CONTENTS

About this Report 01

Message from the Chairman 03

About XCMG Machinery 05

Responsibility Management 11

Comprehensive Governance for Green and Low-carbon Leading with Responsibility for

Quality and Efficiency: Efficient Transformation for Sustainable Integrity Fostering Harmony

Management for Development Development through Public Welfare

Appendix I：

Quantitative Performance Sheet 109

Appendix II: Corporate Governance 19 Climate Change Responses 45 Product and Customer Responsibility 73

Reader Feedback Form 115 Risk Management 23 Pollution Prevention and Treatment 57 Cooperation for Win-Win Outcomes 81

Business Ethics 27 Optimization of Resource Usage 65 Labor Administration 88

Interests and Rights of Shareholders and Creditors 30 Occupational Safety and Health 97

Technological Innovation 32 Community Relations 10301 XCMG Construction Machinery Co. Ltd.2024 Environmental Social and Governance (ESG) Report About this Report 02

About this Report

Introduction Names and Abbreviations

This is an Environmental Social and Governance (ESG) Report issued by XCMG Construction Machinery Co. Ltd. to disclose and For ease of expression and comprehension the following names are used throughout the Report：

demonstrate its ESG practices and performance to stakeholders. The Board of Directors guarantees that there are no false records

misleading statements or material omissions in this Report and is responsible for the authenticity and validity of the information Company name Short name

contained herein. XCMG Construction Machinery Co. Ltd. XCMG XCMG Machinery Company We

Xuzhou Construction Machinery Group Co. Ltd. XCMG Group Group

XCMG Heavy Machinery Co. Ltd. XCMG Heavy Machinery

Xuzhou Construction Machinery Co. Ltd. XCMG Crane

Reporting Period XCMG Finance Co. Ltd. XCMG Finance

The period covered by this Report is from January 01 2024 to December 31 2024 unless otherwise specified. Some information Xuzhou XCMG Mining Machinery Co. Ltd. XCMG Mining Machinery

has exceeded the said period to ensure the completeness of this Report. Xuzhou XCMG Infrastructure Construction Machinery Co. Ltd. XCMG Infrastructure

Xuzhou XCMG Excavator Machinery Co. Ltd. XCMG Excavator

Road Machinery Branch XCMG Construction Machinery Co. Ltd. XCMG Road

Xuzhou XCMG Hydraulic Co. Ltd. XCMG Hydraulic

Xuzhou XCMG Zhilian Logistics Service Co. Ltd. XCMG Zhilian

Reporting Scope Xuzhou XCMG Schwing Machinery Co. Ltd. XCMG Schwing

Unless otherwise specified this Report is about the XCMG Construction Machinery Co. Ltd. and covers its Head Office Branches Xuzhou XCMG Hanyun Technologies Co. Ltd. XCMG Hanyun

and Subsidiaries a scope that is identical to the scope of its consolidated financial statements. Any deviation from the said scope will Xuzhou XCMG Driveline Technology Co. Ltd. XCMG Driveline

be stated in the Report. Xuzhou XCMG Environment Technology Co. Ltd. XCMG Environment

Xuzhou XCMG Truck Mounted Crane Co. Ltd. XCMG Truck Mounted

Xuzhou XCMG Rongpiao E-Technology Co. Ltd. XCMG Rongpiao

Xuzhou XCMG Port Machinery Co. Ltd. XCMG Port Machinery

Science and Technology Branch XCMG Construction Machinery Co. Ltd. XCMG Science and Technology

Data Sources XCMG Fire-fighting Safety Equipment Co. Ltd. XCMG Fire-fighting

Xuzhou XCMG Precision Industrial Technology Co. Ltd. XCMG Precision

All information and data used in this Report are from materials made public by governmental agencies and the formal documents Xuzhou XCMG Crawler Chassis Co. Ltd. XCMG Crawler

and disclosures of the Company. All financial data referenced in this Report are subject to the annual report and other data are from Xuzhou XCMG Fudi Battery Technology Co. Ltd XCMG Fudi

internal statistics of the Company. All monetary amounts are expressed in Chinese RMB unless otherwise stated.Report Publication

This Report is issued electronically which is available on the website of Shenzhen Stock Exchange and the Company’s website

http://xgjx.xcmg.com/.This Report is published in both Chinese and English versions. In case of discrepancies the Chinese version

Basic Framework shall prevail.This Report is prepared with references to in particular general frameworks on ESG/ sustainability/social responsibility both at home Feedback

and abroad including the Guidance on Social Responsibility (GB/T 36000) the Self-Regulatory Guidelines No. 17 for Companies

Listed on Shenzhen Stock Exchange—Sustainability Report (Trial) the Self-Regulatory Guidelines No. 3 for Companies Listed on To better address your and other stakeholders’ needs and to enhance the value of our ESG information provided for you we seek

Shenzhen Stock Exchange-Compilation of Sustainability Reports the Hong Kong Stock Exchange's Environmental Social and your valuable feedback on this Report. Your insights will help us improve our ESG management capabilities and performance. We

Governance Reporting Guide Global Reporting Initiative (GRI) Sustainability Reporting Standards and ISO 26000:2010 Guidance sincerely expect your valuable comments or suggestions and email the feedback to us by sending the Reader Feedback Form

on Social Responsibility and with a focus on the industry context and featuring the Company’s distinctiveness. attached to zqb@xcmg.com.03 XCMG Construction Machinery Co. Ltd.2024 Environmental Social and Governance (ESG) Report Message from the Chairman 04

Message from the Chairman

Green Manufacturing: Protecting Our Planet. We have meticulously outlined technical pathways for the development of new

energy vehicles including electric hybrid and hydrogen-powered options. Our commitment to innovation is evident in our vigorous

advancement of comprehensive new energy product sets and our efforts to explore green low-carbon application scenarios

throughout the industrial chain. In this regard we have successfully established a circular low-carbon ecosystem that promotes

energy conservation emission reduction and the broader green transformation of all industrial chain processes. Concurrently

we have accelerated the transition of our industry toward premium intelligent and environmentally sustainable development. By

leveraging our 5G+ Industrial Internet Platform we have expedited our intelligent transformation and digital transition. We have

consistently been recognized as a national benchmark for smart manufacturing underscoring our leadership in this vital sector.Notably our digital coverage has expanded significantly and we have achieved impressive advancements in the numerical control

rate of key processes.Putting People First: Building a Better Life Together. We have significantly increased our investment in public welfare initiatives

encompassing education poverty alleviation and disaster relief. Our commitment to actively participating in community development

underscores our dedication to fulfilling our corporate social responsibility. In terms of employee welfare we have made substantial

enhancements to our talent development system thereby providing our staff with broader career advancement opportunities and

avenues for personal growth. We prioritize health and safety fostering a harmonious and inclusive work environment. We firmly

assert that the value of a business extends beyond its economic performance; it is also linked to the well-being of the society it

serves. We believe that sustainable development can only be achieved when we grow in tandem with the communities around us.Excellent Governance: Leading toward the Future of the Industry. We have remained steadfast in our commitment to

the principles articulated by General Secretary Xi Jinping during his inspection of Xuzhou embodying a spirit of gratitude and

Chairman of XCMG determination. Our mission is clear: to foster the growth and strengthening of national industries and state-owned enterprises. In

this context we have intensified our focus on our core business reinforcing the real economy in the face of significant downward

Construction Machinery Co. Ltd. pressures within a highly competitive market. Our efforts have underscored the pivotal role of the construction machinery sector

which we confidently regard as the “No. 1 industry”. We are dedicated to advancing integrated innovation reform and openness.Our relentless pursuit of vitality through innovation coupled with a commitment to reform has led to the continual enhancement of

the “1+6+N” technological innovation system. This strategy has effectively expanded our development horizons and created new

competitive advantages promoting stability and ensuring the sustained high-quality development of the business.We stand at a pivotal juncture and embark on a transformative journey. We are resolutely committed to the principles of sustainable“ development. We will continue to deepen our green innovation initiatives fulfill our social responsibilities and enhance our In 2024 we anchored ourselves to the two-phase strategic blueprint named Everest Summit. We governance practices with the aim of establishing ourselves as a leader in the sustainable development of the global construction strengthened our confidence with boosted morale and courageously shouldered major responsibilities. Our machinery industry. We recognize that the pursuit of sustainable development is a long-term and challenging endeavor one that operational quality became more stable with profitability improved while technological innovation capabilities necessitates the collective efforts of all XCMG employees our partners and various sectors of society. We are eager to collaborate and internationalization levels grew stronger. The outcomes of our digital transformation efforts have become closely with all stakeholders to forge a greener more harmonious and prosperous future.increasingly pronounced demonstrating our commitment to achieving measurable progress. We have made

significant strides toward establishing a world-class enterprise marked by tangible accomplishments that In closing I would like to extend my heartfelt gratitude on behalf of the Company to our shareholders customers partners and

underscore our mantra of “progress amid stability”. friends from across society who have consistently supported and nurtured our growth. We are determined to advance with conviction

through actionable initiatives drive progress through innovation and remain steadfast in our pursuit of our vision: to become a

trustworthy and value creating international enterprise!“05 XCMG Construction Machinery Co. Ltd.2024 Environmental Social and Governance (ESG) Report About XCMG Machinery 06About XCMG Machinery

Introduction Corporate Culture

Incorporated in December 1993 XCMG Construction Machinery Co. Ltd. was listed on the Shenzhen Stock Exchange in August

1996 under the abbreviation “XCMG Machinery” with the stock code 000425. As a core member of Xuzhou Construction Machinery

Group Co. Ltd. (XCMG) it stands as a prominent enterprise within China’s construction machinery industry. Renowned for its

extensive scale comprehensive product range it demonstrates competitiveness influence and strategic significance on a national

level.The Company maintains undisputed domestic industry leadership across all key metrics with a longstanding global top-tier position Mission

and recognition as World's 500 Most Influential Brands Fortune China 500 and Forbes China Go-International Brands Top Empower Solid Future

30. 16 equipment categories hold domestic market leadership including truck cranes mobile cranes and road rollers. Globally

the Company dominates in lifting equipment (world No.1 in cranes mobile cranes and horizontal directional drilling) foundation

machinery (global leader in pile drivers concrete machinery) specialized vehicles (top 3 in road machinery aerial work platforms

tower cranes) earthmoving (world No.4 in mining trucks world No.6 and domestic No. 2 in excavators) loaders (domestic No.1

global leader in new energy loaders).Vision

XCMG has established a modern industrial system of "5+1" covering construction machinery mining machinery agricultural

machinery sanitation machinery emergency rescue equipment and the modern service industry. Our products are sold to over 190 To Build a Modern World-class Enterprise and Peak at The

countries and regions with coverage of the Belt and Road Initiative countries exceeding 95% solidifying our role as a key player in Global Hich-end Equipment Manufacturing Industry

China's global equipment manufacturing industry.07 XCMG Construction Machinery Co. Ltd.2024 Environmental Social and Governance (ESG) Report About XCMG Machinery 08

Annual Milestones

Steady Improvement in Quality Focusing on New Development

We resolutely implemented the business With firm and resolute adherence to a green

development policy focused on high quality risk Global Expansion along the Value Chain development strategy we comprehensively Grand Presence

control world-class standards and stable growth. positioned ourselves within the new energy

This strategic approach has already begun to Through the continuous renewal and enhancement sector to reinforce the foundation for high-quality

Our presence at the Bauma China 2024 marked a

manifest in a progressive and favorable development of the “1 + 14 + N” international operation system development.remarkable achievement signifying a transformative

we have enhanced augmenting our global brand leap from “seeing the world at Bauma exhibition” to trajectory for our operations.reputation and influence. “showcasing China to the world”.Advancing in Mining

The large-scale delivery of complete sets of mining

Digital and Intelligent Transformation Responsibility in Premium Transition Talent Responsibilitiesmachinery represented a significant milestone

We fully initiated the “three battles” encompassing We unwaveringly advanced the high-end effectively establishing a “second growth curve” for We diligently strengthened our talent pool ensuring

intelligent transformation digital transformation transformation of our operations accelerating the the industry. that our soft power effectively translates into a

and network connectivity to forge a new type achievement of high-level technological self-reliance foundational support system for the Company’s

of productive force that embodies the unique and self-improvement. sustained development.characteristics of XCMG Machinery.09 XCMG Construction Machinery Co. Ltd.2024 Environmental Social and Governance (ESG) Report About XCMG Machinery 10

Awards and Honors

Golden Award in Overseas Gold Winner in Cross-Border

2023 Forbes China Globalization

Marketing at the 15th Tiger Roar Marketing Category at TopDigital

Innovators Selection Top 30 Brands

Awards Innovative Marketing Awards

Forbes Tiger Roar Awards TopDigital Organizing 13 Science and Technology Awards in the Mechanical Industry among

which the project Key Technological Innovations and Applications

Organizing Committee Committee World’s 500 Most Influential Brands in High-Mobility Wheeled Engineering Vehicle Suspension Systems

received the First Prize for Technological Invention.World BrandLab China Machinery Industry Federation

Chinese Mechanical Engineering Society

Industry Organizations

26th Golden Bull Award of Listed Companies Association name Association membership

2024 Phoenix Star: A-share Best Project to Invest Award Golden Bull

Fortune China 500

Overseas Innovation Award Board Secretary AwardGolden Information Disclosure Award Asia Quality Function Deployment Association Standing Director Entity

Fortune magazine Phoenix Television ifeng. China Securities News China Association for Public Companies Directing Entity

com

National Association of Financial Market Institutional Investors Membership Entity

China Construction Machinery Association Vice Chair Entity

China Machinery Industry Federation Vice Chair Entity

China Federation of Industrial Economics Vice Chair Entity

China Machine Building Quality Management Association Vice Chair Entity

Zhantianyou Development Foundation of Science and

Technology Vice Chair Entity

Mechanical Design Branch Chinese Mechanical Engineering

Society Deputy Director Entity

2024 Fortune China’s Most Admired Forbes China Go-International 2024 LinkedIn “Best in Content Chinese Association for Quality Standing Director EntityCompanies Brands Top 30 Marketing Award”

Fortune magazine Forbes LinkedIn11 XCMG Construction Machinery Co. Ltd.2024 Environmental Social and Governance (ESG) Report Responsibility Management 12

Responsibility Management

ESG Management ESG Impacts Risks and Opportunities

The Company effectively incorporates ESG-related impact risk and opportunity management into its internal governance

frameworks. We perform thorough assessments of sustainability factors that could significantly affect our business model resilience

ESG Structure operational continuity strategic development financial position and performance cash flow stability and financing structures and

cost efficiency over short medium and long-term periods. Material ESG factors identified are systematically prioritized for mitigation

The Company is committed to refining its ESG governance framework by seamlessly incorporating sustainable development or capitalization through targeted actions ensuring robust organizational resilience.principles into its corporate policies and processes. We have implemented a robust ESG reporting mechanism to effectively advance

our management initiatives.Management Process

Decision-making Serves as the supreme ESG decision-making authority of the Company by

reviewing and approving all material ESG-related matters

Board of Directors Oversees assessment of sustainability impacts risks and opportunities We systematically identify ESG-related Building upon this risk identification risks and opportunities in compliance process we conduct comprehensive

with national laws and regulations assessments evaluating the likelihood

policy requirements global sustainability Identify Assess potential magnitude and transmission

trends and our operational context. channels of these impacts.ESG Strategy and Vision

The Company adeptly integrates sustainable development principles into its corporate strategy and decision-making processes. Respond

Anchored by its Five Transformations as well as a comprehensive risk control and compliance framework it adeptly harmonizes

development with security. This is achieved through the enhancement of environmental protection the fulfillment of social

responsibilities and the strengthening of corporate governance. Consequently the Company continuously elevates its governance

capabilities competitiveness innovation capacity risk resilience and value creation. Ultimately this strategic approach not only

advances corporate objectives but also fosters socio-economic sustainable development amplifying positive economic social and

environmental impacts while reinforcing alignment with sustainable business models

Based on the assessment outcomes we formulate targeted response strategies

and implementation measures to effectively mitigate adverse operational and

financial consequences while capitalizing on emerging opportunities. We also

Five Transformations maintain continuous monitoring of risk exposures and regular evaluation of

management protocols to ensure the ongoing effectiveness of our impact risk and

opportunity governance framework

High-end Intelligent Green Service-oriented and International13 XCMG Construction Machinery Co. Ltd.2024 Environmental Social and Governance (ESG) Report Responsibility Management 14

Identification Result and Responses

Risk/opportunity

type

Risk/opportunity Probability Impact time- Expected Responses

description frame impact

Government and regulatory requirements for construction Develop a robust and comprehensive risk assessment framework.Country- projects vary across countries (including aspects such as Formulate flexible and adaptive market entry strategies and operational

specific and human rights protection and environmental compliance). In Revenue models.operations the Company face political economic social High Medium to long term decline Establish an effective compliance management system.policy risk financial and legal risks in host countries which impose Diversify market presence to mitigate risks associated with reliance on a

higher demands on compliance management capabilities. single market.The global focus on environmental protection and sustainable

development has led to a steady increase in market demand We bolster our position in clean technology we consistently increase

for clean technology products. The research development research and development expenditures foster robust collaborations Clean

and implementation of these technologies significantly Revenue with universities and research institutions and enhance our innovation technology contribute to lowering production costs by optimizing High Medium to long term increase capabilities.opportunity production processes and enhancing energy efficiency. This We intensify the promotion of proprietary clean technology achievements strategically articulate our green brand positioning and elevate brand

trend reflects a crucial shift towards sustainable industrial awareness and reputation in sustainable development.practices.Suppliers and partners are widely distributed across various Conduct regular assessments of suppliers’ ESG performance to ensure

regions and these suppliers face significant ESG-related alignment with corporate sustainability goals and standards;Supply chain

risk risks related to contract performance quality management High

Short term medium Cost increase Build a geographically diversified supplier base to mitigate disruption risks

safety management environmental protection and labor to long term from regional natural disasters;Foster long-term partnerships with key suppliers to improve supply chain

management. efficiency and sustainability performance

To ensure successful project execution it is imperative to conduct

Cultural disparities across various countries and regions comprehensive market research to grasp the local market demand

significantly impact project execution necessitating competitive landscape and sociocultural context.Local refined management strategies for local employees. Non- Proactively fostering strong partnerships with local governments is

operations risk governmental organizations (NGOs) closely scrutinize High Medium to long term Cost increase essential; staying informed on policy developments will facilitate access to Chinese enterprises in these locations particularly regarding enhanced support and resources.their environmental practices labor management and the Implementing cross-cultural training for foreign employees is vital in

frequency of safety incidents. fostering an understanding and appreciation of local customs and social

norms thereby minimizing cultural conflicts.15 XCMG Construction Machinery Co. Ltd.2024 Environmental Social and Governance (ESG) Report Responsibility Management 16

ESG Indicators and Objectives Analysis of Material Issues

The establishment of sustainability indicators and targets by the Company reflects its commitment to environmental protection social XCMG Machinery is committed to enhancing its identification and management of material issues. By analyzing industry policy

responsibility and the optimization of governance practices. Furthermore this strategic initiative not only articulates a clear direction trends and benchmarking against peers the Company actively gathers stakeholders’ concerns and expectations through various

for corporate development but also establishes a measurable framework for evaluating progress and success. channels. The identification of key material issues is based on two critical dimensions: materiality on the Company’s financial

conditions and the materiality of impact on economic social and environmental systems. This dual-focus approach guides the

Company in advancing its sustainability initiatives with clear objectives and prioritized actions.E S G Process to Analyze Material Issues

Environmental Social Governance The Company systematically identifies key sustainability issues examining national macroeconomic

Screen policies industry development trends corporate strategic objectives and both global and domestic

Reduce carbon emission intensity; Enhance global responsible Build intelligent upgrade digital sustainability standards. This analytical approach emphasizes both financial significance and the broader

Expand sales of new energy products brand recognition; transformation and connectivity; economic social and environmental impacts of its operations.Increase investment in Improve internal control & The Company engages key internal and external stakeholders through comprehensive surveys to

technological innovation compliance management

Assess quantitatively assess the materiality of identified issues. This analysis evaluates the materiality of Communication with Stakeholder these issues concerning corporate financial performance and their broader economic social and

environmental impacts.XCMG Machinery attaches equal importance to the legal rights and interests of its stakeholders while taking attention to its own

high-quality development. The Company fully understands the expectations and demands of its stakeholders. It actively builds

communication channels and engages in dialogues with stakeholders responding to their needs and concerns. Rank and The board of directors employs a materiality matrix to conduct a thorough final review resulting

approve in a prioritized list of sustainability issues ranked by materiality. High-priority issues are afforded comprehensive disclosure in corporate reports ensuring transparency and accountability.Key stakeholders Expectations and requests Communication channels

*Compliance with national laws and

regulations Matrix of Material Issues

Governmental bodies and *Alignment with national and regional

*Supervision and assessment

regulators strategies *Information submission

*Compliant operation *Work meetings

*Tax payments under laws Product Quality and

Safety

*Official website and WeChat public Supply Chain Sustainable

*Robust corporate governance accounts Business Ethics Management

mechanisms *Information disclosure

Investors/shareholders *Better information disclosure *Performance briefing Labor Management Customer Relations

*Performance growth and return on *Roadshows/reverse roadshows

investments *http://irm.cninfo.com.cn Hazardous Substances

*Other exchanges and interviews and Waste Dispose Data Safety and Customer Climate Change

Privacy Protection Responses

Community Relations Occupational

*Protection of basic rights Corporate Governance Health and Safety

*Better salaries and benefits *Trade union

Employees *Facilitating career development *WeChat public account Equal Treatment to SMEs Cybersecurity and Information Innovation Drive and

*Safe workplace *Questionnaires Security Management Technological Ethics

*Work wellbeing Environmental Protection

of Product Life Cycles Circular Economy

Risk and Opportunity Clean Technology

*Trade union *Customer satisfaction survey

Customers *WeChat public account *Messages via WeChat official account Rural Revitalization

Management Opportunities

and official website

*Questionnaires *Customer visits Ecosystem and Biodiversity

Environmental Policies and

Protection Compliance Management

Suppliers *Fair biddings *Procurement information disclosure*Sustainable supply chain *Supplier exchanges and training Energy Utilization

*Driving economic development in the Water Resource Utilization

community *Communication and exchanges

Communities *Activities for public interest *Daily visits Financial materiality

*Reducing the impact of production *Transparent information

activities on community Environmental Social Governance

Impact materiality17 XCMG Construction Machinery Co. Ltd. Comprehensive Governance for Quality and 2024 Environmental Social and Governance (ESG) Report Efficiency: Efficient Management for Development 18

Performance Highlights in 2024

Comprehensive Governance for Total participation in business ethics A-rated information disclosure

01 anti-corruption and anti-bribery trainingQuality and Efficiency: Efficient Management for Development 67334 7 years in a row

R&D cost

XCMG Machinery demonstrates an unwavering commitment to its business development strategy characterized by a focus on 559790.76 RMB 10000

high quality effective risk management world-class standards and stable growth. Through deep reforms the Company has

achieved significant advancements in enhancing its modern corporate system. Moreover it has accelerated the modernization of its

management practices and fostered the development of new quality productive forces. These strategic initiatives signify that XCMG

Machinery is taking decisive and measured steps towards establishing itself as a world-class enterprise.Responses to UN SDGs19 XCMG Construction Machinery Co. Ltd. Comprehensive Governance for Quality and 2024 Environmental Social and Governance (ESG) Report Efficiency: Efficient Management for Development 20

Corporate Governance Board of Directors

XCMG Machinery rigorously adheres to established laws and regulations including the Company Law of the People’s Republic of The Board of Directors serves as the primary decision-making entity and the cornerstone of the corporate governance framework.China the Securities Law of the People’s Republic of China and the Corporate Governance Guidelines for Listed Companies. The The Company actively enhances the development of its Board with the objective of establishing a well-structured efficiently

operating and results-driven governing body. By doing so the Company aims to maximize the Board’s pivotal role in corporate

Company is committed to formulating and continuously refining its corporate governance system in alignment with the latest legal governance.and regulatory standards. In response to evolving requirements and the practicalities of corporate governance operations XCMG

Machinery promptly undertakes revisions to enhance its governance framework. The Company has established a robust corporate The Board of Directors has instituted several critical committees including a Strategy Committee an Audit Committee a Nomination

governance mechanism that includes the general meeting the Board of Directors the Supervisory Committee and the management Committee and a Remuneration and Assessment committee. Notably the Remuneration and Assessment Committee is tasked

team. This structure delineates clear legal rights and responsibilities promotes transparency ensures coordinated operations with the formulation and evaluation of the Company’s remuneration strategy. This Committee conducts regular reviews and timely adjustments to the remuneration policy ensuring alignment with current market best practices and regulatory requirements.and implements effective checks and balances. Upholding the fundamental business principles of steady operation standardized Furthermore the Committee undertakes comprehensive benchmarking analyses of remuneration levels and structures in

operation and strengthening the core business XCMG Machinery persistently enhances its governance structure for corporate legal comparison to industry peers thereby ensuring the competitiveness of the Company’s remuneration plan. Members of the

entity. Remuneration and Assessment Committee possess specialized expertise in remuneration design and governance. They have a

profound understanding of the Company’s strategic objectives and associated risks enabling them to assist in the development

of a sound and equitable remuneration system. Consequently the Committee plays a pivotal role in enhancing the overall level of

corporate governance within the Company.In October 2024 the 26th Golden Bull Award for As of the end of 2024 the Board of Directors comprised nine members including three independent directors which constitutes one-

Listed Companies were announced and XCMG third of the Board; and two female directors accounting for two-ninths of its composition. The establishment of a Board Observer

Machinery distinguished itself by securing three position further underscored the Company’s commitment to inclusivity allowing small and medium-sized shareholders to engage in

prestigious accolades: the Most Value to Invest the decision-making process regarding significant corporate matters. In 2024 the Board conducted a total of 13 meetings during which it reviewed and deliberated on 50 proposals.Award the Golden Bull Board Secretary Award and

the Golden Information Disclosure Award.Performance on Board Meetings

Board meetings Expected attendance Actual attendance Proposals considered

1311711750

Governance Structure

General Information of Supervisors

General Meeting

Name Position Gender Age Education background Industry experience

The general meeting is the highest body of power of the Company. In 2024 the Company held 2 general meetings where 13

proposals were approved. Yang Dongsheng Chairman Male 56 Master’s degree Management R&D production and marketing

Sun Lei Director Male 47 Master’s degree Management

Performance on General Meeting of Shareholders Lu Chuan Director and President Male 58 Master’s degree Management technology finance

Shao Danlei Director Female 51 Master’s degree Management and finance

Number of general meetings Number of proposals approved at

general meetings Xia Yongyong Director Male 52 Master’s degree Management and production

2 13 Tian Yu Director Male 59 Doctoral degree Finance marketing and risk

Geng Chengxuan Independent director Female 59 Doctoral degree Finance

Kuang Shidao Independent director Male 55 Bachelor’s degree Law

Yang Lin Independent director Male 55 Doctoral degree R&D21 XCMG Construction Machinery Co. Ltd. Comprehensive Governance for Quality and 2024 Environmental Social and Governance (ESG) Report Efficiency: Efficient Management for Development 22

Supervisory Committee Senior Management

The Supervisory Committee independently exercises its authority in accordance with laws effectively supervising to ensure the As of the conclusion of 2024 the Company had a distinguished team of 12 senior executives comprising one president ten vice

Company operates in compliance with regulations. As of the end of 2024 the Company had 7 supervisors. In 2024 the Company presidents—including the executive responsible for finance—and one secretary of the Board of Directors. This team possesses

held 7 Supervisory Committee meetings where 15 proposals were considered. extensive management experience reflecting a deep comprehension of industry dynamics and a keen understanding of market and

customer needs. Moreover their expertise equips them with the capability to accurately anticipate market cycles.Performance of Supervisory Committee Meetings The Company is actively implementing a professional management system that encompasses the establishment and enhancement of tenure and contractual management frameworks. It has devised assessment criteria that align with its goals for high-quality

Supervisory Committee Actual attendance Proposals considered development and institutionalized a dynamic cadre management mechanism with bidirectional mobility. By adopting a performance-

meetings oriented and market-sensitive approach the Company rigorously manages tenure while conducting thorough target assessments

5 through strict implementation of Two Letters & Two Contracts that define responsibilities rights and obligations. The introduction 35 15 of customized employment agreements and targeted performance contracts allows for a market-driven salary distribution model providing a robust framework for performance evaluation assessment and the exit process for professional managers. Furthermore

the Company has optimized its salary management strategy by incorporating tenure-based incentives in addition to the existing

annual basic salary position salary and performance salary structures. This strategic alignment encourages senior executives

to prioritize the achievement of the Company’s long-term strategic objectives thereby fostering a culture of accountability and

excellence. The Company has launched a 2000-person equity incentive plan granting 118 million shares to create a shared-destiny

General Information of Supervisors community between key employees and the organization.Name Position Gender Age Education Industry experience The Company has implemented a robust clawback mechanism for executive compensation ensuring that professional managers background are held accountable for the precision and accuracy of key performance indicators throughout their tenure. In instances of fraudulent

Chairman of the reporting or mismanaged accrued costs and deferred expenses the Company reserves the right to retrospectively evaluate and Zhen Wenqing Supervisory Committee Male 55 Bachelor’s degree Management adjust performance outcomes recouping any excess annual bonuses or tenure-based incentives awarded. Furthermore the 2023

Restricted Stock Incentive Plan delineates three critical performance metrics—return on equity (ROE) net profit growth rate and

Zhang Liankai Vice chair of the Male 47 Master’s degree Management and investment dividend payout ratio—as benchmarks for equity incentive evaluation. These metrics will be rigorously assessed on an annual basis Supervisory Committee over the three fiscal years (2023–2025) with the vesting of restricted shares contingent upon meeting established performance

targets.Cheng Qian Supervisor Female 55 Doctoral degree Finance investment and management

Zhang Xu Supervisor Female 49 Bachelor’s degree Finance

Li Ge Supervisor Female 58 Master’s degree Management

Jiang Lei Supervisor Female 50 Master’s degree Management

Ma Jingya Secretary of the Supervisory Committee Male 40 Bachelor’s degree Management23 XCMG Construction Machinery Co. Ltd. Comprehensive Governance for Quality and 2024 Environmental Social and Governance (ESG) Report Efficiency: Efficient Management for Development 24

Risk Management

We resolutely follow the business development policy focused on high quality risk control world-class standards and stable growth. Organizational Framework for Risk Management

We consistently enhance risk management capabilities and bolster internal audit and internal control processes ensuring that

operations are compliant with established regulations and standards. XCMG Machinery Risk Management Committee

Director (Yang Dongsheng)

Risk Control and Compliance Establish an integrated risk management framework

Vice Director (Lu Chuan)

and formulate a structured

In alignment with the principle of coordinated linkage and the integrated efforts of “control management and implementation” the Company has

developed a robust three-level management organizational structure. This structure encompasses the headquarters assuming overall responsibility transformation strategyMembers (Kuang Shidao Wang Qingzhu Meng Wen Advisors (Hu Yan Chen Jian

the platform providing essential support and the front line bearing primary accountability. Such an arrangement is pivotal in advancing the Yu Hongyu Ma Jingya Qiu Gengzong Zhu Leilei) Yu Hontao)

establishment of the three lines of defense for compliance risk management. Utilizing the Risk Governance and Control (RGC) methodology

the Company continually refreshes its business compliance management guidelines compliance dashboards and risk panorama diagrams. This

dynamic approach facilitates comprehensive review of compliance risks and enables timely adjustments to risk levels. Additionally the Company

prioritizes risk control and compliance training thereby enhancing the risk and compliance management capabilities of all employees.In 2024 the Company established a Risk Management Office which serves as the authoritative decision-making body for the Company’s Risk Management Office

comprehensive risk management efforts. This office is tasked with planning and orchestrating the Company’s integrated risk management framework

while formulating a strategic path for the transformation of the risk management system. The Company is committed to the continuous enhancement Direction Setting System Architecture

System Operation

of its risk management policies and procedures. It strengthens the standardized implementation establishes a dynamic mechanism for risk scanning Post Loan Operation Group Litigation Management Group Group Digital Enablement Planning

and evaluation and promotes specialized handling of risk-related issues. Furthermore the Company is advancing the development of a digital risk Rhythm Domestic

management platform to bolster its digital capabilities in this domain. Overseas Risk Risk

Operation Data-Driven Governance

Operation Adaptive Resourcing

Group

Group …

Risk Compliance Management Performance Review Implementation Continuous Improvement Domestic Overseas Domestic Overseas Domestic Overseas

Risk control and compliance Risk control and compliance Risk control and compliance

training sessions training duration training participation

54 152 Hours 4787 Operationalizing HQ

strategy while building

future-ready capabilities for

Chief Risk Officer International XCMG XCMG International Circular Jiangsu

Business ...Risk Management Dept Marketing Lease Development Business Center Gongxin intensification shared value Division

professional excellence and

enablement.Compliance-grade execution

of non-negotiables and

contextual adaptation of

Chief Risk Officer

Core equipment producers 14 overseas regions Domestic regions strategic options for sound

Risk Management Dept delivery of client service risk

mitigation and shareholder

value.Control Manage Execute

Special Team

Special Team3

Special Team2

Special Team1

Headquarters Platform Front-line

Chief Risk Control Officer (from the headquarters)25 XCMG Construction Machinery Co. Ltd. Comprehensive Governance for Quality and 2024 Environmental Social and Governance (ESG) Report Efficiency: Efficient Management for Development 26

Risk Management Initiatives Internal Audit and Internal Controls

Performance on

In 2024 the Company strengthened its four core risk management capabilities—risk identification assessment response and The Company is committed to continuously enhancing the capabilities of its internal audit team while Internal Audit and

operations—proactively addressing current risks and effectively mitigating emerging threats. intensifying audit supervision. In alignment with the high-quality development goals encapsulated by Internal Controls

the principles of high quality high efficiency high level and sustainability the Company implements

robust oversight and audit support across various key areas including engineering projects overseas

asset management and dealer management. This strategic approach not only identifies weaknesses in Correction rate of issues

Enhancing Risk Identification Capabilities management processes but also ensures the effective supervision of corrective actions stemming from

audit findings thereby establishing a comprehensive closed-loop management system. Furthermore the

Company analyzes and extracts the issues identified during audits compiles a collection of typical audit

The Company executed comprehensive end-to-end risk mapping across all business processes achieving a 360-degree cases and conducts targeted training for key stakeholders including senior leadership overseas regional 100 %

risk perspective encompassing operating units distributors and customers. A robust risk evaluation framework was business managers and personnel within the audit system. This initiative aims to enhance the overall professional competency within the Company.instituted comprising 10 primary categories and 41 subcategories of risk indicators including asset security risks supported Audits on operational

by a dedicated reporting system. Monthly risk scans and evaluations informed dynamic management strategy adjustments In 2024 the Company undertook a comprehensive revision of its internal audit procedures including the performance of overseas

based on identified gaps and trend analyses. Internal Audit Policy in response to adjustments in the organizational structure. This initiative marked a subsidiaries

significant step towards enhancing the internal control framework as it introduced 33 new internal control

rules and revised 49 existing ones. To further bolster this framework a management model characterized

by two levels four layers and eleven categories was established for the internal control system. This

model delineates the management procedures associated with internal control systems and underscores 18

Strengthening Risk Assessment Capabilities the Company’s commitment to developing a systematic standardized and efficient internal control

management system.The Company developed and continuously refined risk control models rules and algorithms for pre-screening credit rating Cybersecurity and Information Security

credit approval and utilization. Enhanced due diligence was rigorously applied in new business approvals with distributor

onboarding incorporating pre-admission credit assessments and risk evaluations. Dynamic credit rating systems for clients The Company has formulated and adheres to robust internal protocols including the Digital Security and Confidentiality Management Policy and the

and distributors were effectively implemented. Additionally a monthly inspection mechanism was established involving on- Information Security Confidentiality and Authorization Management Policy. By leveraging an industrial situation awareness platform it continuously

site compliance verification and subsequent targeted communications to address identified issues. enhances the security capabilities protecting its IoT assets. This initiative integrates the industrial security components of subordinate companies

thereby fostering the development of industrial security protection measures and facilitating secure data access across all branches and subsidiaries.Furthermore the Company has transformed its application release methodology by deploying an intranet load balancer effectively reducing the

exposure of its systems to the Internet. Additionally the implementation of a web application firewall in the internet-facing areas reinforces its security

architecture. Through the integration of certificate loading the Company achieves full-link traffic encryption significantly bolstering the security integrity

Improving Risk Response Capabilities of its operations.Standardized risk control manuals were developed to enhance operational consistency across the organization. Identified

risks underwent systematic assessment with mitigation strategies disseminated through risk alerts and compliance notices Performance on Cybersecurity and Information Security Management

ensuring comprehensive resolution of issues identified during audits and monitoring. A unified risk classification framework Information security Information security Information security Number of data breach

for accounts receivable was instituted categorizing risks into major significant or general levels. This facilitated tiered training sessions training duration training participation incidents

resource allocation and targeted countermeasures thereby safeguarding corporate assets effectively. Judicial resource

optimization initiatives encompassed pre-litigation mediation protocols multi-jurisdictional case coordination innovative

arbitration methods standardized outsourced legal management and specialized criminal case handling. Collectively 3 6 Hours 300 0

these measures addressed the escalating caseloads relative to limited judicial resources and refined multi-channel dispute

resolution frameworks enhancing case management precision.The Company organizes information security specialists

from each branch and subsidiary to conduct a series of

comprehensive training sessions. Additionally it actively

Advancing Risk Operationalization participates in prominent events such as the Jiangsu Province Information Security Competition and the Xuzhou

Network Protection Action Drills thereby ensuring that

An enterprise-wide risk reporting and closed-loop management system was established to enhance organizational risk robust network and information security measures are in

awareness. A risk knowledge repository effectively consolidates and disseminates critical information. Additionally an place. The Company was awarded the prestigious China’s

annual risk management training program—integrating classroom instruction with practical exercises—was implemented Leading Enterprise Award in the 2024 China Industrial Data

alongside a certification system designed to develop and sustain a skilled talent pipeline for risk control functions. Governance initiative. Furthermore three of its subordinate

companies achieved recognition as star-level enterprises in

the realm of industrial information security protection. China’s Leading Enterprise in Industrial Data Governance

for the Year 202427 XCMG Construction Machinery Co. Ltd. Comprehensive Governance for Quality and 2024 Environmental Social and Governance (ESG) Report Efficiency: Efficient Management for Development 28

Business Ethics Business Ethics Audits

XCMG Machinery adheres to ethical standards and actively cultivates a positive corporate image. In its pursuit of economic To effectively mitigate commercial bribery and corruption the Company conducts annual reviews at all operational

objectives the Company demonstrates a profound respect for social values diligently safeguards the rights and interests of its sites to ensure the internal control system is both effective and compliant with regulatory standards. Acknowledging the

stakeholders and contributes meaningfully to the broader community. diverse functions and operations of various departments the Company implements tailored self-assessments through

focused review processes. This approach enables a precise identification and evaluation of potential corruption risks

Fair Competition thereby enhancing the robustness and effectiveness of internal control measures.The Company steadfastly upholds the principles of fair competition promoting ethical business practices and eschewing unjust

competitive behaviors such as price manipulation and monopolistic actions. It has developed and implemented comprehensive Joint Training on Business Ethics

frameworks including the Business Code of Conduct and the Management Policy for Competition Law Compliance. Through

these initiatives the Company diligently identifies and manages risks optimizing risk scenarios and refining risk areas to enhance Anti-corruption and Anti-bribery for Stakeholders

the precision and effectiveness of risk assessment and management. Furthermore the Company has established a robust internal

supervision and management mechanism designed to ensure the fairness and transparency of all business activities.Anti-bribery and Anti-corruption

The Company continuously strengthens its anti-corruption and anti-bribery management. It adds corresponding management

policies during the supplier screening and due diligence process and conducts inspections from time to time. An effective reporting

mechanism is established to enable convenient and safe reporting of supplier violations. The Company has formulated the

Several Provisions on the Clean and Self-discipline of Leaders the Code of Conduct for Business Managers and the Regulations

on the Clean Performance of Duties by Personnel in Key and Highlighted Positions to urge employees to perform their duties

conscientiously and work with integrity and prevent major violations of discipline and law or acts of embezzlement for personal gain.It conducts training sessions on the themes of business ethics anti-corruption and anti-bribery for employees and suppliers creating

a good atmosphere that upholds integrity and resists corruption.Joint Integrity-building to Pool Strength and Promote Development with Peers

Performance on Business Ethics Anti-bribery and Anti-corruption Training

Indicator Unit 2024 value

Total training sessions / 707

Including: Manager training sessions / 4

Employee training sessions / 703

Total training duration Hours 711

Including: Manager training duration Hours 8

Employee training duration Hours 703

Total participation / 67334 Joint Efforts in Upholding Integrity with Stakeholders Special Promotion of the Code of Conduct on Integrity in

Including: Manager participation / 735 Business Activities with Stakeholders

Employee participation / 66599

The Company has developed the Code of Conduct on Integrity in Business Activities with Stakeholders. This code serves to clearly

Employees covered by the training % 100 define the expected behavioral norms and regulatory protocols for all stakeholders including partners such as suppliers distributors

Supplier training sessions / 6 agents and service providers. By establishing standardized business practices the Company aims to foster a culture of integrity and

Suppliers covered by the training / 5531 accountability. A critical component of this initiative is the creation of a blacklist for individuals found guilty of bribery which reinforces

9 the Company’s commitment to transparency and ethical conduct. This approach not only strengthens the enforcement of sanctions Supplier training duration Hours

against bribery-related behaviors but also clearly communicates the Company’s zero-tolerance policy regarding corruption.29 XCMG Construction Machinery Co. Ltd. Comprehensive Governance for Quality and 2024 Environmental Social and Governance (ESG) Report Efficiency: Efficient Management for Development 30

Reporting mechanism

Interests and Rights of Shareholders and Creditors

The discipline inspection departments at all levels are tasked with receiving reports of violations and conducting investigations XCMG Machinery adopts a proactive investor relations strategy that emphasizes extensive communication and engagement

to hold accountable those who commit fraudulent activities. These departments operate under the supervision of through a variety of channels and formats. This approach is designed to effectively articulate the Company’s multifaceted intrinsic

management and higher-level discipline inspection entities. value to global investors. While pursuing economic performance the Company remains committed to safeguarding the interests of

Each unit and function bear the responsibility for implementing anti-fraud measures within its respective area; and is expected shareholders and creditors. By offering a diverse array of rewarding measures XCMG Machinery empowers investors to participate

to assist the discipline inspection departments at all levels during investigations. in and benefit from the successful outcomes of its long-term sustainable development as a world-class enterprise.When the Company’s Discipline Committee receives complaints and reports from subordinate units they are required to

promptly complete the Notification of Investigation and Handling of Accusations Charges and Appeals. This notification

must be submitted to the discipline inspection departments of the respective subordinate units for further investigation and Information Disclosure and Investor Communication

resolution. In cases involving significant or particularly noteworthy issues the Office may directly undertake the investigation

and resolution process. The Company strictly adheres to the laws and regulations governing corporate conduct including the Company Law of the People’s

When the discipline inspection departments of each branch and subsidiary receive complaints and reports from their Republic of China the Securities Law of the People’s Republic of China and the Regulations on Information Disclosure of Listed

organization they should promptly communicate the handling of these leads as well as the findings of any investigations Companies. In this context it has developed and implemented the Regulations on the Management of Information Disclosure

to the superior Discipline Committee. Additionally such notifications should also be relayed to the Party Committee at the Affairs. This framework not only standardizes the information disclosure processes but also upholds the rights of all investors to

corresponding level. be informed and engage in decision-making with particular attention to small and medium-sized shareholders. Furthermore the

The discipline inspection departments at all levels are required to promptly and accurately report their findings regarding Company actively strengthens its communication with global investors. The chairman has taken a hands-on approach by personally

complaints and reports assigned to them by the Company’s Discipline Committee or other senior leadership. This includes participating in performance briefings and investor meetings on multiple occasions. This direct engagement has significantly

providing detailed verification results and the outcomes of any investigations within the established time frame. Should enhanced the Company’s image and influence within the capital markets. The Company has been awarded the Best Practice Case

these departments fail to submit their reports within the stipulated deadline they are obligated to provide a comprehensive of Annual Report Performance Briefing featuring technological by the China Association for Listed Companies for two consecutive

explanation detailing the reasons for the delay. years.Whistleblower Protection Information Disclosure and Investor Communication Measures

The Company has clear policies for managing whistleblowing establishing robust mechanisms that facilitate anonymous reporting.Furthermore it has developed a comprehensive confidentiality framework designed to safeguard the safety privacy and legal rights

Strengthening Investor Creating Market Value

of whistleblowers. Relations Management Management System

Whistleblower Protection Measures

The Company engages in proactive communication This system incorporates a scientific approach to value

Whistleblowing

We formulate the Whistleblowing and Anti-Fraud Policy. activities with both domestic and international investors creation thereby promoting sustainable development

management policy through a variety of channels with its inaugural fostering robust interactions with the capital market and

Environmental Social and Governance (ESG) report in safeguarding the rights and interests of investors.Anonymous We employ various channels including hotline email addresses and mailing addresses for both Chinese and English disclosed in April 2024.whistleblowing channels reporting complaints and whistleblowing incidents.The identities and pertinent information of whistleblowers—including their names work units home

addresses and the details of their disclosures—will be maintained with the utmost confidentiality. Consolidating the Governance Foundation Optimizing Information Disclosure System A comprehensive

confidentiality Any personnel found to be in violation of these confidentiality regulations or who engage in and Improving Standardized Operations to Elevate the Quality of Disclosures

mechanism retaliatory actions against whistleblowers will face serious consequences as stipulated by the

applicable organizational policies and relevant legal frameworks. The Company is committed to upholding exemplary The Company obtained the A-rating for information

corporate governance practices to foster high-quality disclosure for seven years in a row. Over the past three

development. By expanding channels for investor years the Company has disclosed an average of more

We have established whistleblower protection education as a fundamental aspect of our participation in governance we facilitate diverse stakeholder than 150 announcements annually maintaining an

Relevant training and disciplinary inspection processes. By conducting regular training sessions for pertinent personnel involvement in decision-making processes thereby impeccable record with no corrections or supplementary

we reinforce adherence to regulations disciplinary protocols and legal requirements thereby enhancing our shareholders’ rights to information and announcements.education promoting the rigor of our decision-making.effectively safeguarding whistleblowers.31 XCMG Construction Machinery Co. Ltd. Comprehensive Governance for Quality and 2024 Environmental Social and Governance (ESG) Report Efficiency: Efficient Management for Development 32

Interests and Rights of Investors Technological Innovation

Interests and Rights of Shareholders XCMG Machinery regards innovation as the cornerstone of its core competitiveness driving a transformative shift from traditional

manufacturing to advanced high-quality and intelligent production through its Intelligent Upgrade Digital Transformation and

The Company places significant emphasis on shareholder returns recognizing the importance of rewarding a broad base of Connectivity strategy. The Company is committed to fostering a deep integration of technological advancements with industrial

investors with the benefits derived from high-quality development achievements. In 2024 the Company proudly introduced the innovation. By cultivating and developing new quality productive forces XCMG Machinery is actively accelerating its pursuit of high-

Global Investor Return Plan for the Next Three Years (2025-2027). This strategic initiative is designed to enhance the Company’s level self-reliance and self-improvement in science and technology.investment value safeguard the legitimate rights and interests of investors increase shareholders’ sense of fulfillment and foster a Intelligent Upgrade Digital Transformation and Connectivity

community of shared future between the Company and its investors.XCMG Machinery has strategically anchored its digital transformation around three core objectives: achieving full-chain

interconnectivity with 100% process digitization establishing whole-element digital twins with 100% business digitalization and

Sustainable and Stable Cash Returns fostering pan-scenario human-machine collaboration with 100% intelligent decision-making. This transformation is propelled by the

dual engines of robust business strategy and cutting-edge IT innovation. The firm fervently embraces its Chairman’s No.1 Project—

Intelligent Upgrade Digital Transformation and Connectivity—aiming to establish world-class advanced manufacturing clusters in the

In any given fiscal year where profits are generated the Company will proactively explore the feasibility of multiple

dividend distributions throughout that year. In the absence of substantial investment initiatives or major cash outflows the construction machinery sector. As a pioneering first-mover XCMG Machinery has introduced the Three Domains & Six Dimensions

Company pledges that over the next three years (2025 to 2027) the aggregate amount of cumulative cash dividends— smart manufacturing evaluation standard for China’s engineering machinery industry with its Lean Intelligent Pilot Factory setting a

encompassing share repurchases and cancellations—will not fall below 40% of the distributable profit realized each benchmark that significantly enhances productivity and fosters new-growth trajectories.year.Relevant Awards and Honors

Regular Shareholding Increases by the Controlling Shareholder

Awards and Honors

XCMG Group has committed following the completion of necessary approval processes over the next three years to Recognized as a 2024 Jiangsu Province Benchmark Enterprise for Intelligent Upgrade Digital

allocate no less than 20% of the cash dividends received from XCMG Machinery on an average annual basis toward Transformation and Connectivity

augmenting its shareholdings in the listed company.Achieved Level 4 Smart Manufacturing Capability Maturity and Level 3 Data Management Capability

Maturity

Interests and Rights of Creditors Awarded 2024 Digital Transformation Leading Case by The Economic Observer-Qianxing List for

Intelligent Upgrade Digital Transformation and Connectivity Initiatives

The Company upholds a steadfast commitment to integrity in its business operations diligently fulfilling its responsibilities as a

Two case studies—Digital Transformation Practices Based on the No.1 Intelligent Upgrade Digital

debtor by making timely repayments to protect the legitimate rights and interests of its creditors. The internal Information Disclosure Transformation and Connectivity Project and Application and Promotion of Construction Equipment

Management Policy encompasses comprehensive provisions for bond-related disclosures ensuring that material information is Operations Management Platform—selected as MIIT 2024 Exemplary Cases for deep integration of real

communicated to bond investors in a truthful accurate and timely manner. Annually the Company engages rating agencies for economy and digital economy and IoT-enabled industry development

surveillance reviews of its outstanding bonds thereby empowering creditors to thoroughly evaluate its financial operational and

XCMG Crawler and XCMG Fudi included in 2024 5G Factory Directory

governance circumstances. With a distinguished record of on-time debt servicing and no repayment defaults the Company’s strong

performance and creditworthiness have garnered exceptional accolades in capital markets. Remarkably XCMG Machinery has XCMG Heavy Machinery listed in both China's First Batch of Excellence-Level Smart Factories and

consistently maintained China’s highest AAA credit rating since its initial bond issuance in 2011—an honor that sets it apart as the Industrial Internet Pilot Demonstration Projects

only major domestic construction machinery enterprise to achieve this distinction. XCMG Driveline designated as Industrial Internet Pilot 5G Factory33 XCMG Construction Machinery Co. Ltd. Comprehensive Governance for Quality and 2024 Environmental Social and Governance (ESG) Report Efficiency: Efficient Management for Development 34

Examples of Digital Transformation and Intelligent Upgrade

Manufacturing → Intelligent Manufacturing Lean Manufacturing

We successfully convened the kick-off meeting for the Planning XCMG Excavators has successfully established a joint team

and Construction Project of the Leading Lean Intelligent focused on digitalization technology and craftsmanship

Manufacturing Factory. This initiative aims to establish a state-of- thereby clarifying objectives for product research and

the-art intelligent and efficient manufacturing facility within the development streamlining processes and enhancing

construction machinery sector. Our endeavor will significantly overall efficiency. This initiative has led to the creation of an

expedite the development of a cluster of world-class lean and advanced intelligent service model. Utilizing sophisticated

intelligent manufacturing factories. platforms such as XCMG e-Repair Mine Management Master and Service Big Screen 3.0 the company facilitates

remote connection monitoring diagnosis and guidance.These innovations significantly expand service reach and

Smart XCMG Showcased on Bauma Expo elevate service quality. Furthermore the integration of 5G

technology with the industrial Internet fosters seamless data

The XCMG Digital and Intelligent Space Station presents an collection and interoperability within the 5M2E system.innovative smart display solution characterized by its “one engineand four cabins” framework incorporating cutting-edge models

and technologies. This initiative effectively illustrates XCMG’s

significant advancements in digital and intelligent transformation

across diverse domains including operational efficiency circular Digit-driven Intelligent Construction

economy and industry empowerment showcased at Bauma

China 2024. Additionally the introduction of XCMG’s inaugural XCMG Road enhances its comprehensive range of

artificial intelligence assistant platform for intelligent services construction equipment by employing advanced algorithms

leveraging AIGC was met with considerable acclaim from and sophisticated data processing capabilities. Through

industry stakeholders further affirming the Company’s pivotal the integration of innovative technologies such as precise

role in shaping the future of construction technology. preparation 3D leveling and intelligent compaction

combined with state-of-the-art applications like the Beidou

Navigation Satellite System and 5G connectivity it is

Cooperation for Digital Economy Blueprint transforming the landscape of road construction. This

approach facilitates comprehensive monitoring and

We strategically leverage external resources to drive our efforts management of construction data establishing a robust

in intelligent upgrade digital transformation and connectivity. foundation for full-life cycle management of roadways and

Collaborating with 42 external consulting institutions and infusing the transportation construction sector with enhanced

implementation companies we have engaged over 800 intelligence and efficiency.professionals from these teams in various projects across seven

major clusters. Additionally we have established robust digital

ecological partnerships with leading companies such as IBM

and Huawei. Our strategic collaboration with Huawei focuses on

advancing intelligent driving and developing innovative solutions Smart Mining Solution for Open-pit Mines

for open-pit mines significantly enhancing the speed and

depth of our research and development initiatives in intelligent XCMG Machinery’s intelligent mining solution for open-

technologies. pit mines establishes a comprehensive real-time and

intelligent mine management platform through the

Robotic Solutions in Workshops integration of cutting-edge technologies including the

Internet of Things big data and cloud computing. Real-

XCMG Driveline emphasizes a strategic commitment to time data on equipment status production progress and

technological transformation and equipment modernization. By personnel safety is captured via advanced sensors and

integrating robotics within its automated machining production monitoring systems subsequently uploaded to the cloud

lines the company leverages advanced intelligent manufacturing for thorough analysis and processing. This robust intelligent

processes including proprietary machining assembly testing dispatching and management system coupled with state-

and heat treatment. Furthermore the incorporation of 5G of-the-art construction equipment delivers a holistic solution

industrial Internet technologies has markedly enhanced high-end that significantly optimizes the operational efficiency and

development intelligence sustainable practices and safety in safety of open-pit mining operations.production.35 XCMG Construction Machinery Co. Ltd. Comprehensive Governance for Quality and 2024 Environmental Social and Governance (ESG) Report Efficiency: Efficient Management for Development 36

Innovation Drive and Technological Ethics Strategies

In pursuing innovation-driven development the Company systematically identifies and manages associated risks by implementing

Governance robust preventive strategies designed to minimize both the probability and impact of potential challenges. By proactively identifying

and evaluating opportunities the organization consistently cultivates competitive new products thereby securing market advantages

Guided by the strategic objectives of high-end manufacturing intelligence sustainability service orientation and internationalization and ensuring sustainable growth. Importantly the Company achieved a commendable record of zero technological ethics violations

XCMG Machinery is firmly committed to implementing an innovation-driven development strategy. The Company enhances its in 2024.technological innovation framework through the consolidation of the 1+6+N system. Furthermore XCMG Machinery has established

and operationalized a comprehensive suite of internal management policies including the Technical Planning Management Policy

Technical Planning Review Management Measures Management Measures for Core and Key Technologies R&D Management Impact Expected Risk/opportunity type Risk/opportunity Probability time- financial Responses

Index Policy General Rules for R&D Project Management Management Measures for Industry-University-Research Collaborations description frame Impact

Management Measures for External Technological Cooperation Patent Management Measures Work Specifications for Patent

Classification and Grading and Work Specifications for Quality Management of Patent Applications. Under the auspices of the

The emergence of

XCMG Technical Committee the Company is building a premier R&D management system designed to foster world-class research competing substitute The Company will enhance its market

and innovation capabilities featuring technological advancement product competitiveness and R&D efficiency. products in the market

represents a significant Medium Revenue monitoring and analytical capabilities Market risk

The Company is steadfast in its commitment to the continuous exploration of engineering technologies while providing innovative challenge to the Company’s

High to long decrease facilitating timely strategic adjustments

market share necessitating term that will effectively consolidate its

solutions for global engineering construction and sustainable development. It has established 42 research and development (R&D) strategic responses to market position.platforms recognized at or above the provincial level. Among these are the National Key Laboratory of Intelligent Manufacturing for mitigate potential losses.High-end Construction Machinery a national industrial design center two provincial manufacturing innovation centers nine provincial

engineering technology research centers and 17 provincial enterprise technology centers. Risk The company firmly adheres to the

By the end of 2024 the Company had secured a total of 11981 authorized patents including 4252 inventions and 329 international The advancement of Science and Technology Progress smart manufacturing Law of the People's Republic of

patents. Additionally it had developed and issued five international standards and 333 national and industry standards demonstrating data-driven operations China upholding rigorous standards

robust innovation leadership. Technology and AI applications may Short to of technologic ethics in our decision-

ethics risk entail technology ethics Medium medium

Cost

risks arising from improper term increase

making and innovation practices. We

are committed to the principles of

XCMG Machinery’s Technological Innovation Performance implementation or integrity and ethical conduct in research inadequate management and development thereby fostering a

oversight. healthy and sustainable environment

Indicator Unit 2024 value for technological advancement.R&D cost RMB 10000 559790.76 Through strategic

technological innovation

Number of R&D employees / 7619 the Company cultivates

proprietary core

IPR expenditure RMB 10000 2810.59 technologies that

Technology possess independent Medium intellectual property High to long Revenue We will consistently innovate to

Patents authorized in the year / 1675 opportunity rights. This approach term increase enhance our product competitiveness.not only creates distinct

Standards newly formulated in competitive advantages in

the year / 56 the marketplace but also

Standards for which the Opportunity

solidifies its leadership

position within the industry.Company played a role National standards / 33

in their formulation in the

year Industrial standards / 13 The Company adeptly crafts tailored

Diversifying market and specialized products designed to

Group standards / 10 Product demands provide Medium Revenue meet the unique demands of various

opportunity opportunities for the High to long increase industries and application contexts. This

581 Company in product term strategic focus fulfills clients’ operational Innovative R&D projects / innovation. requirements in specific environments

and effectively enhances market share.Accumulative authorized patents / 1198137 XCMG Construction Machinery Co. Ltd. Comprehensive Governance for Quality and 2024 Environmental Social and Governance (ESG) Report Efficiency: Efficient Management for Development 38

Management of Impacts Risks and Opportunities Technological Innovation Achievements

The Company exemplifies a proactive approach in identifying and managing risks and opportunities within its R&D innovation

initiatives thus effectively responding to industry transformations. By consistently developing cutting-edge technologies and products The Company bravely ascends to the forefront of science and technology strategically positioning itself at the pinnacle of the industry.it has significantly bolstered its competitiveness and exerted a considerable influence on the sector's overall progress facilitating It is actively engaged in the vigorous development of emerging sectors while expanding and reinforcing the emergency rescue

industrial advancement. To address potential challenges such as rapid technological obsolescence the Company emphasizes equipment industry. Additionally the Company has established an intelligent production line that currently boasts the shortest cycle

sustainable development through rigorous strategic planning and robust risk management practices. time largest scale and highest efficiency in the sector. Leveraging advancements in cloud computing intelligent manufacturing

smart vehicle networking and large model algorithm platforms the Company integrates cutting-edge technologies such as artificial

Identify intelligence into industrial applications. This commitment to technological innovation is instrumental in cultivating new-quality

productive forces and driving the transformation and upgrading of traditional industries.The Company navigates several critical uncertainties in its development including technological obsolescence market volatility

regulatory shifts and reputation management challenges. To effectively mitigate these risks it has established clear management Technological Innovation Awards and Achievements

objectives and defined implementation scopes prioritizing crucial areas for risk identification. By systematically collecting and

analyzing customer needs industry trends competitor intelligence and emerging technological advancements the Company

enhances the precision and comprehensiveness of its risk identification processes thereby providing strong support for the Technological Innovation Awards

formulation of evidence-based risk management strategies.Assess

The Company employs a systematic methodology to assess both the probability of risk occurrences and their potential severity

of impact. Then risks are classified and ranked based on likelihood and consequences. this approach enhances the rigor of risk

identification and management establishing a robust data-driven foundation for the development of targeted mitigation strategies.Monitor and manage

To enhance R&D efficiency and advance progress we continuously optimize the execution process. This involves strengthening

oversight of the entire workflow actively monitoring potential risks in new product development standardizing research practices

and ensuring that all R&D activities are both scientific and controllable.Indicators and Objectives

The Company has established a R&D Management Index System (Trial) designed to create a comprehensive framework centered

on three strategic pillars: technology product competitiveness and R&D efficiency. This initiative clearly delineates our development

objectives and commits to the vigorous execution of nine key technological plans and R&D projects reinforcing our position in the

industry.Objectives Progress In 2024 the Ministry of Industry and Information XCMG Machinery demonstrated exemplary

Technology published a list of typical cases for performance in technological innovation winning aIn pursuit of “high-end development intelligence green innovation service In progress the application and promotion of safety and total of 13 awards at the Machinery Industry Scienceorientation and internationalization” we are committed to establishing a robust emergency equipment wherein five major products and Technology Awards in 2024. Notably the project

industrial ecosystem for new energy and intelligent technologies. Our objective is from XCMG Machinery were featured. These titled Innovation and Application of Key Technologies

to develop cutting-edge internationalized products while enhancing gross profit products encompass five categories of significant for the Suspension of High-Mobility Wheeled

margins and precisely addressing market demands. promotional cases: industrial work safety accidents Engineering Vehicles was distinguished with the first

mine (tunnel) safety accidents earthquake and prize for the Technological Invention Award. In addition

To fortify our competitive edge we aim to drive advancements in nine core geological disasters urban waterlogging disasters to this prestigious recognition the Company also

technologies through strategic planning. and ice and snow disasters. secured eight accolades from the Jiangsu Provincial

We will construct a first-class R&D management system that fosters world-class Science and Technology Awards.capabilities in technological leadership product competitiveness and R&D efficiency.39 XCMG Construction Machinery Co. Ltd. Comprehensive Governance for Quality and 2024 Environmental Social and Governance (ESG) Report Efficiency: Efficient Management for Development 40

Technological Innovation Achievements Technological Cooperation and Exchanges

Strategic XCMG Machinery has set a new benchmark in the Asian market for aerial platform fire trucks becoming The Company actively integrates resources across the upstream and downstream segments of the industrial chain establishing

Emerging one of the select few enterprises globally that possesses the capability to research develop and innovation consortia that facilitate the deep integration of industry universities and research institutions. This strategic approach not

Sectors manufacture high-end fire trucks with an impressive reach of 100 meters. The construction of the phase only enhances the core competitiveness of the industrial cluster but also propels the construction machinery industry toward high-end

II new base for XCMG Fire-fighting is planned in accordance with the stringent standards of Smart development intelligence and sustainability.Manufacturing 4.0. To date 25 intelligent production lines have been established resulting in a high level

of automation and the implementation of unmanned production processes. This state-of-the-art facility

facilitates the production of a scissor lift every six minutes while an articulated boom aerial work platform In October 2024 the 26th China Mining Conference and

can be fully assembled and rolled off the production line every ten minutes. Exhibition was held with great success. Centered around

the theme of Promoting Mining Cooperation for a Better

Future the conference facilitated in-depth exchanges

Research and A total of 26 types of hydraulic transmission and electronic control components have been successfully and discussions that addressed the evolving landscape

Development developed achieving an impressive industrial scale of RMB 600 million. This advancement significantly and development patterns within the mining industry. By

of Core supports the technical upgrading of mining machinery large-tonnage loaders excavators and the focusing on current hotspots and critical issues affecting

Components substitution of imports. the sector’s advancement the event served as a pivotal

platform for dialogue among industry stakeholders.The Company has developed the industry’s largest 570-horsepower fully automatic transmission XCMG Machinery robustly showcased its comprehensive

positioning itself as one of the few enterprises globally that has successfully launched and applied this suite of mining product solutions underscoring its

technology at scale. This accomplishment has allowed the Company to maintain its leading position in this commitment to advancing the creation of green and

field within China. intelligent mining operations.Industrial A new brand image and logo have been officially launched resulting in a cohesive design for more than

Design 110 fuel and new energy products in terms of appearance color and branding. This unified image made

its inaugural appearance at the Bauma China 2024 underscoring the international appeal of XCMG

products. In September 2024 XCMG Machinery hosted the inaugural Jiangsu Provincial Young Artisan Exchange

The Company fosters an intelligent interactive experience for users driving an enhancement in and Seminar. This significant event brought together

construction machinery usability and achieving significant commercial viability. The vehicle-end interaction representatives from 14 higher vocational colleges

incorporates concepts of intelligent interactivity borrowed from the passenger vehicle industry. For five across Jiangsu. Participants had the opportunity to visit

major product categories the implementation of ten advanced interactive technologies—such as fatigue the Company’s intelligent manufacturing base where

monitoring and facial recognition—has been successfully realized and verified. they engaged closely with the spirit of frontline workers.This experience not only highlighted the dedication and

The functional prototype of the intelligent cockpit made its debut at Bauma China 2024 paving the way for expertise of the workforce but also provided insights into

innovative advancements in interactive behavior within the construction machinery sector. the craftsmanship essential for advancing the nation’s

heavy equipment sector.Technological Innovation-driven Industry Upgrading

Launching a Series We overcame critical challenges associated with key technologies including the structural design

of Groundbreaking of high-altitude and large-lifting boom structures. As a result we introduced iconic products such as

Products that Help the world’s largest 4000-ton wheeled crane a remarkable 23000-ton-meter tower crane a highly

Maintain a Dominant efficient 2600 kN·m rotary drilling rig the 16000 kN intelligent electric-driven horizontal directional In October 2024 the Global Mini-Excavator Conference

Position within the drill the world’s longest 101-meter aerial platform fire truck and the largest-horsepower electric- was held with great success in Xi’an. As a prominent

Industry driven grader. These help us consistently lead the trajectory of technological advancement in the leader in the construction machinery industry XCMG construction machinery sector. Machinery showcased an impressive array of

meticulously crafted products including mini-excavators

Developing A Complete We develop complete solutions for many activities such as underground mining tunnel excavation electric excavators and wheeled excavators. Through

Set of Solutions transportation and loading as well as road construction. For scenarios involving open-pit mining this exhibition XCMG Machinery not only demonstrated

Tailored to the Entire road surface cluster compaction operations bulk material handling and elevated warehouse its formidable capabilities and innovative vision within the

Process Across Multiple storage and logistics we continuously enhance intelligent unmanned solutions thereby accelerating mini-excavator sector but also reinforced its responsibility

Construction Scenarios their commercial implementation. By leveraging advancements in technology and automation we and commitment as a leader in the industry.aim to provide global clients with more efficient and intelligent construction options.41 XCMG Construction Machinery Co. Ltd. Comprehensive Governance for Quality and 2024 Environmental Social and Governance (ESG) Report Efficiency: Efficient Management for Development 42

In December 2024 the 2024 Equipment Manufacturing

Forum was held with great distinction highlighting the

achievements within the industry through the presentation

of the Mechanical Industry Science and Technology

Awards. We proudly received a total of 12 accolades

which included one special award one first-prize award

six second-prize awards and four third-prize awards.In December 2024 the World Intelligent Manufacturing

Conference took place in Nanjing centered around

the theme Accelerating the Upgrading of Intelligent

Manufacturing and Developing New Quality Productive

Forces According to Local Conditions. XCMG Machinery

was invited to participate in this prestigious event. During

the conference the Company successfully formalized

an agreement with the Institute of Industrial Artificial

Intelligence of the Chinese Academy of Sciences and

Nanjing Iron and Steel Co. Ltd. This collaboration aims

to establish the Jiangsu Provincial Key Laboratory of

Industrial Artificial Intelligence.43 XCMG Construction Machinery Co. Ltd. Green and Low-carbon Transformation for 2024 Environmental Social and Governance (ESG) Report Sustainable Development 44

Performance Highlights in 2024

Green and Low-carbon Clean energy consumption percentage Percentage of hazardous substances

02 and waste disposed under lawsTransformation for Sustainable Development 13.63 % 100 %

Green development is not only an essential requirement for the emergence of new-quality productive forces but also a defining

characteristic of high-quality development. XCMG Machinery has adeptly integrated this concept into its development strategy and

production management framework. By aligning with the national strategic goal of achieving dual carbon goals the Company has

effectively seized opportunities within the realm of clean energy. XCMG Machinery has committed itself to the green transformation

and upgrading of its products and operations demonstrating a proactive approach to sustainability. It has systematically implemented

initiatives aimed at reducing pollution lowering carbon emissions conserving resources and promoting recycling. These efforts

are driving the Company’s renewal transformation and overall development while fostering a harmonious coexistence between

humanity and nature. In 2024 XCMG Machinery made a significant investment of RMB 46343900 in environmental protection

initiatives.Responses to UN SDGs45 XCMG Construction Machinery Co. Ltd. Green and Low-carbon Transformation for 2024 Environmental Social and Governance (ESG) Report Sustainable Development 46

Climate Change Responses Climate Change Strategy

In the face of the formidable challenges posed by global climate change the transition to a green and low-carbon economy has Leveraging the International Sustainability Disclosure Standard No. 2—Climate-related Disclosures (IFRS S2) established by

emerged as a consensus among the international community. XCMG Machinery proactively aligned its operations with the strategic the International Sustainability Standards Board (ISSB) the Company has conducted a comprehensive analysis of the risks and

objectives of achieving carbon peaking and carbon neutrality. The Company is committed to exploring and implementing innovative opportunities associated with climate change. Furthermore it has proactively implemented robust strategies to effectively mitigate the

solutions for attaining carbon neutrality within the machinery manufacturing sector. impacts of climate change on its sustainable development initiatives.Climate Change Management List of Climate Risks Identified by XCMG Machinery

Governance Risk/ Climate Risk/opportunity Impact

XCMG Machinery is committed to the continual optimization of its carbon emission and climate risk management framework. opportunity change description Probability time- Potential impact Responsestype risk frame

The Safety and Environmental Protection Department plays a pivotal role in evaluating monitoring and managing environmental

and climate risks while coordinating the Company’s “dual carbon” operational initiatives. Concurrently a dedicated “dual carbon” The requirements We should further enhance our internal

team has been established within the Research Institute tasked with conducting comprehensive research on carbon reduction from governments carbon inventory and carbon reduction

technologies and strategies for minimizing carbon emissions. This team is also responsible for developing a digital and intelligent worldwide for identifying Short initiatives develop a comprehensive carbon Increase in carbon emissions management platform alongside

carbon emissions management system. Through these efforts XCMG Machinery ensures the effective management of greenhouse Policy and greenhouse gas term

legal risk sources greenhouse High medium emissions management a robust carbon footprint management gas emissions mitigates risks associated with climate change and promotes the attainment of its climate objectives. gas accounting and term and compliance costs. system to ensure our compliance with

Strategies emissions monitoring are

national regulations regarding greenhouse

increasingly stringent. gas emissions as well as the monitoring reporting and verification processes.The Company staunchly adheres to the dual carbon vision of Green XCMG Makes the World More Low-carbon as well as its

mission to explore engineering technologies and provide solutions for global construction and sustainable development. By taking We should improve the research and

the lead in releasing the XCMG Action Plan Outline for Carbon Peaking and Carbon Neutrality based on a robust assessment of There is an increasing development framework and cultivate

the risks and opportunities associated with climate change the Company has set a benchmark within the industry. Guided by the demand for research a team of researchers to enhance our

development priorities of high quality high efficiency high effectiveness and sustainability XCMG Machinery strategically focuses focused on energy- The rise in technological innovation capacity regarding clean

on new energy emerging industries and innovative business models. The Company leverages science and technology digital Technology efficient and carbon- research within the field technologies. We actively engage in the reduction technologies Short of clean technology research and development of sustainable

capabilities financial strategies and cultural initiatives as foundational elements in its approach. Through the creation of a distinctive risk and alongside the High term along with the research products and services while optimizing

dual carbon implementation model—characterized by Two Rings Three New Elements Four Empowerments and Ten Actions technology opportunity development of

medium

term and development of new energy structures. Our initiatives include the

against the impact on business operations and sustainability of climate change XCMG Machinery is unequivocally committed to innovative energy energy products increase green transformation of production lines

advancing the strategic objectives of achieving carbon peaking and carbon neutrality. construction machinery operational costs. refinement of manufacturing processes

and essential modernization of equipment enhancement

components. of energy efficiency and significant reduction

of carbon emissions per product unit.Dual Carbon Vision: Green XCMG Makes the World More Low-carbon

Transformation

risk/ The sales of traditional

Dual Carbon Mission: Explore engineering technologies and provide solutions for global construction and sustainable development. opportunities Driven by evolving construction machinery

policies and heightened have experienced declines

Peak carbon settlement by 2027 Carbon peaking by 2035 Carbon neutrality by 2049 environmental resulting in sluggish market

awareness consumer performance for these We should strengthen market research to

Market demands have Short understand market demands; adaptively

risk and increasingly shifted High term

products. Concurrently the

System Support Cycle medium innovative development

adjust product structure and market

opportunity toward green low- of new energy solutions positioning to expand the market share

Carbon Management carbon and intelligent term presents distinct of green products and optimize industrial

Platform Core Cycle for Green Value Standard Framework products. This trend challenges particularly presence.intensifies competition regarding technological

Service R&D within the marketplace. advancements and

New New New operational costs.Energy

Sources Industries Models

Sale Production The attention from the Failure to meet the

public and stakeholders expectations of the

Organizational Supply Management towards the Company’s public and stakeholders Framework Framework We should enhance public opinion

response to climate Short regarding the Company’s monitoring establish crisis managementReputation change adherence to green transformation High term and proactive response plans for negative publicity foster risk the “carbon peaking and medium transparent and efficient communicationLow Carbon Action Green Tech Innovation Smart Green Supply Chain Alliance Remanufacturing carbon neutrality” goals term

to climate change risks

Manufacturing Leadership and commitment to could result in customer

channels with stakeholders and improve

the quality of ESG information disclosure.Ten Actions sustainable development loss decreased investor trust and diminished

Digital & AI Acceleration Dual-Carbon Industrial Circular & Eco- Carbon-Finance Expansion Diversification Enablement Green Culture Cultivation

has increased. competitiveness.XCMG Machinery’s Method and Path for Carbon Peaking and Carbon Neutrality

Powered by Finance Driven by Culture

Empowered by Enabled by Digital

Technologies Infrastructure Ten Actions47 XCMG Construction Machinery Co. Ltd. Green and Low-carbon Transformation for 2024 Environmental Social and Governance (ESG) Report Sustainable Development 48

Risk/ Climate Risk/opportunity Impact opportunity change description Probability time- Potential impact Responsestype risk frame

Logistical resources will

Extreme weather be strained exacerbating We should monitor suppliers’

events such as low pressure on road transportation regarding material preparation

Acute risk temperatures snowfall Medium Short and affecting various aspects term of production and operations and production status analyze heavy rain and typhoons

occur more frequently. such as raw material supply

the rationality of procurement

and product delivery resulting cycles; establish a mechanism for

in financial losses. supply chain risk supervision and

Physical risk management create a weekly

Global warming leads alert for anomalies throughout the

to rising sea levels process and follow up on closure;

resulting in natural There is a risk of supply chain diversify the supply of raw

disasters such as high Medium disruptions leading to the materials to reduce dependence

Chronic risk temperatures and Low term inability to deliver products on a single supplier and supply

droughts as well as long which in turn increases location thereby enhancing

deteriorating climatic term production costs. supply chain stability.conditions in raw material The Company is committed to substantially enhancing its investment in the research and

production areas. development of clean technologies. This initiative aims to facilitate the creation of innovative energy

products and advanced core components for new energy solutions. By emphasizing green design

efficient resource utilization and the implementation of clean technologies we will effectively

minimize pollution emissions across the entire life cycle of our products.Financial

support In November 2024 XCMG Machinery successfully issued the first phase of green medium-term

notes (Technological Innovation Notes) in the Chinese inter-bank bond market. This issuance

marks a pivotal milestone as it represents the first green medium-term note in the constructionmachinery industry achieving the notable distinction of dual labeling as “green + technologicalStrategies for Clean Technology Opportunities innovation”. This financial instrument provides a robust source of medium-term long-term and low-cost capital that is crucial for the accelerated development of new energy construction machinery

and significantly bolsters the Company’s research and development initiatives in the realm of clean

XCMG Machinery is at the forefront of clean technology innovation strategically prioritizing advancements in new energy systems. technologies.The Company meticulously charts its development trajectory in new energy and low-carbon technologies seamlessly integrating

these initiatives into its long-term strategic vision for the transformation known as the “Five Transformations”. This comprehensive

approach empowers products through sustainable design principles enhances production quality via intelligent and green

manufacturing processes and fundamentally drives the Company’s transition toward a greener low-carbon future. The Company is resolutely committed to increasing the market share of its green products

while expanding both the revenue scale and proportion of its new energy offerings. Through

strategic enhancements in market promotion the Company aims to significantly elevate the

Focusing on a forward-looking approach in key areas such as electric technology hybrid market penetration rate of these new energy products thereby securing its leadership position

technology and hydrogen energy technology the Company is committed to advancing the within the industry. Furthermore it is proactively expanding its green initiatives and poised

research and development of comprehensive new energy product solutions. It delves deeply into Market to comprehensively lead the transformation towards sustainability within the construction

the realm of hydrogen fuel cell systems while exploring multidimensional technical pathways. promotion machinery sector.This strategic approach has culminated in the establishment of a complete set of industrial

solutions that encompass the entire value chain including upstream midstream and downstream

Strategy processes. The R&D efforts are centered on four primary technologies: diesel hybrid pure electric

guidance fuel cell and low-carbon internal combustion engines. In addition to these core technologies it has The Company strategically utilizes underutilized spaces specifically the rooftops and parking lot

developed nine types of essential components along with supporting services and operational canopies for the installation of solar panels to generate electricity.frameworks.Internal

The General Research Institute of the Company assumes full responsibility for the research operations

development application and promotion of clean technologies. It is dedicated to addressing critical

core technologies and essential components that enhance both intelligence and environmental

sustainability. The Science and Technology Innovation Committee comprising senior management

and the chairman of the Board plays an active role in decision-making related to clean technology During the supplier screening and management process it is essential to enhance the evaluation

Organizational innovation. This committee ensures the allocation of innovation resources and fosters external of suppliers' clean technology capabilities. This ensures that suppliers demonstrate both the

support collaborations and exchanges. It is empowered to report relevant matters to the Board of Directors necessary clean technology expertise and a strong commitment to environmental protection.affirming its status as the highest authority on these initiatives.Supplier

management49 XCMG Construction Machinery Co. Ltd. Green and Low-carbon Transformation for 2024 Environmental Social and Governance (ESG) Report Sustainable Development 50

In 2024 the Company progressively enhanced its institutional framework to support advancements in clean technology. By

vigorously implementing initiatives centered on green and low-carbon technological innovation the Company effectively addressed Internal Operations

critical technical barriers within the industry including the integration of new energy systems and the development of intelligent

electronic control system technology. Through these efforts the Company not only overcame technological constraints but also The Company has made significant advancements in the construction of photovoltaic power generation. In 2024 it added over 50

significantly bolstered its capacity for independent control over key new energy technologies and core components. The results in megawatts of installed photovoltaic power capacity bringing the cumulative installed capacity to an impressive 134.5 megawatts

the domain of clean technology innovation were substantial showcasing XCMG Machinery’s robust strength in innovation and its by the end of the year. In 2024 the Company’s self-generated photovoltaic power reached 130 million kilowatt-hours resulting in a

unwavering commitment to sustainable development. reduction of 91200 tons of carbon dioxide emissions. Furthermore a total of 9028.44 kilowatt-hours of clean energy were utilized

within the Company with green electricity consumption accounting for 18.63% of the total energy use.XCMG Machinery’s Development and Application of Clean Technologies in 2024 The Company has installed 536 charging stations for electric vehicles and encourages employees to purchase new energy vehicles.The Company has conducted research and development on technologies for recovering and utilizing waste heat from coating

Optimizing Institutional Support exhaust gases. Furthermore it has engineered composite phase-change heat storage materials specifically designed for a defined temperature range. These efforts have resulted in the development of the industry’s first integrated equipment for low-temperature

waste heat recovery storage and utilization of exhaust gases within the construction machinery sector. Pilot applications of this

The Company has established the XCMG New Energy Generating Patents innovative equipment have been implemented on the coating production lines of XCMG Hydraulic and XCMG Excavator. This is

Technology Plan for 2024-2027 to strategically outline poised to significantly enhance operational efficiency by reducing steam consumption during coating pretreatment by 30% annually

its research and development initiatives focused on and lead to an estimated reduction carbon emissions of 1160 tons.clean technologies. In 2024 the Company expanded its portfolio by

acquiring 517 authorized patents pertaining to clean Product Promotion

Creating Standards technologies.In 2024 the Company’s new energy products generated revenue amounting to RMB 10.88 billion reflecting a year-on-year growth

The Company took the lead in drafting and compiling rate of 22.02%.for the Earth-Moving Machinery - Battery Electric With new energy loaders exhibiting a commanding presence in the sector the Company secured the top position in domestic market

Hydraulic Excavators for Plateau Tunnels and other six Applications share during the first half of 2024. This remarkable achievement was further underscored by the receipt of prestigious accolades

national standards’ compile. including the Gold Award for New Energy Market Contribution the Gold Award for Product Quality and the Platinum Award for

Technological Innovation Products.Focusing on three prominent new energy products:

excavators loaders and forklifts we explored the two

Case Contributing to the formulation and drafting of national standards for electric construction machinery Project Efforts principal technological pathways for new energy— for industry progress

hybrid power and pure electric systems. The initiative

encompasses several critical aspects including

The Company’s clean technology research and In August 2024 XCMG Machinery achieved a significant milestone energy management technology for hybrid power

development system encompasses three primary by contributing to the formulation and drafting of seven national systems the optimization of power transmission

areas: the integration of systems the development of standards for electric construction machinery including the Earth-systems in electric loaders based on operational

core power source components and the innovation of moving Machinery - Battery Electric Hydraulic Excavator for scenarios and the configuration design and parameter

electric drive assemblies. By strategically prioritizing Plateau Tunnels. This official release marks a pivotal advancement matching technology for electric drive assemblies.core projects such as medium-sized excavators in the industry highlighting XCMG Machinery’s leadership in These comprehensive efforts significantly enhance

and range extenders the Company is significantly establishing benchmarks that are critical for the evolution of clean the promotion and application of both hybrid and pure

bolstering its research and development capabilities in technology within construction equipment. These newly developed electric products within the construction machinery

clean technologies. standards encompass several essential aspects of the industrial sector. chain including definitions of key terms specifications for entire

machines methodologies for energy consumption testing and

safety protocols for power batteries. By addressing these vital

areas it has effectively filled existing gaps in the standardization

framework for electric construction machinery. This initiative not

only underscores the Company’s commitment to fostering green

transformation but also reinforces its role as a driving force in

promoting the standardized development of the entire industry.51 XCMG Construction Machinery Co. Ltd. Green and Low-carbon Transformation for 2024 Environmental Social and Governance (ESG) Report Sustainable Development 52

The Company has made significant strides across various sectors including building hoisting aerial work earthwork construction and logistics

transportation demonstrating a comprehensive commitment to the new energy field. Through substantial and ongoing investments the Company New energy loaders

has launched an array of unmanned and electrified construction machinery as well as new energy heavy-duty truck products. These advancements

have established multiple cutting-edge demonstration scenarios such as unmanned intelligent mining operations and autonomous construction of The Company’s new energy loaders have found extensive applications across various sectors including railway loading and unloading mine

road machinery. As a result the Company is progressively cultivating a leading cluster of new energy and low-carbon products within the industry. In excavation coal loading and transportation ceramic production non-ferrous metal mining steel plant operations port logistics and building

addition to its product innovations the Company has also advanced the industrial framework for intelligent core components related to new energy. materials construction. The market reliability of these loaders has been thoroughly validated through rigorous testing.This approach has facilitated a new paradigm characterized by independent control joint-venture partnerships and reinforcement of the industrial

chain. Through these initiatives the Company is not only providing a model for the intelligent and sustainable development of the industry but also

asserting its position as a leader in driving technological innovation within the sector.New Energy Products from XCMG Machinery in 2024

New energy cranes

XC9260 hybrid loader the largest load XC9108-EV the highest tonnage electric loader GR350EP the world’s first high-power

capacity within its global class in the world electric grader specifically designed for

mining applications

New energy forklifts

XCT100G5-1HEV Hybrid Crane XLC450 DP Crawler Crane an industry- World’s first Plug-In Hybrid Truck Crane

exclusive Guided by the development concept of Safety Greenness Intelligence and Enhanced Efficiency in Material Handling the Company is focused on the

XCMG’s latest G2-series high-end crane

450-ton dual-power (DP) crawler crane research and development of core technologies for new energy forklifts. It has successfully achieved significant technological breakthroughs across

the entire industrial chain encompassing vital elements such as the electric system and core components like integrated electric drive assemblies and

fully electronically controlled multi-way valves. By the end of 2024 XCMG Machinery established a comprehensive multi-tiered product matrix of new

energy forklifts. This matrix will include the Kunpeng series of electric counterbalance forklifts the Peacock series of high-voltage lithium-ion battery

New energy aerial work platforms New energy excavators forklifts the Mantis series of automated guided vehicles (AGVs) and the Honghu series of warehousing forklifts. Collectively these offerings adeptly

XGS52ACK-Li Pure-Electric Aerial Work XCMG’s full-spectrum electrification strategy covers three technical routes: towed-power electric

meet the green handling requirements of diverse industries including logistics parks metal metallurgy ceramics and automobile manufacturing

Platform the world’s tallest pure-electric and hybrid spanning 21 models (1.9T–90T) these excavators deliver four key advantages: greener across a variety of operational scenarios.straight-boom aerial platform more economical safer and more comfortable.New energy port equipment

New generation of E5 complete sets of new

energy mobile port machinery including

electric front loaders stackers and

counterbalance forklifts

XE215EV Electric Excavator the first-ever XE650GK HEV the world’s first mining hybrid

excavator to receive the New Energy Gold excavator Peacock high-voltage lithium-ion battery forklifts Kunpeng electric counterbalance forklifts

Award

New energy underground infrastructure construction equipment

New energy dump trucks New energy concrete equipment

XTC150G the world’s first diesel-electric dual-power double-wheel milling machine

XZE16000 the world’s largest tonnage electric intelligent horizontal directional drilling rig.XZE8200 the first intelligent electric drive ultra-large tonnage horizontal directional drilling rig

Electric mining truck Electric mixer trucks53 XCMG Construction Machinery Co. Ltd. Green and Low-carbon Transformation for 2024 Environmental Social and Governance (ESG) Report Sustainable Development 54

Hydrogen battery systems New energy road equipment Management of Impacts Risks and Opportunities

XCMG Machinery focuses on three areas: mining logistics and automotive. It has RP355EP electric paver XD120EP electric XCMG Machinery aligns with international standards by employing appropriate methodologies to holistically assess the financial and

independently integrated a 140kW hydrogen fuel cell system with the prototype performance light road roller XM505EP electric light sustainability impacts of climate-related risks. Through systematic identification evaluation and management of climate-related risks

reaching an industry-leading level. milling machine GR350EP electric mining and opportunities the Company integrates operational strategies to develop pragmatic climate action plans and carbon peaking/

grader XLQ1005E electric wet and dry road neutrality pathways ensuring effective climate risk governance.sweeper.XCMG Machinery Management Process for Climate-related Risks

Risk identification Risk assessment Risk response

Core Parts of Intelligent New Energy Products from XCMG

Machinery in 2024 In alignment with the International We employ a rigorous closed- We systematically evaluate Susta inab i l i ty D isc losure loop process encompassing data our organizational capabilities

Standard No. 2—Climate- analysis scenario evaluation and to manage these climate risks

Cell and Battery Pack related Disclosures (IFRS S2) risk prioritization to assess the devising management strategies

established by the International implications of extreme weather that align with operational

The Company has advanced the development of cells and battery packs for driving exponential growth in the revenue of Sustainability Standards Board events and climate change on realities. This proactive planning

related businesses and scaling supporting facilities. (ISSB) we enhance our climate our sustainable development enables us to effectively mitigate

risk management strategies objectives. the adverse impacts associated

to address the multifaceted with climate change.challenges posed by climate

Ultra-high Voltage Motor Control System and Electric Drive Integrated System change. Our approach proactively

identifies the physical risks

transition risks and potential

Our focus on the industrialization of ultra-high voltage motor control systems and electric drive integrated systems has opportunities relevant to our

yielded remarkable results as evidenced by the successful delivery of prototype machines. organization.By centering our efforts on the mining machinery sector we are actively working to bolster our competitive edge in high-

voltage motors. This initiative is designed to promote steady revenue growth in domestic and overseas.Indicators and Objectives

In alignment with national objectives of carbon peaking and carbon neutrality XCMG Machinery has established its own dual carbon

goals. These goals are informed by a comprehensive assessment of climate risks and opportunities reflecting the company's

operational realities. The Company is committed to advancing relevant targets and indicators actively demonstrating its dedication to

reducing greenhouse gas emissions through concrete actions.Completion status

Indicators and Targets in 2024

Shor-term target By 2027 carbon emissions within the operational boundaries will In progress

peak.Medium-term target By 2035 renewable energy sources are projected to comprise In progress

50% of total electricity consumption.

Long-term target Carbon neutrality will be attained within these operational In progress

boundaries by 2049.55 XCMG Construction Machinery Co. Ltd. Green and Low-carbon Transformation for 2024 Environmental Social and Governance (ESG) Report Sustainable Development 56

Management of Greenhouse Gas Emissions 2024 Product Carbon Footprint Management Progress at XCMG Machinery

XCMG Machinery has made significant strides in advancing carbon accounting and inventory processes thereby enhancing the

management of greenhouse gas emissions through digitalization and intelligent technologies. The Company has established a

comprehensive carbon emission control system across the entire industrial chain. This includes the development of a digital carbon Product Carbon Footprint Accounting - Parts

emission control platform and the creation of a life cycle management system for carbon footprint accounting evaluation traceability

and management specifically tailored to construction machinery products. We systematically verify greenhouse gas emissions We undertake the comprehensive collection modeling

in alignment with established guidelines ensuring that carbon emission data throughout the entire value chain is detectable accounting analysis and traceability management of carbon

measurable and traceable. This approach significantly enhances the Company's capabilities in greenhouse gas detection footprint data across 114 core parts of our construction

monitoring carbon accounting and evaluation thereby reinforcing our commitment to environmental responsibility. The Company machinery. This initiative has resulted in the aggregation of 3543

has set an ambitious carbon emission reduction target for 2025 aiming for a 5%1 decrease in carbon emissions per unit of intensity. 1 data entries from suppliers encompassing information on energy consumption and waste generation. From this dataset

we have established 142 proprietary emission factors specific

1 NOTE: Should significant changes occur in future policies market conditions or the Company's strategic orientation

the carbon emission reduction targets will be adjusted accordingly to ensure continued alignment with our objectives. to the carbon footprint of our construction machinery.We formulated an internal standard titled Guidelines for Data

Collection and Management for Carbon Footprint Accounting of

XCMG Machinery’s Greenhouse Gas Management Performance Construction Machinery Products Q/XCMG 1K009 - 2024. This

document is designed to standardize the procedures for data

collection and management.Direct greenhouse gas emissions (Scope 1) Indirect greenhouse gas emissions (Scope 2) Partial Product Carbon Footprint Model (For Parts) of

XCMG Machinery and the Distribution by Category

102363.22 Tons 279299.80 Tons

Total greenhouse gas emissions Product Carbon Footprint Accounting - Main Units

381663.02 Tons We conducted the carbon footprint accounting and evaluation for three

excavator models: XE35E XE35U

and XE600GK. As a result of this

comprehensive assessment we

Case Product Carbon Footprint Management System at XCMG Machinery proudly obtained the first internationally

recognized carbon footprint certification

and carbon label for low-carbon

In September 2024 the Company products within the domestic excavator

formally introduced the Carbon Footprint industry.Accounting Evaluation and Traceability Carbon Footprint Model and International Certification Certificates

Management System for the entire lifecycle Evaluation Report for Three Excavator and Carbon Footprint Labels for

of its construction machinery products. Models Three Excavator Models

This advanced system leverages a digital

carbon management framework combined

with data-driven big data analysis and

predictive modeling technologies. It

comprises two main components: the

Product Carbon Footprint Management

Platform and the Product Carbon

Footprint Management System. Designed

specifically to address the carbon reduction

needs associated with XCMG Machinery products and to facilitate the construction of a low-carbon supply chain this system has

successfully navigated several technical challenges. These include the implementation of digital supply chain carbon management

and traceability as well as the optimization and prediction of carbon emissions during the operation of downstream products through

sophisticated machine learning algorithms. By enabling comprehensive accounting evaluation and traceability of carbon footprints

throughout the entire product lifecycle the system positions XCMG Machinery at the forefront of sustainable practices within the

construction machinery industry.57 XCMG Construction Machinery Co. Ltd. Green and Low-carbon Transformation for 2024 Environmental Social and Governance (ESG) Report Sustainable Development 58

Pollution Prevention and Treatment Strategies

XCMG Machinery prioritizes the continuous improvement of environmental risk assessment and prevention mechanisms to ensure

XCMG Machinery demonstrates a robust commitment to environmental stewardship by adhering strictly to a comprehensive compliance with national and local emission standards for key pollutants maintaining all environmental risks under stringent control.framework of regulations including the Environmental Protection Law of the People’s Republic of Chinathe Law of the People’s Throughout 2024 the Company recorded zero major environmental incidents or regulatory violations in environmental compliance.Republic of China on Prevention and Control of Air Pollution the Law of the People’s Republic of China on Prevention and Control

of Water Pollution the Law of the People’s Republic of China on Prevention and Control of Environmental Pollution by Solid Waste

the Law of People’s Republic of China on the Prevention and Control of Noise Pollution and the Law of People’s Republic of China List of Environmental Risks/Opportunities Identified by XCMG Machinery

on the Prevention and Control of Soil Pollution. The Company is committed to ensuring that pollutant emissions do not adversely

affect employees residents and other stakeholders. We actively enhance our processes and upgrade production equipment

while also optimizing our energy structure to improve overall energy efficiency. Our dedication to researching and developing

green products and services coupled with robust management practices safeguards ecological integrity and biodiversity thereby

supporting sustainable economic and societal advancement. In 2024 we achieved a 100% compliance rate for wastewater waste

gas and noise emissions at the factory boundary. Additionally all hazardous waste was disposed of in full alignment with regulatory Risk/opportunity type Risk/opportunity

Impact

Probability time- Potential Responses

standards. Consequently our production and operational activities have had no detrimental impact on ecosystems or biodiversity. description frame impact

As of the end of 2024 the Company had two subsidiaries that attained national-level green factory certifications six subsidiaries

that secured provincial-level green factory certifications and four subsidiaries earned recognition as municipal-level environmental

protection demonstration enterprises and institutions. These accolades unequivocally underscore the Company’s exemplary We systematically monitor and analyze both domestic and

practices in the realms of green development and environmental protection. The Dual Carbon goals are international environmental protection laws and regulations to

driving green transformation strategically align our corporate policies. Our implementation of

Environmental Policies and Compliance Management across industries with stringent measures for the compliant disposal of pollutants and traditional fuel-powered waste reflects our unwavering commitment to environmental

machinery facing increasingly Short stewardship.Governance Policy and stringent emission restrictions. term Cost legal risks Policies governing pollutant and High medium increase Regular specialized inspections and environmental audits are

waste discharge management term conducted to ensure adherence to regulations.The Company is committed to the continuous enhancement of its organizational framework for environmental management. It has continue to tighten

established robust environmental protection management institutions and appointed dedicated personnel to oversee environmental accompanied by progressive We develop comprehensive environmental risk response plans

compliance. A comprehensive four-tiered environmental management network has been constructed which operates under the upgrades to emission and fortify our compliance capabilities. Internal training on

unified leadership of the Safety and Environmental Protection Department. This network encompasses the safety and environmental standards. compliance is integrated into our performance appraisal system reinforcing our dedication to environmental responsibility.protection departments across all branches and subsidiaries as well as safety officers assigned to workshops and work teams. Such

a structured approach ensures that environmental management responsibilities are effectively implemented at every level of the The transformation of high-

Company. Consequently this fosters an orderly execution of management practices and promotes the stable operation of the overall pollution processes such

management system. as traditional coating and We actively drive the research development promotion and casting is under significant implementation of clean production technologies aimed at

Transition risk/ Short Cost

The Company rigorously adheres to the Environmental Protection Supervision and Management Policy ensuring effective Technology pressure necessitating term increase minimizing pollutant generation.opportunity risk/ an urgent demand for High

management of wastewater waste gas hazardous substances waste materials and noise generated during its production and opportunity upgraded environmental medium revenue We establish an intelligent waste management system that

operational processes. By implementing robust pollution prevention and control measures at the source the Company not only protection equipment to meet term increase ensures comprehensive tracking throughout the classification

mitigates environmental impact but also establishes standardized protocols for the handling and investigation of environmental contemporary regulatory transportation and disposal of hazardous waste.pollution incidents. This proactive approach is instrumental in minimizing environmental risks and reinforces the Company’s standards and societal expectations.commitment to advancing ecological civilization.The increasing focus of

consumers on the circular

economy business model We offer comprehensive value-added services including

underscores a significant Short equipment leasing trade-in and recycling all aimed at

Market shift in market demands. term Cost extending product life cycles and minimizing resource waste. We

opportunity Consequently there is a High medium increase are enhancing our remanufacturing operations by transforming

robust international demand term decommissioned machinery into marketable products thereby

for industrial machinery that is establishing a closed-loop industrial chain encompassing

both low-emission and high- recycling disassembly remanufacturing and sales.efficiency.59 XCMG Construction Machinery Co. Ltd. Green and Low-carbon Transformation for 2024 Environmental Social and Governance (ESG) Report Sustainable Development 60

Management of Impacts Risks and Opportunities Indicators and Objectives

The Company demonstrates a strong commitment to mitigating the adverse impacts of its operations on the ecological environment

Identify and assess environmental risks and biodiversity. By aligning its environmental management goals with its specific production and operational contexts the Company

optimizes and formulates annual environmental management target indicators. These indicators are systematically incorporated

into the Health Safety and Environment (HSE) responsibility statement. The HSE responsibility statements are executed through aThe Company rigorously applies environmental impact assessments for all construction projects as well as the “three hierarchical process beginning with the chairman followed by the general managers of branches and subsidiaries and extendingsimultaneous” approval system. Each branch and subsidiary have developed a tailored self-monitoring plan specifically down to grassroots employees. This structured approach facilitates the implementation of environmental protection responsibilities

addressing the pollutants it discharges. This approach utilizes a diversified monitoring strategy that combines both across all levels of the Company thereby ensuring that environmental management objectives are effectively operationalized and

automatic and manual monitoring techniques. Regular monitoring and information disclosure practices are executed in strict accomplished.accordance with established monitoring plans enabling the comprehensive evaluation of waste gases wastewater and

noise emissions. A complete information management system is maintained for monitoring documentation safeguarding XCMG Machinery’s Environment Management Targets and Their

essential materials such as original monitoring records and data reports. Completion in 2024

Response to environmental emergencies Environment management objectives Completion status in 2024

Each branch and subsidiary have developed a comprehensive Emergency Rescue Plan for Environmental Pollution No significant environmental event or pollution Completed

Accidents that considers their specific production and operational characteristics. In alignment with regulatory requirements

these emergency response plans are routinely updated and filed. 100% compliance discharge of waste and pollutants Completed

95% operational stability rate of environmental protection facilities Completed

Prevent hidden environmental hazards

The Company is committed to fostering a culture of environmental awareness through regular publicity and training Environment Audit

initiatives targeting all staffs. This proactive approach is designed to cultivate an environmentally responsible enterprise and

collectively promote a sustainable low-carbon lifestyle. In alignment with the ISO 14001 standards for environmental management systems XCMG Machinery has instituted a rigorous

internal and external supervision and audit mechanism. This framework facilitates comprehensive reviews of the Company’s

environmental management practices on a regular basis enabling the prompt identification of potential issues and management

deficiencies. In turn XCMG Machinery can implement effective corrective measures swiftly thereby mitigating the risk of

environmental accidents and pollution incidents. The Company is committed to the ongoing enhancement of its environmental

and safety management efficiency. XCMG Machinery holds monthly safety and environmental protection meetings and conducts

Environmental Training Performance thorough on-site environmental audits. These audits encompass comprehensive inspections targeted evaluations and daily checks

across all subsidiaries to ensure the robust functioning of the environmental management system.Environmental training sessions Environmental training duration

As of the end of 2024 XCMG Machinery completed environmental management system audits for a total of 24 branches and

146 110501 subsidiaries culminating in the attainment of the ISO 14001:2015 environmental management system certification. Hours

Percentage of employees covered by

Environmental training participation environmental training

43795100%

Certificates of ISO14001 Environment

Management Systems of Some Branches

and Subsidiaries of XCMG Machinery61 XCMG Construction Machinery Co. Ltd. Green and Low-carbon Transformation for 2024 Environmental Social and Governance (ESG) Report Sustainable Development 62

Hazardous Substances and Waste Management Wastewater Management

To effectively manage the discharge of domestic sewage each branch and subsidiary of the Company has implemented dedicated

XCMG Machinery including its subsidiaries such as XCMG Heavy Machinery XCMG Excavators and XCMG Crawler consisting sewage treatment facilities tailored to address specific pollution factors associated with their production activities. Adhering to the

of a total of 24 entities are acknowledged as key pollutant discharge units by environmental authorities. In strict adherence to principles of “separation of clean water and sewage and separation of rainwater and sewage” the Company employs a diverse

regulatory standards we transparently disclose critical information including: pollutant categories emission methods annual array of technological approaches including both chemical and biochemical treatment methods. To optimize the performance of

discharge volumes and exceedance incidents. As of the end of 2024 all environmental protection administrative licenses remain these sewage treatment facilities the Company has introduced an advanced information platform that enables real-time monitoring

valid. Throughout the year the Company and its subsidiaries effectively implemented robust environmental monitoring plans and risk of Chemical Oxygen Demand (COD) levels. Furthermore the Company has partnered with a qualified professional firm to oversee

management measures. Notably there were no instances of excessive pollutant emissions. Furthermore the organization did not the operation of these facilities thereby minimizing the risk of excessive pollutant discharge.incur any major administrative penalties related to pollutant discharge nor was any criminal liability pursued. Importantly our pollutant

emissions have not had a significant adverse impact on employees local community residents or other stakeholders underscoring To effectively manage the discharge of industrial wastewater the Company has introduced the nano-water treatment technology

our commitment to environmental stewardship and compliance. specifically designed to efficiently recover heavy metal elements from electroplating wastewater. After undergoing rigorous treatment

both the domestic sewage and industrial wastewater are subjected to thorough testing to ensure they meet the third-level standards

Waste Management outlined in the Integrated Wastewater Discharge Standard (GB/T 8978-1996). Once compliance is confirmed the treated effluents

are responsibly discharged into the sewage treatment plant of the development zone. The Company established an ambitious

Guided by the internal specifications outlined in the Environmental Protection Supervision annual wastewater pollutants reduction target and successfully achieved 100% of this objective in 2024.and Management Policy XCMG Machinery maintains an inventory of hazardous waste

in accordance with the national hazardous waste directory. The Company takes stringent

practices for the collection and handling of hazardous waste generated during production

ensuring its safe transfer to designated hazardous waste storage facilities. This waste

is then routinely entrusted to qualified subsidiaries for comprehensive treatment. These

subsidiaries have developed centralized disposal projects specifically for hazardous waste

featuring incineration disposal production lines and systems for the cleaning and reuse of XCMG Machinery’s hazardous waste warehouse

waste packaging drums. As of the end of 2024 the Company integrated cameras from its 27 hazardous waste storage facilities into

the XCMG Safety Production Digital System. This advancement facilitates AI-driven automatic alerts in the event of power failures

within the storage facilities.The solid waste produced by our office and production activities predominantly comprises paper and packaging materials. In

response to this challenge the Company has employed a comprehensive strategy to promote a paperless office environment. This

initiative includes advocating for online work practices and electronic document consumption prominently displaying promotional Waste water treatment station Real-time COD monitoring platform

slogans at printer locations and encouraging the use of double-sided printing. Furthermore the Company actively supports the

recycling of packaging materials and is committed to minimizing the consumption of office supplies and production resources. XCMG Machinery’s Wastewater Control Performance

Through these concerted efforts the Company is reducing the generation of solid waste. The Company established an ambitious

annual waste reduction target and successfully achieved 100% of this objective in 2024. Indicator Unit 2024 value

Total wastewater discharge Tons 957892.56

Performance on the Treatment of Hazardous Substances and Wastes

Industrial wastewater discharge Tons 414992.76

Indicator Unit 2024 value

Domestic wastewater discharge Tons 542899.80

Total hazardous substance and waste generation Tons 5972.83

COD discharge Tons 61.08

Including: Organic solvent waste and waste containing organic solvent Tons 66.36

995.34 BOD discharge TonsMineral oil waste and waste containing mineral oil Tons 8.93

Oil/water hydrocarbon/water mixture or emulsion Tons 552.63 Ammoniacal nitrogen Tons 4.16

Dye and paint waste Tons 2687.23 Total nitrogen Tons 12.41

Surface treatment waste Tons 412.05 Total phosphorus Tons 0.87

Waste containing chromium Tons 26.53 Suspended solids Tons 11.67

Waste containing lead Tons 73.87

Chromium (VI) Tons 0.23

Waste acid Tons 178.27

Other waste Tons 980.55 Total chromium Tons 0.000018

Percentage of hazardous substances and waste disposed under laws % 100 Total nickel Tons 0.00037563 XCMG Construction Machinery Co. Ltd. Green and Low-carbon Transformation for 2024 Environmental Social and Governance (ESG) Report Sustainable Development 64

Waste Gas Management Noise Management

The waste gases produced by the Company’s manufacturing processes primarily consist of volatile organic compounds (VOCs) from The Company prioritizes the optimization of production processes along with the upgrading and replacement of equipment

industrial coating operations and welding fumes. The Company employs a stringent approach to controlling waste gas emissions facilities and labor protection supplies as integral components of its noise management strategy. By focusing on controlling noise

implementing comprehensive equipment management systems alongside targeted control measures. Through strategic upgrades at its source the Company actively mitigates the impact of noise pollution that arises during the production and manufacturing of

and process optimizations the Company ensures that the concentration of emitted waste gases remains significantly below the mechanical equipment. This concerted effort not only safeguards the occupational health of employees but also enhances their

thresholds set in national and local standards. Furthermore the Company is resolutely committed to achieving ultra-low emissions. overall comfort in the workplace.By adopting effective and practical measures it aims to successfully confront the challenges associated with air pollution prevention

and control. The Company set an annual target for reducing waste gas pollutants and achieved 100% of the target in 2024. Noise Management Measures by XCMG Machinery

Waste Gas Management Performance

Indicator Unit 2024 value

Total waste gas emission 10000 m3 1728037.39 Process optimization Equipment upgrading Labor protection

Including: Particles Tons 102.69

Sulfur dioxide Tons 9.98 Through systematic reduction Upgrading from traditional air guns The advancement of labor

Nitrogen oxides Tons 40.46 of gr inding operat ions by to lithium-ion battery-powered protection products specifically

championing the use of electric impact wrenches can reduce designed for the grinding process

NMHC VOCs Tons 117.98 grinding tools in lieu of traditional noise levels in the workplace. can enhance noise protection

pneumatic alternatives coupled measures in the workplace.with the adoption of flexible

grinding discs it is possible to

significantly diminish noise levels

during the grinding process.Case Management of VOC Emission from Coating Waste Gas

In the coating production units across its 21 branches and subsidiaries XCMG Machinery has installed 56 VOC treatment systems

along its coating lines. Each system utilizes the internationally recognized zeolite molecular sieve rotor combined with a regenerative

thermal oxidation combustion process representing an impressive cumulative investment of approximately RMB 220 million.The Company performs regular inspections of the operational status of its VOC treatment equipment. Furthermore it employs

an advanced information system to monitor VOC emissions in real time. By integrating VOC source substitution technologies

with its existing systems XCMG Machinery has managed to maintain the VOC emission concentration across all coating lines at

approximately 10 mg/m3. This figure significantly surpasses the local emission standard of 50 mg/m3 in Jiangsu Province thereby

achieving ambitious ultra-low emissions targets.Case Management of Welding Fume Emission

To effectively mitigate fume emissions generated during the welding process the Company has made a substantial investment

totaling nearly RMB 100 million. This investment has facilitated the acquisition of advanced treatment process equipment including

suction arm systems blowing and suction units integrated machines and environmentally-friendly welding torches all of which

adhere to stringent technological standards. As a result the average concentration of welding fume emissions has been reduced to

approximately 2.16 mg/m3 below the national standard of 4 mg/m3. This achievement markedly improves the working environment

for employees.Simultaneously the Company has completed the transformation of its welding workshops into a dust-free system. This undertaking

encompasses the installation of centralized blowing and suction fume collection and treatment facilities that comprehensively cover

all welding areas. Specialized personnel have been appointed to conduct regular inspections maintenance and management of the

dust removal equipment. This proactive approach guarantees compliance with environmental regulations.65 XCMG Construction Machinery Co. Ltd. Green and Low-carbon Transformation for 2024 Environmental Social and Governance (ESG) Report Sustainable Development 66

Optimization of Resource Usage Water Resource Utilization

XCMG Machinery effectively integrates the principles of green development throughout its office operations and production The water utilized in our office operations and production processes is primarily sourced from the municipal pipeline network

processes. The Company explores innovative remanufacturing models optimizes the use of water resources and enhances the supplemented by recycled water. To ensure the efficient and sustainable use of water resources the Company has taken a series

management of energy consumption and conservation. By committing to the efficient utilization of waste resources water resources of strategic water-saving measures. These initiatives include daily inspections and maintenance of water-using equipment as

and energy XCMG Machinery accelerates to build a more sustainable production model. well as enhanced awareness campaigns focused on water conservation. By comprehensively integrating the principles of water

conservation into both office and production protocols the Company is firmly committed to minimizing unnecessary water waste.Circular Economy

As one of the pioneering national remanufacturing pilot units XCMG Machinery is at the forefront of advancing innovative Water Management Performance

remanufacturing models. In alignment with the objectives outlined in the 14th Five-Year Plan for the Circular Economy Development

issued by the State Council and the National Development and Reform Commission XCMG Machinery has established a Water consumption reduction Water consumption target for

comprehensive industrial waste resource recycling system. This includes the exploration and enhancement of reverse logistics

systems and a recycling trading platform specifically for used products thereby facilitating the large-scale recycling of these materials. Total water consumption compared to 2023 the next year

The Company is committed to ongoing research and development in construction machinery remanufacturing technologies

establishing a robust technical and equipment framework to support these advancements. The application of these technologies 2443940 Tons 414880 Tons 3103991 Tons

extends across various remanufacturing sectors including complete machines and components such as cranes rotary drilling rigs

tunnel boring machines hydraulic cylinders pumps and motors. The initiative effectively facilitates the valorization and recycling of

end-of-life resources including scrap steel non-ferrous metal waste and plastic materials. XCMG Machinery is resolutely committed

to establishing a comprehensive circular industrial chain that encompasses the entire lifecycle—from resources to products then toused products and ultimately to remanufactured products. This commitment supports the Company’s ambition to become a “waste-free enterprise” and aligns with the broader objective of contributing to Xuzhou’s pilot program for constructing a “waste-free city”. Water Saving Measures by XCMG Machinery

In both supplier procurement and product distribution processes the Company prioritizes environmentally friendly packaging

materials characterized by high resource efficiency easy recyclability or biodegradability. This initiative reduces the use of disposable Equipment Upgrade critical systems including air compressors and cooling units with the use of variable

packaging materials such as cardboard and wood minimizes waste generation from operational activities mitigates environmental upgrading and frequency drive (VFD) technology.impact and enhances resource utilization efficiency. process optimization Give priority to purchasing of and promote the use of water-saving equipment and facilities.Performance on Packaging Materials Management Harness the capabilities of Internet of Things (IoT) technology establish a sophisticated IoT

Intelligent water platform including the installation of smart water meters and a remote monitoring system

Consumption of recycled Recycling rate of packaging management to facilitate real-time monitoring and data analysis of water usage across various units and

Packaging materials consumption packaging materials materials equipment and optimize water management efficiency.

4931.32 Tons 3748.77 Tons 76.02 %

Managing water- Focus on the efficient use of essential equipment including water dispensers pipes and

consuming faucets. Rigorous regular inspections and maintenance of water-related facilities are critical

equipment to preventing issues such as leaks drips and other forms of water wastage.Water recycling Rainwater collection and recycling wastewater treatment and reuse steam condensate water recycling.Water conservation Hold targeted training programs focused on water-saving techniques and place water

awareness conservation slogans and informational wall newspapers in high-traffic areas where water is

campaign utilized.67 XCMG Construction Machinery Co. Ltd. Green and Low-carbon Transformation for 2024 Environmental Social and Governance (ESG) Report Sustainable Development 68

Energy Utilization

Risk/opportunity Impact Expected Risk/opportunity type description Probability time- financial Responsesframe impact

Governance

The Company firmly adheres to the principle of prioritizing energy conservation alongside The significant fluctuations We must closely monitor

development consistently enhancing its energy management system. Relevant leadership in energy prices have evolving policies and regulations including carbon tariffs and dual

at both the Company and its branches and subsidiaries assumes primary responsibility introduced substantial energy consumption controls

for energy management initiatives. The Lean Manufacturing Department serves as the market risks. This instability Energy impacts not only operational while proactively optimizing the

centralized entity overseeing the Company’s energy management efforts ensuring Risk price costs and budget planning Medium Short Cost energy structure. By leveraging a digital energy monitoring

cohesive coordination of relevant activities. Each branch and subsidiary have established fluctuations for companies but also term increase platform we can analyze energy

its own energy management department staffed with dedicated personnel tasked with full- poses threats to supply chain stability and may consumption data in real time

time oversight and implementation of energy strategies. This structure guarantees that cause delays in production effectively mitigating risks

management practices accountability strategic measures investment decisions and schedules. associated with fluctuations in energy supply and pricing.supervisory assessments are effectively integrated and operationalized. The Company was XCMG Machinery Won the Title of

honored with the title of Advanced Unit in Energy-Saving Management of the Year by the Investment in research and Advanced Unit in Energy-Saving

Xuzhou Energy-Saving Association in 2024. Reducing reliance on development of advanced Management of the Year in 2024 traditional fossil fuels allows energy construction machinery

companies to substantially is essential. We must focus

In 2024 the Company undertook a comprehensive update of its Energy Management Policy. By implementing a series of strategic decrease energy costs. on pioneering technologies

measures—including sound management practices robust data monitoring the acceleration of technological upgrades and Furthermore embracing including electrification and

Energy clean energy and enhancing Medium hydrogen energy to capture the transformations fostering a culture of energy-saving awareness among employees and refining the energy-saving assessment and energy efficiency not only term Cost burgeoning green equipment

evaluation mechanisms—the Company is poised to meet both its medium-term and long-term energy-saving objectives as well as its Opportunity source bolster an organization’s High to long decline market. By implementing

annual targets. These initiatives are designed to facilitate the integrated advancement of energy conservation emissions reduction structure market competitiveness innovative applications such as

low-carbon strategies and high-quality green development. The overarching goal is to maximize economic benefits while minimizing but also improve its social

term smart microgrids and energy

image thereby unlocking storage systems we can

energy consumption. By the end of 2024 the Company successfully achieved certification of the ISO 50001 Energy Management new business opportunities significantly enhance energy

System. and facilitating strategic utilization efficiency while

partnerships. effectively reducing energy

consumption.Management of Impacts Risks and Opportunities

XCMG Machinery has positioned energy utilization management as a critical catalyst for sustainable development. The Company

has instituted a robust continuous improvement mechanism for energy efficiency through systematic closed-loop management

practices.Energy Management Measures

Energy consumption management

We implement an energy consumption quota management system promote energy performance contracting and strengthen

data monitoring and energy control. We enhance the management of energy-consuming equipment and facilities such as

lighting and air conditioning in both office and production areas. We organize events like Energy Conservation Publicity Week

Certificates of ISO 50001 Energy Management System of Some Branches and Subsidiaries of XCMG Machinery intensify energy conservation education and training and raise energy conservation awareness among all employees.Strategies Energy metering

XCMG Machinery is resolutely committed to spearheading the energy transition and low-carbon transformation within the We install energy metering devices for water electricity gas and other utilities. Each branch and subsidiary is expected to

construction machinery sector. By implementing rigorous energy impact management proactively addressing energy-related establish a comprehensive ledger and develop an energy metering data collection and management system that facilitates

risks and strategically seizing green opportunities the Company ensures a harmonious balance between economic growth and real-time monitoring storage analysis and processing of energy supply and consumption data. This system will be

environmental sustainability. instrumental in overseeing high-energy consumption equipment thereby enhancing energy management practices and

enabling intelligent operation and maintenance solutions.69 XCMG Construction Machinery Co. Ltd. Green and Low-carbon Transformation for 2024 Environmental Social and Governance (ESG) Report Sustainable Development 70

Energy saving Case EMS Energy Management Platform

In pursuit of advancing our technological transformation towards energy conservation and carbon reduction we promote the XCMG Machinery is at the forefront of advancing the application and

utilization of clean energy sources such as solar energy to achieve a complementary integration of multiple energy systems. optimization of its Energy Management System (EMS) platform. Each year

Our initiative encompasses the implementation of over 20 innovative projects which include a sophisticated intelligent energy the Company enhances the networked collection of energy operational

management platform systems for the utilization of waste heat and pressure from air compressors and regenerative thermal data facilitating a significant transition towards "unmanned" operations of

oxidizers (RTO) for coating waste gas treatment the deployment of distributed photovoltaic systems and enhancing the energy facilities. The platform has established an automated framework

technical capabilities of heat pumps and lighting fixtures. With a cumulative investment of approximately RMB 100 million for the collection analysis and early warning of workshop-level energy

these initiatives have collectively realized an impressive energy savings equivalent to 8452 tons of standard coal. consumption data. This innovative model enables integrated management

and intelligent operation across various energy stations allowing for

We promote the adoption of advanced efficient equipment and facilities by replacing over 20 high-energy-consuming devices real-time monitoring and automatic notification of energy operations

including hot blast stoves air compressors and transformers. Our strategy aims to integrate cutting-edge energy-saving and efficiency indicators. As a result XCMG Machinery is driving a

technologies and equipment to significantly enhance the energy efficiency of our operational systems. comprehensive transformation in energy management steering the

We accelerate the development of a comprehensive energy management information system designed to establish an industry towards an era characterized by digitalization and intelligence. EMS Energy Management Platform

effective energy and carbon emission control platform. Five branches and subsidiaries have implemented independent energy Leveraging a robust big data analysis model for energy consumption the Company has developed targeted strategies for energy

management systems such as the EMS intelligent energy management platform. Furthermore we plan and develop a unified conservation and carbon reduction across three primary energy sources: electricity steam and natural gas. In the realm of electricity

Internet of Things (IoT) platform that includes an integrated energy monitoring function for the entire group to facilitate the real- consumption the Company employs real-time monitoring and analysis of critical indicators including energy efficiency and

time collection and analysis of energy data. associated costs. This allows for the dynamic adjustment of control strategies thereby promoting a high utilization of green electricity

and off-peak electricity which ultimately optimizes the overall energy mix. About steam usage the Company has achieved a three-

level enhancement in central heating: progressing from basic temperature control to time-based management and culminating in

Energy assessment an advanced intelligent control system. This significant advancement has enabled a comprehensive exploration of precise supply

modes resulting in a reduction in steam costs exceeding RMB ten million over the past three years. Concerning natural gas the

We evaluate the energy consumption target indicators and the completion status of energy metering objectives for each Company has implemented real-time monitoring of measurement balances and sudden data fluctuations thereby effectively

branch and subsidiary. The results of this evaluation will be integrated into our performance-based management assessment mitigating safety risks. This vigilant oversight not only prevents potential leakage but also enhances gas use safety.system.Indicators and Objectives

We conduct quarterly inspections of energy usage and management practices across all units. In addition we implement

random inspections to ensure compliance and identify areas for improvement at unpredictable intervals. When issues are XCMG Machinery has developed a comprehensive energy index management framework that establishes clear informed and

identified our approach will be to issue timely rectification recommendations. quantifiable objectives for enhancing energy efficiency. This framework systematically drives the optimization of energy structure and

significantly improves energy utilization efficiency.Case Energy and Carbon Emission Control Platform Energy Management Indicators and Targets

The energy and carbon emission control platform developed by XCMG Machinery features a hierarchical distributed architecture

that integrates cutting-edge technologies including cloud computing big data and the Internet of Things (IoT). This system supports Indicator Unit 2024 value

a wide array of functions encompassing carbon emission monitoring accounting and management. The platform is poised to Comprehensive energy consumption per RMB 10000

facilitate the seamless collection of energy consumption data via intelligent devices and pave the foundation for refined management value of output tce/ RMB 10000 0.01508

practices and intelligent control of energy resources. Electricity consumption 10 MWh 48461.9

Steam consumption GJ 14907.19

Natural gas m3 22347600

Gasoline Tons 1687.57

Diesel Tons 7938.81

Comprehensive energy consumption target per RMB

10000 value of output for the next year tce/RMB 10 000 0.01463

New energy consumption kWh 9028.44

Energy and Carbon Emission

Percentage of new energy consumption % 18.63

Control Platform71 XCMG Construction Machinery Co. Ltd. Leading with Responsibility for Integrity 2024 Environmental Social and Governance (ESG) Report Fostering Harmony through Public Welfare 72

Performance Highlights in 2024

Leading with Responsibility for Quality Technology Award from the Percentage of products exported to Employee training expense

03 China Association for Quality countries and regions along the Belt Integrity Fostering Harmony and Roadthrough Public Welfare 3 95+ % 2200 RMB 10000

Incidence rate of occupational diseases Volunteering activities

The Company is resolutely dedicated to achieving high-quality development characterized by thorough quality control and the

systematic implementation of supply chain management. It adheres to stringent occupational health and safety protocols ensuring a

structured approach that prioritizes the well-being of employees. By safeguarding their legitimate rights and interests the Company 0 % 200+

cultivates a workplace environment that is not only supportive but also conducive to professional growth and talent development.In addition to its internal commitments the Company actively engages in public welfare initiatives exemplifying its profound social

responsibility and commitment to community well-being.Responses to UN SDGs73 XCMG Construction Machinery Co. Ltd. Leading with Responsibility for Integrity 2024 Environmental Social and Governance (ESG) Report Fostering Harmony through Public Welfare 74

Product and Customer Responsibility Strategies

XCMG Machinery has developed a comprehensive maturity evaluation model for its quality management system which has

XCMG Machinery has created a robust and comprehensive quality management system designed to rigorously oversee quality culminated in the issuance of the Q/XCMG 25025-2024 Quality Management System Maturity Evaluation Standard (Trial). This

control across the entire product life cycle. It also optimizes communication channels with customers and prioritizes the security of initiative has successfully facilitated the evaluation of 24 branches and subsidiaries. Concurrently XCMG Machinery has advanced

customer privacy. These enable the Company to establish itself as a leader in quality management and customer service within the the regional quality certification mechanism by setting certification criteria for 12 critical process types including welding assembly

Chinese construction machinery industry. and machining. The Company has also released the Q/XCMG 25024-2024 Regional Quality Certification Standard which has

been extensively communicated to grassroots production units. The introduction of the BLM methodology has further strengthened

Product Quality and Safety the Company’s quality agenda emphasizing three pivotal themes: high-end quality first-class systems and quality digitization. This strategic framework encapsulated in the “three horizontal four vertical and one platform” model.Impact

Risk/opportunity type Risk/opportunity description Probability time- Expected impact Responses Governance frame

XCMG Machinery demonstrates a strong commitment to product quality and Concerns surrounding product Short We enhance product quality

safety responsibilities rigorously adhering to internal protocols such as the and safety management

Quality Objective Management Procedure Non-Conforming Product Control Risk Market risk

quality and safety significantly medium Revenue

impact the Company’s brand Medium and long decline systems to effectively minimize

Procedure and Product Monitoring and Measurement Control Procedure. image. term the incidence of quality and

The Company has established a robust quality control system complemented safety-related issues.by a comprehensive end-to-end inspection mechanism that diligently

monitors each stage of production. This meticulous oversight ensures that The advancement of intelligent

XCMG Machinery products consistently exhibit market-leading reliability and manufacturing and digital transformation necessitates the We are actively advancing performance. As of the end of 2024 XCMG proudly holds a valid ISO 9001 the Intelligent Upgrade Digital

Quality Management System certification. Throughout the year the Company Digital strategic incorporation of big Medium Transformation Digitalization

has maintained an exemplary safety record with zero major incidents related Opportunity transition data and artificial intelligence Cost

to product safety or quality and no product recalls initiated. opportunity technologies. Such integration

High and long and Connectivity initiative to

will streamline the production term

decline fully enhance our products

process and enhance the through the integration of

precision and efficiency of advanced technology.product quality control.ISO 9001 Certificate of XCMG Machinery Management of Impacts Risks and Opportunities

XCMG Machinery diligently identifies and manages risks and opportunities related to quality and safety continually enhancing

In 2024 XCMG Machinery distinguished itself as the sole enterprise in Jiangsu product standards. This proactive approach significantly boosts customer satisfaction and strengthens market competitiveness.Province to be selected for the cultivation pool of 34 leading enterprises

recognized by the State Administration for Market Regulation as part of its

initiative to foster a quality-driven nation. Moreover the Company achieved

remarkable recognition from the China Association for Quality securing one Identify The Company establishes clear management objectives and delineates the scope of implementation first prize three second prizes and one third prize in the prestigious Quality emphasizing key areas for risk identification. By systematically collecting analyzing and managing

Technology Award competition. This accolade represents the highest honor in data related to product quality and safety the organization enhances both the accuracy and breadth

the realm of quality technology within China. of risk identification. This comprehensive approach provides robust support for the formulation of

scientifically-based risk management strategies.Assess The Company evaluates the probability of risk occurrence and potential impact categorizing and

prioritizing risks according to their severity and likelihood. This systematic evaluation allows for more

effective risk management and the development of targeted risk response strategies.Quality Technology Awards from the China Monitor The Company continually optimizes its product quality and safety management processes while

Association for Quality and dynamically monitoring potential quality and safety risks throughout the entire production cycle.manage75 XCMG Construction Machinery Co. Ltd. Leading with Responsibility for Integrity 2024 Environmental Social and Governance (ESG) Report Fostering Harmony through Public Welfare 76

Indicators and Objectives The Company has updated its Quality Supervision Inspection

and Assessment Management Measures. This initiative has

The Company has established definitive product quality and safety management benchmarks for 2024 demonstrating steady involved a thorough quality supervision and inspection process

improvement in operational standards. Critical achievements include 49% reduction in early failure rate (0-100h) compared to the across 18 units. Additionally the Company has conducted

year 2023; 38% decrease in warranty replacement frequency; and 37% decline in warranty replacement cost ratio. targeted inspections addressing five critical overseas quality

issues as well as significant projects such as the quality

Quality Management Indicators and Targets concerns associated with crawler cranes designated for export and the challenges faced by road rollers and cranes in the

Algeria project of China Railway Construction International. As a

result of these focused efforts five detailed investigative reports

have been produced accompanied by the issuance of four

Indicator 2024 Target Completion status company-level quality circulars.Internal replacement rate 6.35% 4.37%(completed)

Loss rate from component replacement within 0.42% 0.28%(completed)

the warranty period Case XPS (Lean Six Sigma) Management at XCMG Machinery

In 2024 XCMG Machinery instituted a comprehensive collaborative cultivation

Quality Management Cases in XCMG Machinery and development system aimed at fostering both specialized and multidisciplinary talent. To this end XCMG Machinery established a structured three-tier training

system encompassing the Company branch and subsidiary and departmental

levels. Throughout the year the Company delivered 356 specialized training

The Company has initiated six targeted actions aimed at

enhancing product quality alongside the establishment of six sessions focusing on advanced methodologies including Lean Six Sigma

specialized project teams dedicated to the implementation Statistical Process Control (SPC) and quality leadership. This multifaceted training

of these initiatives. Additionally it has published eight initiative resulted in the successful development of 9 chief quality officers 20 quality

comprehensive standards including the Technical Specification managers 71 quality engineers and 102 quality technical experts. In addition

for Electrical Circuit Layout. Furthermore the Company has XCMG Machinery successfully advanced over 1800 research and development

conducted a thorough evaluation of maturity concerning wiring

and hydraulic cleanliness completing two extensive rounds of quality improvement and lean initiatives. This comprehensive array of projects

assessment. incorporated advanced methodologies such as Six Sigma Black Belt Green Belt

as well as the 8D problem-solving technique and the seven-step approach. These

initiatives spanned critical operational areas including research and development

production supply chain management sales and customer service.The Company has initiated a comprehensive audit focused

on appearance review and benchmarking improvements

for products showcased at the Bauma China 2024. In this

endeavor it conducted quality inspections on 147 products Case XCMG Machinery’s Implementation of Advanced Quality Management Approaches

assessing their overall appearance quality the standardization

of components and compliance with CE regulations.Concurrently the Company undertook a thorough analysis of its In 2024 XCMG Machinery developed a maturity evaluation

products identifying existing gaps or deficiencies in appearance model for its quality management system. This initiative

quality when compared to benchmark competitors. This included the release promotion and training of the Quality

strategic assessment illuminated opportunities for enhancement Management System Maturity Evaluation Standard (Trial).and reinforced the Company’s commitment to the continuous

improvement of the technical quality of its offerings. The Company established a dedicated evaluation panel

that conducted a comprehensive evaluation of the quality

management system maturity across 22 branches and

subsidiaries encompassing a total of 53 subprocesses. The

evaluation findings revealed that each branch and subsidiary

The Company has systematically organized special overseas achieved maturity levels classified as Level 2 (Standardized

quality meetings aimed at enhancing effectiveness within the Level) and Level 3 (Advanced Level). These results indicate

internal framework to support global market initiatives. Through that the operating framework of the quality management

these initiatives it has successfully addressed 73 significant system is standardized but also possesses the capabilities

overseas quality issues. This proactive approach facilitates indicative of an advanced operational state.comprehensive analysis and enables a robust closed-loop

management system for quality concerns.77 XCMG Construction Machinery Co. Ltd. Leading with Responsibility for Integrity 2024 Environmental Social and Governance (ESG) Report Fostering Harmony through Public Welfare 78

Customer Relations End-to-End Process Management by XCMG Machinery

Governance 01 400 Customer Service Center 02 Golden Operator Training Program

XCMG Machinery adheres to a comprehensive set of internal policies and protocols designed to manage customer interactions

effectively. These include the Customer Complaint Escalation Management Policy the Customer Service Center Follow-up The 400 Customer Service Center comprises four specialized units: Information Communication I t demonstrates XCMG Machinery ’s

Procedure the 24-Hour Completion Rate Report the Monthly Spare Parts Work Bulletin the Overseas Customer Management Customer Satisfaction Improvement Customer commitment to advancing industry expertise

Measures and the Customer Complaint Escalation Management Policy. Such structured frameworks ensure that every customer Behavior Analysis and Product Marketing and by sponsoring national hoisting and concrete

appeal is addressed with timely and effective feedback. XCMG Machinery places a high priority on safeguarding customer privacy Promotion. It confidently delivers comprehensive design competitions establishing dedicated

through robust measures including data encryption stringent restrictions on data access rights and ongoing employee education one-stop professional services including service training bases and fostering deep reciprocal

and training. Targeting large projects significant undertakings and major customers the Company is committed to developing lean outlet guidance product pricing consultation technical support complaint resolution repair requests and collaboration with construction enterprises to

operational and management capabilities. This relentless focus on efficiency enables the Company to continuously enhance the spare parts inquiry and sales ensuring exceptional cultivate highly skilled professionals.quality and effectiveness of its customer service. customer experience.Performance on Cybersecurity and Information Security Management User Experience Day Customized Construction Solutions

Rate of product/service-related Rate of responses to product/service- User Experience Day facilitates comprehensive XCMG Machinery leverages extensive

complaints related complaints engagement by promoting new products and Before Sale Services software and hardware capabilities alongside

providing hands-on experiences enabling

0.21 100 decades of construction expertise. Moreover customers to gain a deeper understanding of % % it actively involves customers as consultants in XCMG Machinery’s capabilities and advanced shaping product design manufacturing and

construction solutions.Product recall rate due to ESG factors service processes ensuring the delivery of

(such as safety and environment) Customer satisfaction highly efficient tailored construction solutions that precisely meet client needs.

0%95.32%0403

Customer Privacy Protection Measures Consultative Sales Approach

Recognizing the continuous demand for customized construction

We use advanced technologies such as encryption software and solutions XCMG delivers comprehensive equipment selection

watermarking techniques to ensure the security of sensitive documents. optimization to ensure maximum client return on investment.We restrict access to customer information to only essential personnel.Regular training sessions on data privacy protection are conducted for

employees to ensure compliance with privacy policies. Worry-free Logistics Service

Our turnkey delivery program guarantees professional door-to-door

transport expert first-installation supervision by certified technicians and

Strategies During Sale Services comprehensive operator training for every delivered unit.XCMG Machinery consistently embodies a value-added service philosophy that emphasizes intimacy attentiveness and

comprehensive support across the entire lifecycle and value chain. With the objective of maximizing customer satisfaction—

indeed exceeding expectations—the Company delivers high-efficiency and timely premium services at every stage of product life. Integrated Financial Solutions

This commitment marks a significant transition from a production-oriented manufacturing model to a service-oriented paradigm. Leveraging XCMG Finance—our captive financial services platform—Pioneering the industry XCMG Machinery has adopted an innovative service model that integrates “Internet + cloud technology + we architect financing packages tailored to customer needs regardingmanufacturing” thereby establishing an advanced intelligent service system. This system facilitates self-diagnosis intelligent work engineering machinery products through partnerships with leading

dispatching and a seamless provision of services throughout the entire lifecycle reinforcing its leadership position in the sector. institutions.79 XCMG Construction Machinery Co. Ltd. Leading with Responsibility for Integrity 2024 Environmental Social and Governance (ESG) Report Fostering Harmony through Public Welfare 80

Management of Impacts Risks and Opportunities

Service available 365x24 Expert Diagnosis

Leveraging the China Quality Promotion Association The Company adeptly identifies and manages risks and opportunities associated with customer relationships consistently enhancing XCMG Machinery employs over 5000 service

engineers and operates 1500 specialized service platform XCMG Machinery has established a

the quality of customer service while establishing long-term stable partnerships with clients.vehicles worldwide. The Company is unwaveringly nationwide standardized mobile service system.committed to delivering dedicated support with a Over the past five years it has conducted the Quality

guaranteed 15-minute rapid response and task and Service initiative more than 90 times. Nearly ten

thousand experts have traveled millions of kilometers The Company articulates its management objectives and delineates the scope of implementation with completion within 24 hours available continuously Identify precision. It engages proactively in customer communication to gain a comprehensive understanding

throughout the year. across the country consistently delivering exemplary

user-centered service. of critical customer concerns thereby providing a robust foundation for the development of effective

risk management strategies.Timely Delivery of Spare Parts The Company articulates its management objectives and delineates the scope of implementation with Smart Keeper Service Assess precision. It engages proactively in customer communication to gain a comprehensive understanding

XCMG Machinery has established a XCMG Machinery maintains thousands of critical customer concerns thereby providing a robust foundation for the development of effective

comprehensive GPS Global Service of spare parts centers across five risk management strategies.Center leveraging an Internet of continents supported by a professional

Things platform to deliver proactive inventory valued at nearly one billion Monitor After Sale Services

intel l igent and personalized yuan. The Company guarantees and

The Company continuously enhances its customer service management processes and diligently

delivery of spare parts to customers manage monitors potential risks that may affect customer rights and interests.customer support services. within 72 hours.VIP Customer Club Worry-free Aftermarket Service

It serves as a collaborative platform connecting XCMG Machinery is dedicated to delivering

customers experts manufacturers and engineers. It comprehensive aftermarket services including Indicators and Objectives

operates under a comprehensive management system leasing used equipment appraisal trading major

and well-defined workflows. repairs and remanufacturing. Addressing customer The Company has a robust hierarchical framework for handling customer complaints particularly those related to privacy issues.concerns remains a core responsibility and This multi-tiered response process is designed to ensure that each complaint is addressed promptly and effectively. To facilitate this

unwavering commitment of the Company. process we have established a unified customer service hotline-4001109999 which operates 24 hours a day 365 days a year. This

hotline serves as a central point for receiving customer inquiries repair requests and complaints. Upon receipt of each inquiry our

The Company effectively identifies and manages risks associated with the protection of customer rights and interests proactively team guarantees that a telephone follow-up will occur within 24 hours. In instances where issues remain unresolved within the initial

formulating strategies to mitigate both the likelihood and impact of potential issues. By systematically identifying and assessing 24-hour timeframe our commitment to customer service extends to continuous follow-up until all matters are satisfactorily addressed.opportunities the Company enhances its capacity to meet customer needs thereby securing a competitive edge in the market.Risk/opportunity Risk/opportunity Impact Expected

type description Probability time-frame impact Responses

We systematically monitor and analyze the

Risks legal and regulatory requirements across

regarding various countries and regions where our

Policy policy Medium to Revenue customers are situated ensuring that our Risk risk compliance for High long term decline products consistently comply with relevant

multinational standards. We enhance the protection

customers of customer data security and privacy guaranteeing the responsible and compliant

use of business information.We actively explore and advance innovative

products and emerging business scenarios

including intelligent construction solutions like Our staff at North China Service Area Our staff at Shaanxi-Gansu-Ningxia 6th International Customer Festival

New autonomous technology and digital twins

conducted a visit to Shangliang Coal. North China Service Area conducted a hosted by XCMG Machinery

products Customers' to enhance operational efficiency for our

visit to Yaojie Coal.Opportunity and new demand for High

Medium to Revenue customers.models new products

long term increase

We foster deeper collaboration with clients to

ensure a mutually beneficial relationship that

aligns technological innovation with sustainable

development.81 XCMG Construction Machinery Co. Ltd. Leading with Responsibility for Integrity 2024 Environmental Social and Governance (ESG) Report Fostering Harmony through Public Welfare 82

Cooperation for Win-Win Outcomes

Purchase Risk Management

XCMG Machinery is firmly dedicated to fostering a sustainable supply chain that not only enhances the resilience of both industrial

and supply chains but also drives innovation and mutual development along the chain. By prioritizing win-win cooperation XCMG

Machinery aims to contribute significantly to the establishment of a modern industrial system. Furthermore the Company actively To foster an effective procurement transformation we propose a robust framework anchored in three key dimensions: a centralized procurement model specialized procurement management and enhanced collaboration betweenchampions high-quality collaboration within the framework of the Belt and Road Initiative thereby reinforcing the longstanding procurement and research teams. We establish a comprehensive management framework delineated by “threefriendships that have flourished along the Silk Road for millennia. horizontals and three verticals”. Within this structure we identify 27 core links across eight major business modules

extending from the procurement phase to the final delivery. Furthermore we empower three distinct value streams: the

Sustainable Supply Chain Management product life cycle the integrated sales-production-supply life cycle and the supplier management life cycle.We develop comprehensive full-lifecycle management systems that encompass various critical components including

Governance supplier admission process certification quality performance improvement and the management of freezing withdrawal and blacklisting processes. This initiative significantly enhances the overall planning of procurement

requirements pricing management and supplier and pricing determination practices augment our procurement

XCMG Machinery systematically identifies potential risks within critical supply chain segments including material procurement compliance capabilities and ensure robust quality risk control measures are in place.and logistics transportation. It has developed and updated various policies and taken proactive management strategies. XCMG

Machinery not only screens but also consistently cultivates high-quality supply resources that align with its commitment to sustainable We propose the strategic implementation of localized procurement within our overseas factories. By adopting a

and high-caliber development. This comprehensive approach significantly strengthens the supply chain’s risk resistance and “governance + empowerment” model we aim to significantly enhance the procurement capabilities at the local level. This approach involves the systematic uploading of procurement business data and the vigilant monitoring of

overall resilience. The Company is committed to the development of a robust green and digital supply chain. It emphasizes the procurement function objectives thereby providing essential guidance for procurement activities in each overseas

empowerment of suppliers and treatment with integrity and adopts an equitable stance towards small and medium-sized enterprises region. In conjunction with this we facilitate the development of a unified procurement process system tailored for our

(SMEs). By providing targeted financial support and capacity-building training the Company fosters the growth of SRDI SMEs within international operations. This unified system ensures the standardization of procurement practices while advancing the

its supply network. This initiative not only enhances the unique competitive edge of the Company’s supply chain but also establishes localized procurement across all regions.a green alliance that facilitates synchronized progress. To advance our commitment to sustainability we implement green procurement practices while enhancing policy

risk management. As we promote localized procurement across our overseas regions we prioritize adherence to

Supply Chain Risk Management Mechanism environmental regulatory requirements specific to each project’s location and fortify our management of environmental risk assessments as well as the auditing and certification processes of local suppliers.To promote the quality development of procurement we enhance the recruitment and cultivation of technically proficient

Full Lifecycle Management of Suppliers and value-driven personnel. Additionally we strengthen support and training initiatives for suppliers elevating their professional skills and fostering collaborative progress within our supply chain. This strategic focus will drive overall

excellence and innovation.*We have established a comprehensive management system that encompasses every aspect of supplier engagement.This system should include robust processes for supplier admission management certification of processes quality

management performance improvement as well as mechanisms for freezing withdrawal and blacklisting of suppliers.The multi-faceted management approach will ensure the creation of high-quality supply resources.Logistics Risk Management

*The Company has incorporated ESG factors such as waste management research and utilization of new energy

and materials occupational health environmental safety and corruption-free management into supplier admission

standards. We implement green logistics practices by prioritizing the design and utilization of recyclable carriers. By analyzing

the material flow characteristics within Vendor Managed Inventory (VMI) distribution scenarios we develop a modular

The Company dynamically monitors and manages multidimensional data related to supplier product quality and material loading plan for recyclable carriers significantly improving vehicle loading efficiency. Additionally we establish a reverse

usage and performs regular supplier quality performance evaluations. For mass-production suppliers identified as logistics system to facilitate a closed-loop circulation model encompassing the VMI warehouse - primary manufacturing

requiring performance enhancements we implement clearly defined performance improvement protocols and to facility - VMI warehouse pathway. The integration of electric forklifts is also emphasized to increase our coverage rate

standardize the improvement process. to an impressive 95.23%. Furthermore we are committed to establishing a verifiable and traceable green recycling system by collaborating with accredited waste recycling organizations. This partnership ensures the effective recycling

treatment and repurposing of packaging materials and waste products. We encourage circular packaging solutions

deploying customizable renewable and biodegradable materials to achieve packaging standardization and promote

sustainability throughout our operations.We promote intelligent logistics warehousing by establishing a robust big data platform for IoT-enabled forklifts

optimizing our Distributed Supply Chain (DSC) Integrated Transportation Management System (ITMS) and Warehouse

Management System (WMS) monitoring vehicle operations in a real-time manner and implementing a proactive

warning mechanism. This enhances supply chain efficiency and ensures cohesive production processes.To enhance the efficiency of logistics transportation management we implement a dynamic rolling transportation

plan that effectively aligns transportation resources with demand. Establishing a comprehensive end-to-end logistics

transportation process helps integrate critical components including order management transportation scheduling real-

time tracking and receipt confirmation. This integration significantly bolsters logistics efficiency. Additionally advancing

the customer service component ensures timely communication regarding planning updates. For oversized products

such as port machinery we develop specialized disassembly and transportation plans while securing the necessary

oversized transportation resources and permits.83 XCMG Construction Machinery Co. Ltd. Leading with Responsibility for Integrity 2024 Environmental Social and Governance (ESG) Report Fostering Harmony through Public Welfare 84

Strategies XCMG Machinery is resolutely committed to enhancing ESG management within its supplier network by seamlessly integrating

ESG principles throughout comprehensive processes including supplier admission evaluation and performance assessment.XCMG Machinery capitalizes on its industry leadership to establish a synergistic coalition across the supply chain implementing an The Company prioritizes critical areas such as labor rights protection environmental conservation occupational health and safety

integrated supply chain strategy that promotes collective success throughout the value chain. This approach generates significant and business ethics. To effectively identify and mitigate supplier risks XCMG Machinery has instituted a sophisticated supplier

market opportunities and growth potential for both upstream and downstream enterprises. By consolidating premium resources from classification management system that incorporates stringent qualification reviews dynamic performance evaluations and well-

the construction machinery industry’s value chain XCMG Machinery collaborates with leading original equipment manufacturers defined exit mechanisms thereby significantly improving the stability and reliability of its supply chain.(OEMs) component manufacturers universities and research institutions to form the High-End Construction Machinery and

Core Components Industry Technology Innovation Strategic Alliance. This initiative is instrumental in driving high-quality industry

development fostering advanced manufacturing clusters enabling differentiated competition enhancing in-house control over critical

Risk/opportunity type Risk/opportunity

Impact Expected

supply chain segments and accelerating industrial innovation. description Probability time-frame impact

Responses

Paths for Creating Sustainable Supply Chain Competitiveness

Disruptions in raw

material supply or By implementing an intelligent dynamic

Green logistics caused by inventory management system the

natural disasters Company effectively analyzes fluctuations

We have released the Green Supply Chain Management Policy and set a dedicated Green Supply Chain Management Supply chain Short distribution political events or Low to to long Revenue in market supply and demand logistics

Committee along with its operational office. This initiative covers key components including the classification of procurement risk supplier issues may medium term decline lead times and production capacity. This

materials risk management strategies and selection and certification of suppliers daily supplier management product lead to production halts comprehensive approach proactively identifies potential risks of supply

design production or reuse logistics transportation packaging management and the disclosure of green information within or operational delays. shortages.the supply chain. Such comprehensive measures will facilitate in-depth collaboration among upstream and downstream

enterprises ultimately promoting high-quality green supply chain practices. By leveraging these management advantages

we can significantly reduce environmental risks enhance energy and resource utilization expand the market share of green Risk Inadequate The Company has implemented a

products and establish a green alliance that drives the industry’s sustainable development forward. environmental social robust supplier ESG qualification and

and governance ongoing monitoring system. All new

(ESG) performance suppliers are required to successfully

or noncompliance complete specialized audits focused on

Digital ESG risk by suppliers can Medium to Short Cost environmental management systems significantly jeopardize high term increase (ISO 14001) and labor rights (SA8000)

Guided by a strategic focus on intelligent transformation digital transformation and networking XCMG Machinery has built an the Company's conducted by accredited third-party reputation disrupt certifiers. Any identified non-compliance

integrated sales-production-supply management platform. This platform encompasses nine major systems including Product supply chain operations mandates immediate time-bound

Data Management (PDM) Customer Relationship Management (CRM) Sales and Operations Planning (S&OP) Material and increase regulatory corrective actions to ensure adherence to

Requirements Planning (MRP) Distribution Supply Chain (DSC) Manufacturing Control Technology (MCT) Manufacturing risks. our sustainability and ethical standards.Execution Systems (MES) Internet of Things (IoT) and Enterprise Resource Planning (ERP). Through an end-to-end

integrated management approach this platform comprehensively addresses all aspects of the value chain. The Company By leveraging Th rough s t r a teg i c t echno logy

has developed a supply chain management model and an integrated planning system that reflect its unique characteristics multi-stakeholder collaboration order prioritization and the establishment of long-term partnership

thereby facilitating information interconnectivity throughout the entire chain. This initiative not only enhances planning collaboration to optimize mechanisms we prioritize the support

coordination capabilities but also digitizes the complete supply chain. As a result XCMG Machinery is poised to create a resource allocation Shared and enhance value of innovative supplier partners. By jointly new digital supply chain model and business ecosystem characterized by a user-centric focus enhanced organizational value chain creation the Company Short Revenue advancing research and development

collaboration integrated sharing and ecological intelligence. These advancements position XCMG Machinery to emerge as Opportunity upgrade effectively capitalizes Medium to long increase in high-end components and enhancing

a global benchmark in efficiency and responsiveness while establishing its dominance as a key player within the industrial opportunities on technological term intelligent manufacturing processes we effectively propel the industrial chain

chain characterized by the largest chain surplus. advancements adapts

to evolving market toward higher value-added segments

demands and utilizes thereby achieving significant dual wins

policy support. in cost optimization and market share Supplier capabilities expansion.The XCMG Technical School in collaboration with its dedicated faculty offers targeted training programs aimed at enhancing

the capacity of suppliers whose product and service quality requires improvement. This initiative addresses quality defects

directly providing essential support for equipment upgrades and the development of high-standard operational sectors.XCMG Machinery actively promotes the evaluation of suppliers’ low-carbon efficiency and offers specialized low-carbon

training. A comprehensive evaluation index system has been established to assess low-carbon capabilities and parts within

the construction machinery sector. This system utilizes rigorous and standardized evaluation methodologies to accurately

reflect the low-carbon efficiency of suppliers. Additionally leveraging its advanced product carbon footprint management

system the Company facilitates a transparent visual representation of the evaluation results.85 XCMG Construction Machinery Co. Ltd. Leading with Responsibility for Integrity 2024 Environmental Social and Governance (ESG) Report Fostering Harmony through Public Welfare 86

Management of Impacts Risks and Opportunities Case Supplier Low-carbon Training

The Company actively identifies and addresses risks and opportunities associated with sustainable supply chains thereby reinforcing

its risk management framework and ensuring the security and stability of its supply chain operations. In February 2024 XCMG Machinery hosted the Launch

Meeting for its Carbon Footprint Management and Low-Carbon

Supply Chain Construction for supply chain components

The Company has established clear management objectives and a comprehensive implementation gathering nearly 100 suppliers and partners to collaboratively

Identify framework actively engaging in thorough assessments of suppliers and the supply chain. This rigorous explore the future of low-carbon initiatives within the

approach underpins the development of effective risk management strategies. construction machinery sector. XCMG Machinery showcased

its innovative product carbon footprint management platform

which is implemented across its supply chain alliance partners.This platform facilities the comprehensive accounting

Assess By quantifying the probability and potential impacts of risks the Company systematically classifies analysis and management of carbon footprints associated

and prioritizes them based on severity and likelihood thereby facilitating targeted identification and with component products. In addition XCMG Machinery has

management. a robust reward-punishment framework and an admission

adjustment mechanism to elevate suppliers’ carbon footprint

Monitor management capabilities. A thorough tracing and management

and Continuous monitoring of supply chain risks is maintained allowing for dynamic tracking of potential system for supply chain component products was instituted

manage vulnerabilities across both suppliers and the broader supply network. complemented by the formulation of a rigorous carbon

index evaluation system. These concerted efforts exemplify

the Company’s commitment to achieving synchronous

Indicators and Objectives development with its suppliers.The Company establishes pertinent indicators and objectives for sustainable supply management enhances its prevention and XCMG Machinery has effectively leveraged its role as a leading enterprise within the industrial chain to collaborate with suppliers

control measures for supply chain risks and significantly elevates the standards of sustainable supply chain management. in establishing a low-carbon supply chain for construction machinery products. Throughout the process of acquiring component

data from core first-tier suppliers XCMG Machinery has implemented low-carbon training initiatives aimed at enhancing suppliers’

understanding of product carbon footprints and their capabilities in carbon accounting and management. By the end of 2024 the

Company conducted over 20 comprehensive low-carbon training sessions for its suppliers.87 XCMG Construction Machinery Co. Ltd. Leading with Responsibility for Integrity 2024 Environmental Social and Governance (ESG) Report Fostering Harmony through Public Welfare 88

Joint Efforts for the Belt and Road Labor Administration

XCMG Machinery adheres to the guiding principle of extensive consultation joint contribution and shared benefits in its commitment XCMG Machinery rigorously safeguards the legitimate rights and interests of its employees by ensuring healthy and safe working

to advancing the Belt and Road Initiative. This strategic approach positions the Company to capitalize on development opportunities conditions. The Company commits to prompt salary disbursement actively participates in social security contributions bolsters

accelerate global industrial expansion and reinforce its core internationalization strategy. By illuminating the “light of national industry” employee training initiatives and implements an effective employee grievance system. Furthermore XCMG Machinery has

along the Silk Road XCMG Machinery effectively promotes its global presence. developed a robust talent cultivation system aimed at enhancing employee skills and competencies. By implementing a diverse

array of cultural activities and supportive measures the Company fosters a strong sense of belonging among its workforce thereby

The Company’s evolution within the Belt and Road Initiative signifies a transition from traditional international trade to a more cultivating a warm and inclusive working environment.integrated model that encompasses the global industrial value chain. With nearly 40 overseas subsidiaries and over 300 distributors

worldwide XCMG Machinery has successfully exported its products to more than 190 countries and regions achieving coverage in

over 95% of the areas along the Belt and Road Initiative. Lawful Employment

Highlight Products of XCMG Machinery along the Belt and Road XCMG Machinery demonstrates a strong commitment to compliance with the Labor Law of the People’s Republic of China the

Labor Contract Law of the People’s Republic of China and relevant regulations specific to project locations. The Company has

developed ten internal policies including the Labor Cost Management Policy ensuring thorough legal alignment when signing

employment contracts with employees. Furthermore XCMG Machinery unequivocally prohibits child labor and forced labor while

firmly opposing all forms of discrimination in its labor practices. The Company maintains a comprehensive recruitment management

system along with detailed internal regulations that govern the hiring process. Employment standards including age and competency

requirements are strictly adhered to in compliance with relevant laws. To protect employees’ legitimate rights institutional documents

such as attendance and leave management systems are effectively implemented ensuring access to legal vacation time.Furthermore the Company has established a robust labor risk assessment mechanism which evaluates potential risks—including

child labor and forced labor—prior to the initiation of new projects. As of the end of 2024 the assessment has revealed no such risks

underscoring the Company's commitment to responsible employment practices.Inauguration of the Value-added Business Center by XCMG Machinery contributes to the mining of the Simandou

XCMG Machinery in West Asia and North Africa project the world’s largest undeveloped iron ore mine

Indicator Unit 2024 value

Total employees / 27791

Male / 23548

Employees by gender

Female / 4243

30 years old below / 8314

Employees by age 30 - 50 years old /

XCMG Machinery is extensively engaged in the construction of XCMG Machinery is instrumental in the operations of 17606

the Astana Light Metro. Laos’s largest open-pit gold mine through its complete 50 years old above / 1871

sets of equipment.Senior managers / 12

Case XCMG Machinery Visits Local Construction Machinery Market in Saudi Arabia Employees by level Middle managers / 2658

Average employees / 25121

In June 2024 Yang Dongsheng Chairman and Secretary of the

Party Committee of XCMG Machinery led a delegation to research Jiangsu Province / 15425

the construction machinery market in Saudi Arabia. This initiative Employees by region Other regions in China / 7661

reflects the Company’s strategic commitment to harnessing new

quality productive forces to accelerate its global expansion. During Overseas / 4705

the visit the team paid a visit to the Chinese Embassy in Saudi

Arabia where they met with Minister-Counselor Xie Qinsheng. Xie Domestic employees by ethnic Ethnic minority / 4477

Qinsheng expressed strong appreciation for XCMG Machinery’s role group

in fostering Sino-Saudi relations and promoting bilateral cooperation. Ethnic majority / 18609

He affirmed the embassy’s unwavering support for Chinese-funded Employee turnover %

enterprises exemplified by XCMG Machinery and emphasized the 3.09

importance of collaborating on the Belt and Road Initiative.89 XCMG Construction Machinery Co. Ltd. Leading with Responsibility for Integrity 2024 Environmental Social and Governance (ESG) Report Fostering Harmony through Public Welfare 90

Performance on Cybersecurity and Information Security Management Compensation Management Performance System

Percentage of employees with social

Employment contract rate XCMG Machinery prioritizes the development of a robust compensation system as a critical foundation for executing its

insurances strategic objectives. The Company has implemented a value-driven market-oriented and differentiated compensation

and incentive framework that effectively maximizes employee motivation initiative and creativity. By tailoring specialized

100 100 compensation plans to diverse job categories XCMG Machinery aligns remuneration with individual contributions and % % capabilities ensuring a direct correlation between performance and rewards. This systematic emphasis on responsibility

outcomes and value creation consistently energizes a broad spectrum of talent reinforcing the organization’s competitive

Human Resource Management Awards advantage and fostering sustained excellence.The Company has developed a comprehensive employee performance management system that strengthens the

integration of individual and organizational performance. By systematically decomposing organizational objectives according

to job functions and responsibilities the Company establishes clear key performance indicators (KPIs) and critical tasks

tailored to various roles and levels. Performance goals emphasize not only the achievement of organizational targets but

also support employees’ career development and alignment with corporate culture and values. Through objective and

equitable evaluations high-performing high-value contributors—especially those instrumental in advancing the Company’s

intelligent upgrade digital transition and connectivity—are rewarded with competitive compensation packages and increased

incentives. Employing a diversified compensation strategy combined with a scientifically grounded performance management

2024 AIGC Human system the Company attracts and retains top talent fosters collective commitment and drives the synchronized growth of 2024 Best Employer Brand 2024 Model Leader (Beisen) 2025 Best Employer both employees and the enterprise.

among Global Enterprises Resources Pathfinder (51job)

(MOKA) (Dayee)

Salaries and Benefits Diverse Employee Communication Channels

XCMG Machinery is dedicated to establishing a comprehensive and competitive compensation and benefits system tailored to its XCMG Machinery employs a robust framework for employee engagement exemplified by multiple channels for employee

workforce. The Company implements a market-driven differentiated floating salary structure aligned with distinct positions and feedback including regular convening of the employee representative congress online platforms such as the Chairman’s Mailbox

employs a closed-loop performance management model that links compensation to measurable contributions. This approach and in-person sessions titled Face-to-Face with the Chairman. In 2024 102 proposals put forth by employee representatives were

effectively drives the attainment of performance objectives and fosters continuous improvement. meticulously tracked and implemented. Additionally a mechanism has been instituted for employee representatives to conduct

inspections allowing them to actively participate in decisions affecting their welfare. This includes oversight of key areas such as the

XCMG Machinery ensures all employees receive mandatory social protections including the five social insurances and one housing canteens and restrooms the selection of products for centralized welfare procurement and the inspection of cold protection supplies

fund. Beyond statutory benefits the Company offers additional incentives—such as enterprise annuities commercial insurance across various units. Such inclusive practices not only cultivate a strong spirit of democratic management but also significantly

birthday recognitions and health screenings—thereby cultivating a supportive and motivating work environment. enhance employees’ sense of ownership and investment in the Company’s success.The Company administers an annual anonymous online satisfaction survey that encompasses all permanent employees labor

dispatch workers and interns across every business unit. and uses the feedback received to drive meaningful enhancements. An

evaluation model termed the Charm Index has been developed which encompasses critical dimensions such as job cognition

organizational effectiveness and opportunities for growth and development. The analysis of this model is conducted with a focus

on key indicators and demographic groups resulting in the formulation of an annual key improvement list accompanied by a

detailed responsibility implementation plan. To address identified issues the Company employs various strategies including public

announcements and subsequent follow-up visits to ensure accountability and transparency. In 2024 the employee satisfaction score

reached an impressive 4.49 out of a possible 5 points.Case “Listen to Your Voice” All-Employee Satisfaction Survey in 2024

In 2024 the Company implemented the Listen to Your Voice survey that covers all employees to gain insightful understanding of

employee ideas and address their needs effectively. The survey data underwent rigorous thematic analysis focusing on problem

identification to inform strategic initiatives. By leveraging the findings the Company pinpointed key areas for improvement thereby

enhancing employee happiness and satisfaction. This proactive approach fosters a united effort towards the Company’s connotative

and high-quality development reinforcing its commitment to excellence.91 XCMG Construction Machinery Co. Ltd. Leading with Responsibility for Integrity 2024 Environmental Social and Governance (ESG) Report Fostering Harmony through Public Welfare 92

Career Development

XCMG Machinery’s Employee Training Performance

XCMG Machinery has developed a comprehensive talent development system that encompasses all employees. Centered on job

qualifications rank structures and digital badges the system establishes multidimensional career pathways that align closely with

strategic objectives and business needs while integrating with performance management. This approach consistently cultivates Indicator Unit 2024 value

a high-caliber workforce distinguished by both ethical standards and professional expertise. Through a stratified and categorized

training framework—including onboarding skill enhancement and leadership development—XCMG Machinery combines internal

training with external recruitment. Leveraging industry expert resources and digital learning platforms the company delivers targeted Internally promoted employees / 914

career-aligned training that drives sustained organizational growth and employee advancement.Training expense RMB 10000 1939

Talent Training Measures by XCMG Machinery

Total training sessions / 20945

Onboarding System Enhancement

Total training duration Hours 2380000

The Company has implemented a structured phased onboarding training program that integrates standardized courses

focused on cultural assimilation and job competency development. By combining online and in-person resources with Total training participation / 1550000

practical on-the-job guidance the program effectively accelerates new employees’ role adaptation and organizational

alignment ensuring a steady supply of highly qualified talent to frontline operations.Including: participation by senior managers / 180

participation by middle managers / 150375

participation by average employees / 1393445

Skills Development Perfection

The Company has established a comprehensive skill certification system encompassing multiple sequences and levels.By aligning job qualification standards with updated competency models and leveraging specialized training project-

based practice and digital learning resources it ensures precise alignment between employee capabilities and business

needs thereby strengthening the organization’s core skill reserves.Case The Ninth Season of “XCMG Interns” and the Training Camp for XCMG’s Outstanding Overseas Employees

Management Competency Framework Establishment In October 2024 XCMG Machinery proudly hosted the ninth

season of the XCMG Interns program alongside a specialized

training camp for distinguished overseas employees. Chairman

Grounded in strategic orientation and business breakthroughs a digital leadership development model has been Yang Dongsheng welcomed exemplary staff from 17 countries

established to elevate the digital transformation planning and execution capabilities of managers across all levels. personally attending the graduation ceremony. During the event

Integrating systematic talent assessments and tiered leadership development this approach cultivates management honorary certificates were awarded to outstanding individuals and

personnel endowed with practical experience and global perspectives effectively driving the enterprise’s transformation exemplary teams acknowledging their significant contributions to

and sustainable growth. XCMG’s internationalization strategy. This recognition embodies

their potential for continued excellence and innovation in the

industry.93 XCMG Construction Machinery Co. Ltd. Leading with Responsibility for Integrity 2024 Environmental Social and Governance (ESG) Report Fostering Harmony through Public Welfare 94

Employee Care Caring for Female Employees

XCMG Machinery has established a Women Employees’ Committee and each unit has formally signed the Special Collective

ESG Management Agreement on the Protection of Women Employees’ Rights and Interests thereby standardizing the commitment to uphold these

rights across the organization. The Company has implemented a series of educational initiatives including legal awareness

programs and health-focused lectures specifically designed for female employees. Additionally it has enacted a range of supportive

XCMG Machinery has newly started a comprehensive support program for the families of overseas employees by establishing a measures including protections for women in childbearing period pregnancy period lactation period perimenopausal period and

one-to-one assistance and communication mechanism tailored for these families. Each unit is empowered to provide funds and menopausal period health check-ups and screenings for breast and cervical cancers. In a continued effort to enhance support for

gifts to employees stationed abroad as well as their families during traditional festivals ensuring that care is delivered effectively and female employees the Company established two new women service stations at provincial and municipal levels in 2024.meaningfully. This initiative not only reinforces the Company’s commitment to supporting its overseas staff but also assures their

families of the Company’s warmth and dedication. Examples of Caring for Female Employees

In 2024 the Company engaged with employees in need extending

support to those who were ill or hospitalized and their families.Over the Chinese New Year and Mid-Autumn Day festivals gifts Percentage of employees with five insurances

were offered to 45 employees while a total of 4879 visits and and one housing provident fund

support were recorded across all departments. The investment in

these initiatives amounted to RMB 2.049 million clearly reflecting

XCMG Machinery’s unwavering commitment to the well-being of its 204.9 RMB 10000

employees and their families on multiple levels.Lectures on women health Nursing room

Visiting employees in difficulty

Women service stations The Advanced Female Employees

Commendation Meeting along with the

Reading for Growth Women’s Story

Competition

One-to-one assistance and communication mechanism

tailored for families of employees working overseas95 XCMG Construction Machinery Co. Ltd. Leading with Responsibility for Integrity 2024 Environmental Social and Governance (ESG) Report Fostering Harmony through Public Welfare 96

Employee Activities

The Company consistently offers a diverse array of cultural and sports activities including sports competitions artistic performances

team-building exercises and birthday celebrations. These initiatives not only provide employees with enriching options for their leisure

time but also foster enhanced interaction and collaboration among colleagues. Moreover these activities significantly contribute to

the overall physical and mental well-being of employees.The Company consistently organizes competitive swimming events for its staff.The Company effectively leverages the staff reading room to enhance its intellectual environment. Through the

initiative Reading for Growth it actively promotes the development of a knowledge-driven culture.The Company hosted the 11th XCMG Staff Sports Meeting a remarkable event that drew nearly 20000

employees. This gathering not only highlighted the robust and dedicated spirit of XCMG employees but also

exemplified their commitment to excellence and hard work in the modern era.Annual meeting activities for overseas employees

The Company facilitates a range of sports activities including table tennis tournaments

basketball games badminton competitions and football matches.97 XCMG Construction Machinery Co. Ltd. Leading with Responsibility for Integrity 2024 Environmental Social and Governance (ESG) Report Fostering Harmony through Public Welfare 98

Occupational Safety and Health Occupational Health and Safety Performance of XCMG Machinery

XCMG Machinery prioritizes occupational safety by consistently enhancing its health and safety management system. The Company

establishes comprehensive health and safety objectives delineates effective management strategies and enforces specific Indicator Unit 2024 value

responsibilities. As a result of these rigorous measures 2024 witnessed a commendable record with no health and safety disputes

reported within the Company. Employee and contractor deaths / 0

Number of deaths and injuries / 0

Management System Casualty rate % 0

Lost work hours due to safety incidents Hours 17464

Governance

Percentage of severely injured employees % 0

XCMG Machinery adheres rigorously to 15 internal occupational health and safety protocols including XCMG Ten Safety Red Lines. Percentage of mildly injured employees % 0.0739

In 2024 the Company made significant enhancements to its occupational health and safety management system revising key

documents such as the Occupational Health and Safety Training and Education Policy and the Administrative Measures for the Percentage of injured contractors % 0

Withdrawal and Use of Work Safety Expenses. A robust organizational structure has been established with the chairman serving Expense for work injury insurance RMB 10000

as the primary accountability figure for safety supervision and occupational health monitoring across the Company. We consistently 2781

implement standardized safety protocols and establish measurable development targets for occupational health and safety. We Percentage of employees covered by work injury insurance % 100

ensure the continued validity of our occupational health and safety management system certificate and develop comprehensive

policies and measures to guarantee the health and safety of our contractors. Regular internal and external audits are conducted to Incidence rate of occupational diseases % 0

assess health and safety practices identify management deficiencies and implement corrective actions. This proactive approach

ensures continuous improvement in health and safety performance and guarantees the effective functioning of the system.Strategies

Chairman of the Board

The Company effectively identifies and manages risks associated with occupational health and safety. By proactively formulating

preventive strategies it significantly mitigates both the likelihood and impact of potential risks while actively seizing opportunities to

enhance workplace safety and well-being.President

Impact

Type Risk/opportunity description Probability time- Expected impact Responsesframe

Executive VP

We will steadfastly enhance

EHS Dept. In the event of an occupational health our occupational health

or safety incident operations may and safety management

Production experience disruption or complete Medium practices by implementing

Risk and suspension. Furthermore substantial Cost comprehensive training

EHS Dept at EHS Dept EHS Dept at operations resources will be necessary to

Medium to long

EHS Dept at term

increase programs thereby elevating

XCMG Excavator XCMG Science at XCMG

EHS Dept at EHS Dept at disruptions manage the incident rehabilitate all employees’ competencies

XCMG Heavy XCMG Road XCMG Crane ...... the site and implement subsequent and awareness regarding and Technology Schwing Machinery enhancements effectively. occupational health safety

and protection.Part-time Safety Full-time/ Part-time Full-time/ Part-time The integration of advanced digital

Officers at Depts/ ...... Safety Officers at Safety Officers at ...... technologies including big data

Offices Factories Factories analytics artificial intelligence (AI) and We will implement advanced the Internet of Things (IoT) facilitates management too ls to

real-time monitoring and sophisticated elevate safety standards

Part-time Part-time Part-time Digitalized analysis of safety data. This approach Medium Cost and optimize production

Safety Officers Safety Officers Safety Officers ...... Opportunity management enhances the accurate identification High to long of potential risks and accelerates term decline

efficiency. Additionally we

will establish a digital training

at Teams at Teams at Teams response times. Additionally it platform to enhance the

promotes effective information sharing effectiveness of occupational

and collaboration thereby significantly health and safety training.XCMG Machinery’s Organizational Structure for Safety Management improving decision-making efficiency and execution effectiveness.99 XCMG Construction Machinery Co. Ltd. Leading with Responsibility for Integrity 2024 Environmental Social and Governance (ESG) Report Fostering Harmony through Public Welfare 100

Management of Impacts Risks and Opportunities The Company formulates detailed and targeted risk control measures and has

them updated on a regular basis. In pursuit of improved emergency response

The Company consistently identifies and manages occupational health and safety (OHS) risks through proactive prevention efficiency the Company has installed risk warning signs and emergency

strategies. This approach effectively minimizes both the probability and severity of incidents while leveraging opportunities to enhance response cards at critical locations. These resources clearly delineate simplified

overall safety performance.Graded control of emergency procedures essential contact numbers and the precise locations of

risks emergency supplies. In 2024 a comprehensive investigation was conducted to Graded Control evaluate the safety principal risks and charging control measures associated

with lead-acid batteries and lithium iron phosphate batteries. The charging

area was identified as a vital component of risk management leading to the

standardization of Warning Signs for Important Safety Risks in the Charging Area

XCMG Mach ine ry adhe res throughout the facility.rigorously to all pertinent national

and local laws regulations and

guidelines concerning workplace

safety and occupational health. Identification of Safety Hazards

The Company is committed to

the continuous enhancement of The subsidiaries of XCMG Machinery routinely conducts hazard identification and mitigation efforts including comprehensive

its systematic approach to the inspections specialized examinations safety checks during holidays middle and night shift inspections and daily patrols and urges

classification and control of safety the prompt correction.risks. By the end of 2024 the

Company experienced no major

safety risk. Performance on Safety Hazard Identification

Campaigns to spot safety Correction rate of safety

hazards risks identified

Safety Risk Warning Sign for Charging Room (Area) in XCMG 3992 100 %

Machinery

Occupational Health and Safety Risk Management Measures

Case XCMG Machinery Completes a Comprehensive Safety Risk Remediation Campaign for the Painting System

The Company implements a multi-tiered safety inspection framework for the

timely detection and mitigation of hazards associated with production equipment In 2024 drawing from the critical lessons

and workplace environments. Annual involvement of all employees in risk learned from fire incidents both within the

Multi-level safety identification and professional assessments ensures a thorough evaluation of all industry and beyond XCMG Machinery

inspection potential risks. The Company has developed and implemented the Production investigated fire risks across 165 painting

Safety Accident Emergency Response Plan each branch and subsidiary has booths across various units. Following a

created comprehensive plans specialized plans and on-site disposal protocols thorough risk assessment XCMG Machinery

to minimize the potential impact of risks. implemented significant enhancements to its

safety infrastructure including the installation

of automatic fire extinguishing systems in 33

The Company systematically engages qualified third-party firms to conduct painting booths and the incorporation of fire

comprehensive assessments of occupational disease hazards. This includes the dampers or automatic extinguishing systems

identification and evaluation of relevant risk factors. Throughout the production in 169 exhaust ducts. These strategic

Identification of risks process the Company ensures that its occupational disease prevention improvements unequivocally bolster the

associated with facilities are fully operational with regular inspections to monitor their efficacy. intrinsic safety of the painting system.occupational disease Furthermore we prioritize robust training programs for employees equipping

hazards them with essential knowledge regarding occupational disease prevention. The

Company provides standardized personal protective equipment and enforces

stringent supervision mechanisms to guarantee that compliance in wearing these

articles consistently reaches 100%.101 XCMG Construction Machinery Co. Ltd. Leading with Responsibility for Integrity 2024 Environmental Social and Governance (ESG) Report Fostering Harmony through Public Welfare 102

Safety Emergency Drills Safety Culture

XCMG Machinery’s branches and subsidiaries carry out emergency drills as per the annual emergency drill plan. These drills XCMG Machinery issues its annual Company No. 1 document at the start of each year to guide the year-round safety and

encompass scenarios like mechanical injuries vehicle accidents confined spaces and fires. They serve to evaluate the response environmental protection initiatives and refine safety objectives and indicators ensuring targeted and actionable tasks. The Chairman

time refine emergency protocols replenish emergency supplies and enhance the overall emergency handling capabilities through of the Board and General Managers of branches and subsidiaries sign Business Responsibility Commitment and HSE Responsibility

rigorous training of emergency teams. Commitment ensuring that safety responsibilities are thoroughly implemented at all levels down to average employees.Indicators and Objectives XCMG Machinery has strategically implemented an Occupational Health and Safety Training Policy. The Company invests substantial resources in this initiative to elevate the safety awareness and emergency response capabilities of both employees and

contractors. This endeavor aims to standardize workplace behaviors and substantively improve the overall safety literacy within

The Company actively establishes robust occupational health and safety management indicators and objectives thereby the Company. In 2024 XCMG Machinery organized the Workplace Safety Month during which a raft of safety training drills and

continuously enhancing its management standards in this critical area. promotional events including safety knowledge lectures safety knowledge competition emergency evacuation drills simulated

accident handling were held to foster a strong culture of intrinsic safety.In 2024 the Company allocated a substantial investment of RMB 102.9221 million towards health

and safety initiatives. This funding was strategically directed towards key areas including the

2024 Occupational construction of a digital system the smart transformation and digital networking of safety facilities

health and safety the identification and rectification of potential hazards comprehensive occupational health and Occupational Safety and Health Training Performance

indicators safety training and the provision of personal protective equipment. The outcomes of these efforts

were remarkable: the Company achieved zero fatal accidents among employees and contractors Total training sessions Total participation

as well as zero casualties underscoring its unwavering commitment to workplace safety.

248941589

Guided by the principles of “full funding allocation” and “maximized utilization of resources”

2025 Occupational the Company successfully implemented several initiatives: upgrades to safety protection for Percentage of employees Percentage of contractors

health and safety conventional equipment risk control measures for automated systems maintenance of aging covered by training covered by training

targets machinery enhancement of emergency response capabilities and employee reward programs

for hazard reporting. 100 % 100 %103 XCMG Construction Machinery Co. Ltd. Leading with Responsibility for Integrity 2024 Environmental Social and Governance (ESG) Report Fostering Harmony through Public Welfare 104

Community Relations Charity

XCMG Machinery is committed to cultivating a responsible brand identity that aligns with its core value of Help with Love. The XCMG Machinery has developed a robust and sustainable system for global public welfare operations effectively promoting the

Company emphasizes three foundational pillars: contributing to development creating a sustainable future and fostering growth ethos of XCMG’s Great Love. The Company engages in worldwide public welfare initiatives demonstrating its commitment to social

through compassion. Its initiatives encompass six critical areas: rescue operations health promotion educational support responsibility through active participation in volunteer services charitable giving and educational support programs. Notably in 2024

environmental sustainability customer service excellence and overall development. Through actively engaging in global social XCMG Machinery conducted over 200 volunteer activities.welfare activities XCMG Machinery not only shapes a robust and responsible brand image but also extends its care and commitment

to communities worldwide. This strategic engagement significantly enhances the brand’s reputation.This initiative aims to forge new pathways for integrating

industrial culture with education by utilizing industrial

study tours. We hosted host 15 thematic activities

centered on Construction Machinery + Han Culture.Blood donation activity Volunteers from XCMG Machinery

XCMG Machinery’s Global Responsible Brand System

The XCMG STEAM Courses in 2024 embed the aspirations of

construction machinery within the minds of youth.105 XCMG Construction Machinery Co. Ltd. Leading with Responsibility for Integrity 2024 Environmental Social and Governance (ESG) Report Fostering Harmony through Public Welfare 106

Case XCMG Machinery Begins the Fifth Phase of the African Water Cellar Project Rural Revitalization

XCMG Machinery is fully committed to the national rural revitalization strategy prioritizing the procurement of agricultural products

In 2024 XCMG Machinery in collaboration and raw materials from impoverished regions. This initiative effectively broadens farmers’ sales channels and enhances their income

with the China Foundation for Rural sources. Furthermore XCMG Machinery has invested in the training of numerous technical professionals specifically for rural areas

Development launched the fifth phase of the thereby bolstering local self-development capabilities.African Water Cellar Project. This initiative is

set to construct 40 water cellars in the arid

Oromia Ethiopia. To date XCMG Machinery Case XCMG Excavator Conducts Outreach to Households in Need

and the China Foundation for Rural

Development have successfully established In September 2024 XCMG Excavator in collaboration with its

a total of 201 water cellars across various dealer Guizhou Hengdaxin and key clients conducted outreach

underdeveloped regions in Africa. efforts to assist households in need by promoting community

support. The initiative involved targeted procurement of agricultural

products specifically passion fruits from Liaoli Village. Furthermore

XCMG Excavator formalized a public welfare rescue agreement

addressing geological disaster management with the village

committee. Liaoli Village has been designated as a pilot site for

public welfare initiatives set to receive financial resources and

excavator equipment from XCMG. This endeavor will launch the

Industrial Co-prosperity Public Welfare Plan.Case XCMG Machinery Conducts the Micro-Wish Responsibility Brand Campaign Social Rescue

XCMG Machinery has consistently demonstrated its commitment to safeguarding communities through decisive action in response

In 2024 the Company’s Global Micro-Wish Responsibility to natural disasters and emergencies. The Company swiftly mobilizes professional rescue teams and essential equipment to the

Brand Activity initiative was relaunched. Branches and affected areas ensuring rapid emergency support. In the face of earthquakes floods and other calamities XCMG Machinery plays

subsidiaries deepened collaborations with communities a vital role in the disaster relief effort aiding in the restoration of normalcy in both production and daily life for affected populations.charitable organizations and NGOs with a focus on education This proactive engagement eloquently exemplifies XCMG Machinery’s core values of Responsibility Virtue and Fortitude thereby

environmental protection health and other areas. Their establishing the Company as a formidable leader in the realm of social rescue initiatives.goal was to address social issues promote sustainable

development and fulfill corporate social responsibility through

specific project initiatives. Case XCMG Machinery Takes a Role in the Flood Relief Assistance in Chiang Mai Thailand

In October 2024 Thailand faced significant challenges due to continuous and heavy rainfall leading to widespread flooding across

various regions including Bangkok. In response to an urgent appeal from the Chinese Embassy in Thailand XCMG Machinery

demonstrated its commitment to corporate social responsibility by actively engaging in local flood relief efforts. Collaborating with its

Thai dealer and the Chonburi Province Department of Commerce XCMG Machinery successfully organized the procurement of

disaster relief supplies valued at over 1 million Thai baht. A dedicated team of employees was mobilized to deliver these essential

supplies to affected areas such as Chiang Rai effectively supporting communities in their recovery during this critical time.107 XCMG Construction Machinery Co. Ltd. Leading with Responsibility for Integrity 2024 Environmental Social and Governance (ESG) Report Fostering Harmony through Public Welfare 108

Case Emergency Rescue Equipment of XCMG Machinery Sent to Regions across the Country

In October 2024 while the People’s Republic of China celebrated its 75th anniversary XCMG Machinery made significant strides

in enhancing the nation’s disaster response capabilities. The Company deployed scores of sets of advanced high-precision When Meizhou experienced severe rainfall and rampant

emergency rescue equipment to various regions across the country. This initiative not only reflects XCMG’s commitment to national mountain torrents XCMG Machinery quickly dispatched

service but also constitutes a substantive contribution to improving China’s disaster prevention mitigation and relief efforts. The excavators loaders and other vital machinery. Their swift

array of equipment including aerial ladder fire trucks drainage emergency vehicles multifunctional fire trucks and demolition actions enabled the repair of collapsed roads and the stabilizing

robots is designed for diverse emergency scenarios such as high-rise fires geological disasters and urban flooding. This endeavor of breached dikes.underscores XCMG Machinery’s technological prowess in emergency rescue and exemplifies the responsibilities embraced by a

leading nation in crisis management.In various regions across the nation—including Guangdong

Guangxi Hunan Hubei Sichuan Shaanxi Gansu Anhui

and Hainan—XCMG Machinery has actively engaged in flood

prevention and emergency rescue efforts establishing critical

defenses for communities affected by disasters.When Xuzhou faced an unexpected blizzard XCMG Machinery For the fourth consecutive year XCMG Machinery has

promptly triggered its emergency response plan mobilizing participated in the Emergency Mission drills organized by the

an impressive 121 sets of equipment and deploying 300 State Council. During these drills 35 units of advanced high-

skilled employees overnight. In the harsh temperatures these precision equipment were strategically mobilized in Jinhua

dedicated teams effectively cleared snow and melted ice Zhejiang. This comprehensive deployment encompassing tasks

tirelessly working for 30 consecutive hours to restore seamless from breach containment to drainage and emergency rescue

traffic flow within the city. operations underscores the formidable capabilities and reliability of XCMG Machinery.109 XCMG Construction Machinery Co. Ltd.2024 Environmental Social and Governance (ESG) Report Appendix 110

Appendix I：Quantitative Performance Sheet

Governance

Indicator Unit 2024 value Indicator Unit 2024 value

Number of general meetings / 2 Total training sessions / 707

Including: Manager training sessions /

Number of proposals approved at general meetings / 13 4

Employee training sessions / 703

Proportion of independent directors / 1/3

Total training duration Hours 711

Proportion of female directors / 2/9

Including: Manager training duration Hours 8

Board meetings / 13

Employee training duration Hours 703

Expected attendance / 117 Business Ethics Anti-bribery Total participation / 67334

and Anti-corruption Training

Actual attendance / 117 Including: Manager participation / 735

Proposals considered / 50 Employee participation / 66599

Supervisory Committee meetings / 5 Employees covered by the

training % 100

Actual attendance / 35 Supplier training sessions / 6

Proposals considered / 15 Suppliers covered by the training / 5531

Members of senior management / 12 Supplier training duration Hours 9

Risk control and compliance training sessions / 54 R&D cost RMB 10000 559790.76

152 Number of R&D employees /Risk control and compliance training duration Hours 7619

IPR expenditure RMB 10000 2810.59

Risk control and compliance training participation / 4787

Total patents authorized in the year / 1675

Correction rate of issues % 100

Standards newly formulated in the / 56

Audits on operational performance of overseas subsidiaries / 18 year

Standards for which the

Number of subordinate company achieved recognition as star-level Company played a role in National standards / 33

enterprises in the realm of industrial information security protection. / 3 their formulation in the year

Industrial standards / 13

Information security training sessions / 3 Group standards / 10

Information security training duration Hours 6 Innovative R&D projects / 581

Information security training participation / 300 Accumulative authorized patents / 11981

Number of data breach incidents / 0111 XCMG Construction Machinery Co. Ltd.2024 Environmental Social and Governance (ESG) Report Appendix 112

Environmental

Indicator Unit 2024 value Indicator Unit 2024 value

Direct greenhouse gas emissions (Scope 1) Tons 102363.22 Chromium (VI) Tons 0.23

Indirect greenhouse gas emissions (Scope 2) Tons 279299.80 Total chromium Tons 0.000018

Total greenhouse gas emissions Tons 381663.02

Total nickel Tons 0.000375

Environmental training sessions / 146

Total waste gas emission 10000 m3 1728037.39

Environmental training duration Hours 110501

Including: Particles Tons 102.69

Environmental training participation / 43795

Percentage of employees covered by environmental training % 100 Sulfur dioxide Tons 9.98

Total hazardous substance and waste generation Tons 5972.83 Nitrogen oxides Tons 40.46

Including: Organic solvent waste and waste containing organic

solvent Tons 66.36

NMHC VOCs Tons 117.98

Packaging materials consumption Tons 4931.32

Mineral oil waste and waste containing mineral oil Tons 995.34

Oil/water hydrocarbon/water mixture or emulsion Tons 552.63 Consumption of recycled packaging materials Tons 3748.77

Dye and paint waste Tons 2687.23 Recycling rate of packaging materials % 76.02

Surface treatment waste Tons 412.05 Total water consumption Tons 2443940

Waste containing chromium Tons 26.53 Water consumption reduction compared to 2023 Tons 414880

Waste containing lead Tons 73.87 Water consumption target for the next year Tons 3103991

Waste acid Tons 178.27 Comprehensive energy consumption per RMB 10000

value of output tce/ RMB 10000 0.01508

Other waste Tons 980.55

Electricity consumption 10 MWh 48461.9

Percentage of hazardous substances and waste

disposed under laws % 100 Steam consumption GJ 14907.19

Total wastewater discharge Tons 957892.56 Natural gas m3 22347600

Industrial wastewater discharge Tons 414992.76 Gasoline Tons 1687.57

Domestic wastewater discharge Tons 542899.80 Diesel Tons 7938.81

COD discharge Tons 61.08 Comprehensive energy consumption target per RMB

10000 value of output for the next year tce/RMB 10 000 0.01463

BOD discharge Tons 8.93

New energy consumption kWh 9028.44

Ammoniacal nitrogen Tons 4.16

Percentage of new energy consumption % 18.63

Total nitrogen Tons 12.41

Total phosphorus Tons 0.87

Suspended solids Tons 11.67113 XCMG Construction Machinery Co. Ltd.2024 Environmental Social and Governance (ESG) Report Appendix 114

Social

Indicator Unit 2024 value Indicator Unit 2024 value

Rate of product/service-related complaints % 0.21 Total training participation / 1550000

Rate of responses to product/service-related complaints % 100 Including: participation by senior managers / 180

Product recall rate due to ESG factors (such as safety and % 0 participation by middle managers / 150375environment)

participation by average employees / 1399445

Customer satisfaction % 95.32

Total employee assistance expense RMB 10000 204.9

Total employees / 27791

Employee and contractor deaths / 0

Male / 23548

Employees by gender Number of deaths and injuries / 0

Female / 4243

30 years old or below / 8314 Casualty rate % 0

Employees by age 30 - 50 years old / 17606 Lost work hours due to safety incidents Hours 17464

50 years old above / 1871 Percentage of severely injured employees % 0

Senior managers / 12 Percentage of mildly injured employees % 0.0739

Employees by level Middle managers / 2658 Percentage of injured contractors % 0

Average employees / 25121 Expense for work injury insurance RMB 10000 2781

Jiangsu Province / 15425 Percentage of employees covered by work injury insurance % 100

Employees by region Other regions in China / 7661 Incidence rate of occupational diseases % 0

Overseas / 4705 Campaigns to spot safety hazards / 3992

Domestic employees Ethnic minority / 4477 Correction rate of safety risks identified % 100

by ethnic group Ethnic majority / 18609

Total training sessions / 2489

Employee turnover % 3.09

Employment contract rate % 100 Total participations / 41589

Occupational Safety and

Percentage of employees with social insurances % 100 Health Training Percentage of employees

covered by training % 100

Internally promoted employees / 914

Percentage of contractors

Training expense RMB 10000 1939 covered by training % 100

Total training sessions / 20945

Volunteering activities Session 200+

Total training duration Hours 2380000115 XCMG Construction Machinery Co. Ltd.2024 Environmental Social and Governance (ESG) Report

Appendix II: Feedback Form

Respected readers:

Thank you for reading this report. We appreciate and look forward to your feedback. Your opinions and

suggestions are important for us to continuously improve corporate ESG information disclosures and promote

corporate ESG management and practices. Welcome to send us your valuable opinions and we sincerely

appreciate it!

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8. What are your opinions and suggestions for our ESG performance and this report