. Weintegrate DEI concepts into team building, company operations, and cultural construction,advocating respect, tolerance, and open communication. In the process of recruitment, careerdevelopment, and others, we practice the principles of diversity and inclusion to improve employees’collaboration efficiency and innovation capacities, aiming to build a diversified and inclusive workenvironment.
Attaching importance to attracting and integrating talents with diversified backgrounds, weaim to build a diverse and energetic workforce through fair recruitment, assessment, and promotionmanagement. We regularly organize diversified activities covering all employees to enhance multi-level employees’ understanding and awareness of diversity and inclusion. We encourage employeesto actively express their opinions and accept diversified ideas and opinions to jointly create aninclusive work atmosphere, thereby enhancing multicultural integration and achieving moreefficient team collaboration. The Company encourages employees to provide feedback on violationsof diversity and inclusion principles through various channels and collects reasonable suggestionsfor continuous optimization and improvement of the Company’s related policies and measures.
Key PerformanceFemale employees account for 41.20%Disabled employees account for 0.30%
| place is not only a haven for employees of all ethnic groups to engage in various activities such as exercise, entertainment, socializing, learning, and relaxation but also a good site for them to communicate with each other for better understanding, thereby enhancing their sense of cohesion and unity within the workplace. |
| Case: Unleashing the “She-Power” The Company firmly believes that creating a gender-equal environment that encourages women to actively contribute positive value is not only crucial for the career development of female employees but also essential to the Company’s sustainable innovation and development. The Company provides every employee with equal workplace opportunities and effective supportive initiatives to ensure fair compensation and benefits and the elimination of gender and occupational economic inequalities. We offer female employees fair training and promotion opportunities, encouraging female employees to bravely pursue their career goals and break the career ceiling to better realize their values. Building a growth platform. The Company creates a platform for female employees to support and learn from each other, enhancing connections among female employees through regular communication and experience sharing to provide them with a good environment for mutual learning and growth. Multek has established a women’s innovation studio to lead female workers in learning advanced product and process technologies, thereby contributing to the Company’s innovation and development. Enhancing professional influence. The Company offers female employees with fair |
| training and promotion opportunities and encourages the recognition and appreciation of outstanding women. We set up female role models and enhance their professional influence inside and outside the Company to inspire all female employees to pursue excellence and grasp more participation and development opportunities in various functional and managerial fields within the Company. MFLEX regularly organizes activities to commend outstanding female workers such as the “women’s pace-setter”, and actively nominates outstanding female workers to participate in the external honors selection. Providing caring benefits. The Company provides employees in pregnancy, childbirth, and lactation periods with maternity leave, breastfeeding leave, childcare leave, and other legal protections and humanized special working hour policies, as well as “Mother’s Station” and “Lactation Rooms”. The Company also provides paternity leave to male employees in accordance with laws and regulations, so as to balance family and professional responsibilities. In 2023, DSG introduced the “family and study leave” to support employees’ learning and personal development. Through care and support, an increasing number of female employees are promoted to professional and management positions within the Company, unleashing their full potential in their careers. |
| Case: Independent Life of Special Employees The CCL is a super clean workshop under JDI Electronics, which is mainly composed of employees with intellectual disabilities. There are currently 26 employees in the CCL, including 20 employees with intellectual disabilities, who are supported by 5 instructors allocated in a ratio of 1:4. As supported by the CCL integrated employment project, these special employees have grown into skilled workers with a production capacity of 20,000 sets per month, providing strong logistical support for the Company. They are also Paralympic Games athletes, skilled in handicrafts, singing, and dancing. They have participated in various cultural and sports activities and won multiple honors for the municipal and district disabled persons’ federations and the Company. |
| Chen, who has grown into the pillar of her family: Chen (pseudonym) joined the CCL in October 2006. She was a highly dependent and willful girl, liking to show off herself with poor self-care abilities and childish behavior in daily life. After careful observation and multiple discussions, the department instructors focused the education on improving her self-care abilities, fostering her love for work, and getting rid of her dependence. Through phased and hands-in-hand teaching as well as daily performance opportunities and timely praise, her potential was effectively stimulated. The instructors also communicated extensively with her parents to encourage her to do more work at home and engage in physical activities. Through years of planned and targeted training, Chen has grown into a diligent, responsible, and polite employee at work. She has also taken the initiative to help her parents with household chores at home. Currently, she has become one of the main economic and life pillars of her family. Da Xia and Xiao Xia, a couple independently purchasing a home: Da Xia (pseudonym) and Xiao Xia (pseudonym) were the first batch of employees who came to the CCL in 2006. Under the careful guidance of the mentors, they have grown into proficient professionals within the department in a few years. They became a couple and spent their savings and housing provident fund loans to purchase a home. In their daily lives, they also began to focus on improving their life quality, using holidays to travel, and gradually realizing their life dreams and achieving self-reliance and self-improvement. |
| Case: Contributing Diversity and Inclusion of Overseas Employees As the Company expands its business globally and accelerates its internationalization process, employees from diverse backgrounds and cultures are joining the big family. The Company’s overseas teams regularly organize diversified activities, including Spring Festival |
parties, lunchtime lectures, team building activities, major holiday events, and annual parties, toencourage communication and cooperation among teams and contribute mutual understanding,integration, and complement of different cultures, so as to enhance team cohesion and trust.Cooperating and working together in a diversified and inclusive working atmosphere canencourage overseas teams to stimulate innovative thinking, leapfrog challenges, and better realizetheir self-worth in a friendly working environment.
7.1.2. Labor and Human Rights Management
7.1.2.1. Respecting for Human Rights
The Company strictly complies with international human rights standards such as theInternational Bill of Human Rights, the International Labour Conventions, the International LaborOrganization Declaration on Fundamental Principles and Rights at Work, and the United NationsGuiding Principles on Business and Human Rights (UNGPs), as well as local laws and regulationswhere the Company operates. The Company takes actions consistent with the Responsible BusinessAlliance (RBA) Code of Conduct in its operations, continuously improving human resourcesmanagement policies on the implementation guidelines and management norms of various humanrights issues. We always respect and safeguard the legitimate rights and interests of all employeesand business action stakeholders, eliminating any form of infringement and violation of humanrights, so as to ensure that every employee enjoys a fair, democratic, and healthy workingenvironment.
? Multek: Business Ethics Code? JDI Electronics: Business Ethical Norm? Mutto Optronics: Mutto-007 RBA Management Manual
? Human rights due diligence management
To effectively implement human rights policies and guidelines, the Company refers torequirements such as the Responsible Business Alliance (RBA) Code of Conduct to identify, assess,and manage human rights risks in operations, value chains, and investments and mergers andacquisitions. Risk assessments are conducted through reviews and audits, including regular RBA-based self-assessments on human rights issues at key plants, customer social responsibility checks,or RBA audit certifications, to review the completion and achievement of indicators such as theprevention of forced labor, prohibition of child labor, health and safety, and the protection offreedom of association and collective bargaining rights. Audit results will be used to identify andaddress potential human rights risks and issues, and continuously improve the human rightsmanagement system to create a safe and happy workplace.The Company regularly conducts training related to labor and human rights policies, includingtraining and education activities covering labor and human rights, and labor and human rightsmanagement enhancement training, in order to raise employees’ awareness and understanding ofhuman rights issues. In 2023, Multek conducted the RBA&COC training based on the RBA Codeof Conduct.
Human Rights Due Diligence Process
| Human rights risk identification and assessment Identify and assess human rights risks in the value chain according to international human rights standards, certifications, and | Prevention of human rights risks Develop human rights policies, codes of conduct, supplier codes of conduct, etc., and strengthen relevant training and implementation. | Mitigation and improvement Regularly review and develop improvement action plans within a specified timeframe based on the assessment results, and take mitigation and improvement | Supervision and implementation Establish feedback mechanisms to follow up on the effectiveness of measures and continuously optimize the improvement; |
| other requirements. | measures for key issues. | establish smooth channels for complaints and appeals to detect and resolve human rights issues more effectively. | |
| Key Performance By the end of 2023, Multek and Mutto Optronics have passed the Responsible Business Alliance Validated Assessment Program (RBA VAP) audits with full scores in two or more audit projects. During the reporting period, the Company had 0 complaints related to employee discrimination or harassment. During the reporting period, the Company experienced 0 significant labor and human rights risk events. | |||
? Prevention of human rights risks
| Issues concerned | Management approach | Mitigation measures |
| Prohibition of child labor and protection of minor workers | Global plants comply with local regulations in their hiring processes and strictly prohibit child labor. | ? Thoroughly verify the authenticity of applicants’ identities; ? Establish a reporting mechanism; ? Comply with RBA requirements for proper handling. |
| Forced and compulsory labor | The Company establishes relevant systems such as Forced Labor Management and Control Procedures to strictly prohibit forced and compulsory labor. | ? Employees are free to conclude and terminate labor contracts at their discretion; ? Recruit adequate staff according to business development, and establish a mechanism for managing and tracking working hours. ? Inform employees in advance of overtime work and obtain their consent and regularly analyze and audit working hours to strengthen early warning mechanisms. |
| Anti-discrimination and anti- | The Company establishes internal regulations such as the Anti-discrimination and Anti-harassment Policy to ensure | ? Do not include discriminatory clauses in recruitment advertisements. ? Do not illegally reject to hire employees |
| Issues concerned | Management approach | Mitigation measures |
| harassment | employees are protected from illegal discrimination. | based on factors such as gender, age, race, and other diverse backgrounds. ? Provide reasonable special protections for vulnerable labor groups. |
| Freedom of association | The Company establishes internal regulations such as the Freedom of Association Protection Procedure and the Peaceful Assembly Management Measures to create a work environment conducive to free expression. | ? All employees have the right to freely join or form trade unions and participate in collective bargaining; ? No interference, discrimination, or punishment against any employee, organization, or union exercising the right to freedom of association |
| Health and safety | The Company establishes an occupational health and safety management system and develops corresponding safety operating procedures and methods to create a safe and healthy workplace. | ? Regularly inspect and address safety hazards; ? Promote safety culture and regularly conduct safety and health training and occupational health checks |
| Wages and benefits | The Company establishes internal systems such as the Salary Management Measures, legally stipulating salary and benefits and providing employees with reasonable remuneration. | ? Regularly conduct compliance reviews of wage payments. |
7.1.2.2. Employee Communication and Appeals
The Company respects employees’ opinions and ideas and is committed to establishing an openand healthy communication mechanism to ensure that the voices of employees are heard and valued,so as to promote continuous optimization of management and facilitate the overall development ofthe Company.
? Democratic management
The Company respects employees’ rights of participation, expression, and supervision. Weformulate various rules and regulations such as the election of labor union representatives and
regularly convene democratic management meetings such as staff congresses and communicationmeetings of labor union members. Major matters involving the immediate interests of the employeesare all discussed with the trade union to seek the opinions and suggestions of employeerepresentatives and undergo review. For key issues closely related to employees, such as wages,working hours, labor conditions, welfare benefits, training and development, and the workingenvironment, the Company negotiates with employees through collective bargaining to effectivelyprotect the rights and interests of employees.
Key PerformanceUnion/collective bargaining agreements covering 100% of employees
? To encourage more employees to express their opinions, the Company has established a
diversity communication channel to ensure that all employees can provide feedback andsuggestions conveniently and promptly.
| Employee communication meetings: By building a bridge for communication between superiors and subordinates, the Company provides employees with opportunities for direct dialogue between employees and the management to efficiently drive the Company’s optimization and improvement. Multek Lunchtime Communication Meeting | Online platform & employee hotline: The Company communicates with employees through OA system functions, an online feedback platform, communication hotline, etc., to ensure that employees can freely express their opinions and ideas. |
| Employee service station: MFLEX sets up an employee service station and allocates dedicated personnel to handle employee inquiries and feedback. | General Manager’s mailbox/Employee suggestion box: The Company sets up mailboxes and suggestion boxes, with designated personnel regularly opening them to conduct special investigations and handle and |
provide feedback on employee complaints.
? Appeal and protection mechanism
The Company has established internal rules and regulations such as the Employee AppealManagement Procedure, clarifying the entire process of handling employee appeals and reports andresponding promptly to issues raised by employees. Employee appeals will be handled andinvestigated by a dedicated team composed of the Human Resources Department, trade unionrepresentatives, etc. The Company encourages employees to file appeals in a timely manner whenfacing any unfair treatment or to report violations of human rights, and responds solutions to theappellant in writing within a specified time frame. Every reasonable complaint or report is receivedand independently investigated in a timely manner, ensuring confidentiality. The Company takesproactive measures to protect the legitimate rights and interests of whistleblowers and ensures theyface no negative repercussions or retaliation for reporting concerns.
? Employee satisfaction survey
In order to fully understand employees’ work experiences and feelings, the Company regularlysurveys employees’ job satisfaction, work experiences and organizational identification, andformulates improvement plans for dimensions with low satisfaction, which serve as importantreferences for the optimization of organizational management. In 2023, the majority of employeesshowed favorable attitudes toward organizational culture, development prospects, personalmanagement, and team management. Based on the survey and analysis results, the Company hasformulated specific improvement measures for aspects with low satisfaction such as new employeemanagement, salary and benefits, cultural activities, and logistics management. For example, DSGorganized the most popular activities voted by employees and introduced new welfare initiativessuch as the corporate membership plan for scenic spot tickets. These efforts aim to foster positiveexperiences for employees and their families, thus enhancing overall employee satisfaction.
7.1.2.3. Occupational Health and Safety
Focusing on the health and safety of employees, the Company continuously optimizesoccupational health and safety management systems and measures and is committed to establishinga healthy, safe, and comfortable working environment for employees.
In strict accordance with laws and regulations such as the Safety Production Law of thePeople’s Republic of China, the Law of the People’s Republic of China on the Prevention andControl of Occupational Diseases, the Fire Protection Law of the People’s Republic of China andthe Regulations on Supervision and Management of Occupational Health in the Workplace, as wellas the requirements of the ISO 45001 management system, the Company has established anenvironment, health and safety (EHS) management system and formulated multiple managementpolicies and norms such as the Occupational Health Management System and the Safety ProductionManagement Procedures, which cover all employees, contractors, and specific suppliers. TheCompany sets health and safety objectives such as “zero major safety accidents,” “zero major fireaccidents,” and “zero occupational disease accidents,” and incorporates these objectives into theperformance evaluation of relevant responsible personnel to promote the comprehensiveimplementation of health and safety management systems.
Key PerformanceInvestment in health and safety amounting to RMB 247,293,70070,979 health and safety training hours in total100% coverage rate of occupational health examinations0% incidence rate of occupational diseases0 deaths from work-related injuriesAll major production and operation entities of the Company have passed the ISO 45001occupational health and safety management system certificationJDI Electronics was awarded the title of the Occupational Disease Prevention and ControlDemonstration Enterprise in Suzhou City.
? Risk prevention and control
To comprehensively enhance the level of occupational health and safety risk prevention andcontrol, the Company has implemented a dual prevention mechanism comprising risk assessmentand hidden danger investigation and control. Through a series of initiatives, we identify, assess, and
mitigate potential risks to effectively reduce the probability and impact of safety incidents. Weencourage key operating entities to establish norms for identifying, evaluating, and controlling risksassociated with hazardous sources aligning with the requirements of ISO 45001, and conduct regularhazard identification and risk assessment activities, resulting in the compilation of a safety riskclassification and control list based on assessment findings for comprehensive risk control. Weconduct EHS inspections at all levels in accordance with internal regulations and systems such asthe EHS Inspection and Hidden Danger Investigation and Control System, assessing and filinghidden dangers to actively rectify hidden dangers. Furthermore, various plants are encouraged todevelop emergency plans and outline emergency management procedures and measures withregular emergency drills conducted to enhance employees’ response abilities to major safetyemergencies.
? Healthy and safe workplace
Insisting on prioritizing employees’ health, the Company regularly assesses occupationaldisease hazard risks to formulate and implement occupational disease hazard control measuresbased on risk levels, and provides safety protection facilities and supplies to ensure the safety andhealth of employees’ working environment. We provide regular health examinations and establishhealth records for employees, actively conducting safety and health training to enhance employees’awareness of personal health protection. We also require employees to effectively take safetyprecautions in their daily work, further strengthening the implementation of safety and healthresponsibilities.
Multek Limited Space Emergency Drill
Case: Conducting the “Safety Month” Campaigns to Forge “Safety Spirit”
During the 22nd National Safe Production Month in June 2023, the EHS SupervisionDepartment orchestrated certain thematic activities such as the “Safety Month” launch ceremony,mechanical safety training, and emergency skills competition. The aim was to inspire eachoperational location to engage in diverse forms of “Safe Production Month” campaigns with richcontent. The overarching goal was to heighten safety awareness among all employees, ensuringthat “everyone prioritizes safety and is capable of responding to emergencies”.
| Group Launch Ceremony |
| Mechanical Safety Management Training |
| Safety Knowledge Quiz |
| Group Emergency Skills Competition |
7.1.3. Inspiring Talent Vitality
Talent cultivation is crucial to the sustainable development of the business. With scientific andreasonable talent development strategies and an improved hierarchical training management system,the Company provides a broad development platform and competitive salary incentives to stimulate
employees’ innovation and creativity.Guided by the goal of “high-quality development” with focused on the “three key points, twoteams, and one learning platform”, the Company promotes comprehensive training of talents tojointly drive the Company's development goals and visions.
7.1.3.1. Employee Training
To enhance employees’ capabilities comprehensively, the Company establishes a systematictalent training system for all employees under the overall framework of “Policy/Process-Platform-Program” to fully integrate internal and external training resources. We set up a rich and systematictraining curriculum according to the different training needs of employees at all levels, providingdiverse and scientific training content to create a cultural atmosphere of “all employees are learningconstantly”. The training system covering new employees, key employees, and manager personnelat all levels helps employees achieve continuous growth throughout their careers and continuouslyimprove their professional competitiveness.
| Program | |
| Cadre management | Middle and senior cadres |
| Grassroots cadres | |
| High potential/reserve cadres | |
| Professional talent management | Engineer training camp |
| HR training camp | |
| Quality training camp | |
| Platform | |
| Creation of a learning atmosphere | Online learning platform |
| Book corner/reading club | |
| Internal trainers research on teaching approach | |
| Policy/Process | |
| Establishment of a training system | |
| Platform-Dongshan Precision Learning Platform |
| DSBJ Cloud Classroom The Company has built an exclusive online learning platform based on the cloud classroom learning platform, which provides employees with rich course resources and efficient, convenient, and flexible learning services to create an active learning community, thereby enhancing learners’ sense of participation and enthusiasm. The learning platform, which covers a wide range of contents including financial management, supply chain management, research and IT management, workplace effectiveness, professional skills, etc., has become an important platform for employees’ daily work learning and self-learning. Key Performance By the end of 2023, there have been 29,799 trainees learning courses on the cloud classroom platform, with a total learning duration of 15,557.48 hours. |
| Internal Trainers Research on Teaching Approach To meet the needs of organizational development and talent cultivation, the Company has established an internal trainer mechanism, which incorporates professional talents from various departments into the internal trainer team and conducts training for internal trainers’ teaching ability such as lesson research workshops, to build a team of internal trainers with comprehensive qualities and strong professional abilities, thereby achieving mutual promotion and win-win results for the Company’s development and individual growth. In 2023, the Company collaborated with external professional institutions to launch the internal trainer training program - DSBJ Master Plan, which effectively enhances the training capabilities and levels of internal trainers through diversified forms of training, such as micro-learning, online live broadcasting and classroom-based intensive training, so as to lay a solid foundation for the Company’s talent cultivation. |
? New employee training
The Company provides targeted training for newly hired employees, helping them initiallyunderstand the Company’s development and various policies and systems through the combinationof theory and practice, to quickly integrate into the Company’s environment and master job skills.The Company also assigns instructors to guide and follow up on employees’ learning and progressat work, supporting them to continuously grow and improve.
Case: Voyage Program - Transitioning from Campus to CareerThe Voyage Program is a trust integration and empowerment training program designed forcollege graduates. Based on the characteristics and needs of the student population, the programdesigns efficient classroom training and self-learning plans under the “70-20-10” rule accordingto the cultivation mode of “intensive training+ instructor teaching”, helping college graduatesquickly integrate into the Company to learn essential workplace skills and map out their futuregrowth blueprint.
? Leadership training
In response to the Company’s development strategy and employees’ career development needs,we have developed a comprehensive hierarchical leadership training plan that encompassesleadership theory, team management, decision-making, communication skills, conflict resolution,and other aspects. By providing opportunities for employees at different levels to develop leadershipskills and support their continuous learning and growth, our training initiatives are designed to assistmanagers at all levels, as well as the next generation of leaders, in understanding organizationalstrategy, enhancing their management capabilities, and broadening their horizons. Through theseefforts, we seek to cultivate leading talents capable of driving the high-quality development of theCompany.
| Middle and senior managers: Focusing on the knowledge and skills of middle and senior strategic management and leadership, the Company conducts training on strategic thinking, business development planning, crisis management, team building, decision- | 【Highlights】Six Rules for Cadres - Series of Courses for Cultivating Subordinates The cultivation and echelon building of talents need to rely on cultivating and developing cadres in practice to inspire potential and improve performance. In 2023, under the theme of “Cultivating Subordinates”, the Company launched the “Six Rules for Cadres - Series of Courses for Cultivating Subordinates”, which enhances the leadership of middle and senior managers through three modules, namely, “Knowing people well and teaching them according to their abilities”, |
| making, and other aspects. | “Coaching subordinate to teach skills”, and “Fostering team spirit to resolve conflicts”. Based on the planning, the Company will continuously launch courses relative to the themes of “Deployment” and “Efficiency” in 2024. [Highlights] “Transformational Leadership” Training of DSG In 2023, DSG organized the “Transformational Leadership” training for key position personnel, which covered topics such as leadership and management, effective communication and workplace relationships, how to build relationships with different members, how to motivate performance, career development, coaching and mentoring, with a focus on improving leadership succession planning and guidance and coaching capabilities. |
| Grassroots cadres: The Company designs targeted training content tailored to the actual work of grassroots leaders, covering contents of team management, crisis handling, goal setting and execution, employee motivation, etc., to help them better cope with various challenges in their daily work. | [Highlights] Operation Leader Training Camp of Multek The project aims to build a team of employees who can manage and understand operations. Multek helps operation leaders transform inherent thinking and focus more on team development, system construction, and management work, in order to comprehensively improve the completion rate of operational indicators such as quality, efficiency, and material consumption rate. |
| High-potential/reserve cadres: Young employees are the future hope of Dongshan Precision. The Company cultivates young talents with leadership potential and innovative ability through professional leadership development courses. | [Highlights] Leadership Training Camp for Post-90s Generation To build a high-potential and high-performance young team and improve the echelon building of talents, the Company launched the “Post-90s Generation Leadership” training camp, offering eight courses in four modules, namely, “Self-Drive,” “Business Domain,” “Interpersonal Domain,” and “Team Domain,” to comprehensively enhance the leadership skills of post-90s employees. |
2023 Environmental, Social, and Governance (ESG) Report of Suzhou Dongshan Precision Manufacturing Co., Ltd.
? Professional position training
The professional position training aims to enhance employees’ knowledge and skills in theirprofessional fields, improving work efficiency and quality. The training covers various businessareas such as research and development, production, quality, EHS, sales, and human resources toensure that employees master the latest professional knowledge and technologies to adapt to marketchanges and meet the development needs of the Company.
| Engineer Experience Extraction Training Camp | Hundred-Day Talent Discovery Program of HR Team |
| In order to continuously improve the competitive ability of engineers, the Company has launched the second phase of the engineer capability enhancement project - the Experience Extraction Training Camp, aiming to provide advanced training for the participants of the first phase of the project. The project has developed a total of 76 experience extraction courses and established a team of technical expert internal trainers, laying a solid foundation for the Company’s technology accumulation and talent development. | To fulfill the standards and requirements of “cultivating subordinates” in the Company’s six rules for cadres, we launched the HR ability enhancement training camp - the hundred-day talent discovery program in 2023. The participants of the project are HR supervisors/managers from various business segments, who are required to choose a subordinate as a mentee to fully tap into the potential of the mentee to enhance the mentee’s work skills and efficiency. |
? External joint training
The Company actively provides external educational resources for employees, introducinghigh-quality and professional training resources internally while supporting employees toparticipate in external training and learning, so as to help employees keep up with the forefrontfields with continuous improvement. In 2023, the Company collaborated with multiple externalorganizations to carry out high-quality training programs, ensuring employees of variousbackgrounds have access to the necessary knowledge and resources.
| courses such as the Exploring the Smart Benchmark - Bosch Smart Factory Lighthouse Road and a series of industrial robot technology training courses in the park, to help employees understand the cutting-edge technology of smart manufacturing and apply to their actual work, so as to provide strong support for technological innovation. |
| Case: DSG Collaborates with External Organizations to Create Multi-Dimensional Training Series In 2023, DSG collaborated with multiple external organizations to provide a series of training programs for employees, including but not limited to ISO27001 internal auditor training, project management, English courses, innovation and research development, advanced Excel, and transformational leadership training, offering employees more high-quality training opportunities to enhance their personal and professional development. ? Collaboration with BSI for ISO 27001 internal auditor training; ? Collaboration with NTUC Learning Hub for project management training; ? Collaboration with English Express to provide English courses for expatriate staff in China; ? Collaboration with Eagle Infotech for advanced Excel group training courses; ? Collaboration with Career Development Consulting for transformational leadership training; ? Collaboration with other organizations to offer training in communication skills, time management, and other soft skills. |
7.1.3.2. Employee Development
The Company continuously improves the competency model according to strategic planningand business development trends and provides employees with diverse career developmentopportunities and a broad stage for achievement of common development objectives betweenindividuals and the Company.
? Career promotion
Under the principles of organizational needs prioritization, emphasis on both moral characterand performance, orderly promotion, and promotion and demotion of employees based on theirperformance, the Company has established internal rules and regulations such as the PersonnelPromotion Management Measures related to career development to continuously improve the careeradvancement system. We establish clear dual channels composed of management and professionalcareer development based on employees’ situation to realize the orderly and smooth flow of talentshorizontally and vertically through internal competition, job rotation, etc., so as to provideemployees with fair promotion and development opportunities. Through regular talent inventoryprojects, we continuously improve the ability and quality models of various positions andunderstand the talent reserve of high-potential employees and key positions, to assist talents incontinuously advancing in their careers.
? Educational and qualification support
As encouraging employees to continuously deepen and improve their professional fields, theCompany provides sufficient support and guarantees for continuing education and careeradvancement, motivating employees to learn continuously to become the most competitive in theirpositions. The scope of re-education support covers 100% of formal employees.
| Continuing education | ? The Company supports employees to obtain high education degrees to promote their professional development, with front-line supervisors/technicians focusing on upgrading to associate/bachelor degrees, and engineering technicians focusing on pursuing dual degrees to upgrade to bachelor’s/master’s degrees. Outstanding employees recommended by departments can be offered the opportunities to pursue master’s degrees such as Master of Business Administration (MBA), Master of Engineering Management (MEM), etc. | |
| Career promotion | Certification incentives | ? Incentives for obtaining CPA certification, etc. |
| Incentives for | ? Incentives for enterprise functional level recognition | |
| obtaining professional qualifications | by the Human Resources and Social Security Bureau | |
| Case: EEAP Employee Educational Subsidy Program To support employees’ career development and enhance their professional skills and educational level, Multek has established an Employee Education Assistance Program (EEAP) to provide eligible employees with education assistance. | ||
7.1.3.3. Salary Incentives
To attract, motivate, and retain outstanding talents, the Company continuously improves theemployee compensation and incentive system to ensure that all employees receive compensationcommensurate with their work performance.
? Diversified incentives
Based on the “3P+1M” (Position, Person, Performance, and Market) compensation philosophy,the Company formulates a scientifically and reasonable compensation and incentive program inaccordance with the Dongshan Precision Assessment and Incentive Distribution Code and otherrelated compensation and incentive regulations. The Company has established the Assessment andIncentive Management Committee, which is chaired by the CEO, to review key assessment andincentive systems to ensure that employees receive fair and competitive compensation.
The Company’s employee compensation structure consists of fixed salary, performance pay,variable bonuses, and subsidies, with the variable compensation closely linked to performanceevaluation results. For senior managers, variable compensation is directly linked to the Company’sperformance, incentivizing them to shoulder greater responsibilities in the Company’s development.Common employees also have a variable component in their compensation structure, tied to factorslike company performance, organizational performance, and individual performance, aiming tofully engage employees’ enthusiasm for work. Through diverse incentive mechanisms, theCompany has formed a comprehensive incentive distribution plan including instant incentives,short-term incentives, and long-term incentives, aligning employee interests with organizationalgoals to foster a mutually beneficial relationship between employees and the Company.
| Instant incentives | ? Material instant rewards include monthly performance bonuses, individual rewards, team rewards, etc.; ? Non-material instant incentives include honorary rewards, recognition, public praise, etc.; ? When an organization or individual’s behavior does not meet the organizational requirements or is detrimental to the Company’s interests, the Company needs to take negative incentives, such as counseling, warnings, public announcements, dismissal, or even termination of employment contracts, to stop such behavior. |
| Short-term incentives | ? The performance-driven salary adjustment strategy is adopted, according to which salaries of employees with outstanding performance are increased regularly each year; ? Quarterly and annual bonuses are paid based on performance results; ? Employees with poor performance rated as C and D will not be eligible for salary adjustments or any variable bonuses. |
| Long-term incentives | ? Retention bonuses are provided for key core and high-potential employees with outstanding performance; ? Programs such as employee stock ownership plans are implemented for core backbone employees. |
? Performance evaluation and appeals
In order to ensure the fairness, impartiality, and objectivity of performance evaluation results,the Company regularly organizes performance evaluations based on relevant rules and regulationssuch as the the Performance Evaluation Management Measures, to comprehensively evaluateemployees’ work performance and capabilities through multidimensional assessments and multi-level reviews.
months are included in the Performance Improvement Plan (PIP), in order to help them enhancetheir skills and improve their work performance. At the same time, the company has establishedsmooth channels for performance appeals and feedback. If an employee is unclear about ordisagrees with the performance evaluation results, the employee can appeal to the HR departmentin writing. Upon receiving the appeal application, the HR department is required to providefeedback on the acceptance and processing results within 5 working days, ensuring that the rightsand interests of employees are fully respected and protected.
7.1.4. Emphasis on Human Care
With great attention to human care for employees, the Company advocates for a balancebetween life and work and provides comprehensive welfare benefits for all employees. In additionto statutory basic benefits, the Company has provided employees with commercial insurance, paidleave, high-temperature subsidies, health examination, health lectures and consultations, holidaygifts, free meals, etc., to enhance employees’ sense of belonging and happiness. We pay attention tospecial employee groups such as pregnant women, disabled individuals, and families in difficulties,and actively offer them economic assistance, welfare benefits, and care and warmth to create a warmand loving corporate atmosphere. We hold a diversity of Employee activities to enrich employees’leisure lives, help them relieve work pressure, and maintain a positive and upward work and lifeattitude.
| Case: Employee Assistance Program (EAP) Provides Support for Employees’ Mental Health Multek division and TP&LCM division have introduced an Employee Assistance Program (EAP) to provide counseling and support services to employees through various communication methods. Regardless of work stress, family issues, or interpersonal relationships, employees can receive timely help and support through the EAP to effectively reduce stress and improve mental health. | EAP Stress Relief Workshop |
The EAP can help us identify, prevent, and avoid crisis eventsin a timely manner, thereby creating a positive workenvironment. By the end of 2023, the EAP has covered allemployees at Multek division.
| MFLEX: Summer Activities for Kids | |
| Multek: Family Day | LED Division: International Women’s Day |
| JDI Electronics: Fun Sports | Mutto Optronics: Mid-Autumn Festival Garden Party |
| DSG: Team Building through Cooking | Precision Manufacturing Division: Flower Arrangement Class |
7.2. Community Construction
The Company’s sustainable development cannot be separated from the stability and prosperityof the society. The Company actively practices corporate social responsibility, participating invarious charity and volunteer activities to contribute to society with practical actions.In recent years, the Company has been continuously providing warmth to students in need.By the end of 2023, through ongoing initiatives, such as continuous support activities forunderprivileged primary and secondary school students in Suzhou and Yancheng city, collaborationwith “Xinghua Education Assistance Foundation” to help underprivileged high school students inQingyang city, Gansu province, and creation of “Dongshan Precision Dream Assistance Fund” forunderprivileged college students, the Company has fostered a working idea of “encouraging allsubsidiaries to engage in public welfare activities with focuses on Yancheng and Suzhou” and builta sound public welfare assistance system for “teenagers in Jiangsu, Guangdong, and evennationwide”, helping more underprivileged students with dreams pursue their educationalaspirations. During the reporting period, “Dongshan Precision Education Fund” donated RMB 2million to the Jiangsu Hope Project Office and Jiangsu Youth Development Foundation, which wasused to subsidize 400 outstanding underprivileged college freshmen, offering them a brighteroutlook on their academic journey.
2023 Environmental, Social, and Governance (ESG) Report of Suzhou Dongshan Precision Manufacturing Co., Ltd.
| Key Performance In 2023, the Company’s public welfare investment amounted to RMB 3.43 million. Volunteers from Multek and Touch Division served a total of 2,915 hours throughout the year. | ||
| Case: Illuminating the Future of 216 Underprivileged Students Through Love With heartfelt love igniting the light of hope, we sincerely subsidize students to ensure a bright future. The Company collaborates with the Cares for the Next Generation Working Committee in Duomen District, Zhuhai Province to jointly hold a donation for an education ceremony named “Warm the Hearts of Huangyang Students in Need”. This donation activity aims to help excellent students from poor families to complete their studies. The Company hopes that this activity could encourage more caring individuals from all walks of life to support educational causes and help more people experience the power of positivity and kindness. | ||
| Environmental Protection Public Welfare Activity Named “Learn from Lei Feng to | Charity Sale Event | |
| Practice Volunteer Actions” | |
| Warm Winter Action | Green Charity Hiking |
2023 Environmental, Social, and Governance (ESG) Report of Suzhou Dongshan Precision Manufacturing Co., Ltd.
8. Appendix
Appendix I: Key Performance TableCorporate Governance and Economic PerformanceEconomic Performance
| Indicators | Unit | 2023 |
| Total Assets | RMB 100 million | 443.72 |
| Operating revenue | RMB 100 million | 336.51 |
| Net profit attributable to shareholders of the listed company | RMB 100 million | 19.65 |
| Basic earnings per share | RMB/share | 1.15 |
Business Ethics and Anti-corruption
| Indicators | Unit | 2023 |
| Proportion of directors participating in anti-corruption training | % | 100% |
| Proportion of employees participating in anti-corruption training | % | 100% |
Environmental PerformanceEnvironmental Management
| Indicators | Unit | 2023 |
| Environmental protection investment | RMB 0’000 | 22,868.42 |
| Coverage rate of environmental protection training | % | 100% |
| Compliance rate of “three wastes ” emissions | % | 100% |
Social PerformanceResearch and Development Innovation
| Indicators | Unit | 2023 |
| R&D investment | RMB 100 million | 11.61 |
| Proportion of R&D investment over revenue | % | 3.45% |
Customer Rights and Interests
| Indicators | Unit | 2023 |
| Customer complaint response rate | % | 100% |
| Customer complaint resolution rate | % | 100% |
Employee HiringEquality and Diversity
| Indicators | Unit | 2023 |
| Proportion of female employees | % | 41.20% |
| Proportion of disabled employees | % | 0.30% |
| Incidents of employee discrimination/harassment | Event | 0 |
| Significant labor and human rights risk events | Event | 0 |
Occupational Health and Safety
| Indicators | Unit | 2023 |
| Incidence of occupational diseases | % | 0% |
| Number of employees who died due to work-related injuries | Person | 0 |
Note 1: The data statistics scope includes Multek, MFLEX Suzhou, MFLEX Yancheng, YanchengDongshan, JDI Electronics, Mutto Optronics, and some subsidiaries of the Precision ManufacturingDivision.Social Public Welfare
| Indicators | Unit | 2023 |
| Public welfare contributions | RMB 0’000 | 343 |
| Volunteer service hours throughout the year2 | Hour | 2915 |
Note 2: The data statistics scope of volunteer service hours throughout the year includes Multek andthe Touch Division.
2023 Environmental, Social, and Governance (ESG) Report of Suzhou Dongshan Precision Manufacturing Co., Ltd.
Appendix II: Index of Indicators
| Report chapter | GRI standards |
| Reporting Instructions | 2-2/2-3 |
| Message from the CEO | 2-22/2-23 |
| About Dongshan Precision | 2-1/2-2/2-6/2-16/2-28/201-1 |
| Sustainable Development Governance | 2-12/2-13/2-14/2-16/2-22/2-29/3-1/3-2/3-3 |
| Excellent Governance for Stable and Efficient Operations | |
| Corporate Governance | 2-9/2-10/2-11/2-12/2-15/2-17/2-27/3-3/405-1 |
| Business Ethics | 2-23/2-27/3-3/205-2 |
| Digital Intelligence Transformation | 203-2 |
| Information Security and Privacy Protection | 2-27/418-1 |
| Collaboration for Mutual Benefit to Build a Sustainable Supply Chain | |
| Establishment of a High-quality Supply Chain | 3-3 |
| Supply Chain Risk Management and Control | 3-3/408-1/409-1 |
| Responsible Mining Procurement | 3-3 |
| Continuous Improvement of Product Quality and Competitiveness by Insisting on Quality | |
| Driven by Innovation | 2-6 |
| Quality Priority | 2-27/3-3/416-1/416-2/419-1 |
| Professional Services | 2-25/2-27/3-3/417-1/417-2/417-3 |
| Building a Clean and Low-carbon Production System for Environmental Friendliness | |
| Environmental Impact Management | 3-3/2-23/2-27 |
| Expansion of Green Energy | 201-2 |
| Addressing Climate | 3-3/201-2 |
| Change | |
| Water Resources Management | 303-1/303-2 |
| Emissions and Waste Management | 306-1/306-2 |
| Biodiversity Conservation | 304-2 |
| Working Together for a Better Future Based on People-Oriented Philosophy | |
| Talent Development | 2-30/3-3/401-2/403-1/403-2/403-3/403-5/403-6/403-7/403-9/405-1 |
| Community Construction | 203-2 |
| Appendix | |
| Key Performance Table | 2-7/2-30/201-1/205-2/403-9/405-1 |
| Index of Indicators | / |