鲁泰Ｂ：社会责任报告（英文版）

Lu Thai Textile Co. Ltd.Social Responsibility Report

2020

March 2021

LUTHAI TEXTILE

Lu Thai Textile Co. Ltd.Social Responsibility Report

Overview

Reporting Entity

The Reporting Entity is "Lu Thai Textile Co. Ltd." which can be referred to as

“We” “the Company” “Lu Thai” “Lu Thai Company” and “Lu Thai Textile” unless

otherwise specified in the main text.Time Period

The time period is from January 1 2020 to December 31 2020. Considering the

continuity and comparability of the information disclosure the disclosure time of

partial information may be accordingly subject to advance or postponing.Reporting Period

The report is an annual report.Reporting Scope

This report is made to mainly disclose the Company’s fulfillment of its social

responsibility in the year 2020 and partially covers the data of related subsidiaries.References

China Social Compliance 9000 for Textile & Apparel Industry (CSC9000T)

Social Responsibility Management System (SA8000)

The 2030 Agenda for Sustainable Development (A/RES/70/1)

Language Version

This report has been prepared in both Chinese and English. If there is any

discrepancy the Chinese version shall prevail.

2020

Contents

(I) Company Profile

(II) Culture Philosophy

(III) Main Business Performance

(I) Social Responsibility Management

(II) Business Ethics and Integrity

(III) Communication with and

Response to Stakeholders

(I) Safety Operation

(II) Green Production

(III) Climate Action

(IV) Supply Chain Management

(I) Employees’ Rights and Benefits

(II) Growth Platform

(III) Care for Employees

LUTHAI TEXTILE

(I) Deepen the Product Quality Control

(II) Product Realization Geared to

Sustainable Development

(III) Keep Improving Service

Capabilities

(IV) Creatively Promote Sustainable

Development

(I) Help and Support the Impoverished

and Deliver the Positive Energy

(II) Donate Money for Schools and

Shape the Future

(III) Open and Share Promote the

Local Development

(IV) Charitable Activities Contribute to

the Community Development

General Information

Sustainable Development Man-

agement

Sustainable Products and Ser-

vices

Sustainable Production & Opera-

tion

Employee Development

Social Welfare

Chapter 1 General Information

● Company Profile

● Culture and Philosophy

● Main Business Performance

(I) COMPANY PROFILE

Lu Thai Textile Co. Ltd. has already become the largest

world-renowned manufacturer for high-grade yearn dyed fab-

ric and premium-brand shirts and established the complete

industrial chain ranging from spinning dyeing & printing

garment making to brand marketing. Besides the Company

has also set up 14 holding subsidiaries 3 offices and over 40

manufacturing factories in 8 countries including China U.S.A.Italy Japan India Vietnam Cambodia and Burma etc. as an

internationalized textile and garment enterprise integrating

R&D design manufacturing and marketing service with the

focus on the industrial chain integration and comprehensive

innovation.

At present Lu Thai has 700000 spindles and 102000 yarn

spindles and annual capacity of yearn dyed fabric of 220 mil-

lion meters printed and dyed fabric of 90 million meters and

30 million shirts. Since 2019 the Company has manufactured

new functional fabric and knitted fabric. 60% of the Company's

products were sold to more than 60 countries and regions

such as the US Europe and Japan. It has established stra-

tegic partnership with renowned brand owners at home and

abroad.The Company’s production and business operation perfor-

mance have always ranked among the best in the nationwide

textile industry. The Company has been authenticated to be a

high-tech enterprise national industrial design center national

enterprise technical center and laboratory identified by CNAS.It has won various honorary titles such as National May First

Labor Medal Prize for Outstanding Contribution in Chinese

Philanthropy National Quality Award China Grand Awards for

Industry and Single Champion Demonstration Enterprise in

the Manufacturing Industry.Lu Thai has been upholding the philosophy of green environ-

mentally friendly and sustainable development and manu-

facturing healthy and environmentally friendly textiles for the

world.General Information

(II) CULTURAL PHILOSOPHY

(III) MAIN BUSINESS PERFORMANCE

Values: Human-orientated Precise and Scientific

Customer-focus Win-win from Integrity

Human-orientated:

Giving top priority to human resources the Company up-holds the philosophy of “respecting people relying on peoplecultivating people and for the people” and respects labor

knowledge talent and creation. It advocates for equal opportu-

nities fair competition and appointment of people by abilities.

Besides it cares about and has deep love for its employees

by providing them with a good environment for working living

and learning. By doing so the Company shares the fruits of

development with its employees and grows together with its

employees.Precise and Scientific:

Rigorous responsible and conscientious the Company seeks

for ever greater perfection. Modest prudent efficient and inno-

vative it applies a realistic and pragmatic approach. Moreover

it follows the guiding principles of unity and discipline industry

and ambition and commitment to excellence. It also adopts

practical and realistic methods makes overall plans and takes

all factors into consideration and gives prominence to the key

points to boost institutional regulated and standardized work

and achieve sound stable and sustainable development.

Customer-focus:

Focused on customer demands as always the Company en-

deavors to provide products to the satisfaction of its custom-

ers. With client oriented production and operation it makes

agile response to market changes runs its business in an in-

novative manner provides customers with excellent products

and services and dynamically meets personalized demands of

customers to improve customer satisfaction and loyalty.Win-win from Integrity:

The Company aims to establish stable mutually trusted ev-

er-lasting and win-win partnership based on integrity quality

and service. It abides by commercial ethics keeps its word

serves customers heartily treats employees sincerely and

cooperates with suppliers earnestly. It unites people improves

satisfaction of related parties and achieves win-win coopera-

tion through honest operation.

Currently Lu Thai Textile Co. Ltd. has possessed the total assets of RMB 12.130 billion and the net assets of RMB 8.093 billion.

The Company’s production and business operation performance have always ranked among the best in the nationwide textile

industry. In 2020 due to the impact of COVID-19 it manufactured textile fabric of 188 million meters and 18.89 million shirts. In

2020 the Company recorded the operating revenue of RMB 4.751 billion and the net profit attributable to shareholders of the

listed company of RMB 97 million representing a year-on-year decrease of 30.14% and 89.78% respectively.Mission: Creating Wealth Contributing to Socie-

ty. Providing Fabric and Shirts for the World

Creating Wealth Contributing to Society:

The Company has always created value for its customers

sought happiness for its employees created wealth for the so-

ciety and gained benefits for its shareholders. It realized value

while developing the economy and serving the society. It also

fulfilled its responsibility by saving resources protecting the

environment and engaging in public welfare. Through these

efforts it assisted in comprehensive and coordinated devel-

opment of the material civilization cultural and ideological

progress and ecological civilization and shared the fruits of

cultivation with all members of the public.Providing Fabric and Shirts for the World:

Holding fast to the inheritance and innovation in the textile in-

dustry the Company aims to create beautiful life through yarn

decorate happy life with fabric enrich the world with clothes

and contribute to the progress in the textile and garment civili-

zation and harmonious development of the society.Vision: World First-class and Century Luthai

From the perspective of space:

The Company will seize the development trend in the industry

create a world-class high-end brand and tap the development

potential and lead the progress in the industry via technologi-

cal innovation across the globe.

From the angle of time:

Beyond textile the Company will embark on a journey of sci-

entific development featuring environmental protection low

carbon technology and humanity. In this way it will stand out

in market competition and make its undertakings ever-lasting.General Information

Chapter 2

Sustainable Development Management

● Social Responsibility Management

● Business Ethics and Integrity

● Communication with and Response to Stakeholders

Sustainable Development Management

Sustainable Development Goals (SDGs) of the

United Nations

B u i l d i n g d i s -

a s t e r - r e s i l i e n t

i n f r a s t r u c t u r e

for inclusive and

sustainable indus-

t r i a l i za t i on and

innovation.S t r e n g t h e n i n g

means of imple-

mentation and re-

vitalizing the global

p a r t n e r s h i p f o r

sustainable devel-

opment.Promot ing sus-

tained inclusive

and sustainable

economic growth

for full and produc-

tive employment

and decent work

for all employee.

1.Social Responsibility Strategy

In the past 30 years Lu Thai Textile Co. Ltd. actively fulfilled

its social responsibility consistently adhered to the develop-

ment idea of green environmental protection and sustainable

development and devoted to producing healthy and envi-

ronmental-friendly textiles for the world and promoting the

sustainable development of economy society and ecological

environment.In order to strengthen the enterprise’s social responsibility

management Lu Thai Company has combined the new sit-

uation of economic development with that of social develop-

ment and worked out the social responsibility and sustainable

development strategy of Lu Thai Textile Co. Ltd. based on

previous social responsibility practice and achievements. With“World-class Lu Thai with A Long History of 100 Years Peo-ple First Scientific Management Law Abiding Harmonious

Development Working Hard Pursuit of Excellence CreatingWealth and Contribution to the Society” as the policy the so-

cial responsibility and sustainable development strategy has

taken environmental protection sustainable development and

care for the society into consideration.

2. Construction of Social Responsibility System

In order to guarantee the effective implementation of social

responsibility strategy the Company has established and im-

proved the social responsibility-related system according to

applicable laws regulations and related international stand-

ards so as to guarantee that the Company’s operation can

produce positive influence on the ecological environment the

society and other interested parties and boost the sustainable

development of the Company the society and the environ-

ment.The social responsibility performance team consisting of

senior executives major department heads and labor repre-

sentatives shall serve as the Company’s highest management

organization in charge of the Company’s social responsibility

management. The team will convene and hold a meeting

semiannually for preparing the social responsibility system

documents researching and reviewing major matters in rela-

tion to the Company’s social responsibility work managing

coordinating and discussing the social responsibility fulfillment

of related parties including various departments and suppliers

and the specific execution of applicable standards urging the

implementation of social responsibility performance inspec-

tion and taking actions to eliminate hidden problems in which

way the Company’s social responsibility management can

be institutionalized and normalized and the harmonious and

sustainable development between the enterprise and the envi-

environment/society can be ensured.With the steady advancement of the Company’s comprehen-

sive internationalization strategy the Company has also made

the social responsibility system construction of overseas fac-

tories an important part of its development earnestly fulfilled

its social responsibilities listened to the voices of all walks of

life built a good relationship with related parties and achieved

good social benefits.(I) SOCIAL RESPONSIBILITY MANAGEMENT

The Company has always paid attention

to the return on investment of share-

holders. From the listing in 1997 to

2020 through the issuance of B shares

and the additional issuance of A shares

and A share convertible bonds a total

of RMB 3.360 billion was raised. Since

its listing the Company has realized an

accumulative net profit of RMB 10.721

billion. As it insists on cash distribution

every year the total cash distribution

amounts to RMB 5165 billion with the

cash distribution rate at 48.18% which

is1.51 times of the accumulated raised

funds.Sustainable Development Management

1. Adhere to the Compliance Operation

The Company has always emphasized that integrity and

law-abiding principles are the foundation of the Company and

always abide by the values of "integrity and win-win situation".

As the Company adheres to the principle of honesty law-abid-

ing and compliance management it has perfected the credit

management mechanism and established a credit manage-

ment system involving society customers partners and sup-

pliers employees shareholders and other related parties; by

means of the propaganda of corporate culture publicity and

education training inspection and supervision of employees’

behaviors and other measures the Company continues to

guide employees to abide by ethical standards improve their

moral accomplishment establish the law-abiding social image

ensure the value of integrity and promote ethical behaviors.

2. Intellectual Property Protection

Intellectual property rights provide a strong support for the

Company’s development and it is the magic weapon for the

Company to compete in the domestic and foreign markets. Lu

Thai has always attached great importance to the protection of

intellectual property rights. Therefore the Company continues

to optimize the intellectual property system sets up the intel-

lectual property and patent protection team establishes vari-

ous trademark management regulations and patent application

management procedures fights against any infringement of

trademark rights patent rights and copyrights etc. improves

the overall operational efficiency of intellectual property protec-

tion and propels its innovation and development by virtue of its

intellectual property rights. After more than 30 years of devel-

opment Lu Thai has indeed turned a page for its protection of

intellectual property rights.

MORAL CONDUCT AND RESULTS

Objects

Quantity of Non-

conformance Events

Quantity of Non-

conformance Events

Legal Tax Payment (%)

Quantity of Uncivilized

Events

Popularization rate of

Professional ethics

education for employees

(%)

Quantity of Violations

against code of ethics

External audit results

Quantity of immoral events

influencing the community

Senior Leaders

Middle-level

Cadres and

Functions

Employee

Shareholders

Communities

100

Standard unqualified

audit opinions

100

Standard unqualified

audit opinions

100

Standard unqualified

audit opinions

Indicators 2018 2019 2020

Sustainable Development Management

(II) BUSINESS ETHICS AND INTEGRITY

As the trust and support of interested serve as the basis for the Company’s sustainable and healthy development Lu Thai has

regarded the government shareholders and investors customers employees suppliers and partners the community and the

public as the most important interested parties paid great attention to communicate with various related parties listened careful-

ly to their voices and taken their feedback seriously. In line with the actual situation the Company has timely adjusted the com-

munication mechanism and methods and accordingly improved the Company’s management system.Related

Parties

Governments

Customers

Shareholders

and Investors

Community

and Public

Employee

Suppliers and

Partners

Safe Production

Environment-friendly Production

Compliant Operation

Employment Enhancement

Fulfillment of Social

Responsibilities

Product quality and environmental

protection

Satisfactory service accountable

marketing

Prompt delivery and reasonable

price

Respect customers and take

customer complaints seriously

Investment returns

Continuous profitability

Transparent operation

Employment Enhancement

Protect environment

Economic development

Improvement of people’s

livelihood

Scientific and reasonable wages

and benefits

Healthy and safe working

environment

Improve the attainment and the

career development

Smooth communication and

respect for human rights

Credible operation keeping

promises

Respect free wills and control the

risks

Equality and mutual benefit

continuous cooperation

Adhere to business ethics

and promote the sustainable

development of supply chain

Contribute the enterprise’s experience to

the industry’s development

Contribute the enterprise’s strength to

improve the people’s livelihood

Contribute the enterprise’s wisdom to

protect the environment

Improve the product quality management

system

Improve the customer relationship

management system

Conduct the customer satisfaction survey

Visit customers regularly

Compliance management open and

transparent operation

Safeguard the legitimate rights and

interests of shareholders

Help the poor and join the public welfare

activities

Energy saving and emission reduction

trees planting

Promote the employment and develop

local suppliers

Scientific and reasonable remuneration

system

Improve the employee training mechanism

Carry out the career planning

Create a good atmosphere and encourage

employees to make innovations

Establish a variety of communication

channels to keep abreast of employee

needs

Help the poor and support employees

Continuously improve supplier

management processes and strengthen

the control of operational risks

Strengthen the contract management and

standardize the credible procurement

Share experience and technology mutual

exchange of needed goods

Legal Operation

Be subject to supervision

Wisdom contribution

Improvement of people’s

livelihood

Customer visit

Customer service hotline

Open business operation

Annual work report

Financial audit report

General meeting of

shareholders

Supervision by the masses

Visit communities

Labor Union employees’

representative

Complaint channels:

employee hotline complaint

box etc.Trade union committee

members employee

representative assembly

Frequent High-level

Exchanges

Experience and technology

exchange and cooperation

Routine communication

Open business operation

Expectations and

Requirements

Interactive

Mode Measures Taken

Sustainable Development Management

(III) COMMUNICATION WITH AND

RESPONSE TO STAKEHOLDERS

Chapter 3

Sustainable Products and Services

● Deepen the Product Quality Control

● Product Realization Geared to Sustainable Development

● Keep Improving Service Capabilities

● Creatively Promote Sustainable Development

Sustainable Development Goals (SDGs) of the

United Nations

B u i l d i n g d i s -

a s t e r - r e s i l i e n t

infrastructure for

inclusive and sus-

tainable industriali-

zation and innova-

tion.Take sustainable

consumption and

production way.Take urgent action

to address climate

change and im-

pacts.Sustainable Products and Services

(I) Deepen the Product Quality Control

2018

2019

2020

863

186

7538

10004

8945

13482

11904

10076

55.90%

84.04%

88.80%

103

735

780

750

The 13th Technical

Skills CompetitionThe Company has always attached great importance to the product quality control and established the quality policy of “Thequality is the foundation of the Company’s life and it’s always the Company’s mission to satisfy the needs of customers and themarket and continuously improve the product quality” so as to ensure the product quality avoid any hazards of personal safety

health environment and the harm caused by the product itself and provide the society with safe reliable high-quality and envi-

ronment-friendly products.The Company continues to promote the construction of quality culture. In 2020 we organized various activities such as techni-

cal competition outstanding employees evaluation quality improvement activities and QC group proposals etc. to continuously

strengthen the quality awareness of all employees and actively create a good quality culture atmosphere in which the product

quality is the focus.Number of

groups registered

ParticipantsPromoters Employees Engagement Issuance sessions Number of sub-

jects issued

Sustainable Products and Services

In April 2009 Lu Thai Test Center was recognized by China National Accreditation Service for Conformity Assessment (CNAS)

and passed subsequent reviews in a row. At present among the 128 method standards of the Test Center four product stand-ards were recognized by CNAS meeting the demand for testing fabric and shirts and achieving “one report applicable to allcountries”. Therefore the Company is able to provide the public with healthy green and reliable tests.To respond to the pandemic in 2020 the Company added test items for medical protective equipment in terms of impermeability

water permeability hydrostatic pressure antistatic property flooding and splicing interdye.The Company updates test standards regularly. In particularly it updated 20 standards in 2020. Last year the Test Center

organized 91 internal comparisons including 56 manual comparisons 30 comparisons through instruments and five compar-

isons of retained fabrics. Effectiveness of the test results was supported by external proficiency testing and comparisons with

third-party agencies.The Company has established a quality and safety responsibility management system continuously improved the quality man-

agement system strengthened the quality management involving all employees the whole process and all aspects strictly

organized the production and operation and quality control according to applicable national and industrial quality and safety reg-

ulations policies and standards implemented the major quality accident reporting and emergency response system improved

the product quality traceability system and supervised the product safety environmental protection and sustainability by means

of monitoring measuring and process control in order to realize the product’s “intrinsic safety”.Sustainable Products and Services

Lu Thai adheres to the philosophy of green development and introduces the concept of sustainable development from the very

start of product design as designers take the harmony and unity of economy society and environment into full consideration in

the design process. It has made good use of natural resources to reduce negative impact on the environment. Gradually the

focus of product design has been transferred from appearance function and commercial interest to the field of sustainable de-

velopment. While realizing the product economic benefits the environmental protection and personal health are also taken into

consideration.(II) Product Realization Geared to Sustainable Development

Sustainable Products and Services

PLANT DYE植物染

In terms of raw materials we attach great importance to the re-

newable and reusable resources prioritize the selection of green

and environment-friendly fibers and actively develop ecological

textiles. The Company witnessed continuous increase in renewa-

ble and organic products. In 2020it manufactured organic fabric

of 450000 meters organic yarn of 690000 kilograms renewable

fabric of 980000 meters and renewable yarn of 390000 kilo-

grams.

As for the process we focus on reducing the adverse impact on

the environment remain committed to changing the traditional

high-consumption and high-pollution production model actively

promote clean production and adopt new technologies that are

energy-saving efficient and pollution-free. Our dyeing and color

rendering technologies can save 37% of water consumed by the

previous technology.In the production process we fully consider the impact on the sur-

rounding environment and the employee’s health pay attention

to the use of green and environment-friendly chemicals actively

develop non-toxic and harm-free dyeing auxiliaries and apply

efficient permeation auxiliaries and levelling agents saving 20%

water in the dyeing process without pretreatment. We have also

built sewage treatment facilities and collectively disposed of the

dyeing and printing waste water for the purpose of mitigating the

damage on the environment.

For products we advocate the sustainable consumption mod-

el ensure corresponding consumption to be conducive to the

environmental protection and the ecological balance. We prefer

organic cotton and have achieved environmental protection and

energy conservation due to the excellent non-iron performance of

such cotton.Sustainable Products and Services

(III) Keep Improving

Service Capabilities

The Company endeavors to build an ex-

pansion-based marketing organization cen-

tering around customers carries out reform

and integration on regional marketing or-

ganizational structures and operations the

iron triangle collaborative operation mode

and the motivation of the marketing team

and continuously enables collaboration be-

tween customers and products integration

of business and management and subdivi-

sion of marketing and services. Externally

the Company promotes the concept ofwholehearted services and builds the “com-mon future for customers” from all aspects

including design R&D manufacturing and

marketing service; internally it advocatesthe concept of “downstream chains are cus-tomers” and builds a team of close commu-

nication and highly efficient collaboration.

At the same time the Company continuously

pays attention to the customer’s needs visits its

customers and holds market analysis meetings

on a regular basis analyzes and researches

the changes of market and customer demands

conducts the customer satisfaction survey ana-

lyzes the potential customer’s opinions and the

competitor’s information systematically identi-

fies various quality and safety risks and actively

takes preventive actions. The Company has

established a system for reporting major qual-

ity accidents and product monitoring system.

Based on the market and differentiated needs of

customers it has strengthened monitoring anal-

ysis and assessment of quality hazards in terms

of selection of raw materials preliminary order

review technology customization quality con-

trol production process control and product de-

livery so as to timely warn quality risks promptly

take measures to eliminate major quality and

safety hazards and effectively achieve the early

detection early research early warning and

early disposal of quality and safety risks. On the

condition that various preventive measures are

positively taken the Company has established

a sound customer complaint handling mecha-

nism and responded quickly to customer quality

feedback.The Company recorded completion rate of lead

time for bulk of 93% product qualification rate

of 98% and customer satisfaction of 89 scores

with a tremendous decrease in customer feed-

back per million meters 15% lower than the

indicator.The implementation of a series of measures has

effectively eliminated the occurrence of major

quality and safety accidents in the Company

ensured the continuous improvement of the

quality of products and services improved the

overall quality service level of the Company and

satisfied the differentiated needs of customers

from various aspects such as quality delivery

cost service safety and environmental protec-

tion and won the trust of customers.Sustainable Products and Services

Sustainable Products and Services

The Company always regards the scientific and technological innovation as the guiding principle the market the direction the

enterprise the main body scientific research institutes and universities the support strategic customers and key suppliers the

alliance to establish the seamlessly-linked creative the “Double Four-in-One” mode involving production quality control R&D

design and marketing so as to carry out basic critical and forward-looking scientific researches improve the comprehensive

technical level of the industry and help the industry’s upgrade from manufacturing creation to creativity. Moreover the Compa-

ny regards “enterprise development through science and technology” as an important strategy for the Company’s development

and the transformation of scientific research innovations and scientific and technological achievements the Company’s primary

task in order to thoroughly build the enterprise’s core competitiveness maintain the leading position of technology introduce the

healthy and sustainable lifestyle and convey the infinite connotation of the development of modern textiles.

Focused on the main business over the more than three decades Lu Thai has iterated its yarn from carded cotton to combed

cotton from ordinary ring spinning to compact spinning and from ordinary yarn count to high count and super high count. In

terms of fabric the Company has applied technologies from ironing to long-lasting non-iron coupled with health and comfort

from nonelastic fabric to 360° stretch and from weaving to knitting. Moreover the Company has upgraded its sewed shirts to

seamless shirts. Lu Thai explores infinite possibilities in an innovative manner to guide a healthy and sustainable lifestyle and

showcase the implications of modern textile development.(IV) Creatively Promote Sustainable Development

Sustainable Products and Services

Through continuous improvement of scientific research

and innovation system the Company actively builds its

scientific and rational innovation network and continuously

increases investment in science and technology research and

development.Regarding the 106 technical research projects approved for

the year the Company carries out regular summary validation

and inspection at each node with an average completion rate

of each node of 94%. It also managed 31 product development

projects and organized technical review. To meet the market

needs amid the pandemic it mainly developed protective and

antiviral fabric and garment.The Company always insists on the independent innovation

enhances its technical cooperation with various research

institutes colleges and universities strategic clients and

important suppliers by relying on various technical platforms

including the national enterprise technical center the national

industrial design center the national demonstration base

for introducing talents the national post-doctoral scientific

research station and Shandong Provincial Engineering

Technology Research Center dedicates itself to the cutting-

edge technical research and gradually transforms from the

technical research to the integrated product development.

Besides the Company will also transform from the overcoming

of key technical difficulties to the mastery of technical

principles and the formulation of industrial standards and from

the focus on technical innovation to the dynamic integration

of new technique exploration with model innovation improve

the low-carbon green and sustainable development enhance

the impetus and vigor for the enterprise development promote

the contribution of scientific and technological progress to the

industrial development and propel the industrial upgrading

In 2020 the Company declared 20 projects at the national

ministerial and provincial level. It was also identified as a

national high-tech enterprise and a national demonstration

enterprise of green industrial product design and passed

the review of the national manufacturer in single item. It was

granted two awards for top ten innovative products by China

National Textile and Apparel Council (CNTAC). In 2020 the

Company developed 43 new products and technologies

and completed 83 technical improvement tasks in which

three were identified as internationally benchmarked upon

appraisal by experts organized by CNTAC. Additionally it led

or participated in the formulation of five industrial standards.

Chapter 4

Sustainable Production & Operation

● Safety Operation

● Green Production

● Climate Action

● Supply Chain Management

Sustainable Development Goals (SDGs) of the

United Nations

Ensu re hea l t hy

lives and promote

well-being for all at

all ages.

Ensure access to

water and sani-

tation for all with

sustainable man-

agement.P r o m o t e s u s -

tained inclusive

and sustainable

economic growth

full and productive

employment and

decent work for

all.

Ensure sustaina-

ble consumption

and product ion

patterns.

Ensure universal

access to afforda-

ble reliable and

m o d e r n e n e r g y

services.Make cities inclu-

sive safe resilient

and sustainable.Take urgent action

to combat climate

change and its im-

pacts.Sustainable Production & Operation

Safety shall be the lifeblood for the enterprise’s development and the guarantee for the healthy stable and

sustainable development of enterprises. In 2020 the Company actively promoted the construction of a

long-term mechanism for safe production established and improved a strict and scientific safety production

responsibility system and supervision system continuously improved safety production rules and regulations

promoted the standardization of the safety production management and comprehensively enhanced the

level of safety production management and safety production. As a result the safety situation continues to be

stable and positive on the whole.(I) Safety Operation

The Company always adheres to the principle of “safety first prevention first comprehensive management”

promotes the safety production standardization and continuously promotes the construction of safety

production management system. In 2020 it formulated and improved 49 policies on production safety

management defining safety responsibilities of the Company’s personnel at all levels ranging from the

president to the grassroots employees. Meanwhile the Company has established safety production

committees at home and abroad to strengthen the construction of leading cadres and supervision teams.

All factories and departments have established their own safety and fire management leading groups

and appointed full-time safety and fire management personnel to improve the Company’s safety and

fire management network. Through training education and guidance the Company will strengthen the

construction of a safe production culture

1.Construction of Safety Production Management System

Sustainable Production & Operation

2.Management of Safety Risks and Hazards

3. Management of Chemicals

The Company continued to improve the dual prevention

system of hierarchical control of production safety risks and

identification and management of hazards and persists in risk

prevention and early identification. It took risk identification as

the basis hierarchical risk control as the key identification of

hazards as the approach and information technology as the

platform to build the dual prevention mechanism of control and

identification of corporate production safety risks thus building

safety management based on standards and targets.

Besides the Company thoroughly identi f ied various

environmental factors and sources of dangers took effective

management and control measures established its own safety

production risk information database and assembled relevant

information on enterprise safety production. Meanwhile the

Company applied the qualitative and quantitative statistical

analysis methods to determine the severity of various

risks so as to define the priority of risk control and related

control measures. Based on the department’s daily safety

management and the supervision and control of the safety

management departments at all levels the Company carried

out the process management and implemented the effective

control to achieve the goal of improving the safe production

environment and reducing and eliminating safety production

accidents.

In 2020 the Company enhanced risk inspection including

4813 routine safety inspection items and carried out more

than 30 comprehensive inspections in total including seasonal

inspections holiday inspections and special inspections

identifying 1460 hazards. It identified 220 sources of danger

including three major risk hazards and formulated effective

preventive measures.improve the personnel’s safety production awareness legal and regulatory knowledge and professional quality and competence

implement the safety production target responsibility management system and decompose various safety management

objectives at all levels. The environment of all workplaces met standards and all employees wore protective equipment

completely in good condition.Sustainable Production & Operation

The Company controlled the entire process of procurement

transportation storage use and disposal of dangerous

chemicals established Safety Management Regulations

on Dangerous Chemicals clarified the responsibilities of

relevant departments and strengthened the construction of

dangerous chemicals systems. In addition the Company also

formulated 2020 Annual Dangerous Chemicals Emergency

Plan and carried out emergency drills for dangerous

chemicals emergencies so as to continuously enhance the

reliability and practicability of such emergency plan and

improve the coordination and cooperation between different

departments. For the personnel involved in the work of

dangerous chemicals the Company implemented the level-3

safety training system formulated 2020 Annual Training

Plan organized a series of safety education activities and

strengthened the personnel’s safety awareness by learning

related laws and regulations and chemical-related knowledge

and analyzing different cases so as to continuously improve

the Company’s safety management level of dangerous

chemicals.Using safe and healthy chemicals the Company is aimed at

producing safe reliable and green textiles that can be traced

in the entire industrial chain and fulfills its responsibilities

with a sincere attitude and actions of green manufacturing.Through efficient chemical management and good process

control it has reduced the content of pollutants and joined

hands with brand owners suppliers related parties in the

chemical industry and non-governmental organizations to

reduce impact on the environment.The Company adopted a who le -process chemica l

management model through which it managed chemicals

from the source and mainly managed the process with the

support of endpoint control. It took the initiative to prevent

hazardous chemicals from the source established a grid-

based and information-based very large data base (VLDB)

of all chemicals introduced and integrated third-party

resources to rapidly identify reduce substitute and eradicate

toxic and hazardous chemicals. The test pass rate of new

dyeing auxiliaries reached 100%. The Company tested and

monitored hazardous chemical substances in outputs (textiles

waste water and sludge) and ensured that both inputs and

outputs complied with laws regulations and standards of the

government so as to meet the needs of buyers and consumers

for health safety and environmental protection.It included ecological control of chemicals in supply chain

management joined hands with suppliers to better use

chemicals while reducing discharge and vigorously promoted

upstream suppliers to carry out ecological control and obtain

the certificate of conformity (COC) of chemicals to ensure

ecological stability of source chemicals.Though disclosure of the waste water discharge data on IPE

and ZDHC Gateway and brand association the Company

achieved open and transparent data and information

transmission in the supply chain.

4. Production Safety Emergency Management

Sustainable Production & Operation

The Company continued to improve the construction of

emergency management system and steadily enhanced its

abilities in accident prevention and emergency response. In

order to improve the emergency processing capacity of the

Company and various production plants and departments

during accidents the Company perfected Regulations on

Emergency Preparedness and Response Management and

other rules and regulations in 2020 formulated Emergency

Preparedness and Response for Fire Accidents Emergency

Preparedness and Response for Hazardous Chemicals

Leakage Accidents Emergency Preparedness and Response

for Natural Gas Leakage Accidents and other response plans.

At present the Company has established 9 full-time rescue

teams and convened more than 110 full-time firefighters

and more than 1700 volunteer firefighters. It has 63 safety

supervisors and 100 employees with safety management

qualification certificate. In 2020 the Company provided

firefighting training sessions for more than 2300 persons

including team leaders group leaders employees in

key positions of firefighting full-time and part-time safety

supervisors and volunteer firefighters. By doing so it

strengthened the safety awareness and sense of responsibility

of employees improved the capabilities of firefighting

inspection and eradicated fire risks. Last year it particularly

provided firefighting training sessions for more than 700 new

employees helping them to acquire common sense of fire

safety learn how to use firefighting equipment correctly and

improve the capabilities of fire escape and fighting early fires.

According to the annual plan it organized two drills of fire

emergency rescue for all employees. In this way it checked

the effectiveness of the contingency plan and kept improving

the plan and enhanced the emergency response capabilities

of employees and the guard team.

In 2020 in line with arrangements and plans of departments and application and needs of production departments the

Company provided 45 lectures of occupational health and safety with cumulatively more than 9500 trainees. It invested

cumulatively RMB 14.5 million in safety in the whole year.

Amid the pandemic in 2020 there was huge pressure on all levels of the economy and society from entities to psychology

and from supply to demand. Faced with the severe situation of responding to the pandemic and the extreme scarcity of anti-

pandemic supplies the textile industry devoted every effort to fight against the pandemic by manufacturing and supplying anti-

pandemic supplies including masks and protective garment aiming to protect life safety of all people including medical staff of

all countries and contribute to response to COVID-19 support of people’s livelihood and development across the globe.

5. Management of Response to COVID-19

Sustainable Production & Operation

Specifically Lu Thai took actions without delay. It actively joined in the actions for stability of the global supply chain and

industrial security promoted manufacturers and purchasers to fulfill their social responsibilities amid the pandemic and thus

injected positive energy into the recovery of the global textile industry. Based on the latest changes in the situation Lu Thai

assisted in resumption of work and production further enhancing confidence of customers. It adjusted production rapidly to

manufacture anti-pandemic supplies such as masks and protective garment to contribute to global response to COVID-19. In

spite of the impact of COVID-19 the Company has been staying true to its responsibility and mission and holding a responsible

attitude to weather through difficulties together with its employees customers shareholders suppliers partners and members

of the public. It firmly believed that concerted efforts would lead to a bright future.Since the outbreak of COVID-19 Lu Thai has been paying close attention and proactively fulfilling corporate social responsibility

by donating RMB 1 million to the Red Cross for fighting against COVID-19 and treating and curing the infected.Sustainable Production & Operation

During the period of the pandemic on the one hand the Company mainly stayed in contact and followed up with customers

to ensure timely communication with them and introduced new products to them via online promotional meetings customized

promotional meetings and designer promotional meetings for mutual support and joint development. On the other hand it

practiced the philosophy of the community of common future with customers by timely allocating masks and other anti-pandemic

supplies to them. To respond to COVID-19 the Company improved its research manufacturing and sales of protective products

including masks isolation gowns protective garment and home isolation fabric and vigorously developed functional fabric such

as antibacterial and antiviral fabric to complete its orders. In 2020 it sold 26.31 million masks 16.55 million isolation gowns and

2.34 million meters of protective fabric mainly to Japan Germany Italy and Canada.

On 22 May 2020 Lu Thai convened a commendation conference of response to COVID-19 in which it selected four advanced

collectives fighting against COVID-19 ten models fighting against COVID-19 and 100 advanced individuals fighting against

COVID-19.

(II) Green Production

Closely following the trend of “green and sustainable economy and low-carboncompetition” in the global economy the Company was dedicated to the global

competition of green and low-carbon economy and aimed to knit high-quality

green textiles for the world. By constantly strengthening resource conservation

management enhancing environmental governance boosting circular economy

of enterprises promoted green manufacturing and constructing green factories

the Company vigorously built a green ecosystem for textile economy and jointly

promoted ecological civilization with customers and suppliers.

1.Sustainable Utilization of Resources

（1）Water Resource

Sustainable Production & Operation

（2）Energy Control

Sustainable Production & Operation

The Company strictly abides by relevant laws regulations

standards and policies implements such laws and regulations

as Implementation Measures for the Execution of the Strict-

est Water Resource Management Policy and performs water

conservation according to relevant requirements of water re-

source management authorities.The Company has established a long-acting mechanism for

water conservation management. It has formulated the plan

for unit consumption of water by products and the annual

water conservation plan divided the water conservation goal

among workshop sections and production teams with clearly

defined responsibilities. It has strictly implemented the system

that requires simultaneous design construction and applica-

tion of main works and water conservation measures and the

establishment of adequate water consumption plans water

conservation goals water conservation goals and measures

and water management policies. It has strictly conducted wa-

ter balance tests according to the specified cycle.

During production the Company has encouraged production

departments to develop new water conservation techniques

promoted semi-cylinder dyeing overflow dyeing and short liq-

uor dyeing and focused research on production technologies

with “minimized and zero use of water”.The Company has increased investment in reclaimed water

reuse projects further promoting recycled use of water re-

source and providing long-term guarantee for social develop-

ment. It has invested RMB 80 million in the development of a

reclaimed water reuse project with a capacity of 20000 tons/day which adopts the world-leading “immersion ultra-filtration+ reverse osmosis” technology to realize the regeneration and

reuse of waste water. Indicators of the Company’s reclaimed

water were better than the national quality standards for re-

used water. In this way it succeeded in recycling regional wa-

ter resources. Reclaimed water accounted for 25%.

Sustainable Production & OperationThe Company has focused on the theme of “promoting theconservation and recycling of resources on all fronts taking

actions of water conservation reducing energy and material

consumption and realizing cyclic connection between pro-duction and life systems”. On top of that it comprehensively

boosted energy conservation helped to build a resource-sav-

ing and environment-friendly society and proactively per-

formed corporate social responsibility.

In 2020 the Company continued to promote energy conser-

vation and emission reduction earnestly implemented spirits

from such meetings strengthened leadership to coordinate

the work formed a new pattern of energy conservation andemission reduction that “focuses on deepening system re-forms supported by technology innovation to achieve greendevelopment”.

Centering around its main task of product structure upgrading

the Company adjusted measures to local conditions and es-

tablished science-based plans. In terms of energy conserva-

tion and emission reduction the Company set specific goals

and had highlights and its energy conservation plan was

both continuous and phased. Besides it further improved the

institutional development of the measurement management

system accurately grasped the scale and made the energy

consumption statistics reasonable and truthful. Moreover the

Company improved the information transmission capacity of

the Energy Control Center and proactively developed an on-

line energy monitoring system as required by the NDRC and

the Ministry of Industry and Information Technology (MIIT)

to ensure digital and dynamic monitoring of corporate ener-

gy management. Additionally it strengthened the promotion

and implementation of energy conservation and emission

reduction through publicity and training sessions in a variety

of forms. It also kept enhancing on-site energy management

and put an end to leakage. It used scientific design to exercise

management of major energy including electric power steam

and natural gas

It used scientific design to exercise management of major

energy including electric power steam and natural gas. In

terms of electric power consumption the Company carried out

construction works strictly in accordance with the best energy

conservation plans for new reconstruction and expansion pro-

jects maintained the traditional advantages including motor

frequency conversion and water pump throttling and proactive-

ly explored the application of excitation motors and magnetic

mechanical and electrical equipment in actual production. It

conducted deployment of key energy consumption equipment

optimized the networking of self-produced air pressure gas

pipes to realize demand-based gas supply and introduced

two-stage permanent-magnet variable frequency screw-type

air compressors. By optimizing the air pressure and heat ex-

change system it succeeded in making use of the thermal

energy of compressed air and thus was able to save 520000

kWh per year. The Company continuously replaced modulator

tubes with LED lights. Specifically it replaced 200000 modu-

lator tubes cumulatively and saved energy by 45% in terms of

electricity consumption for lighting.In terms of heat consumption the Company took emphasis on

quality and efficiency enhancement and continued to improve

the quality of steam transmission. It continuously improved

the heat exchange capacity of the sewage waste heat system

and increased the heat exchange efficiency of heat exchange

equipment. It optimized the layout of steam transmission pipe-

lines and through years of research and practical experience

used the most cost-effective new heat insulation materials

to insulate transmission pipelines and parts along the way

and reduce the loss in steam transmission. It used technical

means to continuously increase the combustion efficiency of

gas equipment and researched the application of recycling

waste heat from fume and the technology of air pre-heating

processing to reduce equipment heat loss and substantially

cut gas consumption.

By deepening energy control measures promoting technology

innovation and taking other related measures the Company

has further improved its energy management system with en-

hanced energy management level cut the costs of energy op-

erations and successfully completed the annual goal of energy

conservation.

The Company always places importance on the development

of circular economy by reducing resource consumption

systematically from the source in production cutting the

generation of waste and realizing comprehensive use of

diverse resources. It has developed more than 100 energy

conservation and environmental protection technologies

in a number of aspects including liquid ammonia recovery

equipment condensate recovery colored alkali recovery and

recycling of cooling water in slashing and finishing workshops.In terms of the recycling of liquid waste the Company has

introduced two sets of German alkali recovery equipment and

independently developed two sets of recovery equipment

to recycle liquid alkali from mercerizers with a reuse rate of

more than 80%. In terms of solid waste reduction and reuse

the Company carries out grade-based recovery and separate

reuse and treatment of waste cotton and lap waste.Through process and equipment improvement the Company

recovers paper tubes woven bags and other packages from

garment factories and reuses them in yarn-dyed fabrics which

has substantially reduced the waste of resources. In terms of

the yarn tubes by replacing paper tubes with plastic tubes the

Company reduced waste through recycling.

2.Reuse of Waste

(III) Climate Action

Sustainable Production & Operation

(IV) Supply Chain Management

The Company attaches importance to the development

of ecological civilization and the protection of ecological

environment and makes solid steps to drive the improvement

of environmental protection. It has proposed the overallrequirements of “continuously taking air pollution controlactions winning the battle of guarding blue skies expediting

water pollution control strengthening solid waste and garbage

disposal enhancing pollutant discharge standards andhonoring commitments for emission reduction” continued

to ensure orderly implementation of various environmental

measures by inputting manpower materials and financial

resources and achieved long-term development in the

development of corporate environmental policies sewage

discharge control air pollution control and solid waste control.It has improved regional resource environment alleviated the

tense supply of water resources within related basins avoided

water body pollution and built an ecological environment with

lucid water and lush mountains playing a demonstration and

leading role in the industry.

Air pollution control: The Company has proactively exerted

VOCs control spent heavily on the purchase of VOCs control

equipment and carried out installation of online surveillance

equipment required by municipal and regional ecological

environment regulatory authorities.

Emission reduction: The Company has carried out closed

collection and concentrated treatment of waste gas from

sewage to reduce gas emissions from odorous pollutants. It

has also introduced low-nitrogen combustion equipment to

reduce the oxynitride emission from production. Moreover

it has strengthened chemicals control by restricting the

use of and gradually substituting substances that produce

greenhouse gases and damage the ozone layer. It added

seven waste gas treatment facilities and thus recorded an

annual capacity of 865.5 million cubic meters.The Company has exercised management of solid and

hazardous waste and collected stored and transferred such

waste according to relevant regulations on hazardous waste.It has designated places to store hazardous waste assigned

personnel to manage it and appointed qualified units to carry

out standard disposal of it.Through vigorous efforts in energy conservation and emission

reduction and powerful approaches in environmental

protect ion the Company not only has improved i ts

comprehensive corporate management level but also

has delivered the concept of promoting green corporate

development through science and technology innovation.

In 2020 the Company outperformed the national and local

standards in sewage discharge with a YOY decrease of 39%

in COD discharge and 40% in oxynitride emission.The “Dyeing and Printing Waste Water Large-flux MembraneTreatment and Recycling Technology and Industrialization”

technology developed by the Company has won the Second

National Prize for Progress in Science and Technology and

various technologies including the semi-cylinder dyeing

technology and the reuse of reclaimed water are applied to

make great breakthrough in energy saving emission reduction

and the green and low carbon technology in the textile

industry. Meanwhile the Company’s semi-cylinder dyeing

technology ever won Major Energy-saving Achievement

Award in Shandong Province. Besides the Company has won

various honorary titles including National Leading Company

with Excellent Water Utilization Performance in the Textile

Industry Shandong Provincial Water-saving Enterprise

Shandong Provincial Outstanding Enterprise in Energy

Saving (only 5 enterprises win this title) and Zibo Municipal

Outstanding Enterprise with Favorable Energy-saving

Assessment Result and contributed to the development of a

green system and a low-carbon ecological economic circle.Lu Thai has always been committed to building a green

sustainable text i le and apparel supply chain. As an

important part of the Supply Chain Management Strategy

the sustainable development concept shall be regarded

as one important criteria for supplier selection evaluation

and procurement distribution so as to continuously deepen

the cooperation with upstream suppliers downstream

customers and other partners. By means of the Supply Chain

Management the sustainable development concept can be

extended to the entire supply chain.Sustainable Production & Operation

In 2020 Lu Thai continued to optimize the supplier

management system and established the Supply Chain

Department to manage the supply chain in a coordinated

manner. It assessed and managed all suppliers from various

aspects such as quality assurance R&D cooperation

employees’ rights and benefits environmental protection

health and safety and business ethics strengthening

cooperation with advantageous suppliers. The Company

has included suppliers in the scope of safety management

set up a strict supplier access system qualification review

system and supplier assessment system established the

list of qualified suppliers regularly audited and supervised

suppliers and carried out corresponding follow-up and

guidance measures as needed. By sharing resources with

various partners the Company has tried its best to make

them understand and obey related criteria of sustainable

development and promoted the construction of sustainable

development capacity.

Confronted with various opportunities and challenges in the

future Lu Thai is willing to work together with all suppliers

customers and other partners to promote the sustainable

development of the entire industry chain continuously improve

the product competitiveness.Meeting on R&D cooperation between the Company and Tangshan Sanyou

Meeting on R&D cooperation between the Company and Huntsman

Sustainable Production & Operation

Chapter 5

Employee Development

● Employees’ Rights & Benefits

● Growth Platform

● Care for Employees

Sustainable Development Goals (SDGs) of the

United Nations

Ensu re hea l t hy

lives and promote

well-being for all at

all ages.

Ensure inclusive

a n d e q u i t a b l e

quality education

and promote life-

long learning op-

portunities for all.P r o m o t e s u s -

tained inclusive

and sustainable

economic growth

full and productive

employment and

decent work for

all.

Ach ieve gender

equality and em-

power all women

and girls.S t r e n g t h e n t h e

means of imple-

mentation and re-

vitalize the Global

Pa r tne rsh ip f o r

Sustainable Devel-

opment.

Employee Development

Employees are the foundation of the Company and the key

to the business success. The Company actively cultivates the

corporate culture featuring the care and love for employees

adheres to the “people-oriented” values highlights and

safeguards the legitimate rights and interests of employees

truly enables employees to come stay and work well and

creates good and harmonious humanistic environment for

employees’ development providing the personnel guarantee

for the Company’s continuous development.

1. Recruitment

The Company always adheres to the people-oriented principle

and respects and safeguards the legitimate rights and interests

of employees. The Company strictly abides by relevant

international standards and conventions acknowledged by

the host government and applicable laws and regulations

prevailing in the host country such as the Labor Law of

the People's Republic of China the Labor Contract Law

of the People's Republic of China the Law of the People's

Republic of China on the Protection of Women's Rights and

Interests the Labor Law of Cambodian Garment Industry

the Myanmar Factory Law the Vietnamese Labor Law and

the Vietnam Trade Union Law to legally recruit employees.In addition the Company resolutely refuses forced labors

eliminates child labors and executes the non-discriminatory

employment policy. In respect of employment remuneration

training opportunities promotion dismissal or retirement the

Company eliminates and opposes any discriminatory acts

based on race national or social origin social class descent

religion physical disability gender sexual orientation family

responsibilities marriage status union membership political

opinion age or other aspects. The Company respects the right

of employees to form and join any trade unions freely and

ensures the unhindered communication channels. Through

relevant systems the Company can guarantee that employees

have fair and reasonable remuneration benefits vacation and

occupational health and safety rights.

2. Democratic Communication

The Company attaches great importance to the common

construction co-governance and sharing with employees

and emphasis is placed on the democratic management

democratic participation and democratic supervision of

employees. Besides the Company has established a variety

of communication channels so as to timely understand the

needs of employees solve various problems in employees’

work and life and provide them with targeted support and

assistance.

A t home and ab road t r ade un ion and emp loyee

representatives are free to communicate with employees in

regardless of time and place. As the labor union

The pho to shows tha t emp loyees o f Lu An

Garment Co. Ltd. were discussing with each

other. The company held one meeting of employee

representatives each month to learn about employees'

opinions on and suggestions for it

chairman’s reception day is selected monthly or

quarterly meetings of trade union members employee

representatives and the Company management are

held. Meanwhile employees at home and abroad

can give feedback through email suggestion box

and SMS. For different opinions suggestions and

complaints submitted by employees the trade union

and the Company shall conduct timely investigations

and formulate improvement measures. Then

corresponding feedback shall also be given to

employees in order to continuously meet the needs of

employees.On the labor union chairman’s day (the 25th day each

month) the staff union and the democratic union of

the company will receive different complaints opinions

and suggestions from employees on which basis

the chairman will communicate with the company on

behalf of these employees. Under the guidance of the

Ministry of Labor all employees elected employee

representatives.(I) Employees' Rights and Benefits

The continuous development of Lu Thai Company derives

from the passion of employees for continuous innovation.The Company always pays attention to the personal growth

of employees focuses on the development potential of

employees and development opportunities strives to create

an optimal development environment for each employee’s

learning and growth constantly motivate employees’

enthusiasm and innovation spirit and promote the mutual

growth and improvement between employees and the

Company.

1. Education and Training

Based on the talent training plan the demand for the

employee’s growth and development and related job

responsibilities the Company can improve the knowledge

structure of employees enhance the overall quality of

employees upgrade the employees’ professional skills work

attitudes and behavioral patterns maximize their potentials

and realize their value of life to the greatest degree by

investigating the training needs formulating various training

plans organizing the implementation and conducting the

tracking management and improvement.

In 2020 the Company further expanded the business of Lu

Thai School proactively provided training sessions of new

apprenticeship on-the-job training skill training golden blue-

collar training work-based training and high-skilled talent

training carried out independent assessment of skilled talent

and improved the academic qualifications of staff on active

duty. It provided skill training for more than 5500 employees

cumulatively among whom more than 2500 employees

were granted vocational qualification certificates of spinners

weavers dyers electricians and bench workers. In this way

the Company provided a good platform to help with the growth

and development of its employees.In overseas factories the Company formulated corresponding

training schemes and took various measures including the

apprentice led by the master on-site video training and the

establishment of training teams and the trainer system in line

with the characteristics of local employees. Different training

cycles were set and modularized and standardized

training tutorials based on hours were prepared. These

training sessions aim to ensure that employees are able to

meet post requirements and adapt to their posts as soon

as possible. Training for junior management personnel was

conducted to enhance their management level and make

them improve fast laying a foundation for the Company’s

promotion of localization.(II) Growth Platform

As shown in the picture employees of Polaris Apparel Co.

Ltd. Were voting their Representative.

3. Establishment of Scientific Remuneration

System

The Company has adopted a variety of methods to motivate

employees and implemented and continuously improved the

remuneration system which highlights specific contributions

of various positions and meet various requirements of

different positions. The Company strictly abides by relevant

international standards and conventions acknowledged by

the host government and applicable laws and regulations

prevailing in the host country. Furthermore the Company

follows the principle of distribution according to work

implements the equal payment for equal work and the system

of more payment for more work avoids withholding the

employee’s salary disciplinary purposes and regularly conveys

the composition of wages and bonuses. The Company aims

to fully realize the value of employees by establishing a sound

and scientific remuneration system that allows employees to

share the benefits from the Company’s growth.Remuneration of employees abroad saw continuous increase

with a percentage between 6% and 10%.

Employee Development

2. Career Planning

Based on the career development of the employees the Company has also designed the training system and prepared

corresponding training plans. In many ways the Company has enriched the employees’ working experience broadened

the field for career development and accelerated the growth and success of employees.

By the end of 2020 the Company had owned one National Friendship Award one Taishan Scholars Specially-invited

Expert two Shandong Provincial Outstanding Young and Middle-aged Experts three Shandong Provincial Chief

Technician five Qilu Chief Technician and five Shandong Provincial Chief Industrial Technicians. In 2020 domestic

companies newly hired 3227 technicians. After years of hard work the Company has gradually cultivated a talent team of

reasonable structure and high quality to support the healthy stable and sustainable development of the Company.

Employee Development

3. Diversification of Employees

The Company has formulated and implemented the goal for

diversification in all aspects from the gender age ethnicity

and religious beliefs of its employees. Meanwhile the

Company has strictly observed relevant laws and regulations

and international conventions to ensure the fair employment

of male and female employees and actively promote the

localization of overseas employees because the localization

of employees can help the Company understand different

cultures of different regions promote the employment of the

local people and facilitate the growth of local economy.In overseas factories Lu Thai has attached great importance

to the localization of employees and focused on stimulating

their initiatives from the talent selection and training to

formal appointment in which way some employees with

corresponding management and technology knowledge

can become skillful quickly and adapt themselves to various

positions. During the selection of foreign managers priority will

be given to employees with strong adaptive capacity learning

ability and outstanding skills. Through assessing developing

and training technical cadres corresponding technical

personnel and management personnel will be clearly classified

based on their scores and abilities and corresponding training

will accordingly be carried out.

4. Evaluation of Outstanding Employees

In 2020 the Company made great effort to create a good

atmosphere in which all employees could learn from

outstanding employees and make themselves become

outstanding employees by holding various activities including

the evaluation of outstanding employees technical skills

competitions science and technology progress commendation

conference etc.. Through advocating the spirit of workmanship

and appraising and electing Lu Thai Craftsmen all employees

will be inspired to research and develop new technologies and

continuously improve their knowledge skills and attainments

based on their own work. All incentives and awards amounted

to more than RMB 10 million.In the course of development Lu Thai has always adhered to the value of People First and regarded human resources as the

Company’s primary resources. While maintaining its healthy stable and sustainable development the Company has allowed

its employees to share its developmental achievements. Based on the principle of Attracting Talents by virtue of Corporate

Culture the Company carries out the seamless management throughout the process. From employees’ entering into the

Company learning and growth family building to their children’s education all-round management support and assistance

will be given as a means for care and love for employees in which way employees will be no fear of attacks from behind and

are willing to seek common growth and development with the Company.(III) Care for Employees

Employee Development

1. Recreational and Sports

Activities

Based on the principle of “RetainingTalents by virtue of Career Emotionsand Corporate Culture” the Company

highlights the construction of corporate

culture and humanistic environment. In

addition the Company has established

the employees’ part-time symphony

orchestra and other organization to

make their life more colorful. Further

the Company positively creates the

harmonious atmosphere and strives to

build a good working environment for

employees so as to make their work and

life happier and continuously improve

their sense of belonging and satisfaction.In line with the characteristics of the host

country various overseas production

bases fully respect the free will of their

employees and organize diversified

recreat ional and sports act iv i t ies

based on different cultures to enrich

employees’ work and life and enhance

the collective cohesion.

2. Welfare Treatment

As the Company always attaches great

importance to the employees’ welfare it

has actively built the culture of “Home”

focused on the employee satisfaction

and created the harmonious and

pleasing humanistic environment for all

employees. For example the Company

will provide employees with diversified

working lunches free of charge; various

holiday gifts will be presented to female

employees on International Working

Women’s Day (March 8); quarterly

welfare wil l also be granted to al l

employees; the Company will organize

various lectures on health knowledge;

the Company’s senior management

will have a dinner with employees on

the Mid-Autumn Day; the Company will

provide employees with comfortable

accommodation environment and all

dormitories will be equipped with air

conditioners with available Internet

Access; the Company will pay attention

to the mental heath of employees and

provide free psychological counseling

services. By paying attention to the

employees’ emotions health and diets

the Company will continuously enhance

their happiness and sense of gain and

improve their cohesion and centripetal

force.

3. Help and Support Employees

In order to better fulfill its responsibilities

and obligations of safeguarding the

legal in terests of employees and

exclude the difficulty and anxiety for

them the Company has continuously

given assistance and warmth to those

employees in need. In order to help

their children attend the kindergarten

the Company has invested and built

an internal kindergarten to benefit the

internal employees while providing the

society with inclusive services. In order

to care the employees’ families and

encourage their children to contribute to

the nation the Company has established

the Golden Autumn Scholarship as

incentives for their offspring’s study

in universit ies. For the purpose of

eliminating the difficulties encountered

by employees the Company has set up

the assistance mechanism to help those

employees in trouble. For example Lu

Thai Assistance Funds was organized

to grant relief funds to any employee

experiencing sudden changes or under

special circumstances and their direct

relat ives. In 2020 a total of RMB

211000 was donated to employees in

need. During holidays the Company’s

senior management would visit and

express sympathy to those extremely-

poor employees at the grassroots level

and encourage them to rebuild their

confidence and embrace their new life

with firm attitude.

Employee Development

4. Spare-time Life

In order to enrich the spare-time life

of employees the Company has built

various clubs swimming pools fitness

rooms libraries and e-reading rooms

in domestic and overseas factories on

which basis employees can relax their

body and mind enjoy colorful spare-time

life enhance their friendship have deep

mutual understanding and strengthen

their abilities. By virtue of the Company’s

humanistic care the cohesion and the

sense of belonging of employees can

thus be reinforced.

7. Female Employee

Management

The Company established the Female

Employee Committee to take charge

of female employees. In 2020 to

commemorate the 110th International

Working Women's Day carry forward

the Company's excellent corporate

cul ture enr ich the cul tural l i fe of

employees in their spare time guide

female employees to practice new

ideas and make achievements and

fully display the unremitting pursuit and

ambition of female employees so as to

boost the sound stable and sustainable

development of the Company during

the period of the International Working

Women's Day the Female Employee

Committee organized online activities

based on the current new situations

including a writing competition selection

of short video works online reading and

micro-course online training.In the whole year a total of 20 training

sessions were held where 5184

employees attended. Among them there

were 11 sessions about psychological

hea l th s i x sess ions abou t se l f -

improvement and family education and

three lectures on special topics namely

"maternal love as a beam of light"

perinatal care and "painless labor" and

knowledge about maternity insurance

and medical insurance.

Free physical examinat ions were

organized for female employees. A

total of 4500 employees received the

examinations this year with a total

expense of approximately RMB 70000.

5. Visit the Employees’ Home

and Understand their Life

D u e t o t h e s u d d e n o u t b r e a k o f

COVID-19 overseas employees could

not visit their relatives back in China as

scheduled. To solve this problem the

Company paid visits to their relatives

and helped solve their difficulties. The

Company visited 304 persons during the

Mid-Autumn Festival and 209 persons

during the Spring Festival.

By organizing different forms of home

visits and exchange activities including

attending local employees’ weddings

celebrating birthdays for employees

a t tend ing the adu l t ceremony o f

employees’ families etc. the Company

tried to understand the family and living

conditions of employees so as to be

closer to their life and build a good

humanistic environment.

6. Respect the Local Traditional

Culture Participate in Local

Folk Activities and Better Blend

into Local Culture.

According to different conditions of

different countries where overseas

production bases are located the

Company respects different traditional

cul tures prevai l ing in the region

participates their in ethnic activities and

better blends into the local culture and

Employee Development

Chapter 6

Social Welfare

● Help and Support the Impoverished and Deliver the Positive Energy

● Donate Money for Schools and Shape the Future

● Open and Share Promote the Local Development

● Charitable Activities Contribute to the Community Development

Sustainable Development Goals (SDGs) of the

United Nations

Eradicate extreme

poverty for all peo-

ple everywhere.

E n d h u n g e r

a c h i e v e f o o d

security and im-

proved nutrit ion

and promote sus-

tainable agricul-

ture.

Ensure inclusive

a n d e q u i t a b l e

quality education

and promote life-

long learning op-

portunities for all.

B u i l d r e s i l i e n t

infrastructure pro-

mote sustainable

industrial ization

and foster innova-

tion.

Ensu re hea l t hy

lives and promote

well-being for all at

all ages .Promote sustained

inclusive and sus-

tainable economic

growth fu l l and

productive employ-

ment and decent

work for all.

Ach ieve gender

equality and em-

power all women

and girls.Make cities inclu-

sive safe resilient

and sustainable.Social Welfare

The Company adheres to the traditional virtues of the Chinese nation through respecting the old and taking good care of

children conducts various charity activities pays attention to the disadvantaged groups and actively creates the good

atmosphere for building a harmonious society. In recent three years the Company has provided a total of RMB21 million for

poverty alleviation and social welfare donations. At the end of 2020 the Chairman and his family members continued to donate

RMB1 million to the elderly in the district based on 13 consecutive years of donations. Now they have donated RMB15 million in

total to continuously carry forward the traditional virtue of respecting and honoring the elderly.Lu Thai has always attached importance to supporting the development of education. The Company established

Lu Thai Textile Scholarship and Lu Thai Textile Education Fund to encourage teachers with outstanding teaching

achievements and students with excellent academic performance and help poor students fulfill their dreams about

campus. As the Company supports the educational development it has promoted schools and enterprises to

complement each other by virtue of their advantages. At the same time priority can be given to graduated students

for their employment in the Company achieving the benefits of mutual development of schools and enterprises.(I) Help and Support the Impoverished and Deliver the Positive Energy

(II) Donate Money for Schools and Shape the Future

Social Welfare

(IV) Charitable Activities Contribute to the Community Development

The day 12 March 2020 marked the 42th Arbor Day of China during which time the Company organized volunteers to

participate in the activities held by communities bringing a great upsurge in tree planting in Spring and joint development of

ecological homestead.In the process of achieving sustainable development the development of enterprises is inseparable from the local department’s

participation and support and the local development also requires the creation and contribution of enterprises. While realizingits healthy and stable development Lu Thai adheres to the corporate mission of “Creating wealth Contributing to the society

Clothing the country and Boosting the development of the world” and is committed to continuously contributing to the local

development creating benefits and jobs increasing tax revenues and improving people’s livelihood in order to actively

undertake its social responsibilities reward the society and live in harmony with the society.(III) Opening and Sharing Promoting the Local Development

Social Welfare

As the acceleration of China’s “Going Global” policy Lu Thai has developed and steadily promoted the Company’s

comprehensive international strategy set up branch offices respectively in Milan and Tokyo established its subsidiary in New

York and built various production plants in Vietnam Cambodia and Myanmar. Besides the Company has made full use of

global resources and implemented the effective industrial layout in all aspects from R&D and design production and operation

market development and customer service etc.

Further the Company has also built many production plants

in Cambodia Myanmar and Vietnam. Based on Lu Thai’s

excellent corporate culture it pays attention to the openness

and inclusiveness of culture honors local customs cultural

traditions and religious beliefs respects the cultural diversity

and promotes the exchange of different cultures. Combined

with local laws and regulations customs and practices it

has formed a corporate culture with local characteristics and

designated a specialist in charge of carrying out researches

and the implementation. While driving the development of

the surrounding areas the Company also ensures that the

employees could fully understand and acknowledge the

corporate culture so that the corporate culture is rooted in

the employees’ work and life. Therefore the corporate culture

can support the construction of economy which will in return

promote the surrounding areas’ development and accelerate

the sustainable development of the Company and the

harmonious progress of the local community.

As a garment factory Polaris Apparel Co. Ltd. was invested

by Lu Thai Textile Co. Ltd. in 2014. The company is located

in Svay Rieng Province Cambodia. In 2020 the company

donated approximately USD5800 to the Cambodian

Garment Training Institute Fund (CGTI) through the Garment

Manufacturers Association of Cambodia (GMAC). Besides the

company has

also provided wages and salaries to satisfy the basic needs

of local communities add much more inclusive services to the

employees and create more favorable employment conditions

for the local surplus labors. In order to protect the water

resource environment the company invested USD353000

to build sewage treatment facilities. In order to guarantee the

reasonable disposal of domestic wastes the company has

entrusted qualified units for waste disposal. By taking a series

of measures the company has actively burdened its due

social responsibilities and promoted the stable and sustainable

development of the local economy and society. The Company

was awarded the title of Better Factories Cambodia by the

International Labor Organization. The certificate will continue

to be valid from June 12 2015 on. It passed the SA8000

certification in 2016 and guaranteed compliance to protect the

rights and interests of employees.

Ever since the incorporation Vanguard Apparel Co. Ltd.

has proactively participated in events held by the Myanmar

Garment Manufacturers Association (MGMA) Myanmar

Centre for Responsible Business (MCRB) International

Labour Organization (ILO) Union of Myanmar Federation

of Chambers of Commerce and Industry (UMFCCI) and

International Committee of the Red Cross vigorously assumed

social responsibility established harmonious labor-capital

relationships and made contribution to economic development

and improvement of people's living standards in Myanmar.

Besides the company has payed an active role in the local

public welfare undertakings donated various resources to

build roads for nearby communities helped local residents

obtain convenient transportation conditions and driven the

economic development. Meanwhile the company has also

contributed to build a library for local residents enrich their

spare-time life and help them meet their spiritual and cultural

needs. The company will organize various activities to show

its care and love for children every year make charitable

donations to various orphanages and hold different social

celebrations to care the healthy and happy growth of local

children and facilitate the development of local society. It

passed the BSCI certification in 2017 performed social

responsibility and proactively fulfilled corporate social

responsibility.

Continental Textile Co. Ltd. is an overseas yarn-dyed fabric

production base established in Vietnam. The company pays

close attention to the development of local society and actively

participates in social welfare activities to facilitate the social

development. It ensured sustainable development and

passed certification of SA8000 the organic cotton system the

renewable system and the environmental management system

successively. Since it passed the SA8000 certification in 2017

it has complied with the standards for social responsibility and

never received any external complaint.With a total investment of USD 30 million Lu An Garment Co.Ltd. is located in An Giang Province Vietnam. The production

line features high automation level high product quality and

high level of environmental protection and manufactured

products are mainly sold to the United States the European

Union Japan and other countries and regions. As the

company always adheres to the traditional virtue of helping

the poor it has actively fulfilled its social responsibilities and

showed its care for the learning and living conditions of the

disadvantaged groups especially those in need. It passed the

SA8000 certification in 2017 and proactively fulfilled corporate

social responsibility.In order to better fulfill overseas social responsibilities and

establish a better image for Chinese companies Lu Thai

always adheres to its responsible operations and forms the