Supplier Management

Supplier Management

Fair operation mechanism establishment

Upholding the scientific, efficient and fair management concept, theCompany continues to establish and perfect the supplier managementsystem and mechanism.Through open supplier recruitment, access reviewand evaluation, the Company establishes a strategic, high-quality andqualified supplier catalog and implements dynamic management, to drivethe continuous upgrade of supply chain management. The Companystrictly carries out comprehensive supplier review based on the principlethat “review comes before procurement" and in terms of technologyquality, service, price, reputation, etc. supplemented by on-the-spotinvestigation. The Company selects high-quality suppliers, optimizes thesupplier structure, and expands procurement channels, to create a highquality procurement value chain. The Company implements sunshineprocurement, promotes fair competition, and establishes a unifiedCompany-wide e-commerce procurement platform, CREC ProcurementE-commerce Platform(namely Luban E-commerce Network), whichpublicizes procurement information and solidifies procurement processesIn addition, the Company makes full use of the e-commerce procurementplatform to purchase various products and services online, and promotesopen and transparent procurement activities. As of the end of 2022, therewere more than 290,000 reqistered suppliers on the e-commerce platformof the Company, including 290,000 domestic suppliers and 25 overseassuppliers.

Prohibition of bribery and other illegal activities

The Company implements a commitment system to resist commercialbribery. In the System for the Management of Supplier, various suppliersare explicitly required to sign the Supplier Commitment Letter (《 供应商承若书》) when they apply for registration, and they should promise to abideby national laws and regulations related to anti-corruption and be lawabiding and upriqht. When the Company conducts various procurementactivities, it makes clear in the procurement documents that all types osuppliers must strictly abide by relevant laws and regulations such as thenational Anti-Unfair Competition Law, and prohibit bribery and othelillegal activities. Suppliers should also sign integrity agreements and strictlyimplement the agreement The Company establishes a negative list otsupplier bad behaviors, and includes bribery of employees in thedentification standard of suppliers' major bad behaviors. For suppliers withcorresponding bad behaviors, the Company will take measures to restricttransactions and prohibit them from participating in the Company's newprocurement activities within a certain period of time, and quide suppliersto operate incorruptibly. In 2022, the Company carried out restrictedtransaction management on some suppliers that violated the integrityregulations in accordance with the integrity agreement, and created a faircompetition procurement environment.

Promoting suppliers to fulfill their socialresponsibilities

The Company establishes a supplier access and evaluation managementsystem, conducts a qualified supplier access review for supplier integritymanagement, safe production, environmental protection, etc., andimplements supply directory management for qualified suppliers. Whilecarrying out daily evaluations and annual evaluations of suppliers, theCompany comprehensively evaluates the quality of raw materials providedby suppliers, environmental protection measures, etc, and includes theevaluation results into the annual evaluations of suppliers

In the contracts between the Company and suppliers, the binding clauseson labor safety, safequarding the rights and interests of peasant workersand environmental protection are specified. Suppliers are required toactively implement occupational safety and health protection measuresincrease investment in safety management, and continue to improve safetyequipment and facilities, to provide a safe employment environment andproduction conditions for peasant workers. The Company conducts safetyand health education and training for peasant workers, and activelyprevents safety accidents in the work process, to minimize occupationahazards. The Company earnestly implements national regulations on workinjury insurance and accident insurance, and includes peasant workers inthe insurance coverage. The Company further implements the provisionson the payment of peasant workers' labor remuneration, and ensures thatpeasant workers'remunerations are paid in full and on time by establishinga special account system, a security system, and a payroll system. Bysigning contracts, the Company oversees suppliers to ensure labor safety.safeguard the rights and interests of peasant workers, protect theenvironment, and quides them to fulfill their social responsibilities.