2024 Environmental Social and Governance ESG Report

HUAGONG TECH COMPANY LIMITED

20243

Notes on the Preparation of the Report

Scope of

the Report This is the third environmental social and governance (ESG) report publicly released

by HUAGONG TECH COMPANY LIMITED. (collectively referred to as “HGTECH”

“the Company” or “we” ) covering HGTECH and its major holding subsidiaries.Unless otherwise stated the scope is consistent with the scope of the consolidated

financial statements in the annual report of HUAGONG TECH COMPANY LIMITED.(stock code: 000988).Timeframe

This is an annual report and the report covers the period from January 1 2024

HUAGONG TECH COMPANY LIMITED to December 31 2024 and some of the text goes beyond this to increase the completeness of the report.ENVIRONMENTALSOCIAL AND GOVERNANCE REPORT

Basis ofPreparation This report has been prepared in accordance with “Shenzhen Stock ExchangeSelf-Regulatory Guidelines No.1 for Listed Companies–Corporate Governanceof Main Board Listed Companies” released by the Shenzhen Stock Exchangeand referenced “Shenzhen Stock Exchange Self-Regulatory Guidelines No.17 forListed Companies–Sustainability Report (Interim)” “Shenzhen Stock ExchangeSelf-Regulatory Guidelines No.3 for Listed Companies-Sustainability ReportPreparation” T/CERDS2-2022 “Corporate ESG Disclosure Guidelines” Global

Reporting Initiative Standard.Data

description The data and cases in this report come from the records or financial reports of

HUAGONG TECH COMPANY LIMITED. and its major holding subsidiaries in actual

operation.Contact Information

Office of the Board of Directors of

HUAGONG TECH COMPANY LIMITED

Tel: 027-87180126

Fax: 027-87180139

E-mail: 0988@hgtech.com.cn

You can get more information about HUAGONG TECH

COMPANY LIMITED. through the company’s official

website (https://www.hgtech.com.cn) and Juchao

Information Network (http://www.cninfo.com.cn).5

CONTENTS

ENVIRONMENTALSOCIAL AND GOVERNANCE REPORT

Chairman's Message 07

01 Innovation Environment Giving BackAbout Us Empowering H0undreds of Ind3ustries Cultivating Gre0en Developmen5t Momentum Practice Socia0l Responsibility7

Company Profile 09 “Innovation-Driven” Development Strategy 21 Environmental Management System 38 Technology Serves for Social Development 60

Corporate Culture Philosophy 12 HGTECH CENTRAL RESEARCH INSTITUTE 24 Response to Climate Change 39 Social Contributions 60

- source of innovation

Identification of Important Issues 12 Environmental Protection Investment 44

Products and Services Safety and Quality 25

Concise Overview of ESG Management 13 Waste Disposal 44

Data Security and Clients Privacy Protection 26

Rational Utilization of Resources 47

Intellectual Property Protection 28

Environmental Protection Initiatives at 49

Promoting Intelligent Transformation and 29 Overseas Bases

Digital Transformation

Governance Win-Win Guardianship Sustainable

Adherence to 0Compliance2 Hand in hand 0with partners to4 move forward Take Care of 0Employee and D6evelopment Developm0ent 8

Corporate Governance Structure 15 Supply chain security 31 Employee Rights & Benefits 51 Communications with Stakeholders 63

Internal Control and Risk Management 16 Empowering SMEs for High-quality 33 Employee Development & Training 53 Anti-Bribery and Anti-Corruption 65

Development

Information Disclosure and Standardized 17 Employee Promotion and Incentives 56 Anti-Unfair Competition 65

Operations Collaborative Development of Industry 33

Academia Research and Utilization Occupational Health and Safety 57

Compliance Construction 18

Protect Clients’ Rights and Interests 34

Investor Relationship Management 18 Key Performance Table 66

Shareholder Returns 19 Benchmarking Index Table 69

Feedback Form 70ENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 7

Chairman’s At present artificial intelligence is accelerating the Driving the responsibility to the ground by scientific and reshaping of all aspects of human work and life HUAGONG technological innovation. HUAGONG TECH COMPANYTECH COMPANY LIMITED adheres to the beautiful mission LIMITED adheres to the innovation concept of “technology-Message of “innovation fuels a better world” integrates ESG into driven with market guidance” vertically builds a two-tier the development of the enterprise and strives to create and four-tiered R&D structure between HGTECH CENTRAL

economic value while practicing the responsibility to the RESEARCH INSTITUTE and hold ing subsid iar ies

society the environment and the future. continuously optimizes and coordinates R&D resources of

the whole group and increases R&D investment by 23.73%

Sound governance is the cornerstone for enterprises in the whole year and actively explores AI+ new energy 6G

to go through the cycle. The Company has strengthened and other cutting-edge fields in the face of major industrial

the “Nine Rules of Military Justice” to build a clean demands and forward-looking technologies. In 2024 we won

and honest company; made efforts to build a full-cycle the second prize of the National Science and Technologycompliance management and strengthened the “Three Progress Award the first prize of the Machinery IndustryLines of Defense”; and continued to explore the synergistic Science and Technology Award and other honors. We know

operation of the multi-dimensional management mechanism that only by embracing science and technology can we win

of compliance internal control and law to ensure a scientific the long-term trust of our shareholders the market and the

and effective corporate governance structure. At present the society.Company has formed a three-tier ESG governance structureof “decision-making level management level and executive Guarding a green future: harmonizing technology andlevel” and the Company maintains regular communication the environment. Guided by the “dual carbon goals”

with stakeholders accurately identifies ESG core issues the Company prioritizes green technologies and intelligent

related to the Company and tracks performance in daily manufacturing continuously increasing investments in

management. In 2024 the Company was rated by the State- energy conservation and emissions reduction. We refine

owned Assets Supervision and Administration Commission production processes enhance efficiency in Three Wastes

of the State Council as a benchmark enterprise under the disposal and energy util ization and drive low-carbon

“Science Reform Action”. transformation across supply and industrial chains. In 2024

subsidiaries were recognized as National-Level Green

The vitality of corporate innovation originates from Factories and Provincial-Level Green Factories contributing

people and should be returned to them. We have always to the accelerated development of a green low-carbon and

HUAGONG TECH COMPANY LIMITED regarded our employees clients and communities as the circular economic system.key to sustainable development. We continue to improve our

Chairman Xinqiang Ma diversified and flexible training system help our employees Artif icial intel l igence is revolutionizing industries

grow professionally emphasize their physical and mental worldwide. HUAGONG TECH COMPANY LIMITED remains

health and work hard to create a fair and harmonious committed to our culture of open professional and efficient

working environment so as to let the value contributors collaborating with global partners to advance sustainable

stand in the center of the stage and to give them a greater development through continuous technological innovation.sense of fulfillment; through “industry + education” relying Together we strive to build a smarter more sustainable

on Hubei Engineers Association the company continues to world."

support rural education industrial development in old areas

and cultivate outstanding young engineers; the Company

adheres to the corporate philosophy of “client-centered”

and the satisfaction rate of major clients at home and abroad

has been increasing year by year so as to make science

and technology truly serve the needs.ENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 9

Company Profile

HUAGONG TECH COMPANY LIMITED (hereinafter referred to as "HGTECH" stock code: 000988)

was founded in 1999 in the heart of Optics Valley of China originated from the Huazhong University

of Science and Technology (HUST). Listed on the Shenzhen Stock Exchange in 2000 the Company

is a high-tech enterprise group integrating R&D production sales and services and was recognized

as a National Innovative Enterprise in 2015. Since its establishment the company has adhered to

“laser technology and its applications” as its core business focusing on in-depth exploration of new

technologies markets and fields. Anchored in the two major sectors of new energy vehicles and digital

empowerment it has maintained steady and progressive development momentum. HGTECH aims

01 to “participate in building a fully connected fully perceptible and fully intelligent world and becoming a globally influential technology leader” amid the new development paradigm where domestic and international cycles reinforce each other the company will leverage its strengths in innovation to foster more new technologies products and directions contributing to the strategy of building China into a manufacturing powerhouse.Business ScopeSmart Manufacturing Business

The company possesses domestically leading R&D and manufacturing technologies for laser equipment

as well as a full industrial chain advantage in the industrial laser sector. It is committed to providing

extensive and comprehensive laser-based intelligent manufacturing solutions for the industrial sector

About HGTECH delivering integrated “laser + smart manufacturing” solutions for industries such as 3C electronics automotive electronics and new energy PCB microelectronics semiconductor panels consumer goods

agricultural machinery and healthcare. With a comprehensive layout in laser intelligent equipment

automated production lines and smart factory construction the company stands as one of China’s

largest laser equipment manufacturers and a globally leading provider of “laser + smart manufacturing”

system solutions. It is also a National Key High-Tech Enterprise a participant in international standard-

setting and the lead organizer and contributor to national standard development.Connection Business Unit

The company has a leading one-stop vertical integration solution in the optical communication industry

with strategic research and development and large-scale production capabilities for a full range of

products from chips to devices modules and subsystems. The products include active optical devices

home terminals network terminals intelligent vehicle mounted optics etc. widely used in important

fields such as global wireless communication and AI computing power ranking eighth in the global

optical module manufacturer rankings. The company focuses on four major application scenarios: AIGC

5G/5G-A F5G-A Intelligent Connected Vehicle committed to building an intelligent optical network

HUAGONG TECH COMPANY LIMITED world serving the world’s top Internet service/data application providers (AI computing) NEM (network

equipment manufacturers) and telecom operators; The intelligent terminal business strives to build a

world-class enterprise that integrates personal and home intelligent communication terminals.

000988

STOCK CODE Sensing Business Unit

The company continues to solidify its global leadership in thermal management and multi-functional

sensor technologies for new energy vehicles. With proprietary core technologies in the manufacturing

and packaging processes of sensitive ceramic chips for sensors it drives intelligent upgrades across the

entire new energy industrial chain. The company provides world-leading multi-dimensional sensing and

control solutions for sectors including new energy and smart connected vehicles photovoltaic energy

storage smart homes smart grids and smart cities.11

ENVIRONMENTALSOCIAL AND GOVERNANCE REPORT Six Industrial Bases

Wuhan Optical Valley Headquarters

Ezhou Intelligent Manufacturing Equipment Industrial Park

HGTECH Xiaogan Electronics Industrial Park

HGTECH Intelligent Manufacturing Industrial Park

Hungary HGTECH Jingmen Industrial Park

HGTECH Optoelectronics Research & Innovation Park 60

Germany

Overseas Cooperation in Research and Development Industrial Base Offices

North America North China

Overseas R&D Marketing Center

Central China 60

East China

South China Sales & Service Centers

Industrial Base 1

Industrial Base 2 Industrial Base

Thailand 11

Vietnam

Overseas Subsidiaries

10

Australia

Overseas Offices

Overseas R&D Marketing Center

Corporate Honors & Awards 2024

National Science and Technology Progress Award 2024 “Strong Industrial Chain Brand”

Second Prize; in Shipbuilding;

benchmark enterprise under the “Science Reform Action”; Hubei Provincial Science and Technology Progress

Award Second Prize;

National Manufacturing Single Champion;

Regional Distribution 2024 Hubei Top 100 Enterprises;

Machinery Industry Science and Technology Award First Prize;

2024 Hubei Top 100 Manufacturing Enterprises;

The headquarter of HGTECH is located in Wuhan East Lake High-tech Development Zone and the Disclosed Information Quality: Nine Consecutive Years of

“Grade A”Excellence (by Shenzhen Stock Exchange); 2024 Wuhan Top 100 Enterprises;

company has set up namely Wuhan Optical Valley Headquarters Ezhou Intelligent Manufacturing

Equipment Industrial Park HGTECH Xiaogan Electronics Industrial Park HGTECH Intelligent CCTV’s“Specialized Sophisticated Innovative” 2024 Wuhan Top 100 Manufacturing Enterprises;

Manufacturing Industrial Park HGTECH Jingmen Industrial Park and HGTECH Optoelectronics Annual Best Practices Award; Outstanding Case for New Quality Productivity

Research & Innovation Park and more than 60 offices in the four major regions of Central China South Tianma Award for Investor Relations of Listed in Hubei Listed Companies;

China East China and North China and more than 60 sales and service centers forming a global Companies in China; “Industry-Education Integration Contribution Award”

marketing network layout with 11 overseas subsidiaries and 10 overseas offices. from China Optics Valley.National Green Factory (HGLaser);ENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 13

Corporate Culture Philosophy

Cultural Spirituality 01. Innovation-Driven 11. Waste Disposal

Mission & Vision and Core Values 02. Product and Service Safety and Quality 12. Energy Utilization

03. Supply Chain Security 13. Water Utilization

Innovation fuels a better world Open Professional Efficient 04. Employees 14. Circular Economy

Participate in building a fully connected Group Struggle Exceeding Expectations 05. Data Security and Customer Privacy Protection 15. Communications with Stakeholders

fully perceptible and fully intelligent world

06. Empowering SMEs for High-quality Development 16. Anti-Bribery and Anti-Corruption

Achieve value share success

Become a technology company

07. Rural Revitalization 17. Anti-Unfair Competition

with global presence

08. Social Contribution 18. Pollutant Discharge

09. Environmental Compliance Management 19. Intellectual Property Protection

10. Responding to Climate Change 20. Compliant Management

Identification of Important Issues

Identify important issues Concise Overview of ESG Management

0401

analysis and 19 05

09 20 15 While delivering cutting-edge innovative products and services the Company actively complies with summary of issues 10 02

03 regulatory requirements from the State-owned Assets Supervision and Administration Commission and

08 06 the Shenzhen Stock Exchange. Upholding the principles of ESG management we continuously refine

11 14 and optimize ESG mechanisms advance regularized ESG governance and integrate ESG practices

07

13 deeply into daily production and operations to drive high-quality development. In 2024 HGTECH

12

further enhanced its ESG governance framework with the goal of building ESG competitiveness aligned

communications with 18stakeholders 17 with corporate distinctiveness. A three-tier ESG governance structure “Decision-Making Layer–

16Management Layer–Execution Layer” was established to clarify responsibilities at each level. Board of

Directors: Oversees strategic ESG decision-making and supervision; Legal & Compliance Department:

Coordinates ESG implementation under board guidance Business Units & Subsidiaries: Execute

specific ESG works transforming commitments into measurable actions.identify core issues in

the context of the

company’s actual

situation industry

characteristics and

policy backgrounds

Most important

Financial significance

Most important

Impact significanceENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 15

Corporate Governance Structure

The Company strictly complies with the Company Law of the People’s Republic of China the Corporate Governance

Guidelines for Listed Companies and the Listing Rules of the Shenzhen Stock Exchange along with other applicable laws

regulations and regulatory requirements. We have established a modern corporate governance structure comprising four

key bodies—the Shareholders’ Meeting Board of Directors Supervisory Board and Executive Management—ensuring a

well-defined standardized and efficient governance mechanism. The Board of Directors has established four specialized

committees: Strategy Committee Nomination Committee Compensation and Performance Committee Audit Committee.Each committee operates with clearly defined responsibilities functioning independently while ensuring the fairness

transparency and scientific rigor of corporate governance decisions.HGTECH Governance Structure Organizational Chart

Adherence to

Compliance Shareholders’ Meeting Strategy Committee

Nomination Committee

Board of Directors

Compensation

and Performance Committee

Sound governance and compliance form the fundamental guarantee for

sustainable corporate development. HGTECH continuously enhances its

corporate governance framework improves the compliance management Audit Committee

system standardizes internal controls and institutional mechanisms

Supervisory Board

actively maintains strong investor relations and ensures robust and steady

corporate growth.Executive Management

The Shareholders’ Meeting Board of Directors and

Supervisory Board are responsible for deliberating

major corporate development matters. In 2024 the Shareholders’ Meeting

02 Company successfully completed the transition of its Board and Supervisory Board. The meeting activities Held 4 times，deliberated 22 proposalswere as followsSupervisory Board Board of DirectorsHeld 7 times，deliberated 13 proposals Held 12 times，deliberated 43 proposalsENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 17

Composition and Key Responsibilities of Governance Bodies covering: environmental controls operational controls IT system controls internal audit mechanisms. Through continuous

implementation analysis and optimization of this system the Company has: effectively mitigated operational risks achieved

all internal control objectives.In 2024 the company engaged Daxin Certified Public Accountants (Special General Partnership) as its internal control audit

institution to evaluate the effectiveness of internal controls across all functional departments at headquarters and subsidiaries.The supreme authority of the Company deciding on corporate business policies The audit scope covered 95.32% of the company’s total consolidated assets and 99.26% of total consolidated operating

Shareholders’ and investment plans in accordance with laws electing and replacing Directors and revenue with no material deficiencies identified in internal control design or implementation during the year.Meeting Supervisors not represented by employees reviewing and approving reports from the The company publishes its annual Internal Control Self-Assessment Report concurrently with its annual report on the

Board of Directors and Supervisory Board. Shenzhen Stock Exchange website. Beyond external and internal audits the company has established a comprehensive

risk governance framework where the Strategic and Risk Management Committee conducts feasibility studies and provides

risk recommendations for major business strategies investments financing plans capital operations and asset management

projects. Additionally independent directors and the employee-represented Supervisory Board provide multi-level oversight

of the company’s operational decisions and management activities ensuring robust risk management and corporate

9 Directors (including 3 Independent Directors) serving as the company’s decision- governance throughout the organization.

making body conducting fair and science-based appointments following Nomination Board of

Committee procedures convening Shareholders’ Meetings and implementing their Directors

resolutions overseeing corporate disclosure matters.Information Disclosure

5 Supervisors (including 2 employee-elected Supervisors and 3 female Supervisors)

acting in the interests of all shareholders; exercising statutory powers to supervise and Standardized Operations

Supervisory performance of the Board and senior management financial affairs internal controls

Board risk management and disclosures; safeguarding the lawful rights of the company

shareholders employees and stakeholders.The company places great emphasis on information disclosure and communication with

shareholders and creditors strictly complying with the Company Law of the People’s

Republic of China the Securities Law of the People’s Republic of China and the

Information Disclosure Management Measures for Listed Companies among other laws

and regulations. We actively disseminate information to investors through various channels

including meetings publications and online platforms such as annual general meetings

regularly published annual reports semi-annual reports and quarterly reports as well

as interim announcements prospectuses and press releases. All company information

is available through the Shenzhen Stock Exchange website China Securities Journal

Shanghai Securities News Securities Times Securities Daily and the Juchao Information

Network (http://www.cninfo.com.cn). The company discloses periodic reports and interim

announcements in accordance with requirements ensuring the content is truthful accurate

and complete without material errors and has never encountered any questioning from

regulatory authorities or media regarding our disclosures.In 2024 the company released 100 announcements and disclosure documents organized

4 large-scale on-site investor communication events participated in over 300 various

Internal Control & Risk Management exchange activities and engaged with more than 2000 investors cumulatively. The

company was awarded the highest “A” rating in the 2023-2024 Information Disclosure

Assessment of Shenzhen Stock Exchange-listed companies marking the ninth consecutive

year of receiving this honor which demonstrates recognition from regulatory authorities and

widespread investor approval while setting an exemplary standard in the market. During theThe Company places high importance on internal control systems and risk management. During the reporting period in year the company was honored with several prestigious awards including the “Best Boardaccordance with the Basic Standards for Enterprise Internal Control and related guidelines we proactively updated and of Directors Award” from the China Association for Public Companies’ Tianma Awards

refined our internal control framework. We have established a scientifically designed efficient and operationally effective the “Best Value Communication Award” and “Best Value Communication IR Team of theinternal control system that integrates risk management processes across all business operations a dual-layer monitoring Year” from Jiemin Finance as well as the “Outstanding IR Team for Investor Relationsstructure comprising the audit committee and internal audit department supervises and evaluates internal controls among Listed Companies” from Panorama Network.ENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 19

During the reporting period the company maintained frequent and in-depth communication with institutional investors through

Compliance Construction both online and offline channels to keep them updated on corporate developments. We sustained close engagement with

regulatory bodies and financial media while significantly enhancing interactions with retail investors. This included active

participation in the Shenzhen Stock Exchange’s “Visiting Listed Companies” program hosting earnings briefings

accessible to all investors and establishing a dedicated investor hotline to facilitate more direct and effective dialogue. These

comprehensive efforts have enabled investors to develop objective thorough and nuanced understanding of the company

The company continuously improves the four-level compliance organizational

fostering long-term stable relationships built on transparent communication.structure coordinates and integrates the resources of the group headquarters

subsidiaries and external lawyers and promotes the continuous improvement of

the compliance management system.The company consistently advances its reform initiatives including the “ScienceReform Action” within a legal governance framework adhering to the principles Shareholder Returnsof “risk orientation serving the bigger picture comprehensive coverage andfocusing on key areas” to strengthen legal review processes. We have enhanced

contract management systems to establish full lifecycle oversight and issued critical

compliance manuals such as the Guidelines for Preventing Job-Related CrimesTen Compliance Rules for Managers Legal Compliance Risk Alerts for Technology The company actively implements the CSRC’s key requirements of “strengthening investor-oriented corporate culture andEnterprises and Common Overseas Compliance Risks Chinese Enterprises enhancing the investment value of listed companies.” Adhering to the principle of creating sustained value for shareholders

Should Know. Targeting key personnel critical processes and high-risk scenarios while maintaining corporate sustainability we have continuously improved our scientific consistent and stable dividend

we conducted six compliance audits covering contracts litigation cases and trade decision-making and oversight mechanisms. In strict compliance with the profit distribution policies and approval proceduressecrets ensuring timely corrective actions. Through innovative “Business-Legal stipulated in the Company’s Articles of Association we ensure full protection of minority investors’ legitimate rights andWorkshops” we aligned legal and operational priorities while 15 training sessions interests rewarding their trust and expectations. Since listing the company has maintained consecutive years of dividend

directly empowered over 2000 employees. By collaborating with 30+ domestic distributions with cumulative cash dividends reaching approximately RMB 1.087 billion. The gradually increasing payout

and international law firms and updating standardized contract templates for sales ratio demonstrates our commitment to delivering positive returns to investors and underscores the company’s long-term

procurement infrastructure and technology cooperation we are building a robust investment value.compliance ecosystem.In line with our commitment to sustainable growth and rewarding investor confidence HGTECH’s 2024 profit distribution plan

was approved at the Ninth Session of the Ninth Board of Directors after comprehensive evaluation of the company’s financial

performance operational requirements and shareholder return considerations. The proposed allocation will distribute a cash

dividend of RMB 2.00 per 10 shares (tax-inclusive) based on the year-end total share capital of 1005502707 shares with no

Investor Relationship Management stock dividends or capital reserve conversions. The total cash payout amounts to RMB 201100541.40 while retaining RMB

252621205.34 in undistributed profits for the subsequent fiscal year with implementation contingent upon formal ratification at

the upcoming annual shareholders’ meeting.The cash dividend distribution situation of the company’s

common shares in the recent three years

Investor

Communication

Channels

handling on providing responses participating in

investor hotline on the interactive Q&A platform investor exchange meetings

600+ 265 responses 300+

calls

reply rate 100%

In 2024 amid a complex and volatile market environment where capital markets experienced significant fluctuations due

to multiple factors investor anxiety mounted and market sentiment remained subdued. Recognizing these challenges the

company’s Board of Directors placed paramount importance on investor relations management directing the organization

to promptly address market concerns with accurate and comprehensive responses. Through proactive communication of the

company’s long-term value proposition and strategic development roadmap we effectively stabilized market sentiment andreinforced investor confidence during this period of uncertainty.ENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 03 21In 2024 the net profit attributable to the parent company 21% of the company increased by 21.17% the R&D investment increased by 23.73% and the overseas sales revenue increased by 25.57%. We have won five national honors and established one new joint innovation platform and have been included in the “Excellent Practice Cases of ListedCompanies with New Productive Forces in Hubei”.

23%25%

“Innovation-Driven” Development Strategy

HGTECH adheres to taking Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as its guidance and

Empowering always keeps in mind the instructions put forward by General Secretary Xi when he inspected HGTECH which are “For scientific and technological innovation first it depends on investment and second it depends on talents.” The company

adheres to the development strategy of “innovation-driven” closely focuses on achieving high-level self-reliance and

strength in science and technology and persists in developing high-end manufacturing and service-oriented manufacturing.hundreds of It has overcome a number of core technologies such as pressure sensors high-speed optical chips and silicon optical chips and the localization rate of ultrafast lasers such as picosecond and femtosecond lasers has significantly increased. In 2024

the company won more than 20 awards including the Second Prize of the National Science and Technology Progress Awardthe First Prize of the Machinery Industry Science and Technology Award and the “Innovation Award for Laser Industrialindustries Equipment” of the Seventh Hongguang Award etc. which have helped China’s energy optoelectronics and information optoelectronics industries move forward.H G T E C H a d h e r e s t o i n d e p e n d e n t r e s e a r c h a n ddevelopment aims at the goal of “global first - launchindustry - leading and specialized refined characteristicand innovative” and focuses on independent innovation The Second Innovation Day of HGTECH

and industrial chain collaborative innovation to achieve the -“New Quality Cup” Selection Activity of Specialized Refined

upward and innovative development of the enterprise. Characteristic and Innovative R&D Achievements

On June 28 2024 we held the Second Innovation Day of HGTECH - the “New Quality Cup” Selection

Activity of Specialized Refined Characteristic and Innovative R&D Achievements. At the event site

the achievements of the HGTECH CENTRAL RESEARCH INSTITUTE of HGTECH since its physical

operation for one and a half years were centrally displayed and awards were presented to the winning

projects of the selection of specialized refined characteristic and innovative R&D achievements. Among

them the New Energy High-voltage WPTC Heater Project of HGGaoli won the first prize the 3C

Composite Laser Precision Welding Series Equipment of HGLaser Precision Business Group won the

second prize and the Huagong Zhulong - Steel Structure Digital Intelligent Manufacturing Platform of

HGCyber won the third prize.ENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 23

Innovation Excellence - 2024 Highlights

In 2024 HGTECH (including its wholly-owned subsidiaries) was honored with

2024 “Strong Industrial Chain Brand” (Shipbuilding Industry)

Top 10 Most Competitive Optical Device & Auxiliary Equipment Enterprises (China)

“Laser Industrial Equipment Innovation Award”- 7th Red Light Awards (2024)

MM AWARD 2024 for Innovative Products

“Most Competitive Optical Communication Product”-10th ICC Stone Product Heroes List

“2024 Innovation Product Award” & “2024 Most Influential Product Award”- 9th CFCF Optical Connectivity Conference

“Technological Innovation Award”- 9th Packaging Printing & Labeling Competition

“Top 10 Innovation Award”- Hubei 6th “Workers’ Cup” Entrepreneurship & Innovation Competition

Adhere to Organized Innovation

Vertically a R&D structure with two levels and four gradients of the Central Research Institute and core enterprises has

been established to coordinate the R&D resources of the entire group. At the group level the superior resources from both

upstream and downstream of the industrial chain are integrated to promote the construction of the Central Research Institute.Focusing on national needs and industry development trends research and development projects are launched mainly

targeting “forward-looking technologies bottleneck technologies monopolized products common technical problems etc.”.Products and technologies for the next 3 to 5 years are laid out. The technology centers of each subsidiary iterate specialized

refined characteristic and innovative products improve processes and launch research and development projects for items

that can be quickly implemented according to customer order requirements and have high gross profit margins. At the same

time they undertake the relevant work of engineering and industrialization of the R&D achievements of the Central Research

Institute.Strategic Development of Innovation Talent

National Science and Technology Progress Award (Second Prize) Technological innovation relies on two key drivers: investment and talent. HGTECH has intensified efforts to enhance both theFirst Prize in Mechanical Industry Science and Technology Award quality of talent acquisition and cultivation with a sharp focus on high-caliber expertise. Building upon its established“ three-tierNational Manufacturing “Single Champion” Enterprise training” system the company has partnered with six universities to jointly develop master’s/Ph.D. engineering candidates

and cultivate exceptional engineers. Concurrently HGTECH resolutely implements its “500 PhDs Initiative.” To date the

National Green Factory Certification

Company has built a technical talent pool exceeding 2400 professionals serving as an intellectual powerhouse for both

Hubei Provincial Green Factory Certification corporate sustainable development and advancements in the optoelectronics industry.“Specialized & Innovative · Annual Breakthrough” Recognition

Top 10 Technological Innovation Products of 2024

2023 Outstanding Smart Manufacturing Application Award (China)

“AAA-Rated” Intelligent Manufacturing System Solution Provider Building Industrial and Innovation Ecosystems

AAA Credit Enterprise (China Electronic Components Association)

Leveraging its investment platform the company integrates high-potential players across the industrial chain to accelerate

“Technological Innovation Award”-National “Data Factor ×” Finals (Industrial Manufacturing Track) the commercialization and demonstration of technological achievements. Through equity investments deployment of

2023 Smart Manufacturing System Solution “Challenge & Tender” Project top management talent and collaborative breakthroughs in core technologies it has nurtured innovative enterprises like

“Hubei Premium Quality” Certification Huaray Laser Everbright Photonics and Yunling Optoelectronics – all mastering critical proprietary technologies. Strategic

partnerships with over 30 upstream/downstream partners have co-developed 100+ localized laser equipment solutions

Outstanding Case of New Quality Productivity Among Hubei Listed Companies

for new energy semiconductors and next-gen display panels. These efforts significantly enhance the completeness and

First Prize – 1st Central China High-Value Patent Competition competitiveness of energy optoelectronics and information optoelectronics supply chains establishing a product evolution

Third Prize - 1st Intelligent Manufacturing Solution Innovation Competition cycle of “R&D → Application → Optimization → Maturation.”ENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 25

HGTECH CENTRAL RESEARCH INSTITUTE: Products and Services Safety and Quality

source of innovation

HGTECH focuses on strengthening technological innovation and product innovation as the logical In 2024 HGTECH comprehensively promoted the “grand quality concept” covering

starting point for high-quality development. It continuously increases R&D investment and optimizes the three major dimensions: product quality service quality and business operation

innovation system. At the group level a Central Research Institute has been established to plan and quality. Key indicators were established in terms of quality management and lean

deploy strategic and forward-looking innovation achievements from the top level. As a result a team management and the management granularity was refined to expand the profit

dedicated to independent innovation has been formed. With the mission of undertaking major national margin. Specific measures include: improving the quality function of the headquarters

strategic goals it promotes the self-reliance and self-improvement of optoelectronic technology. establishing a quality professional qualification evaluation system distilling the

16-character group quality policy (accurate demand scientific planning prevention

Taking the construction of the Central Research Institute as the starting point HGTECH focuses first do it right the first time) through intensive training in the senior management

on creating a cradle of innovation a gathering place for high-end talents and a platform for the training workshop learning the management concept of "zero defects" reflecting on

concentration of innovative resources for itself. It continuously strengthens the construction of the the quality loss of PONC (Price of Non-Conformance) carrying out the cultivation

technological innovation system aims at the commanding heights of future technological and industrial of the first batch of lean black belt talents and for the first time introducing the value

development and in line with the new trends in industry development has achieved phased results in stream methodology to sort out key projects in the entire value chain and binding them

a number of core technical fields such as semiconductor (SiC) wafer processing and detection the with talent at different belt levels. Through the above measures a quality awareness

manufacturing of complex shaped holes in key components of aero-engines silicon photonics chips shared by all employees has been initially formed the product market indicators have

and optical modules green ships visual sorting of intelligent cutting and blanking production lines been significantly improved and the brand value of the company has become more

in the construction machinery industry and the PTC controller of the thermal management system prominent.for new energy vehicles. It has also made a comprehensive layout in terms of intellectual property

rights achievement awards and the cultivation of technology-based enterprises. Throughout the The company has always adhered to the value of “customer-centricity” and

year it applied for 421 patents among which 192 were invention patents and applied for 113 software implemented it in specific work. Focusing on customers’ concerns the company

copyrights. ensures the consistency of mass-produced products and makes sure that product

quality meets customers’ requirements and complies with relevant standards. The

company has earnestly implemented and passed the requirements of domestic and

international quality management system standards such as ISO 9001 ISO 14001

TL9000 (for the telecommunications industry) and IATF 16949 (for the automotive

industry). It also owns two categories of national CNAS-certified testing laboratories.Based on the production standards of different industries and international leading

quality management concepts the company has formulated and implemented relevant

quality management regulations such as the “Quality Management Manual”

the “Process for Handling Nonconforming Products” and the “Measures forQuality Reward and Punishment Management”. A quality management system

has been established covering the entire process of products from design raw

material procurement production and delivery to after-sales service. Meanwhile

through measures such as production skill training proposals for improving quality

and efficiency OCC (Operation Control Center) quality improvement activities

and performance evaluation of suppliers’ quality the company comprehensively

enhances the quality of products services and business operations. The company

has also won the Wuhan Mayor’s Quality Award and a series of excellent supplier

awards further demonstrating its outstanding achievements in quality management.ENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 27

Data Security and Clients Privacy Protection

Information Security Management Measures

In the digital era information security has become one of the core elements of enterprise operation

which is directly related to the enterprise’s reputation customer trust and business continuity.HGTECH has been continuously carrying out and improving its information security work.In order to ensure the comprehensiveness and effectiveness of customer data security the company

has established a multi-level and all-round information security architecture.System Security

System Security Deploy unified anti-virus software issue strategies from the background to strengthen the operating system and ensure

system-level security.Manage and control system resources Strengthen password management strategies.Physical Security operational activities and users of the Regularly conduct vulnerability scanning and patch updates for the system and promptly fix known security vulnerabilities.system which serves as the foundation of

Protect the physical facilities equipment

information system security.or areas of the information system from

unauthorized access and misuse.Data Security

Information

Security Database Security Use an all-in-one backup device for data backup integrating backup storage and recovery functions to protect data security quickly restore services and ensure business continuity.Network Security Architecture Ensure the confidentiality integrity Deploy cloud desktops to centrally manage and control R&D data enhance data security support remote collaboration flexibly

expand resources and reduce operation and maintenance costs.consistency and availability of the information

Ensure that the hardware and software of the Use encryption software to encrypt R&D data in real time to ensure data confidentiality integrity and availability.in the database.network system as well as the data within

the system are not subject to accidental or

malicious changes damage or leakage.Guarantee the continuous reliable and normal Management Security

operation of the system and the uninterrupted Terminal Security

network services.Protect the security of computer terminals Improve information security management systems and processes. Through regular security audits risk assessments and

as the infrastructure for information storage other activities ensure the effective implementation and continuous improvement of information security measures.transmission and application processing. Implement strict access control strategies to ensure that only authorized users can access sensitive information.Regularly review the account permissions of application systems and promptly clean up unnecessary permission settings.Information Security Management Measures Employee Awareness of Security

Regularly conduct information security training for employees to improve their security awareness and prevention capabilities.Educate employees to identify common network attack methods such as phishing emails and malware and learn how to prevent them.Network Security

Construct the network according to the third-level security protection requirements achieving high-level security standards in the

five aspects of physical environment network host application and data ensuring data integrity confidentiality and business Client Information Security

continuity. Build a multi-layered protection system through technical and management means.Deploy firewalls web application firewalls (WAF) threat detection and prevention systems to avoid external network attacks.Data Encryption: Encrypt customer information during storage and transmission to prevent the illegal acquisition or tampering of

Deploy Internet behavior management systems to regulate users’ Internet behavior improve network security protect corporate information during the storage and transmission processes.information security and enhance employees’ work efficiency simultaneously.Access Control: Implement strict access control strategies to ensure that only authorized personnel can access customer information.Deploy bastion hosts to achieve access control auditing and monitoring preventing illegal access and operations. At the same time regularly review and update access permissions.Deploy virtual private networks (VPNs) to enhance network security and privacy encrypt data transmission and ensure the security Security Audit: Regularly conduct security audits of the use of customer information to ensure that the use of customer information

of remote access. complies with laws regulations and company policies.Deploy access control systems to ensure compliant access and prevent security risks.ENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 29

Intellectual Property Protection

Promote Intelligent Transformation and

As a listed company and an innovative enterprise HGTECH integrates the work of Digital Transformation

intellectual property rights protection into the whole process of enterprise managementas an important part of the company’s development. It has formulated the “HGTECHIntellectual Property Rights Management Measures” and its implementation rules

and effectively implements laws and regulations such as the “Patent Law” and

the “Trademark Law”. In combination with the actual development situation of Relying on the ties of industry-university-research-application guided by the

the enterprise it continuously improves and perfects the intellectual property rights “national strategic needs and industrial development needs” HGTECH has

management mechanism. The company strengthens the R&D management developed nearly a hundred sets of domestic laser equipment for industries such

throughout the entire life cycle promotes the improvement of the quality of intellectual as new energy semiconductors new-generation display panels ships and

property rights and scientific and technological achievements and comprehensively bridges and aerospace. It has “upgraded the intelligence level” for industrialincorporates intellectual property rights management into the whole process of development from three aspects: “equipment intelligence production lineimplementing major special projects and key products. It forms an overall protection automation and factory intelligence”. Adhering to the creation of “world debutsystem for intellectual property rights covering various forms such as patents technical industry-leading specialized refined characteristic and innovative products”

secrets and software copyrights and establishes a working mechanism for patent risk the company builds its foundation with precision pursues strength with

early warning and response. For the key products of core holding companies a variety Weichai Lovol: Project of uniqueness and empowers itself with innovation. It plays a role in strengthening Intelligent Warehouse and

of methods such as trademarks patents and standards are used for comprehensive supplementing and stabilizing the industrial chain and solves the “bottleneck” Automatic Distribution for High-

standardized and all-round protection weaving an intellectual property rights problems. Horsepower Tractors

protection network for specialized refined characteristic and innovative products. The

company strengthens the construction of the intellectual property rights management Up to now the customers of HGTECH’s intelligent manufacturing business

team and regularly organizes training the content of which involves trade secrets have covered key industries of the national economy such as ships energy

trademark use copyright etc. comprehensively improving the capabilities of creating equipment construction machinery steel structures and new energy materials.applying protecting and managing intellectual property rights. At the same time legal It has provided intelligent manufacturing-related services including top-level

means are used to carry out rights protection activities to avoid the risk of technology design planning production line planning and implementation general integration

leakage caused by product counterfeiting incidents and the loss of technical personnel of warehousing and logistics and digital products for more than 700 enterprises

and effectively safeguard the legitimate rights and interests of the company. and has won a number of national-level honors including 9 intelligent factories

with a value of over 100 million yuan. It has helped many intelligent factories

While strictly protecting its own intellectual property rights the company also exercises such as Jining Energy Xineng Shipbuilding Zoomlion Heavy Industry Co. Ltd. Zijin Lithium Yuan : Project

strict self-management to ensure that it does not infringe upon the intellectual property Taiyuan Heavy Industry Co. Ltd. Weichai Lovol Heavy Industry Co. Ltd. and of the Automated Stereoscopic

rights of others. During the research development and technological transformation of Shunte Electric Co. Ltd. to achieve digital and intelligent transformation and Warehouse

new technologies new processes and new products the company makes full use of upgrading.intellectual property documents to formulate correct research directions and technical

routes raises the starting point of research and development and avoids duplicate

development or intellectual property infringement disputes.In 2024 centering on market and customer needs by guiding the research

development and innovation of key new products and new technologies the company

applied for a total of 421 patents throughout the year among which 192 were invention

patents. It also applied for 113 software copyrights and released 5 national standards

and 10 industry standards for which it took the lead or participated in the formulation

and revision.HGTECH has 13 national-level talent and intelligence platforms including a national-

recognized enterprise technology center a national-level industrial design center a

national CNAS laboratory and a post-doctoral research workstation. The company

has been successively recognized as a national innovative enterprise and a national

high-tech enterprise and has successively won honorary titles such as a national- Taiyuan Heavy Industry：The First Intelligent Cutting Shunte Electric: Digital Production Line Project of the

level “Specialized Refined Characteristic and Innovative Little Giant” enterprise and Distribution Center in the Heavy Industry Sector in Smart Factory for Transformers

China

a “Single Champion in Manufacturing” awarded by the Ministry of Industry and

Information Technology and a national intellectual property demonstration enterprise.ENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 31

Supply Chain Security

Regarding supply chain management in order to standardize the bidding activities in the supply chain and promote the refinedmanagement of procurement the company has formulated the “Measures for the Management of Supply Chain Bidding ofHGTECH”. A procurement committee has been established at the group level and the construction of the group-level supply

chain management system of HGTECH has been launched and continuously promoted. It supervises the implementation

of the supply chain management system and major special projects. The procurement departments of each subsidiary areresponsible for the qualification examination and daily management of suppliers to ensure that the procurement work is “openfair and just”.In terms of supply chain management capabilities the company is committed to promoting the high-quality development

Hand in hand with of the supply chain ecosystem. Through the strategy of “controlling resources upstream and channels downstream” it continuously optimizes and improves the supplier admission and evaluation system and builds a stable efficient and

sustainable supply chain management system. This ensures that the introduced suppliers meet high standards and strict

requirements prevents supply chain risks lays a solid foundation for the high-quality development of the supply chain

partners to ecosystem and provides strong support for the long-term development of the company.Supplier Controlling supplier admission is an important way to ensure the quality of goods ormove forward services from the source. The company strengthens the management of supplier Admission performance evaluation by strictly implementing the “Measures for the Managementof Supplier Development and Evaluation” and seeks for excellent supplier partners

to establish long-term and stable cooperative relationships with them. The company

adopts unified standards for the development selection evaluation and management

of suppliers to ensure that suppliers enjoy equal rights to know choose and participate.It scores suppliers according to the procurement amount importance delivery

efficiency and quality and conducts hierarchical management.The company has always adhered to the business principle of integrity as the foundation. It attaches The list of supplier admission qualifications includes

great importance to the collaborative relationships with suppliers and customers fully respects and

protects the legitimate rights and interests of suppliers and customers. Guided by the principles of

Basic Business license / credit certificate /

integrity fairness and justice it jointly creates a good cooperative ecosystem and atmosphere

Qualifications authorized agency license

constantly pursues the goal of mutual benefit and win-win results and achieves mutual benefit and

win-win outcomes.Product quality certification report /

Professional industry admission certificate

Qualifications (such as special equipment qualification) /

quality management system certificate

04 Social responsibility compliance certificate / Additional environmental management system certification / Verifications etcProcurement In order to further standardize the company’s procurement behavior ensure the quality and efficiency of the company’s material procurement and reduce Process procurement costs each subsidiary has formulated the “Procurement Management Measures” in combination with its own actual situation. The procurement process implements three-level business management covering requirements procurement

and warehousing.ENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 33

Collect procurement requirement information and formulate a demand plan; Empowering SMEs for High-Quality Development

Requirements Communicate with the procurement management department about the model selection; Fill in the “Procurement Application Form” and submit the

demand application.In 2024 the company organized over 20 management coaching sessions for selected upstream enterprises through initiatives

The procurement management department is responsible for the such as Monthly Quality Campaigns Quarterly Quality Initiatives and on-site audits. These efforts solved quality problems

standardized management of material coding; and secured an annual customer satisfaction rating above 95 points.Procurement Source suppliers conduct bidding set prices carry out small-batch trials and mass procurement;

Provide risk warnings;

Conduct performance evaluations of suppliers.Accept and store the purchased materials in accordance with the“ IncomingWarehousing Inspection Control Procedure” and conduct warehousing management; Collaborative development of industry

Give warnings for inventory and idle materials.academia research and utilization

A Supplier － Excellent B － Good The company has always been committed to the in-depth integrated development of industry university and research.Assessment Focusing on strategic innovation projects and the research and development of core technologies it actively builds cooperation

≥ 96 points 90 ≤ 96 points bridges with universities scientific research institutions and industry customers by means of establishing joint laboratories

making equity investments dispatching excellent management personnel and jointly breaking through key core technologies.The company has formulated the “MeasuresGive priority to placing orders Maintain normal procurement. It efficiently integrates and makes full use of social resources promotes the transformation of scientific and technological for the Management of Supplier Performance

w i t h s u c h s u p p l i e r s a n d The Quality Department shall achievements into practical applications and contributes to the overall progress and innovation of the industry.Assessment”. Through measures such as

increase the order quantity; through data analysis support the

Relax inspection or sampling suppliers to continuously improve. inspections performance evaluations and In 2024 HGTECH jointly established the Semiconductor Laser Equipment Industry Innovation Joint Laboratory with

inspection. capability assessments it conducts objective Huazhong University of Science and Technology Optics Valley Laboratory Jiufengshan Laboratory Huaray Laser and

and comprehensive evaluations of suppliers Changfei Advanced Semiconductor to promote the in - depth integration of industry university research and application

from multiple dimensions including supplier and accelerate the transformation and application of scientific and technological achievements in the field of semiconductor

scale product quality order delivery time laser equipment. The company also signed strategic cooperation agreements with 21 units including Wuhan University of

C － Qualified D － Unqualified after-sales service etc. Four supplier grades Technology Optics Valley Laboratory Jiufengshan Laboratory Hikvision and Inovance Technology to focus on industrial

namely A B C and D are formed to achieve directions and promote technological and industrial upgrades.

80 ≤ 90 points ≤ 80 points the survival of the fittest among partners and

suppliers. A list of the company’s excellent In the aspect of industry exchanges the company regularly visits suppliers and major customers and actively participates in

core partners and suppliers is established to various industry exhibitions and forums. Through in - depth exchanges and sharing it keeps up with the industry development

Reduce the procurement share. Issue a notice to stop supply and create a sound ecological environment for the trend grasps the frontier technical dynamics and looks for potential cooperation opportunities providing valuable industry

According to the assessment require improvement within one

results issue rectification warnings company. insights and technical support for the company’s development.month. If there is no improvement

to the supp l iers and requ i re af ter the re-evaluat ion the

comprehensive rectification. If supplier will be directly eliminated.there is no improvement the

supplier will be downgraded to

level D.Improve Supply Improve the supplier admission and evaluation system strictly control the situation

where technical personnel of product lines designate suppliers and achieve the

Chain Management whole-life cycle management of suppliers.Capabilities Optimize the supply chain process enhance the collaborative efficiency of the

supply chain take into account both joint and coordinated management and

differentiated competition and establish a more efficient flexible and competitive

supply chain management system.Strengthen risk control and management enhance the awareness of integrity and

self-discipline and ensure the legality and compliance of operations.ENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 35

Protect Clients’ Rights and Interests

Three “Alls” Customer Complaints and Feedback

In the open market environment full of fierce competition HGTECH deeply Customer Service In order to better improve the service level and respond to customer needs in a timely manner regarding the managementunderstands that customers are the cornerstone of the company’s Management System of customer complaints the company strictly implements in accordance with the enterprise standard C06005 “Customersurvival and development. The company firmly implements the business Complaint Handling Process”. Each subsidiary has formulated documents such as the “Customer Complaint andphilosophy of “market-oriented and customer-centric” and deeply Returned Product Handling Process” the “400 Telephone Management Measures” and the “Customer Communicationimplements the principle of “Three Alls”: “All processes that do not Pre-sales Service Management Measures”. The company timely receives customer complaints through channels such as the customer

create value for customers should be deleted; all departments that do not feedback hotline and the company’s official website. All complaint information is classified by the company and specific

create value for customers should be abolished; all those whose value response and handling time limits are set. At the same time the service department supervises the handling process to ensure

created for the company does not match their salaries should be adjusted that each complaint is resolved within the specified time limit.Project Implementationor dismissed.”

Create Value for Clients

Protection of Customer Information

From senior managers to various functional departments and then to each

subsidiary the company takes customer satisfaction as the core criterion

for measuring the effectiveness of its work. HGTECH continuously After-sales Service

optimizes its organizational structure improves its informatization

level and promotes lean manufacturing to meet the diverse needs

of customers and is committed to establishing long-term and stable

customer relationships. Through continuous improvement and innovation Customer Complaint Management

it provides customers with excellent products and services wins the trust

of customers strikes a balance between maximizing customer value and

maximizing the company’s profits and achieves a “win-win” situation Customer Satisfaction Survey

for both customers and the company.Solving Customer Complaint Issues

Customer Service throughout the Whole Life Cycle

Under the guidance of the concept of “customer-centricity” all departments of the company and its subsidiaries under

the unified management system of the group have formulated relevant customer management systems and management Paying Attention to the

methods suitable for different customer groups according to their different business scopes. A management mechanism has Listening and Understanding

been established to provide technical services throughout the whole life cycle of customers covering the pre-sales in-sales Customer Experience

and after-sales stages so as to achieve positive interaction with customers.Each subsidiary has set up relevant departments such as the marketing department quality department marketing center

and after-sales service department. Their responsibilities include establishing and improving the regular customer visit system Recording and Organizing Learning and Improvement

coordinating customer complaint management tracking product quality and undertaking product installation and maintenance.In addition the company regularly conducts training for personnel in the online and offline marketing systems to continuously

improve their professional capabilities and customer service capabilities and enhance the quality of customer service.Prompt Response Follow-up and Feedback

Customer Research

In view of the differences in customer needs in the domestic and international markets as well as among customers

from different industries there are obvious differences in determining customer needs preferences and even in product

development and promotion. From the company’s management team to the sales directors of each major region they will Investigation and Analysis Providing Solutions

pay irregular visits to key industries and major core customers every year to understand the industry situation and customer

needs. The company has two major categories of methods for conducting market research on customer needs. One category

is to directly obtain information from customers such as customer satisfaction questionnaires factory open day activities

offline salons telephone follow-ups and quality inspection tours across the country. The other category is to utilize the existing

information of the company such as product sales volume customer feedback industry forums WeChat official accounts Solving customer complaint issues requires a proactive attitude efficient communication and problem-solving abilities. The

Douyin accounts and other platforms and apply this information to the design of products and services marketing process key is to focus on customers’ needs put customers at the center and strive to provide solutions that satisfy customers.improvement and the development of other business activities.ENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 37

Customer Satisfaction Management

The company has always attached great importance to customer feedback. It has formulated and strictly implemented

the “CX08-01 Customer Satisfaction Measurement Procedure” to measure customer satisfaction mainly using

electronic questionnaires to collect data and conducting telephone interviews. After the customer satisfaction

survey is completed the company requires each subsidiary to hold a summary and analysis meeting reflect on the

measurement methods and survey results and form a customer satisfaction report so as to continuously improve

the company’s service quality and service level and enhance its market competitiveness. In addition the company

regularly conducts training for personnel in the online and offline marketing systems such as training courses like

the “Tempering Plan” to continuously improve their marketing capabilities and customer service capabilities and

enhance the quality of customer service. 05

In 2024 HGTECH and its subsidiaries won awards such as the “Best Quality Award” from Ningbo Deye the

“Best Supplier in Terms of Quality Performance in 2024” from the Automotive Quality Industry Association the

“Excellence in Quality Award” from Skyworth Electric Appliance the “Pioneering Spirit Award” from SAIC-GM-

Wuling the “Outstanding Supplier Award” from Sanden the “NIO Quality Excellence Partner” from NIO the “TCLAir Conditioning’s Steadfast Partner Award” the “2023 Collective Wisdom and Effort Award” from Tianjin Fuao

Denso the “Best Quality Award” from Supor the “Best Quality Award” from Yutong Colin the “Best ServiceSupplier” from Changhong the “2023 Outstanding Application Award for Intelligent Manufacturing in China” from

E-WORK the “New Energy Million-unit Breakthrough Award” from SAIC-GM-Wuling the Excellent Partner Awardfrom Haier Smart Home the VAVE Contribution Award from Deepal Automobile the “Rapid Response to SupplyAssurance in the Fourth Quarter of 2023” award from SAIC-GM-Wuling the “Outstanding Quality Award” from

GAC Aion in 2023 the “Best Collaboration Award” from Geely Automobile in 2023 the “Quality Pinnacle Award Cultivating Greenin 2023” from Leapmotor the “GGII Golden Ball Award - Application of the Year 2024” the Jungo Technical

Innovation Award the “Outstanding Quality Award for Suppliers” from Zhongke Electric the commendation of the

“Difficulties-overcoming Delivery Team” by a certain intelligent equipment company in Shanxi the commendation

of the “Outstanding Project Management Award” by a certain special equipment company in Luoyang and the Development

commendation of the “Supplier with Outstanding Quality Contribution” by a certain intelligent equipment company in

Shanxi.Momentum

HGTECH is deeply integrated into China’s national “dual carbon”

strategic framework consistently elevating green development as a

cornerstone of its corporate strategy. Guided by the new development

philosophy of innovation coordination green growth openness

and sharing the company advances its environmental management

systems while strengthening resource circularity and energy efficiency

controls. Through continuous exploration of innovative practices in low-

carbon sustainable development HGTECH remains fully committed to

accelerating the achievement of the “dual carbon goals”.ENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 39

Environmental Management System Response to Climate Change

HGTECH integrates the concept of sustainable development into the company’s operation deeply learns and implements National Green Factory

Xi Jinping’s idea of ecological civilization and takes the company’s social responsibility work into overall consideration. In

response to the “dual carbon goals” HGTECH integrates the concept of green low-carbon and sustainable development HGLaser a wholly-owned subsidiary of HGTECH was awarded “Green Factory” in the “2024 Green Manufacturing List”

into the company’s high-quality development strategy. Complying with the trend of industry change under the concept of issued by the Ministry of Industry and Information Technology of China. HGTECH has one more national honor! HGLaser

green energy-saving HGTECH further promotes the construction of green industrial manufacturing system emphasizes continues to adhere to the green development implements the national “dual carbon goals” and constantly improve the

the catalytic role of industrial development in driving revitalization and strictly implements regulations related to environmental green manufacturing management system. HGLaser will leverage its leadership role to drive green collaborative development

protection emission reduction production safety and labor law then promoting the sustainable development of the company across upstream and downstream industries facilitating a comprehensive green transformation of the manufacturing sector

and whole society. toward “greening automation and intelligence”.HGLaser establishes an energy management system in line with GB/T23331-2020/ISO50001:2018 standard RB/T 119-2015

Environmental Compliance Management Energy Management Systems Certification Requirements for Machinery Enterprise and was awarded Energy Management

System Certification Certificate of Greenhouse Gas Verification and Certificate of Carbon Footprint of Products in 2024.To ensure the orderly implementation of environmental management work HGTECH Under the Notice of the General Office of the Ministry of Industry and Information Technology on the Construction of Green

has formulated a series of environmental protection systems such as Environment and Manufacturing System (MIIT Section (2016) No. 586) and the Notice of the Ministry of Industry and Information Technology on

Occupational Health and Safety Management Manual Procedures for Environmental the Issuance of (Interim Measures for the Cultivation of the Green Factory Gradient and Management) (MIIT Section (2024)

Factors Identification Evaluation and Control Safe Production Responsibility System No. 13) the ‘Evaluation Requirements for Green Factories’ and other relevant laws and requirements the third-party

and Safety Management System in accordance with Environmental Impact Assessment evaluation agency Central Union (Beijing) Certification Centre Limited conducts an evaluation of the establishment operation

Law of the People’s Republic of China and other relevant regulations. According to and effect of the green factory of Wuhan HGLaser Engineering LLC. The whole evaluation process was strictly compliant with

the requirements of GB/T 2400/ISO 14001 Environmental Management Systems— regulatory requirements and the internal management procedures of CEC. All requirements outlined in the evaluation criteria

Requirements with Guidance for Use GB/T 45001/ISO 45001 Occupational Health have been comprehensively addressed in this assessment and the evaluation process was conducted with authenticity and

and Safety Management Systems—Requirements with Guidance for Use and AQ/ validity. Based on document reviews and on-site assessments CEC confirms that the evaluated entity complies with the

T9006 Basic Specifications for Work Safety Standardization and HGTECH adheres Green Engineering requirements. The evaluated entity achieved a score of 93.7 points in the 2023 Green Factory Evaluation

to the principle of safety first and environmental protection combined with the Index which meets the Green Factory Evaluation Requirements.characteristics of relevant EHS management activities involved in the company product

design development production and service. Additionally HGTECH establishes

EHS management system and EHS Management Manual which clearly defines EHS

management system policies objectives and operational procedures in accordance with

relevant laws regulations and other requirements.HGTECH actively responds to the industrial green development plan— Made in China 2025 carries out standardized and

normalized management in strict accordance with ISO14001:2015 Environmental Management Systems—Requirements with

Guidance for Use firmly implements the national environmental policies and regulations strictly enforces the national local and

industrial standards also analyses predicts and evaluates the impact on the ecological environment in advance. HGTECH

has continuously increased investment in energy-saving emission reduction and technological transformation and taken

the initiative to phase out inefficient production equipment. Based on ensuring that discharge of wastewater waste gas noise

and solid waste meets the regulatory standards HGTECH further promotes the lean management continuously improves

the products’ process to enhance the treatment efficiency of three-waste and energy utilization finally implements green

manufacturing and commits itself to the creation of green factory.Provincial Green Factory Waste-free factory

The safety and environmental protection departments of HGTECH and subsidiaries are responsible for the establishment

implementation maintenance and improvement of the environmental protection system. In 2024 HGTECH was awarded

Hubei Huagong Image Technology Development LLC actively In the list of “Waste-free Factory” in Wuhan

the Certificate of Environmental Management System and all its subsidiaries passed the supervision and audit of the

explores the construction of green factories improves the company’s model units (the first batch of 2024) issued

environmental management system and hold the certificates. HGTECH reviews the implementation of environmental green factory organizational structure and personnel management by Wuhan Municipal Bureau of Economy and

protection related regulations and the operation of environmental protection facilities of each subsidiary from time to time responsibilities establishes and improves the management system and Information Technology and Wuhan Ecology

and corrects behaviors that are not in line with the company’s environmental protection policy then proposes rectification incentive system for green factories regularly organize green factory and Environment Bureau HGLaser wasmeasures. HGTECH regularly environmentally monitors the ‘three wastes’ on key emission enterprises and make sure trainings carry out green factory audits and improve the management rewarded the model unit of “Waste-freethat the annual environmental monitoring results falls within the requirements of relevant laws and regulations. HGTECH has system ensuring that the requirements for the construction of green Factory” in Wuhan.built an energy statistics system and power consumption monitoring platform which can conduct monthly statistical analysis factories are satisfied. In 2024 Hubei Huagong Image Technology

to improve the secondary measurement of water and electricity. The Subsidiaries like HGGaoLi and HGImage both have Development LLC was successfully awarded the green factory

obtained pollutant discharge permits. For more information about environmental management performance please refer to certification of the provincial level in Hubei. Additionally HGLaser was

“Key Performance Table - Table 2”. also awarded as a provincial-level green factory.ENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 41

Greening Products to HGTECH devotes itself to achieving the “dual-carbon goals” by improving Automotive Lightweighting

processes upgrading production equipment building green factories as well asAchieve“Dual Carbonresearching developing lightweight and intelligent green products and servicesGoals” and improving and strengthening management. HGTECH catalyzes the green On the basis of keeping strength and safety automotive lightweighting is to reduce the overall vehicle mass as

transition and upgrading of the manufacturing sector drives green and low-carbon much as possible improve the power performance of automotive and to reduce fuel consumption. HGTECH

development and then contributes to the Beautiful China Initiative. empowers the automotive industry transformation with “Laser + Intelligent Manufacturing”. The evolution

toward automotive lightweighting—encompassing advanced material processing structural and modular design

methodologies and next-generation joining technologies—demands parallel innovations in manufacturing

processes. HGTECH drives this industrial transformation through its “Laser + Intelligent Manufacturing”

solutions so laser cutting and welding technologies with their unique advantages in efficiency precision flexibility

and non-contact processing have emerged as critical enablers of automotive lightweighting.Laser + Intelligent

Application of Automotive Lightweighting

Manufacturing Pioneers the Automotive Industry’s New

Journey Toward Low-Carbon Transition 3D Five-Axis Laser Cutting Intelligent Equipment

Driven by “dual carbon goals” new energy vehicles are entrusted as a historic Specially developed for automotive hot-formed components this intelligent laser processing system effortlessly

mission of our era. As an advanced production tool laser is widely used in the design cuts through ultra-high-strength steel up to 2000 MPa. It enables precision thinning of hot-formed high-strength

process and production of new energy vehicles etc. HGTECH actively explores the steel sheets achieving 20% weight reduction per component—making automotive materials thinner lighter yet

typical application of advanced laser technology in the manufacturing of new energy harder and stronger.vehicles and assisting the traditional automotive industry in the upgrading of intelligent

manufacturing. PTC Heater

Typically the weight of a single PTC heater is around Integrated Laser Welding Equipment for A

2kg. By increasing the power density of the heating

pack the heater’s volume can be reduced by 10% utomotive Door Rings

while maintaining the same power output enabling an

Compared with the traditional stamping-welding

optimal balance of high performance and light weight.technology the application of the integrated double

3D 5-Axis Laser Cutting/

Welding for Automotive A/B Pillars Roof Panel Welding for door r ing laser welding thermoforming solut ion

Body-in-White reduces the weight of the door ring parts by about 10k

Weakening Process for Airbag Covers Tailgate Welding for New Energy Battery Pack Module and increases the material utilization rate to 71.9% and

Welding of Airbag Initiators Body-in-White Battery Box (Tray) improves the collision safety performance of the local

area which is an important path for the lightweighting of

Seat Systems Cutting Welding automation production line replaces steel with the steel parts of the body-in-white to be realized./Welding aluminum to achieve “weight reduction” of the body.Wheel Hub Cutting/

Welding The unique welding anti-deformation technology of

HGTECH can control the welding seam precision at

1mm which can be applied to all-aluminum battery Solar/Light/Rain/Defogging SensorBumper Beam &

Crash Box Welding

4-Door & 2-Hood Cutting pack shells. Also it can reduce the weight of the battery It is a multi-functional integrated sensor that combines

/Welding/Hemming/Sealing pack by about 26.7% bringing a new choice of process solar rain temperature & humidity monitoring and

with lighter quality and higher strength.Side Panel Welding for HUD functions into a compact unit. It compacts multiple

Body-in-White separate sensors into a single unit that weights less

Battery Tray Welding than 20g enabling intelligent bus control and functional

Cutting/ Body-in-White Roof Panel Laser Welding integration.Welding of Automotive Plastic Floor Panel Welding for BIW

Components Automation Production Line

Drivetrain Component Cutting

Laser Drilling for /Welding The first all-aluminum body laser welding production

Automotive Bumpers line independently built by HGTECH reduces the edge

Headlight/Taillight Cutting & Welding width of parts and connecting auxiliary materials by

about 20% and further reduces the weight of the

body-in-white and still maintains the stability of the

equipment welding speed and strength.ENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 43

Practices in Shipbuilding Industry

Tire Mold Laser Cleaning Intelligent Equipment

In 2024 HGTECH continues to plough into the shipbuilding industry successfully signing projects

such as “Jining Energy Xinneng Shipbuilding All-process Intelligent Factory” and “JiangnanLow-carbon Automation Shipbuilding Factory Automated Cutting Production Line for Assembled Parts”. In June 2024 the

“Wuhu shipyard Weihai base intelligent cutting and blanking production line” project has successfully

High-end Laser Equipment to Help Tire Industry Transformation

commenced operations. This innovative project has developed specialized processes for the

Pneumatic tires are the “feet” of automobiles. As an indispensable component in automotive manufacturing shipbuilding industry including: 1.process information analysis 2.inkjet marking 3.bevel cutting 4.edge

pneumatic tires are vital to ensuring safety water drainage grip and driving comfort during use—all of which chamfering 5.automated material handling of semi-finished components. The system achieves full

depend on regular cleaning of tire molds. However traditional tire mold cleaning methods suffer from low automation integration across all production stages: 1.part extraction from nesting diagrams 2.steel

efficiency high energy consumption and significant pollution failing to meet modern tire production demands plate marking and layout3.automated cutting 4.automated sorting 5.automated beveling6.automated

for energy savings emission reduction and low-carbon sustainability. Laser cleaning technology non-contact edge chamfering7.in-line buffering and palletizing via automated material handling. For the production

abrasion-free and eco-friendly solution will replace the traditional cleaning process inevitably. process of inland vessels HGTECH innovatively applies self-developed high-end laser cutting

equipment laser composite welding equipment and full-width multi-head marking and coding equipment

HGTECH independently researches and develops “Tire Mold Laser Cleaning Intelligent Equipment”. HGTECH in the project of “New Energy Ship Manufacturing Base All-process Intelligent Factory” and adopts

has overcome the laser cleaning head vision guidance technology and many other core components and several self-developed new-generation information technologies such as cut-off line intelligent

processes fearless of high temperature “baking test”. The equipment can make the dirt swept away if “not generation and identification technology intelligent mixed-sleeve discharging technology weak featuredismantle the mold” also can clean a pair of tire molds online at 45 minutes. The equipment can effectively solve identification and positioning technology visual AI intelligent sorting system yard management systemthose tough problems such as “long standby time repeated disassembly mold wear and tear non-complete intelligent central control system and digital twin system. High-precision identification and positioningcleaning environmental pollution high energy consumption” so as to reduce the downtime of vulcanizer technology AI + vision intelligent sorting system yard management system intelligent central

improve the production efficiency and tire quality. The equipment brings a new era of “low-carbon automated” control system digital twin system and many other self-researched new generation of information

tire mold cleaning. technology to achieve the whole process from raw materials to the hull of the hull welding ship intelligent

manufacturing the completion of the project to achieve the production efficiency of the hull components

have increased by 50% the overall design efficiency have increased by 10% the operating cost have

reduced by 20% the product first-pass yield rate increased to 95% energy consumption per unit

output reduced by 15% the key equipment CNC rate of more than 95% the rate of digital acquisition of

more than 98% intelligent system solutions hardware and software autonomy rate of more than 95%.After the completion of the project it will form the first green intelligent intensive and standardized new

energy shipbuilding base in China realizing the standardized development industrialized integration

and large-scale application of inland new energy ships.Laser + Intelligent

Manufacturing Empowers the Maritime Industry’s Low-Carbon

Exploration of the Oceans

The low-carbon requirements of the International Maritime Organization (IMO) are forcing shipyards to upgrade

processes but eco-friendly technologies often come with increased costs. For example traditional cutting fumes

account for more than 15% of total energy consumption while laser technology inherently has a green DNA-zero

emissions and low energy consumption. The laser intelligent production line compared with the traditional flame

cutting the emission of VOCs from laser cutting is reduced by 92% and the dust capture efficiency is ≥ 99.5%

Self-Developed All-Purpose Line Marking and Printing Wuhu Shipyard Weihai Base Intelligent Cutting and

after equipped with the activated carbon + HEPA filtration system also the sound pressure level for laser cutting is Machine Blanking Production Line

≤ 75dB which comply with the international environmental protection standards.As a leading domestic supplier of intelligent manufacturing system solutions， HGTECH directly addresses thepain points of the shipbuilding industry and independently developed intelligent equipment for ship hull component

manufacturing represented by high-end laser cutting equipment laser cleaning equipment comprehensive

scribing machines and laser hybrid welding equipment. HGTECH also offer intelligent production lines for ship

hull component manufacturing represented by flexible intelligent material preparation lines and flexible intelligent

welding lines as well as industry digital products such as visual sorting and digital twins. We firmly believe that real

“intelligent transformation and digitalization” do not simply replace manual labor but rather leverage technology to

make manufacturing more efficient greener and more humanity. The intellectualization of the shipbuilding industry

is a marathon and HGTECH is willing to be a “long-term partner” beside the shipyards using hard technology to

help China move from being a major shipbuilding country to a powerful shipbuilding nation. Jining Energy Xinneng Shipbuilding All-process Shipbuilding Welding Production Line Solutions

Intelligent FactoryENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 45

Environmental Protection Investment

General Management System: Waste Management Regulation Waste and Waste Management Regulations.Industrial Emission categories: waste cartons waste metals waste glass products waste plastics etc.In 2024 the enterprises under HGTECH have cumulatively invested over 17 million yuan in environmental governance mainly Waste Pollution prevention and control measures: for recyclable waste: sold to waste collectors or direct

for the disposal of hazardous waste the construction and operation and maintenance of waste gas treatment facilities the recycling on its own; for non-recyclable waste: managed through a sanitation service agreement

improvement of on-site environmental facilities environmental monitoring regular monitoring of wastewater and waste carbon between the property management company and local municipal sanitation department ensuring

centralized processing in compliance with environmental regulations.emission compliance the formulation of environmental contingency plans environmental impact assessment and acceptance

and other environmental protection expenditures. The affiliated companies have paid environmental protection taxes in

accordance with the law.Case

Waste Disposal

Waste gas

HGImage and its subsidiaries strictly comply with national laws and regulations

HGTECH strictly abides by the Environmental Protection Law of the People’s Republic of China Air Pollution Prevention and regarding the prevention and control of air solid waste noise and water

Control Law of the People’s Republic of China Solid Waste Pollution Prevention and Control Law of the People’s Republic pollution. For production waste gas it has newly installed 4 sets of advanced

of China Water Pollution Prevention and Control Law of the People’s Republic of China and other laws and regulations RTO regenerative thermal oxidation systems. These systems can efficiently and

to carry out pollutant management. HGTECH has formulated documents on sustainable development such as Carbon centrally collect and catalytically combust medium- to high-concentration organic

Emission Management System Prevention and Control of Environmental Pollution Energy Management Procedures Clean waste gas with air volumes of 20000 m3 30000 m3 40000 m3 and 55000 m3

Production Management Procedures etc. For the wastewater waste gas hazardous wastes and general industrial solid respectively achieving 100% harmless discharge of waste gas in production

wastes generated in the course of production and operation the company has formulated an effective internal management line and reducing VOC emissions by 21.472 tons. In addition total hydrocarbon

system monitored all kinds of emission indexes in accordance with the national and regional emission standards and carried methane and non-methane total hydrocarbon concentration online monitoring

out strict emission management making sure that all waste disposal is Compliance treatment and discharge. Clean production devices have been installed in the discharge pipelines of the RTO regenerative

is throughout the entire process of project planning and product planning giving priority to the use of clean production thermal oxidation systems to monitor in real-time whether the waste gas meets

technologies processes and equipment with high resource utilization and low pollutant generation and giving priority to the the standards after being treated by the RTO. These devices are also connected

selection of non-toxic non-hazardous easy to degrade or easy to recycle solutions. Through the reduction and control of online to the data system of the Environmental Protection Bureau to achieve real-

environmentally hazardous substances promote green design and production effectively preventing environmental pollution. time data monitoring of the company’s waste gas emissions. The monitoring

Enhance energy performance and reduce greenhouse gas emissions by purchasing energy-saving equipment and products results of waste gas wastewater and noise are all qualified every year.improving processes and conducting energy-saving activities.RTO Regenerative Thermal Oxidation

System

Waste Water Management system: Wastewater Discharge Management Standards.Discharge category: domestic sewage production wastewater.Pollution Prevention Measures: regular inspection of sewage discharge pipelines; regular sampling Total hydrocarbon methane non-methane total hydrocarbon

and monitoring; environmental pollution insurance coverage; establish a chemical wastewater concentration online monitoring device

depository; recycling and disposal by a qualified treatment center.Management System: Management Measures for Exhaust Gases Norms for Air Emissions Hazardous Waste

Waste Gas Management.Emission categories: volatile gases from chemical substances exhaust gases from cutting and

welding processes etc. HGImage and its subsidaries have established and

Pollution prevention and control measures: open fume extraction equipment during production; strictly implemented the Hazardous Waste Collection

Storage and Transfer Management System Emergency

Response Plan for Environmental Emergencies and

actively disposed hazardous wastes such as hazardous

Management System: Waste Management Regulations Waste and Discarded Materials Management chemicals. It also carries out chemical spillage emergency

Hazardous Regulations response drill and other environmental emergencies to

Waste Discharge categories: mercury-containing batteries waste mixed hardware waste electronic effectively prevent hazardous waste from polluting the

components waste activated carbon chemicals etc. environment and jeopardizing the health of employees.Pollution prevention and control measures: set up corresponding waste storage areas and garbage Chemical Spillage Emergency Response Drill

containers and mark them; use chemical crates when turn over or transport corrosive chemical

bottles.ENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 47

Rational Utilization of Resources

Cases of “Three Wastes” Management

HGTECH has always been an active responder to environmental protection. Adhering to the two-way management model

of “technological transformation and management” it has formulated management systems such as Energy Management

Case 1： System and Management Specification for Resource and Energy Conservation. These systems aim to achieve the energymanagement goals of “refined energy management scientific energy metering energy conservation accountability andIn accordance with the self - monitoring requirements of pollutant discharge permit HGImage commissioned a third- visual on-site management”. By doing so the company reduces its resource and energy consumption improves the

party organization Wuhan Jinglan Testing Co. Ltd. to carry out environmental testing in 2024. The company’s utilization rate of resources and energy minimizes resource waste cuts costs and fully realizes the scientific rational and

wastewater waste gas and noise at the factory boundary were tested and the test results met the standards. effective use of resources and energy. At the same time it also enhances the modernization level of the company’s energy

Among them waste gas was tested twice a year domestic wastewater was tested once a year and noise at the management.factory boundary and unorganized waste gas were tested once a year.Circular Economy

Case 2：

In accordance with the principle of recycling reuse cost reduction and waste reduction Hubei Huagong Image Technology

In accordance with the self-monitoring requirements of pollutant discharge permit HGGaoli entrusted a third-party Development LLC continues technological innovation and process optimization and carries out the secondary reuse of PET

institution Hubei Lanke Testing Technology Engineering Co. Ltd. to conduct environmental testing in 2024. The film products after stripping. Hubei Huagong Image Technology Development LLC recycles 250 tons of PET film products

company’s wastewater waste gas and noise at the factory boundary were tested and the test results met the annually further effectively reducing the amount of solid waste generation.standards. Among them waste gas was tested twice a year domestic wastewater and unorganized waste gas

were tested once a year and the noise at the factory boundary was tested four times a year. The Fujuoduo tin

plating workshop of HGGaoli conducts organized waste gas testing twice a year and unorganized waste gas testing Resource Management and Energy Saving Measures

once a year.Electricity Electricity Consumption of Production Case 3： and Power Equipment

Hubei Huagong Image Technology Development LLC conducts monitoring of waste gas waste water and noise Consumption

According to centralized production each

twice a year. In June and November 2024 it has entrusted the qualified third-party company Hubei Meichen

department should avoid equipment empty run

Testing Co. Ltd. to sample and test waste gas wastewater and noise and all test results are qualified.and follow the three optimal energy - saving

status labels for equipment startup frequency in

the Equipment Management Procedures (i.e.use upon startup intermittent shutdown and

keep running for long - term use) to determine

when to switch on or off. When the equipment

Lighting Office Electricity shuts down or not in use it should be turned off

Pollutant Discharge and the power supply should be cut off.Office area: Use natural light as the main lighting and turn on 2/3

(on cloudy days) or 1/3 (on sunny days) of the lighting during the Power equipment: According to the temperature

day.In order to implement the national environmental protection policy HGGaoli a wholly-owned subsidiary of HGTECH has and humidity of the workshop refrigeration

formulated a series of sustainable development system documents such as Carbon Emission Management System mainframe boiler humidifier dehumidifier Corridors locker rooms restrooms: natural light is the main source

Hazardous Waste Storage and Disposal Management System Noise Control Management System Management wind cabinet cooling water pump chilled water of illumination during the day; turn on 1/2 of the lights on cloudy

pump shall be adjusted to the most energy-

Regulations on Fixed-point Disposal of Park Garbage Management System for Precursor (Highly Toxic) and Explosive days when there is insufficient light.saving way.Hazardous Chemicals and Energy Conservation and Consumption Reduction Management System. These documents

are used to conduct analysis prediction and assessment of the impact on the ecological environment in advance. HGGaoli Roads in the factory: keep lighting off during the day and keep

continuously increases its investment in energy conservation and emission reduction phases out outdated equipment and lighting on at night.ensures that wastewater waste gas noise and solid waste are discharged in compliance with standards. At the same time Air Conditioning ManagementEach production workshop:keep lighting on according to the

HGGaoli deeply promotes lean management improves the production process enhances the treatment efficiency of the three workforce and work part of the lights； in non-work areas only During summer cooling the temperature

waste (wastewater waste gas and solid waste) and the utilization efficiency of energy and actively creates a green factory. open a (or a row of) lights； during non-working hours only part of should not be set below 26° C; during winter

the lights (a or a row) to ensure that the channel lighting to facilitate heating the temperature should not exceed

With strict management HGGaoli successfully changed its sewage discharge permit to simplified management. In 2024

personnel’s movement . 18 ° C. When the air - conditioner turns

HGGaoli passed the renewal audit of the environmental management system and was rewarded the certificate. HGGaoli on the doors and windows connected with

has achieved zero violations in pollutant emissions throughout the year and there were no accidents at or above the minor Office appliances (such as: computers printers water dispensers outdoor area should be kept closed.The water

injury level or environmental accidents. What HGGaoli has done has effectively promoted the sustainable development of the etc.) must follow:turn on only when needed shut down immediately system of the central air conditioner should

company and whole society setting an example for the green development of the industry. after use; computer monitors are automatically sleep after 3 be cleaned once a year improving heat

minutes of inactivity; computer monitors are manually power off exchange efficiency and reducing operational

when leaving workstations. unplug power cords at end of day. load.ENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 49

Water Raw

Consumption materials

The company purchases main raw and auxiliary materials according to the amount of usage and existing stock.According to the water consumption plan issued by the Municipal Water Conservation Office the company strictly The use of raw and auxiliary materials should strictly adhere to the principle of “first in first out” to prevent from

controlls the clean water water consumption and sewage discharge. ineffective or deteriorating.Each subsidiary equipment management department is responsible for inspecting water supply pipe network timely Each department should avoid wasting reusable raw and auxiliary materials as well as leftover materials by

discovering and repairing leakage faults and preventing leakage and water waste. Water usage in the restrooms discarding them casually. If these materials have the potential for reuse they should be utilized again.should be paid special attention. Close the valve in time after flushing the toilet. Only turn on the faucet halfway when

washing hands and turn it off promptly after use.In addition the company implements lean production supports agile management through informatization and digital

tools. The company continues to improve the turnover efficiency of products and the utilization rate of the site which

promotes quality improvement and reduces waste effectively reduces production costs and shortens the product

Oil Usage development and production cycle.Gases

Usage

During the operation of various types of equipment attention should be paid

to lubricating materials used (such as the lubricating oil for air compressors)

to avoid waste. The company’s shuttle buses are electric vehicles which Environmental Protection Initiatives at Overseas Bases

helps reduce greenhouse gas emissions.When maintaining equipment and facilities each department should pay

attention to the amount of lubricant to avoid excessive application and Examples of PracticeNitrogen air pressure gas etc.waste and leakage to the ground polluting the environment.HGGenuine a wholly-owned subsidiary of HGTECH Safety Operations Supervision System Resource and

A l l subs id ia ry equ ipment ini t iated the preparat ion of i ts overseas factory in Energy Conservation Management Regulations Wastewater

management departments must Thailand covering a total area of 5032 square meters. Discharge Management Regulat ions Air Emission

perform regular maintenance on By November of the same year the production line was Management Regulations and Noise Emission Management

gas supply systems according officially operational focusing on the mass production of Regulations. By rigorously implementing these systems the

Office supplies to the Gas Supply Equipment 800G/1.6T high-speed products. Since its establishment company achieved zero violations of pollutant emissions

Maintenance Work Instructions. the company has consistently paid close attention to and throughout the year with no environmental pollution

thoroughly researched Thailand’s environmental policies incidents or personnel casualties fully demonstrating its

E a c h g a s - c o n s u m i n g and regulatory requirements actively integrating these social responsibility in environmental protection and safety

department should adjust the standards into daily operations. Adhering strictly to local management.The company actively promotes office automation and networking tries to gas pressure range and the environmental regulations the company demonstrates a

use electronic documents and electronic mailboxes in work and advocates requirements of the production strong sense of responsibility and unwavering commitment Examples of Practice

revising manuscripts on electronic media to reduce paper consumption. p r o c e s s t o t h e m i n i m u m to environmental protection. Through continuous learning

pressure to reduce the flow it optimizes management practices to advance sustainable HGGaoli a wholly-own subsidiary of HGTECH established

A designated person should be assigned to manage the daily office supplies rate and save gas. development goals and contribute positively to local Electronics (Thailand) Co. Ltd at 10th January 2024 and

of each department and the system for requisitioning office supplies communities and the environment. invested 45 million RMB. As since establishment HGGaoli

should be strictly implemented; except for the confidential information of the According to the requirements Electronics (Thailand) Co. Ltd has developed a series of

company the paper materials should be utilized on both sides. of equipment and process all In compliance with Thai laws and regulations including the rules and regulations regarding to sustainability including

gas-using departments do not Factory Act National Environmental Quality Promotion Regulations on Hazardous Waste Storage and Disposal

Streamline documents. For matters that do not necessarily require issue use nitrogen gas if they can Act Hazardous Substances Act Occupational Safety Management Regulations on Noise Control Management

official documents for deployment try to deploy them through meetings use air pressure gas and do Health and Environment Act and Wastewater Discharge Regulations on Designated Disposal of Site Scrap and

as much as possible. For matters that truly require the issuance of official not use high-purity nitrogen if Standards for Factories and Industrial Zones the company Waste Regulations on Controlled Substances (Toxic/

documents the printing quantity should be accurately calculated to avoid they can use general nitrogen has established a series of institutional documents focused Explosive Chemicals) Regulations on Energy Conservation

reprinting and excessive printing. so as to reduce the cost of gas on sustainable development and environmental protection. and Consumption Reduction Management. All documents

source. These include but are not limited to Safety Production are under ISO14001:2015&45001:2018 system and relevant

Economically use cleaning and sanitation tools. Mops rags waste paper Responsibility Management Regulations Occupational law in Thailand. Throughout the year there were zero

baskets should be properly stored to extend the service life. Health Management System Fire Safety Management violations in pollutant emissions zero incidents of minor

System Chemical Usage Safety Operating Procedures injuries or above and zero environmental accidents.ENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 51

Employee Rights and Benefits

Employee Employment and Basic Rights

The company strictly complies with Labor Law of the People’s Republic of China Labor Contract Law of the People’s

Republic of China the Trade Union Law of the People’s Republic of China and Personal Information Protection Law of the

People’s Republic of China as well as relevant laws and regulations applicable in overseas areas. In combination with the

actual situation the company has formulated a complete human resources management system and relevant regulations.Take Care of The company adheres to the principle of equal employment and opposes all forms of discriminatory behaviors resulted from differences such as gender age region educational background religious belief nationality race and disability status. The

company devotes itself to striving to create a diverse and inclusive working environment. At the same time the company has

established a fair just and open mechanism for selecting and employing personnel. Use of child labor forced labor overtime

Employee and work harassment and abuse are definitely prohibited and HGTECH firmly safeguards the legitimate rights and interests of employees.During the reporting period the labor contract signing rate was 100% and the social insurance payment rate for employees

Development under the labor contract system was also 100%. There was no use of child labor or forced labor. For more information on employee employment performance please refer to “Key Performance Table - Table 5”.HGTECH cares respects safeguards the legitimate rights and Employees Rights & Management Methods

interests of every employee and ensures that every employee

can find a platform for growth and development. The company

provides a diversely flexible training system to help employees Recruitment: The company has formulated management systems such as the Interim

Provisions on Recruitment Management and the Management Measures for Implementing

continuously improve themselves and achieve their career the Falcon Plan. Adhering to the principles of "open recruitment fair competition scientific

goals. At the same time HGTECH attaches great importance evaluation and selection of the best candidates" the company conducts recruitment activities

to physically and mentally health of employees strives to standardizes the employment procedures protects employees’ privacy and information

security. The company firmly prohibits employment of child labor and resists all forms of

create a friendly and harmonious working environment so that Recruitment and forced labor.all employees can feel the care and warmth of the company Dismissal Dismissal: The company conducts dismissal-related work with employees in accordance

while working. with local laws and regulations.Salary: The company adheres to equal pay for equal work continuously optimizes the

system management system and provides employees with competitive salary. A precise

incentive mechanism is set up according to different job categories enabling those value-

contributors to have a greater sense of fulfillment and fully stimulating employees’ potential.

06 Promotion: The company implements the principles of open fair and just promotion management. There are four basic principles in managers selection: having both ability and integrity and integrity taking precedence;Salary and Promotion focusing on performance and conducting multi-position rotations; competing for employee with open procedures keep flexible for both upward and downward mobility; giving more chances to young cadres with professional expertise.ENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 53

Working Hours: The company has formulated management systems to ensure that working

hours in different locations comply with local regulations. Different shifts are set according to

production needs and employees’ rights and interests are protected as stipulated.Overtime: The company advocates "Happy Work Healthy Life" and opposes all forms of

perfunctory overtime. There is an application for overtime work in advance if necessary. The

company aims to continuously improve work efficiency by enhancing employees’ professional

Working Hours qualities optimizing processes promoting informatization and carrying out production

Overtime automation transformations enabling employees to strike a good balance between work and life.and Vacation Vacation: In accordance with local laws and regional policies of the working locations the Spring Sports Festival Condolences During the High-Temperature Period Women's Day Celebration

company provides employees with paid annual leave marriage leave maternity leave for female

employees nursing leave etc.Additionally the company organizes symposiums for different employees:“Angel Interview” for new employees before

their regularization; “Falcon Symposium” for structural talents; “Youth Symposium” for school recruits;“TechnicalSymposium” for R&D personnel;“ Engineering Master and Doctor Symposium” for engineering and technical experts; “ Expert Employee Birthday Party The Optics Valley Marathon in 2024 Music Festival in the Middle SummerSymposium” for technical experts. The company gain multi-dimensional understandings of employees’ evaluations of

the company’s management as well as their suggestions. The company actively responds to the demands of employees

strengthens the sense of belonging of employees and improves their satisfaction.Employee Benefits Employee Development and Training

In accordance with relevant national laws and regulations the Statutory Benefits

company has formulated management systems such as the Interim

Provisions on Unified Welfare Management to further optimize the Statutory holidays

employee welfare system. Also the company provides employees Talent Echelon On June 28 2022 General Secretary Xi Jinping emphasized that technological Marriage leave

with diverse welfare guarantees including statutory benefits health innovation depends on investment and talent during his inspection to HGTECH. Maternity leave and paternity leave Construction

benefits living benefits consolation benefits and growth benefits. HGTECH has always holds the concept of “the future of enterprise lies in innovation Annual leave etc. the key to innovation lies in investment and the focus of investment is talent”. Basedon the principle of “introducing and cultivating at the same time and incentivizing andrestraining synergistically” HGTECH has set up an employee career development

Consolation Benefits Living Benefits system so as to manage effectively and create a favorable environment for the growth

of talents.Condolences to employees in difficult situations Commuting shuttle busesCondolences to retired employees Canteen services and meal allowances As a high-tech enterprise HGTECH advocates that “To be a manager whoCondolences to sick employees Telephone bill subsidies understands technology to be a technical expert who understands management”

Condolences for the death of employees’ near kin etc. Team - building activities and festival benefits etc. and always insists on two promotion paths of management and profession. The

company prioritizes character core competencies and primary strengths in talent

selection embracing the following principles: No perfectionism – Valuing growth

Health Benefits Growth Benefits potential over flawless track records; Merit-based advancement – Rejecting seniority-

driven promotion systems; The company has consistently built the qualification

Annual physical examination Learning allowances system regularly gives evaluation of employees which helps employees improve

Supplementary commercial insurance Remuneration for in - house trainers professionalism. In addition the company encourages cross-department rotations to

Allowances for in - house trainers develop multi-skilled talent.Evaluation for excellence and commendation

Employee Care The company adheres to the work philosophy of “Happy work and Healthy life”

devotes itself to creating a comfortable working environment for employees. The

company actively carries out various activities in employee care and consolation

creating a warm and harmonious workplace environment.The company continuously cares for the health and life of employees and their

families and provides supports to employees in difficulty. During the reporting

period the company spent a total of RMB222100 on helping employees in

difficulty.ENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 55

Training Systems for EmployeeMulti-dimensional As the starting point —— “making the best use of everyone’s talents and creatingTalent Cultivation value together”. The company innovatively put up with many talent cultivation Research & Marketing Managers General Training

methods under the philosophy that “everyone can succeed”. HGTECH has actively

System Development established a three-level training system: Young Talent Training Elite Training

Senior Management Refresher Workshop. Special talent cultivation programs have Academician Online Mobile Classroom for Salesman Executive Charging Workshop New Employee Training

been innovatively advocated: Product Line General Manager Training Camp Mobile IPD Wolf Class Product Line General Manager Lean Office

Classroom for Salesman Academician Online Growth Plan 91 Talent Classroom. Technical Night Talk Industry Show Training Camp 91 Talent Classroom

Also HGTECH has explored and established: Reverse mentoring post-95 Younger Engineering Sales Toolkit Elite Class Book Reading Club

cadre team Online training methods OPE Micro Academy Online and offline training. Laser First Classroom Hardening Program Youth Class Xin Xin Xiangrong

HGTECH has been encouraging employees to learn independently and empowerthemselves and building a learning organization where “everyone can learneverywhere at any time if wanted”. At the same time HGTECH has formed a talent

cultivation model with joint efforts from the government universities and enterprises

by focusing on the construction of HGTECH CENTRAL RESEARCH INSTITUTE

the cultivation of outstanding engineers and the training of engineering masters and 1 4

doctors.Reverse mentoring post - 95 Xin Xin Xiangrong

Employees born after 1995 All staff20

9 Youth Class 1

Young employees

Offline Training Average Training Micro Classes Youth Plan Jumping Plan

Training Attendances Hours Per P2erson 0C2reated 4 New employees

in campus recruitment Skilled personnel

110001520013.736751

Sessions Person hour Class 7

Mobile Classroom

for Salesmen 3 Elite Class Middle managers 40

Marketing personnel

Academician Online 91 Talent Classroom

Academician Technician &Managers

Online 14 All staff

9 Laser for

New Hire Training First Lecture

Newly hired employees New employees and 4 trainees outside of

company

Executive Charging 2024

1 Workshop

Training Senior managers Training

Group Photo

AI training Projects

All staff partiallyENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 57

Employee Promotion and Incentives Main IncentivesThe company advocates “let value contributors have more sense of achievements let valuecontributors stand in the center of the stage” establish the precise incentive management system

make smaller accounting unit designs more attractive material incentive and spiritual incentives such

as annual salary assessment for managers five firewalls for management personnel regularly conduct

performance assessment openly and fairly every year constantly update the method of selecting and

appointing managers integrate the performance appraisal into job promotion which effectively identifies

outstanding talents and realizes precise incentives. At the same time according to employees’ willing

and needs career development the company improves the qualification system internal transfer internal

competition exchange of space and other mechanisms. Besides the company gives full play to the

leading role of independent evaluation as to accelerate the growth of employees.Company Performance Management Model

Occupational Health and Safety

Production In terms of production safety the company comply with relevant laws such as the Work

Safety Law Fire Safety Law. Safety policy: safety first prevention first comprehensive

Safety management. Requirements: full coverage zero tolerance and emphasis on effective.All men should be responsible for production safety. The company has clearly defined

the division of responsibilities and signed 977 safety responsibility certificates involving

more than 8300 personnel. The company has issued systems to standardize the

management process of work safety such as Accident Management System Ten

Prohibitions on Safety Training for Work Safety Education and Labor Safety Supplies

Management.Closely focusing on the company’s annual plan we further improve the responsibility

management system establish safety and defense responsibility system. To enhance

safety awareness and ability the company carried out 25 safety trainings throughout

the year with a total of 5165 training attendance. HGTECH has deeply carried out

the “dual control” work of safety risk control and hidden danger investigation

adhering to the combination of special inspections and daily investigation. A total of

26 comprehensive safety inspections have been organized more than 260 safety

production hidden dangers have been investigated and 253 have been rectified and

closed with a rectification completion rate of 97%.ENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 59

Emergency Response

In order to strengthen the ability to respond to emergencies the company has formulated the Emergency

Disposal Plan for Safety Emergency. HGTECH carries out firefighting drills and special emergency drills

for key processes by simulating safety accidents rehearsing disposal and rescue actions. To strengthen

our safety production team we have organized all kinds of training related to safety production such as

mechanical injury prevention training first aid training fire safety training and drills traffic safety training

forklift use safety training etc. Besides our daily safety work:monthly inspection annual replacement

of firefighting equipmentannual inspection of gas body detectors various types of special equipment 07

on schedule “Special Equipment Safety Management System” “Temporary Electricity OperationManagement System” “Management System of Operations at Height” “Management Systemof Fire Operation” etc. HGTECH still have completed: re-filing of the emergency plan for work safety

accidents strengthen limited space management make a numbered record on all limited space clarify

safety management requirements post warnings in public.Fire Safety Drill

Practice Social

Firefighting Skills Competition Safety Escort "Rescue" Around

YouSpecial Training on First Aid Responsibility

Occupational Health

In order to prevent control and eliminate occupational hazards effectively and protect the

healthy and other interests of the employees the company has formulated the Occupational

Health Management System Occupational Health Physical Examinations and other systems

in accordance with Law on the Prevention and Control of Occupational Diseases. By system

standardization training education and occupational health publicity etc. HGTECH has been HGTECH actively undertakes social responsibility firmly integrates

continuously strengthening the management and detection of occupational hazards and its

prevention and control. The main occupational diseases involved in the company are noise the fulfillment of social responsibility into the production management.dust chemical substances laser radiation and so on. In daily work the company employees are Throughout the synergist ic development of industr ial regions

equipped with personal protective equipment (such as earplugs ear muffs dust masks anti-virus

popularization science education public welfare practice etc. HGTECH is

masks etc.) also protective facilities such as dust removal ventilation soundproof walls etc.HGTECH supervises the employees to receive and wear daily labor protection products to protect always giving back to the society with its own actions.the health and safety of the employees in working. In addition in accordance with the Technical

Specification for Occupational Health Surveillance and other standards the company has

commissioned a third-party qualified medical examination organization to carry out occupational

health tests for employees in occupationally hazardous positions build up a file for monitoring and

immediately inform the results of tests.In 2024 HGTECH was awarded the Certificate of Occupational Health and Safety Management

System. Throughout the year there is no incidents which have adverse effects on social and

internal security and instability. There is no fire safety accident explosion accident serious security

accident and unsettling incidents seriously jeopardizing the society. HGTECH has successfully

completed the annual work of production safety.ENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 61

Technology Serves for Social Development

Under the guidance of Hubei Province’s Strategy--“Rise of Central China” HGTECH gives full play to the driving effect

of leading role: take application scenarios as the traction; strengthen the deployment of industrial forward-looking system;

increase innovation investment; promotes cross-industry and cross-regional integration of innovation resources; promotes

innovation and collaboration of industrial chain supply chain; drives the development of industrial clusters by extending

supplementing and strengthening the chain. HGTECH has promoted the development of local electronics industry and

advanced equipment manufacturing industry. HGTECH has become a model of Wuhan’s high-tech industry radiating and

driving the surrounding area injecting a strong impetus for the synergistic development of regional economy.With an investment of more than 1 billion RMB the company has established HG Xiaogan Electronics Industrial Park and

Ezhou Advanced Equipment Manufacturing Base in Xiaogan Ezhou and Jingmen which not only promotes the accelerated

transformation of innovation achievements and the rapid development of key industrial clusters but also expands new

development space for all enterprise and the city. Jingmen New Anti-Counterfeit Packaging Material Manufacturing Base has

employed the poor and disabled people in the neighboring area. It provides more suitable jobs and contributes to the disabled

people. Xiaogan Sensor Manufacturing Base has employed the disabled and takes the lead in joining the Xiaogan Love and

Help the Disabled Employment and Entrepreneurship Enterprise Union. The company takes care of the disabled from all

aspects and creates a favorable atmosphere for the whole society to help the disabled.In addition as a major taxpayer HGTECH pays full taxes timely which providing stable tax support for the local economy. The

company has awarded the honor of Top Ten Taxpayers in the East Lake High-tech Development Zone for many consecutive

years. Recently HGTECH has been deeply exploring into the high-end markets in emerging fields continuously increasing

its investment in research and development and creating a highland for gathering high-quality talents. Amid the new

development paradigm where domestic and international circulations mutually reinforce each other we will strengthen existing

advantages address weaknesses forge new competitive edges and catalyze the emergence of cutting-edge technologies

innovative products and transformative directions to inject robust momentum into sustained regional economic growth.Public Welfare Practices and Rural Revitalization

Social Contributions In order to enrich the extracurricular reading resources of rural students and

broaden their knowledge horizons the 8th Youth Class of HGTECH planned

several thematic activities such as“ bookmarks with love and creativity”“ wasteto treasure” “auction with love” “salted fish exchange” in 3 months.Public Benefit Science Education Outreach On March 5 2024 at the closing ceremony of the 8th Youth Class all the students of the 8th Youth Class donated their earnings to Wuhan YouthDevelopment Foundation which support the construction of the “ProjectHope Library” in the central elementary school of Fenghuang Town XinzhouAs the first science and technology exhibition hall in China to display District Wuhan City. At present the plaque-unveiling ceremony of the“ Projectlaser science and technology laser technology application and intelligent Hope Library” has been completed in Fenghuang Town Central Primary

manufacturing HGLaser is committed to providing the public with colorful School Xinzhou District Wuhan City.science education and training and practical activities with the goal of“spreading laser science knowledge and promoting laser technology In addition in 2024 members of the Youth League Committee of HGTECHapplication” Since its completion in June 2020 and officially open publicly and young volunteers formed six loving teams and went to Chongyang County

in early 2021 for the national public Laser Technology Museum carries out in Xianning City Jieheshi Town and Xizhai Town in Songzi City to carry out

the “National Popularization of Science” “Public Open Day” and other the Ruby Public Welfare Campaign. They visited more than 25 families in need

science education activities. Through interactive exhibitions explanations paid a visit to and offered condolences to more than 40 school-age children.demonstrations practical operations and other forms visitors can gain a They delivered love funds school supplies daily necessities and living items to

deeper understanding of the development of laser technology application each child and assigned love liaison officers in a ratio of one to two.fields and future trends. In 2024 HGLaser Technology Museum hosted 1500

sessions for Industry professionals (automotive aerospace sectors) general

public visitors student groups with almost 24000 visitors’ attendance;

delivered 142 customized science programs for domestic school groups

and leading higher education institutions; conducted live-streamed science

demonstrations with Optics Valley Suspended Monorail Wuhan Open Tennis

Tournament Hubei Provincial Science Museum to provide more interesting

science experience.ENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 63

Communications with Stakeholders

08 Guided by the aim of “providing satisfactory products to society creating an innovative space for employees and generating substantial returns for shareholders” the company takes responsibility for stakeholders such as shareholders investors customers employees and value-chain partners. HGTECH keeps regular communications with stakeholders in various ways and collects their opinions.

Communications and

Stakeholders Topic Concerned Response

Shareholders’ Meeting and

Standardize corporate governance Board of Directors

Economic performance

Shareholders and Regular information

Research and innovation

investors disclosure

Protecting shareholder rights and interests

Investor Relation Management Expand communication

methods for investors

Operation legally Research and investigation

Product quality and Safety

Government and Symposium between

Promoting economic development government and enterprise

regulatory agencies

Environmental management Daily communication and

Social responsibility information report

Online official website/

WeChat account

Offline exhibitions and

Product Quality and Safety promotional activities

Promote product and service innovation

Professional sales team

Client Intellectual Property Protection

Information Security and Privacy Protection Factory open day

Protect clients’ rights and interests after-care

Regular visits

Survey on satisfactionENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 65

Anti-Bribery and Anti-Corruption

Establish a reasonable salary

Occupational Health and Safety and welfare system HGTECH has established a multi-layered compliance system to combat bribery and corruption treating this as the

foundational imperative of ethical operations. The company gives full play to the leading role of the “key minority”:the

Safeguarding employee’s rights and Diverse training system managers of HGTECH and its subsidiaries sign compliance commitments for senior executives every year; conduct

benefits

Smooth communication compliance oaths; publicly demonstrate their attitudes towards compliance management; establish systems such as

Employee Good working environment channels the “Compliance Management System of HGTECH” and the “Administrative Measures for Penalties in InternalAudits of HGTECH”; improve an integrity self-discipline system highlighting the requirements for anti-bribery and anti-

Establish a sound career development Cultural Journal corruption;distribute “Integrity and Compliance Manual” and carry out training;The company prohibits employees from

system bribery and corruption in any behaviors including but not limited to directly or indirectly giving and accepting:cash gift money

Holidays and sports activities

Information Security and Privacy Protection marketable securitiesphysical items kickbacks expenses for tourism and entertainment non-property interests e.g. job

Survey on satisfaction opportunities.The company publicly announces reporting hotline and email address through public channels and issues integrity initiative

letters on important festivals. The company exposes non-compliant incidents on the “Compliance Exposure Platform”

and tracks the accountability and handling process. HGTECH updates the compliance evaluation criteria every year and

incorporates them into the annual salary assessment of managers HGTECH devotes to the implementation of compliance

Fulfill the contract legally management from top to bottom.Continuous and stable cooperation

Suppliers and Technical Seminar

Open and fair procurement procedures

partners Bidding and review supplier

Adhere to business ethics

Supplier training Anti-Unfair Competition

Online official website/ The company adheres to those principles: honesty and trustworthiness equal

Information disclosure in truth and accuracy WeChat account consultation and mutual benefit win-win results. The company scrupulously

Medium Product development and innovation Media Open Day abides by business ethics complies with relevant laws and regulations and

conducts market competition in accordance with the law. The company attaches

Keep good cooperation Strengthen daily great importance to p fair competition in operation and prohibits behaviors that

communication violate business ethics and disrupt the market competition order such as unfair

competition.The company fulfills the requirements of anti-unfair competition through regular

training warning cases and other ways.Social welfare projects

Carry out public welfare and charity activities

Public and Community Volunteer

Promote industry development Activities

Community

Environmental management Strengthen environmental

managementENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 67

Key Performance Table

Table 1: Economic Performance Table 3: Supply Chain Management Performance

Index Unit 2022 2023 2024 Index Unit 2024

Total Assets Ten thousand yuan 1687847.37 1751509.12 2082432.87 Total number of suppliers / 3108

Operating Revenue Ten thousand yuan 1201102.88 1030973.30 1170917.55 Number of supplier training sessions / 155

Belonging to Shareholders of

the Parent Company Net profit Ten thousand yuan 81830.54 100747.60 122074.99 Passing rate of supplier qualification review % 83.96%

Basic Earnings per share Yuan per share 0.81 1 1.21

Table 4: Product R&D and Innovation Performance

Table 2: Environmental Performance Index Unit 2022 2023 2024

Product R&D investment Ten thousand yuan 60845 80232 99270

Index Unit 2024

R&D investment growth rate % 35.02% 31.86% 23.73%

Energy usage management

R&D investment as a percentage of revenue % 5.07% 7.78% 8.48%

Total electricity consumption linear measure 110507116

Total number of R&D personnel personnel 2032 2176 2483

Total natural gas consumption cubic meter 538791

Number of patent applications / 370 324 421

Water resource utilization management

Number of authorized patents / 283 239 232

Total water consumption cubic meter 595068

Packaging usage management

Total amount of packaging materials ton 3456.69

Recyclable packaging usage ratio % Table 5: Employee Management Performance43%

Pollutant discharge management

Index Unit 2024

Total greenhouse gas emissions ton 37506.02

Total number of employees

Total amount of industrial wastewater discharge ton 0 person 8823

Proportion of male employees

Total amount of domestic sewage discharge ton 239189 % 63.7

By Gender

Proportion of female employees

Waste management % 36.3

Total number of production personnel

The amount of hazardous waste disposal ton 249 person 4311

Total number of Sales staff

The amount of general industrial solid waste ton 2022.4 personBy 1141

Personnel Total number of financial staff Total amount of household waste ton 1884 person 105

Type Total number of technician

Environmental protection person 2483

Total number of administrative personnel

Annual environmental investment expenditure Ten thousand yuan 1784.94 person 783

Proportion of Under 30 years old employees

Number of incidents punished for violating environmental % 29piece 0

protection laws and regulations By Age Proportion of 30 to 50 years old employees % 65.5

Table 2 Covers First-Tier Subsidiaries and Select Second-Tier Subsidiaries of HGTECH. Proportion of Over 50 years old employees % 5.5ENVIRONMENTALSOCIAL AND GOVERNANCE REPORT 69

Benchmarking Index Table

Comparative Index Report on the Self-Regulatory Guidelines for Mainboard Listed Companies No. 1 – Standard

Employee Management Per formance Operations of the Shenzhen Stock Exchange

Index Unit 2024 Content of Norm Corresponding chapters

Proportion of employees with a master’s degree or above % 16.6 8.1: Overview Stakeholder communication By Educational

Background Proportion of employees with a bachelor’s degree % 41.5 8.2: Business Principles Compliance construction

Proportion of female employees in management % 24.9 8.3: Social Responsibility Strategic Planning and Working Mechanism Concise Overview of ESG Management

Proportion of male employees in the management team % 75.1 8.4: Disclosure of Social Responsibility Reports Information disclosure

Proportion of employees under the age of 30 in the management team % 9.7 8.5: Protection of Employee Rights and Interests Employee Rights and Benefits

Proportion of employees aged 30 to 50 in the management team % 85 8.6: ( Ⅰ ) Comply with environmental protection laws regulations and

Environmental management system

Proportion of employees aged 50 and above in the management team % 5.3 industry standards

Employee Rights Management 8.6: (II) Environmental Protection Plan Response to climate change

Coverage rate of employee labor contracts % 100 8.6: (III) Natural Resource Utilization Reasonably utilize resources

Social security coverage rate % 100 8.6: (IV)Pollutants disposal in compliance with laws Waste Disposal

Expenditure amount for supporting financially distressed employees Ten thousand yuan 22.21 8.6: (V) Pollution Prevention Facilities Waste Disposal

Employee Health and Safety 8.6: (VI) Taxes and fees payment related to environmental protection Environmental investment

Health check-up coverage rate % 100 8.6: (VII) Supply Chain Security Supply chain security

The Amount of safety accidents and environmental pollution incidents 次 0 8.6: ( Ⅷ ) Other environmental protection responsibilities Environmental management system

Employee safety training coverage rate % 100 8.7 and 8.9: Environmental Information Disclosure Cultivating Green Development Momentum

Coverage rate of supplier employee safety training % 100 8.8: Implementation Situation and Corrective Measures of Environmental

Environmental management system

Employee training management Protection Policies

Employee training coverage rate % 100 8.10: ( Ⅰ ) Laws Regulations and Industry Standards about Product Safety Products and Services Safety and Quality

Average training hours for employees hour 13.7 8.10: (II) Production Environment and Production Process Safe production

Proportion of senior administrators % 100 8.10: (III) Safety Assurance Mechanism for Product Quality and Accident

Emergency response

Proportion of intermediate administrators % 100 Emergency Plan

Proportion of ordinary employees % 100 8.10: (IV) Other production and product safety responsibilities Occupational Health and Safety

8.11: ( Ⅰ ) Employee Management System and Measures for Handling Employee Rights and Benefits

Violations

8.11: (II) Prevention on Occupational Hazards and Supporting Safety

Occupational Health and Safety

Measures

8.11: (III) Employee Training Employee Development and Training

8.11: (IV) Protection Responsibilities of Other Employee Rights Employee Care and Development

8.12: Scientific Ethics Standards Not Applicable

8.13: Content of Social Responsibility Report Practice social responsibilityENVIRONMENTALSOCIAL AND GOVERNANCE REPORT

Feedback Form

Thank you for reading 2024 Environmental Social and Governance ESG Report of HUAGONG TECH COMPANY LIMITED

To continuously improve our ESG practices and provide more valuable information to stakeholders we sincerely invite

you to share your feedback and suggestions with us via the following channels. Your support for our ESG efforts is greatly

appreciated!

Tel: 027-87180126

Fax: 027-87180139

Email: 0988@hgtech.com.cn

Address: No. 1 6th Road Huazhong University of Science and Technology Science Park

East Lake High-Tech Development Zone Wuhan City Hubei Province

Contact Person: Office of the Board of Directors in HGTECH

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development managementHUAGONG TECH COMPANY LIMITED

Contact Information

Office of the Board of Directors in HGTECH

Tel: 027-87180126

Fax: 027-87180139

Email: 0988@hgtech.com.cn