2024 Environmental, Social and Governance ESG Report

2024

HUAGONG TECH COMPANY LIMITED

Notes on the Preparation of the Report

Contact InformationOffice of the Board of Directors ofHUAGONG TECH COMPANY LIMITEDTel: 027-87180126Fax: 027-87180139E-mail: 0988@hgtech.com.cnYou can get more information about HUAGONG TECHCOMPANY LIMITED. through the company’s officialwebsite (https://www.hgtech.com.cn) and JuchaoInformation Network (http://www.cninfo.com.cn).

This is the third environmental, social and governance (ESG) report publicly releasedby HUAGONG TECH COMPANY LIMITED. (collectively referred to as “HGTECH”,“the Company” or “we” ), covering HGTECH and its major holding subsidiaries.Unless otherwise stated, the scope is consistent with the scope of the consolidatedfinancial statements in the annual report of HUAGONG TECH COMPANY LIMITED.(stock code: 000988).This is an annual report and the report covers the period from January 1, 2024to December 31, 2024, and some of the text goes beyond this to increase thecompleteness of the report.

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

The data and cases in this report come from the records or financial reports ofHUAGONG TECH COMPANY LIMITED. and its major holding subsidiaries in actualoperation.

Scope ofthe Report

Timeframe

Basis ofPreparation

Datadescription

ENVIRONMENTAL,SOCIAL AND GOVERNANCE REPORT

HUAGONG TECH COMPANY LIMITED

Company ProfileCorporate Culture PhilosophyIdentification of Important IssuesConcise Overview of ESG Management

ENVIRONMENTAL,SOCIAL AND GOVERNANCE REPORT

Corporate Governance StructureInternal Control and Risk ManagementInformation Disclosure and StandardizedOperationsCompliance ConstructionInvestor Relationship ManagementShareholder Returns

“Innovation-Driven” Development StrategyHGTECH CENTRAL RESEARCH INSTITUTE- source of innovationProducts and Services, Safety and QualityData Security and Clients Privacy ProtectionIntellectual Property ProtectionPromoting Intelligent Transformation andDigital Transformation

Environmental Management SystemResponse to Climate ChangeEnvironmental Protection InvestmentWaste DisposalRational Utilization of ResourcesEnvironmental Protection Initiatives atOverseas Bases

Employee Rights & BenefitsEmployee Development & TrainingEmployee Promotion and IncentivesOccupational Health and Safety

Technology Serves for Social DevelopmentSocial Contributions

Communications with StakeholdersAnti-Bribery and Anti-CorruptionAnti-Unfair CompetitionSupply chain securityEmpowering SMEs for High-qualityDevelopmentCollaborative Development of Industry,Academia, Research and UtilizationProtect Clients’ Rights and Interests

About Us

GovernanceWin-WinGuardianship

EnvironmentGiving Back

SustainableDevelopment

Key Performance TableBenchmarking Index TableFeedback Form

CONTENTS

InnovationEmpowering Hundreds of Industries

Adherence to ComplianceHand in hand with partners to move forwardTake Care of Employee and Development

Chairman's Message 07

Cultivating Green Development MomentumPractice Social Responsibility

HUAGONG TECH COMPANY LIMITEDChairman Xinqiang Ma

Chairman’sMessage

At present, artificial intelligence is accelerating thereshaping of all aspects of human work and life, HUAGONGTECH COMPANY LIMITED adheres to the beautiful missionof “innovation fuels a better world”, integrates ESG intothe development of the enterprise, and strives to createeconomic value while practicing the responsibility to thesociety, the environment and the future.Sound governance is the cornerstone for enterprisesto go through the cycle. The Company has strengthenedthe “Nine Rules of Military Justice” to build a cleanand honest company; made efforts to build a full-cyclecompliance management and strengthened the “ThreeLines of Defense”; and continued to explore the synergisticoperation of the multi-dimensional management mechanismof compliance, internal control and law to ensure a scientificand effective corporate governance structure. At present, theCompany has formed a three-tier ESG governance structureof “decision-making level, management level and executivelevel”, and the Company maintains regular communicationwith stakeholders, accurately identifies ESG core issuesrelated to the Company, and tracks performance in dailymanagement. In 2024, the Company was rated by the State-owned Assets Supervision and Administration Commissionof the State Council as a benchmark enterprise under the“Science Reform Action”.The vitality of corporate innovation originates frompeople and should be returned to them. We have always

regarded our employees, clients and communities as thekey to sustainable development. We continue to improve ourdiversified and flexible training system, help our employeesgrow professionally, emphasize their physical and mentalhealth, and work hard to create a fair and harmoniousworking environment, so as to let the value contributorsstand in the center of the stage, and to give them a greatersense of fulfillment; through “industry + education”, relyingon Hubei Engineers Association, the company continues tosupport rural education, industrial development in old areas,and cultivate outstanding young engineers; the Companyadheres to the corporate philosophy of “client-centered”,and the satisfaction rate of major clients at home and abroadhas been increasing year by year, so as to make scienceand technology truly serve the needs.

Driving the responsibility to the ground by scientific andtechnological innovation. HUAGONG TECH COMPANY

LIMITED adheres to the innovation concept of “technology-driven with market guidance”, vertically builds a two-tierand four-tiered R&D structure between HGTECH CENTRALRESEARCH INSTITUTE and holding subsidiaries,continuously optimizes and coordinates R&D resources ofthe whole group, and increases R&D investment by 23.73%in the whole year, and actively explores AI+, new energy, 6Gand other cutting-edge fields in the face of major industrialdemands and forward-looking technologies. In 2024, we wonthe second prize of the National Science and TechnologyProgress Award, the first prize of the Machinery IndustryScience and Technology Award, and other honors. We knowthat only by embracing science and technology can we winthe long-term trust of our shareholders, the market and thesociety.

Guarding a green future: harmonizing technology andthe environment. Guided by the “dual carbon goals”,

the Company prioritizes green technologies and intelligentmanufacturing, continuously increasing investments inenergy conservation and emissions reduction. We refineproduction processes, enhance efficiency in Three Wastesdisposal and energy utilization, and drive low-carbontransformation across supply and industrial chains. In 2024,subsidiaries were recognized as National-Level GreenFactories and Provincial-Level Green Factories, contributingto the accelerated development of a green, low-carbon, andcircular economic system.

Artificial intelligence is revolutionizing industriesworldwide. HUAGONG TECH COMPANY LIMITED remainscommitted to our culture of open, professional, and efficient,collaborating with global partners to advance sustainabledevelopment through continuous technological innovation.Together, we strive to build a smarter, more sustainableworld."

The company possesses domestically leading R&D and manufacturing technologies for laser equipment,as well as a full industrial chain advantage in the industrial laser sector. It is committed to providingextensive and comprehensive laser-based intelligent manufacturing solutions for the industrial sector,delivering integrated “laser + smart manufacturing” solutions for industries such as 3C electronics,automotive electronics and new energy, PCB microelectronics, semiconductor panels, consumer goods,agricultural machinery, and healthcare. With a comprehensive layout in laser intelligent equipment,automated production lines, and smart factory construction, the company stands as one of China’slargest laser equipment manufacturers and a globally leading provider of “laser + smart manufacturing”system solutions. It is also a National Key High-Tech Enterprise, a participant in international standard-setting, and the lead organizer and contributor to national standard development.

The company continues to solidify its global leadership in thermal management and multi-functionalsensor technologies for new energy vehicles. With proprietary core technologies in the manufacturingand packaging processes of sensitive ceramic chips for sensors, it drives intelligent upgrades across theentire new energy industrial chain. The company provides world-leading multi-dimensional sensing andcontrol solutions for sectors including new energy and smart connected vehicles, photovoltaic energystorage, smart homes, smart grids, and smart cities.

About HGTECH

HUAGONG TECH COMPANY LIMITED (hereinafter referred to as "HGTECH" stock code: 000988)was founded in 1999 in the heart of Optics Valley of China, originated from the Huazhong Universityof Science and Technology (HUST). Listed on the Shenzhen Stock Exchange in 2000, the Companyis a high-tech enterprise group integrating R&D, production, sales, and services, and was recognizedas a National Innovative Enterprise in 2015. Since its establishment, the company has adhered to“laser technology and its applications” as its core business, focusing on in-depth exploration of newtechnologies, markets, and fields. Anchored in the two major sectors of new energy vehicles and digitalempowerment, it has maintained steady and progressive development momentum. HGTECH aimsto “participate in building a fully connected, fully perceptible, and fully intelligent world and becominga globally influential technology leader”, amid the new development paradigm where domestic andinternational cycles reinforce each other, the company will leverage its strengths in innovation to fostermore new technologies, products, and directions, contributing to the strategy of building China into amanufacturing powerhouse.

Company Profile

Business Scope

The company has a leading one-stop vertical integration solution in the optical communication industry,with strategic research and development and large-scale production capabilities for a full range ofproducts from chips to devices, modules, and subsystems. The products include active optical devices,home terminals, network terminals, intelligent vehicle mounted optics, etc., widely used in importantfields such as global wireless communication and AI computing power, ranking eighth in the globaloptical module manufacturer rankings. The company focuses on four major application scenarios: AIGC,5G/5G-A, F5G-A, Intelligent Connected Vehicle, committed to building an intelligent optical networkworld, serving the world’s top Internet service/data application providers (AI computing), NEM (networkequipment manufacturers), and telecom operators; The intelligent terminal business strives to build aworld-class enterprise that integrates personal and home intelligent communication terminals.

Connection Business Unit

Smart Manufacturing Business

000988

STOCK CODE

HUAGONG TECH COMPANY LIMITED

Sensing Business Unit

Overseas Offices

Overseas Subsidiaries

Offices

Sales & Service Centers

Wuhan Optical Valley HeadquartersEzhou Intelligent Manufacturing Equipment Industrial ParkHGTECH Xiaogan Electronics Industrial ParkHGTECH Intelligent Manufacturing Industrial ParkHGTECH Jingmen Industrial ParkHGTECH Optoelectronics Research & Innovation Park

Six Industrial Bases

East ChinaSouth ChinaCentral ChinaNorth China

North America

Australia

Germany

Thailand

Vietnam

Hungary

Overseas R&D Marketing Center

Overseas R&D Marketing Center

Overseas Cooperation in Research and Development

Industrial Base

Industrial Base

Industrial Base 2Industrial Base 1

The headquarter of HGTECH is located in Wuhan East Lake High-tech Development Zone, and thecompany has set up, namely Wuhan Optical Valley Headquarters, Ezhou Intelligent ManufacturingEquipment Industrial Park, HGTECH Xiaogan Electronics Industrial Park, HGTECH IntelligentManufacturing Industrial Park, HGTECH Jingmen Industrial Park, and HGTECH OptoelectronicsResearch & Innovation Park, and more than 60 offices in the four major regions of Central China, SouthChina, East China, and North China, and more than 60 sales and service centers, forming a globalmarketing network layout with 11 overseas subsidiaries, and 10 overseas offices.

Regional Distribution

Corporate Honors & Awards 2024National Science and Technology Progress AwardSecond Prize;benchmark enterprise under the “Science Reform Action”;National Manufacturing Single Champion;Machinery Industry Science and Technology Award First Prize;Disclosed Information Quality: Nine Consecutive Years of“Grade A”Excellence (by Shenzhen Stock Exchange);CCTV’s“Specialized, Sophisticated, Innovative”Annual Best Practices Award;Tianma Award for Investor Relations of ListedCompanies in China;National Green Factory (HGLaser);

2024 “Strong Industrial Chain Brand”in Shipbuilding;Hubei Provincial Science and Technology ProgressAward Second Prize;2024 Hubei Top 100 Enterprises;2024 Hubei Top 100 Manufacturing Enterprises;2024 Wuhan Top 100 Enterprises;2024 Wuhan Top 100 Manufacturing Enterprises;Outstanding Case for New Quality Productivity in Hubei Listed Companies;“Industry-Education Integration Contribution Award”from China Optics Valley.

While delivering cutting-edge innovative products and services, the Company actively complies withregulatory requirements from the State-owned Assets Supervision and Administration Commission andthe Shenzhen Stock Exchange. Upholding the principles of ESG management, we continuously refineand optimize ESG mechanisms, advance regularized ESG governance, and integrate ESG practicesdeeply into daily production and operations to drive high-quality development. In 2024, HGTECHfurther enhanced its ESG governance framework with the goal of building ESG competitiveness alignedwith corporate distinctiveness. A three-tier ESG governance structure “Decision-Making Layer–Management Layer–Execution Layer” was established to clarify responsibilities at each level. Board ofDirectors: Oversees strategic ESG decision-making and supervision; Legal & Compliance Department:

Coordinates ESG implementation under board guidance, Business Units & Subsidiaries: Executespecific ESG works, transforming commitments into measurable actions.

Innovation fuels a better worldParticipate in building a fully connected,fully perceptible, and fully intelligent worldBecome a technology companywith global presence

Open, Professional, EfficientGroup Struggle, Exceeding ExpectationsAchieve value, share success

Mission & Vision

Cultural Spiritualityand Core Values

Corporate Culture Philosophy

Identification of Important Issues

Concise Overview of ESG Management

identify core issues inthe context of thecompany’s actualsituation, industrycharacteristics, andpolicy backgrounds

communications withstakeholders

analysis andsummary of issues

Financial significance

Most important

Most important

Impact significance

Identify important issues

01. Innovation-Driven

02. Product and Service Safety and Quality

03. Supply Chain Security

04. Employees

05. Data Security and Customer Privacy Protection

06. Empowering SMEs for High-quality Development

07. Rural Revitalization

08. Social Contribution

09. Environmental Compliance Management

10. Responding to Climate Change

11. Waste Disposal

12. Energy Utilization

13. Water Utilization

14. Circular Economy

15. Communications with Stakeholders

16. Anti-Bribery and Anti-Corruption

17. Anti-Unfair Competition

18. Pollutant Discharge

19. Intellectual Property Protection

20. Compliant Management

Adherence toCompliance

Sound governance and compliance form the fundamental guarantee forsustainable corporate development. HGTECH continuously enhances itscorporate governance framework, improves the compliance managementsystem, standardizes internal controls and institutional mechanisms,actively maintains strong investor relations, and ensures robust and steadycorporate growth.

The Company strictly complies with the Company Law of the People’s Republic of China, the Corporate GovernanceGuidelines for Listed Companies, and the Listing Rules of the Shenzhen Stock Exchange, along with other applicable laws,regulations, and regulatory requirements. We have established a modern corporate governance structure comprising fourkey bodies—the Shareholders’ Meeting, Board of Directors, Supervisory Board, and Executive Management—ensuring awell-defined, standardized, and efficient governance mechanism. The Board of Directors has established four specializedcommittees: Strategy Committee, Nomination Committee, Compensation and Performance Committee, Audit Committee.Each committee operates with clearly defined responsibilities, functioning independently while ensuring the fairness,transparency, and scientific rigor of corporate governance decisions.

Corporate Governance Structure

Shareholders’ Meeting

Strategy CommitteeNomination CommitteeCompensationand Performance Committee

Audit Committee

Executive Management

Board of Directors

Supervisory Board

Shareholders’ Meeting

Held 4 times，deliberated 22 proposalsBoard of DirectorsHeld 12 times，deliberated 43 proposals

Supervisory BoardHeld 7 times，deliberated 13 proposals

HGTECH Governance Structure Organizational Chart

The Shareholders’ Meeting, Board of Directors, andSupervisory Board are responsible for deliberatingmajor corporate development matters. In 2024, theCompany successfully completed the transition of itsBoard and Supervisory Board. The meeting activitieswere as follows

The supreme authority of the Company, deciding on corporate business policiesand investment plans in accordance with laws, electing and replacing Directors andSupervisors not represented by employees, reviewing and approving reports from theBoard of Directors and Supervisory Board.Shareholders’Meeting

Composition and Key Responsibilities of Governance Bodies

SupervisoryBoard

5 Supervisors (including 2 employee-elected Supervisors and 3 female Supervisors),acting in the interests of all shareholders; exercising statutory powers to superviseperformance of the Board and senior management, financial affairs, internal controls,risk management, and disclosures; safeguarding the lawful rights of the company,shareholders, employees, and stakeholders.

9 Directors (including 3 Independent Directors), serving as the company’s decision-making body, conducting fair and science-based appointments following NominationCommittee procedures, convening Shareholders’ Meetings and implementing theirresolutions, overseeing corporate disclosure matters.

Board ofDirectors

The Company places high importance on internal control systems and risk management. During the reporting period, inaccordance with the Basic Standards for Enterprise Internal Control and related guidelines, we proactively updated andrefined our internal control framework. We have established a scientifically designed, efficient, and operationally effectiveinternal control system that integrates risk management processes across all business operations, a dual-layer monitoringstructure comprising the audit committee and internal audit department supervises and evaluates internal controls,

The company places great emphasis on information disclosure and communication withshareholders and creditors, strictly complying with the Company Law of the People’sRepublic of China, the Securities Law of the People’s Republic of China, and theInformation Disclosure Management Measures for Listed Companies, among other lawsand regulations. We actively disseminate information to investors through various channelsincluding meetings, publications and online platforms, such as annual general meetings,regularly published annual reports, semi-annual reports and quarterly reports, as wellas interim announcements, prospectuses and press releases. All company informationis available through the Shenzhen Stock Exchange website, China Securities Journal,Shanghai Securities News, Securities Times, Securities Daily, and the Juchao InformationNetwork (http://www.cninfo.com.cn). The company discloses periodic reports and interimannouncements in accordance with requirements, ensuring the content is truthful, accurateand complete without material errors, and has never encountered any questioning fromregulatory authorities or media regarding our disclosures.In 2024, the company released 100 announcements and disclosure documents, organized4 large-scale on-site investor communication events, participated in over 300 variousexchange activities, and engaged with more than 2,000 investors cumulatively. Thecompany was awarded the highest “A” rating in the 2023-2024 Information DisclosureAssessment of Shenzhen Stock Exchange-listed companies, marking the ninth consecutiveyear of receiving this honor, which demonstrates recognition from regulatory authorities andwidespread investor approval while setting an exemplary standard in the market. During theyear, the company was honored with several prestigious awards including the “Best Boardof Directors Award” from the China Association for Public Companies’ Tianma Awards,the “Best Value Communication Award” and “Best Value Communication IR Team of theYear” from Jiemin Finance, as well as the “Outstanding IR Team for Investor Relationsamong Listed Companies” from Panorama Network.

Information Disclosureand Standardized Operations

Internal Control & Risk Management

covering: environmental controls, operational controls, IT system controls, internal audit mechanisms. Through continuousimplementation, analysis, and optimization of this system, the Company has: effectively mitigated operational risks, achievedall internal control objectives.In 2024, the company engaged Daxin Certified Public Accountants (Special General Partnership) as its internal control auditinstitution to evaluate the effectiveness of internal controls across all functional departments at headquarters and subsidiaries.The audit scope covered 95.32% of the company’s total consolidated assets and 99.26% of total consolidated operatingrevenue, with no material deficiencies identified in internal control design or implementation during the year.The company publishes its annual Internal Control Self-Assessment Report concurrently with its annual report on theShenzhen Stock Exchange website. Beyond external and internal audits, the company has established a comprehensiverisk governance framework where the Strategic and Risk Management Committee conducts feasibility studies and providesrisk recommendations for major business strategies, investments, financing plans, capital operations and asset managementprojects. Additionally, independent directors and the employee-represented Supervisory Board provide multi-level oversightof the company’s operational decisions and management activities, ensuring robust risk management and corporategovernance throughout the organization.

265 responsesreply rate 100%

300+

handling oninvestor hotline

600+calls

participating ininvestor exchange meetingsproviding responseson the interactive Q&A platform

The company continuously improves the four-level compliance organizationalstructure, coordinates and integrates the resources of the group headquarters,subsidiaries, and external lawyers, and promotes the continuous improvement ofthe compliance management system.The company consistently advances its reform initiatives, including the “ScienceReform Action” within a legal governance framework, adhering to the principlesof “risk orientation, serving the bigger picture, comprehensive coverage, andfocusing on key areas” to strengthen legal review processes. We have enhancedcontract management systems to establish full lifecycle oversight and issued criticalcompliance manuals such as the Guidelines for Preventing Job-Related Crimes,Ten Compliance Rules for Managers, Legal Compliance Risk Alerts for TechnologyEnterprises, and Common Overseas Compliance Risks Chinese EnterprisesShould Know. Targeting key personnel, critical processes, and high-risk scenarios,we conducted six compliance audits covering contracts, litigation cases, and tradesecrets, ensuring timely corrective actions. Through innovative “Business-LegalWorkshops,” we aligned legal and operational priorities, while 15 training sessionsdirectly empowered over 2000 employees. By collaborating with 30+ domesticand international law firms and updating standardized contract templates for sales,procurement, infrastructure, and technology cooperation, we are building a robustcompliance ecosystem.

Compliance Construction

InvestorCommunicationChannels

Investor Relationship Management

In 2024, amid a complex and volatile market environment where capital markets experienced significant fluctuations dueto multiple factors, investor anxiety mounted and market sentiment remained subdued. Recognizing these challenges, thecompany’s Board of Directors placed paramount importance on investor relations management, directing the organizationto promptly address market concerns with accurate and comprehensive responses. Through proactive communication of thecompany’s long-term value proposition and strategic development roadmap, we effectively stabilized market sentiment andreinforced investor confidence during this period of uncertainty.

The company actively implements the CSRC’s key requirements of “strengthening investor-oriented corporate culture andenhancing the investment value of listed companies.” Adhering to the principle of creating sustained value for shareholderswhile maintaining corporate sustainability, we have continuously improved our scientific, consistent, and stable dividenddecision-making and oversight mechanisms. In strict compliance with the profit distribution policies and approval proceduresstipulated in the Company’s Articles of Association, we ensure full protection of minority investors’ legitimate rights andinterests, rewarding their trust and expectations. Since listing, the company has maintained consecutive years of dividenddistributions, with cumulative cash dividends reaching approximately RMB 1.087 billion. The gradually increasing payoutratio demonstrates our commitment to delivering positive returns to investors and underscores the company’s long-terminvestment value.In line with our commitment to sustainable growth and rewarding investor confidence, HGTECH’s 2024 profit distribution planwas approved at the Ninth Session of the Ninth Board of Directors after comprehensive evaluation of the company’s financialperformance, operational requirements, and shareholder return considerations. The proposed allocation will distribute a cashdividend of RMB 2.00 per 10 shares (tax-inclusive) based on the year-end total share capital of 1,005,502,707 shares, with nostock dividends or capital reserve conversions. The total cash payout amounts to RMB 201,100,541.40, while retaining RMB252,621,205.34 in undistributed profits for the subsequent fiscal year, with implementation contingent upon formal ratification atthe upcoming annual shareholders’ meeting.

Shareholder Returns

The cash dividend distribution situation of the company’scommon shares in the recent three years

During the reporting period, the company maintained frequent and in-depth communication with institutional investors throughboth online and offline channels to keep them updated on corporate developments. We sustained close engagement withregulatory bodies and financial media while significantly enhancing interactions with retail investors. This included activeparticipation in the Shenzhen Stock Exchange’s “Visiting Listed Companies” program, hosting earnings briefingsaccessible to all investors, and establishing a dedicated investor hotline to facilitate more direct and effective dialogue. Thesecomprehensive efforts have enabled investors to develop objective, thorough and nuanced understanding of the company,fostering long-term stable relationships built on transparent communication.

HGTECH adheres to independent research anddevelopment, aims at the goal of “global first - launch,industry - leading, and specialized, refined, characteristicand innovative”, and focuses on independent innovationand industrial chain collaborative innovation to achieve theupward and innovative development of the enterprise.

In 2024, the net profit attributable to the parent companyof the company increased by 21.17%, the R&D investmentincreased by 23.73%, and the overseas sales revenueincreased by 25.57%. We have won five national honorsand established one new joint innovation platform, and havebeen included in the “Excellent Practice Cases of ListedCompanies with New Productive Forces in Hubei”.

HGTECH adheres to taking Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as its guidance, andalways keeps in mind the instructions put forward by General Secretary Xi when he inspected HGTECH, which are “Forscientific and technological innovation, first, it depends on investment, and second, it depends on talents.” The companyadheres to the development strategy of “innovation-driven”, closely focuses on achieving high-level self-reliance andstrength in science and technology, and persists in developing high-end manufacturing and service-oriented manufacturing.It has overcome a number of core technologies such as pressure sensors, high-speed optical chips, and silicon optical chips,and the localization rate of ultrafast lasers such as picosecond and femtosecond lasers has significantly increased. In 2024,the company won more than 20 awards, including the Second Prize of the National Science and Technology Progress Award,the First Prize of the Machinery Industry Science and Technology Award, and the “Innovation Award for Laser IndustrialEquipment” of the Seventh Hongguang Award, etc., which have helped China’s energy optoelectronics and informationoptoelectronics industries move forward.

On June 28, 2024, we held the Second Innovation Day of HGTECH - the “New Quality Cup” SelectionActivity of Specialized, Refined, Characteristic and Innovative R&D Achievements. At the event site,the achievements of the HGTECH CENTRAL RESEARCH INSTITUTE of HGTECH since its physicaloperation for one and a half years were centrally displayed, and awards were presented to the winningprojects of the selection of specialized, refined, characteristic and innovative R&D achievements. Amongthem, the New Energy High-voltage WPTC Heater Project of HGGaoli won the first prize, the 3CComposite Laser Precision Welding Series Equipment of HGLaser Precision Business Group won thesecond prize, and the Huagong Zhulong - Steel Structure Digital Intelligent Manufacturing Platform ofHGCyber won the third prize.

The Second Innovation Day of HGTECH-“New Quality Cup” Selection Activity of Specialized, Refined,Characteristic and Innovative R&D Achievements

“Innovation-Driven” Development Strategy

21%

25%

Empoweringhundreds ofindustries

23%

Vertically, a R&D structure with two levels and four gradients of the Central Research Institute and core enterprises hasbeen established to coordinate the R&D resources of the entire group. At the group level, the superior resources from bothupstream and downstream of the industrial chain are integrated to promote the construction of the Central Research Institute.Focusing on national needs and industry development trends, research and development projects are launched mainlytargeting “forward-looking technologies, bottleneck technologies, monopolized products, common technical problems, etc.”.Products and technologies for the next 3 to 5 years are laid out. The technology centers of each subsidiary iterate specialized,refined, characteristic and innovative products, improve processes, and launch research and development projects for itemsthat can be quickly implemented according to customer order requirements and have high gross profit margins. At the sametime, they undertake the relevant work of engineering and industrialization of the R&D achievements of the Central ResearchInstitute.

Technological innovation relies on two key drivers: investment and talent. HGTECH has intensified efforts to enhance both thequality of talent acquisition and cultivation, with a sharp focus on high-caliber expertise. Building upon its established “three-tiertraining” system, the company has partnered with six universities to jointly develop master’s/Ph.D. engineering candidatesand cultivate exceptional engineers. Concurrently, HGTECH resolutely implements its “500 PhDs Initiative.” To date, theCompany has built a technical talent pool exceeding 2,400 professionals, serving as an intellectual powerhouse for bothcorporate sustainable development and advancements in the optoelectronics industry.

Leveraging its investment platform, the company integrates high-potential players across the industrial chain to acceleratethe commercialization and demonstration of technological achievements. Through equity investments, deployment oftop management talent, and collaborative breakthroughs in core technologies, it has nurtured innovative enterprises likeHuaray Laser, Everbright Photonics, and Yunling Optoelectronics – all mastering critical proprietary technologies. Strategicpartnerships with over 30 upstream/downstream partners have co-developed 100+ localized laser equipment solutionsfor new energy, semiconductors, and next-gen display panels. These efforts significantly enhance the completeness andcompetitiveness of energy optoelectronics and information optoelectronics supply chains, establishing a product evolutioncycle of “R&D → Application → Optimization → Maturation.”

Adhere to Organized Innovation

Strategic Development of Innovation Talent

Building Industrial and Innovation Ecosystems

National Science and Technology Progress Award (Second Prize)First Prize in Mechanical Industry Science and Technology AwardNational Manufacturing “Single Champion” EnterpriseNational Green Factory CertificationHubei Provincial Green Factory Certification“Specialized & Innovative · Annual Breakthrough” RecognitionTop 10 Technological Innovation Products of 20242023 Outstanding Smart Manufacturing Application Award (China)“AAA-Rated” Intelligent Manufacturing System Solution ProviderAAA Credit Enterprise (China Electronic Components Association)“Technological Innovation Award”-National “Data Factor ×” Finals (Industrial Manufacturing Track)2023 Smart Manufacturing System Solution “Challenge & Tender” Project“Hubei Premium Quality” CertificationOutstanding Case of New Quality Productivity Among Hubei Listed CompaniesFirst Prize – 1st Central China High-Value Patent CompetitionThird Prize - 1st Intelligent Manufacturing Solution Innovation Competition

In 2024, HGTECH (including its wholly-owned subsidiaries) was honored withInnovation Excellence - 2024 Highlights

2024 “Strong Industrial Chain Brand” (Shipbuilding Industry)Top 10 Most Competitive Optical Device & Auxiliary Equipment Enterprises (China)“Laser Industrial Equipment Innovation Award”- 7th Red Light Awards (2024)MM AWARD 2024 for Innovative Products“Most Competitive Optical Communication Product”-10th ICC Stone Product Heroes List“2024 Innovation Product Award” & “2024 Most Influential Product Award”- 9th CFCF Optical Connectivity Conference“Technological Innovation Award”- 9th Packaging, Printing & Labeling Competition“Top 10 Innovation Award”- Hubei 6th “Workers’ Cup” Entrepreneurship & Innovation Competition

Products and Services, Safety and Quality

In 2024, HGTECH comprehensively promoted the “grand quality concept”, coveringthree major dimensions: product quality, service quality, and business operationquality. Key indicators were established in terms of quality management and leanmanagement, and the management granularity was refined to expand the profitmargin. Specific measures include: improving the quality function of the headquarters,establishing a quality professional qualification evaluation system, distilling the16-character group quality policy (accurate demand, scientific planning, preventionfirst, do it right the first time) through intensive training in the senior managementtraining workshop, learning the management concept of "zero defects", reflecting onthe quality loss of PONC (Price of Non-Conformance), carrying out the cultivationof the first batch of lean black belt talents, and for the first time introducing the valuestream methodology to sort out key projects in the entire value chain and binding themwith talent at different belt levels. Through the above measures, a quality awarenessshared by all employees has been initially formed, the product market indicators havebeen significantly improved, and the brand value of the company has become moreprominent.The company has always adhered to the value of “customer-centricity” andimplemented it in specific work. Focusing on customers’ concerns, the companyensures the consistency of mass-produced products and makes sure that productquality meets customers’ requirements and complies with relevant standards. Thecompany has earnestly implemented and passed the requirements of domestic andinternational quality management system standards such as ISO 9001, ISO 14001,TL9000 (for the telecommunications industry), and IATF 16949 (for the automotiveindustry). It also owns two categories of national CNAS-certified testing laboratories.Based on the production standards of different industries and international leadingquality management concepts, the company has formulated and implemented relevantquality management regulations, such as the “Quality Management Manual”,the “Process for Handling Nonconforming Products”, and the “Measures forQuality Reward and Punishment Management”. A quality management systemhas been established, covering the entire process of products, from design, rawmaterial procurement, production and delivery to after-sales service. Meanwhile,through measures such as production skill training, proposals for improving qualityand efficiency, OCC (Operation Control Center) quality improvement activities,and performance evaluation of suppliers’ quality, the company comprehensivelyenhances the quality of products, services, and business operations. The companyhas also won the Wuhan Mayor’s Quality Award and a series of excellent supplierawards, further demonstrating its outstanding achievements in quality management.

HGTECH focuses on strengthening technological innovation and product innovation as the logicalstarting point for high-quality development. It continuously increases R&D investment and optimizes theinnovation system. At the group level, a Central Research Institute has been established to plan anddeploy strategic and forward-looking innovation achievements from the top level. As a result, a teamdedicated to independent innovation has been formed. With the mission of undertaking major nationalstrategic goals, it promotes the self-reliance and self-improvement of optoelectronic technology.Taking the construction of the Central Research Institute as the starting point, HGTECH focuseson creating a cradle of innovation, a gathering place for high-end talents, and a platform for theconcentration of innovative resources for itself. It continuously strengthens the construction of thetechnological innovation system, aims at the commanding heights of future technological and industrialdevelopment, and in line with the new trends in industry development, has achieved phased results ina number of core technical fields, such as semiconductor (SiC) wafer processing and detection, themanufacturing of complex shaped holes in key components of aero-engines, silicon photonics chipsand optical modules, green ships, visual sorting of intelligent cutting and blanking production linesin the construction machinery industry, and the PTC controller of the thermal management systemfor new energy vehicles. It has also made a comprehensive layout in terms of intellectual propertyrights, achievement awards, and the cultivation of technology-based enterprises. Throughout theyear, it applied for 421 patents, among which 192 were invention patents, and applied for 113 softwarecopyrights.

HGTECH CENTRAL RESEARCH INSTITUTE:

source of innovation

Use an all-in-one backup device for data backup, integrating backup, storage, and recovery functions to protect data security,quickly restore services, and ensure business continuity.Deploy cloud desktops to centrally manage and control R&D data, enhance data security, support remote collaboration, flexiblyexpand resources, and reduce operation and maintenance costs.Use encryption software to encrypt R&D data in real time to ensure data confidentiality, integrity, and availability.

Improve information security management systems and processes. Through regular security audits, risk assessments, andother activities, ensure the effective implementation and continuous improvement of information security measures.Implement strict access control strategies to ensure that only authorized users can access sensitive information.Regularly review the account permissions of application systems and promptly clean up unnecessary permission settings.

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

Data Encryption: Encrypt customer information during storage and transmission to prevent the illegal acquisition or tampering ofinformation during the storage and transmission processes.Access Control: Implement strict access control strategies to ensure that only authorized personnel can access customer information.At the same time, regularly review and update access permissions.Security Audit: Regularly conduct security audits of the use of customer information to ensure that the use of customer informationcomplies with laws, regulations, and company policies.

Deploy unified anti-virus software, issue strategies from the background to strengthen the operating system and ensuresystem-level security.Strengthen password management strategies.Regularly conduct vulnerability scanning and patch updates for the system, and promptly fix known security vulnerabilities.

System Security

Data Security

Management Security

Client Information Security

Network Security

Employee Awareness of Security

Information Security Management Measures

Information Security Management Measures

Construct the network according to the third-level security protection requirements, achieving high-level security standards in thefive aspects of physical environment, network, host, application, and data, ensuring data integrity, confidentiality, and businesscontinuity. Build a multi-layered protection system through technical and management means.Deploy firewalls, web application firewalls (WAF), threat detection and prevention systems to avoid external network attacks.Deploy Internet behavior management systems to regulate users’ Internet behavior, improve network security, protect corporateinformation security, and enhance employees’ work efficiency simultaneously.Deploy bastion hosts to achieve access control, auditing, and monitoring, preventing illegal access and operations.Deploy virtual private networks (VPNs) to enhance network security and privacy, encrypt data transmission, and ensure the securityof remote access.Deploy access control systems to ensure compliant access and prevent security risks.

In the digital era, information security has become one of the core elements of enterprise operation,which is directly related to the enterprise’s reputation, customer trust, and business continuity.HGTECH has been continuously carrying out and improving its information security work.In order to ensure the comprehensiveness and effectiveness of customer data security, the companyhas established a multi-level and all-round information security architecture.

Protect the physical facilities, equipment,or areas of the information system fromunauthorized access and misuse.

Physical Security

System Security

Database Security

Terminal Security

Network SecurityEnsure that the hardware and software of thenetwork system, as well as the data withinthe system, are not subject to accidental ormalicious changes, damage, or leakage.Guarantee the continuous, reliable, and normaloperation of the system and the uninterruptednetwork services.

Protect the security of computer terminalsas the infrastructure for information storage,transmission, and application processing.

Manage and control system resources,operational activities, and users of thesystem, which serves as the foundation ofinformation system security.

Ensure the confidentiality, integrity,consistency, and availability of the informationin the database.

Data Security and Clients Privacy Protection

Information

SecurityArchitecture

Relying on the ties of industry-university-research-application, guided by the“national strategic needs and industrial development needs”, HGTECH hasdeveloped nearly a hundred sets of domestic laser equipment for industries suchas new energy, semiconductors, new-generation display panels, ships andbridges, and aerospace. It has “upgraded the intelligence level” for industrialdevelopment from three aspects: “equipment intelligence, production lineautomation, and factory intelligence”. Adhering to the creation of “world debut,industry-leading, specialized, refined, characteristic and innovative products”,the company builds its foundation with precision, pursues strength withuniqueness, and empowers itself with innovation. It plays a role in strengthening,supplementing and stabilizing the industrial chain, and solves the “bottleneck”problems.Up to now, the customers of HGTECH’s intelligent manufacturing businesshave covered key industries of the national economy such as ships, energyequipment, construction machinery, steel structures, and new energy materials.It has provided intelligent manufacturing-related services including top-leveldesign planning, production line planning and implementation, general integrationof warehousing and logistics, and digital products for more than 700 enterprises,and has won a number of national-level honors, including 9 intelligent factorieswith a value of over 100 million yuan. It has helped many intelligent factoriessuch as Jining Energy Xineng Shipbuilding, Zoomlion Heavy Industry Co., Ltd.,Taiyuan Heavy Industry Co., Ltd., Weichai Lovol Heavy Industry Co., Ltd., andShunte Electric Co., Ltd. to achieve digital and intelligent transformation andupgrading.

Promote Intelligent Transformation andDigital Transformation

Weichai Lovol: Project ofIntelligent Warehouse andAutomatic Distribution for High-Horsepower Tractors

Zijin Lithium Yuan : Projectof the Automated StereoscopicWarehouse

Taiyuan Heavy Industry：The First Intelligent Cuttingand Distribution Center in the Heavy Industry Sector inChina

Shunte Electric: Digital Production Line Project of theSmart Factory for Transformers

As a listed company and an innovative enterprise, HGTECH integrates the work ofintellectual property rights protection into the whole process of enterprise managementas an important part of the company’s development. It has formulated the “HGTECHIntellectual Property Rights Management Measures” and its implementation rules,and effectively implements laws and regulations such as the “Patent Law” andthe “Trademark Law”. In combination with the actual development situation ofthe enterprise, it continuously improves and perfects the intellectual property rightsmanagement mechanism. The company strengthens the R&D managementthroughout the entire life cycle, promotes the improvement of the quality of intellectualproperty rights and scientific and technological achievements, and comprehensivelyincorporates intellectual property rights management into the whole process ofimplementing major special projects and key products. It forms an overall protectionsystem for intellectual property rights covering various forms such as patents, technicalsecrets, and software copyrights, and establishes a working mechanism for patent riskearly warning and response. For the key products of core holding companies, a varietyof methods such as trademarks, patents, and standards are used for comprehensive,standardized and all-round protection, weaving an intellectual property rightsprotection network for specialized, refined, characteristic and innovative products. Thecompany strengthens the construction of the intellectual property rights managementteam and regularly organizes training, the content of which involves trade secrets,trademark use, copyright, etc., comprehensively improving the capabilities of creating,applying, protecting and managing intellectual property rights. At the same time, legalmeans are used to carry out rights protection activities to avoid the risk of technologyleakage caused by product counterfeiting incidents and the loss of technical personnel,and effectively safeguard the legitimate rights and interests of the company.While strictly protecting its own intellectual property rights, the company also exercisesstrict self-management to ensure that it does not infringe upon the intellectual propertyrights of others. During the research, development, and technological transformation ofnew technologies, new processes, and new products, the company makes full use ofintellectual property documents to formulate correct research directions and technicalroutes, raises the starting point of research and development, and avoids duplicatedevelopment or intellectual property infringement disputes.In 2024, centering on market and customer needs, by guiding the research,development, and innovation of key new products and new technologies, the companyapplied for a total of 421 patents throughout the year, among which 192 were inventionpatents. It also applied for 113 software copyrights, and released 5 national standardsand 10 industry standards for which it took the lead or participated in the formulationand revision.HGTECH has 13 national-level talent and intelligence platforms, including a national-recognized enterprise technology center, a national-level industrial design center, anational CNAS laboratory, and a post-doctoral research workstation. The companyhas been successively recognized as a national innovative enterprise and a nationalhigh-tech enterprise, and has successively won honorary titles such as a national-level “Specialized, Refined, Characteristic and Innovative Little Giant” enterprise,a “Single Champion in Manufacturing” awarded by the Ministry of Industry andInformation Technology, and a national intellectual property demonstration enterprise.

Intellectual Property Protection

Hand in hand withpartners tomove forward

The company has always adhered to the business principle of integrity as the foundation. It attachesgreat importance to the collaborative relationships with suppliers and customers, fully respects andprotects the legitimate rights and interests of suppliers and customers. Guided by the principles ofintegrity, fairness, and justice, it jointly creates a good cooperative ecosystem and atmosphere,constantly pursues the goal of mutual benefit and win-win results, and achieves mutual benefit andwin-win outcomes.

Regarding supply chain management, in order to standardize the bidding activities in the supply chain and promote the refinedmanagement of procurement, the company has formulated the “Measures for the Management of Supply Chain Bidding ofHGTECH”. A procurement committee has been established at the group level, and the construction of the group-level supplychain management system of HGTECH has been launched and continuously promoted. It supervises the implementationof the supply chain management system and major special projects. The procurement departments of each subsidiary areresponsible for the qualification examination and daily management of suppliers to ensure that the procurement work is “open,fair and just”.In terms of supply chain management capabilities, the company is committed to promoting the high-quality developmentof the supply chain ecosystem. Through the strategy of “controlling resources upstream and channels downstream”,it continuously optimizes and improves the supplier admission and evaluation system, and builds a stable, efficient andsustainable supply chain management system. This ensures that the introduced suppliers meet high standards and strictrequirements, prevents supply chain risks, lays a solid foundation for the high-quality development of the supply chainecosystem, and provides strong support for the long-term development of the company.

Controlling supplier admission is an important way to ensure the quality of goods orservices from the source. The company strengthens the management of supplierperformance evaluation by strictly implementing the “Measures for the Managementof Supplier Development and Evaluation”, and seeks for excellent supplier partnersto establish long-term and stable cooperative relationships with them. The companyadopts unified standards for the development, selection, evaluation and managementof suppliers to ensure that suppliers enjoy equal rights to know, choose and participate.It scores suppliers according to the procurement amount, importance, deliveryefficiency and quality, and conducts hierarchical management.

In order to further standardize the company’s procurement behavior, ensurethe quality and efficiency of the company’s material procurement, and reduceprocurement costs, each subsidiary has formulated the “Procurement ManagementMeasures” in combination with its own actual situation. The procurement processimplements three-level business management covering requirements, procurement,and warehousing.

SupplierAdmission

ProcurementProcess

Supply Chain Security

Business license / credit certificate /authorized agency licenseProduct quality certification report /industry admission certificate

(such as special equipment qualification)/quality management system certificateSocial responsibility compliance certificate /environmental management system certification /etc

BasicQualifications

ProfessionalQualifications

AdditionalVerifications

The list of supplier admission qualifications includes

The company has formulated the “Measuresfor the Management of Supplier PerformanceAssessment”. Through measures such asinspections, performance evaluations, andcapability assessments, it conducts objectiveand comprehensive evaluations of suppliersfrom multiple dimensions, including supplierscale, product quality, order delivery time,after-sales service, etc. Four supplier grades,namely A, B, C, and D, are formed to achievethe survival of the fittest among partners andsuppliers. A list of the company’s excellentcore partners and suppliers is established tocreate a sound ecological environment for thecompany.

Improve the supplier admission and evaluation system, strictly control the situationwhere technical personnel of product lines designate suppliers, and achieve thewhole-life cycle management of suppliers.Optimize the supply chain process, enhance the collaborative efficiency of thesupply chain, take into account both joint and coordinated management anddifferentiated competition, and establish a more efficient, flexible and competitivesupply chain management system.Strengthen risk control and management, enhance the awareness of integrity andself-discipline, and ensure the legality and compliance of operations.

SupplierAssessment

Improve SupplyChain ManagementCapabilities

Give priority to placing orderswith such suppliers andincrease the order quantity;Relax inspection or samplinginspection.

Maintain normal procurement.The Quality Department shall,through data analysis, support thesuppliers to continuously improve.

Reduce the procurement share.According to the assessmentresults, issue rectification warningsto the suppliers and requirecomprehensive rectification. Ifthere is no improvement, thesupplier will be downgraded tolevel D.

Issue a notice to stop supply andrequire improvement within onemonth. If there is no improvementafter the re-evaluation, thesupplier will be directly eliminated.

A－ExcellentB－Good

C－QualifiedD－Unqualified

≥96points90≤96points

80≤90

points

≤80

points

The company has always been committed to the in-depth integrated development of industry, university and research.Focusing on strategic innovation projects and the research and development of core technologies, it actively builds cooperationbridges with universities, scientific research institutions and industry customers by means of establishing joint laboratories,making equity investments, dispatching excellent management personnel, and jointly breaking through key core technologies.It efficiently integrates and makes full use of social resources, promotes the transformation of scientific and technologicalachievements into practical applications, and contributes to the overall progress and innovation of the industry.In 2024, HGTECH jointly established the Semiconductor Laser Equipment Industry Innovation Joint Laboratory withHuazhong University of Science and Technology, Optics Valley Laboratory, Jiufengshan Laboratory, Huaray Laser, andChangfei Advanced Semiconductor to promote the in - depth integration of industry, university, research, and application,and accelerate the transformation and application of scientific and technological achievements in the field of semiconductorlaser equipment. The company also signed strategic cooperation agreements with 21 units, including Wuhan University ofTechnology, Optics Valley Laboratory, Jiufengshan Laboratory, Hikvision, and Inovance Technology, to focus on industrialdirections and promote technological and industrial upgrades.In the aspect of industry exchanges, the company regularly visits suppliers and major customers, and actively participates invarious industry exhibitions and forums. Through in - depth exchanges and sharing, it keeps up with the industry developmenttrend, grasps the frontier technical dynamics, and looks for potential cooperation opportunities, providing valuable industryinsights and technical support for the company’s development.

Collaborative development of industry,academia, research and utilization

Accept and store the purchased materials in accordance with the “IncomingInspection Control Procedure” and conduct warehousing management;Give warnings for inventory and idle materials.

Collect procurement requirement information and formulate a demand plan;Communicate with the procurement management department about themodel selection; Fill in the “Procurement Application Form” and submit thedemand application.The procurement management department is responsible for thestandardized management of material coding;Source suppliers, conduct bidding, set prices, carry out small-batch trialsand mass procurement;Provide risk warnings;Conduct performance evaluations of suppliers.

Requirements

Procurement

Warehousing

In 2024, the company organized over 20 management coaching sessions for selected upstream enterprises through initiativessuch as Monthly Quality Campaigns, Quarterly Quality Initiatives, and on-site audits. These efforts solved quality problemsand secured an annual customer satisfaction rating above 95 points.

Empowering SMEs for High-Quality Development

Customer ServiceManagement System

Pre-sales ServiceProject ImplementationProtection of Customer Information

After-sales ServiceCustomer Complaint ManagementCustomer Satisfaction Survey

Protect Clients’ Rights and Interests

Solving customer complaint issues requires a proactive attitude, efficient communication and problem-solving abilities. Thekey is to focus on customers’ needs, put customers at the center, and strive to provide solutions that satisfy customers.

Listening and Understanding

Recording and Organizing

Prompt Response

Investigation and AnalysisProviding Solutions

Follow-up and Feedback

Learning and Improvement

Paying Attention to theCustomer Experience

Solving Customer Complaint Issues

Three “Alls”

Create Value for Clients

Customer Service throughout the Whole Life Cycle

Customer Research

Customer Complaints and FeedbackIn the open market environment full of fierce competition, HGTECH deeplyunderstands that customers are the cornerstone of the company’ssurvival and development. The company firmly implements the businessphilosophy of “market-oriented and customer-centric”, and deeplyimplements the principle of “Three Alls”: “All processes that do notcreate value for customers should be deleted; all departments that do notcreate value for customers should be abolished; all those whose valuecreated for the company does not match their salaries should be adjustedor dismissed.”From senior managers to various functional departments and then to eachsubsidiary, the company takes customer satisfaction as the core criterionfor measuring the effectiveness of its work. HGTECH continuouslyoptimizes its organizational structure, improves its informatizationlevel, and promotes lean manufacturing to meet the diverse needsof customers, and is committed to establishing long-term and stablecustomer relationships. Through continuous improvement and innovation,it provides customers with excellent products and services, wins the trustof customers, strikes a balance between maximizing customer value andmaximizing the company’s profits, and achieves a “win-win” situationfor both customers and the company.Under the guidance of the concept of “customer-centricity”, all departments of the company and its subsidiaries, underthe unified management system of the group, have formulated relevant customer management systems and managementmethods suitable for different customer groups according to their different business scopes. A management mechanism hasbeen established to provide technical services throughout the whole life cycle of customers, covering the pre-sales, in-salesand after-sales stages, so as to achieve positive interaction with customers.Each subsidiary has set up relevant departments such as the marketing department, quality department, marketing center,and after-sales service department. Their responsibilities include establishing and improving the regular customer visit system,coordinating customer complaint management, tracking product quality, and undertaking product installation and maintenance.In addition, the company regularly conducts training for personnel in the online and offline marketing systems to continuouslyimprove their professional capabilities and customer service capabilities, and enhance the quality of customer service.In view of the differences in customer needs in the domestic and international markets as well as among customersfrom different industries, there are obvious differences in determining customer needs, preferences, and even in productdevelopment and promotion. From the company’s management team to the sales directors of each major region, they willpay irregular visits to key industries and major core customers every year to understand the industry situation and customerneeds. The company has two major categories of methods for conducting market research on customer needs. One categoryis to directly obtain information from customers, such as customer satisfaction questionnaires, factory open day activities,offline salons, telephone follow-ups, and quality inspection tours across the country. The other category is to utilize the existinginformation of the company, such as product sales volume, customer feedback, industry forums, WeChat official accounts,Douyin accounts, and other platforms, and apply this information to the design of products and services, marketing, processimprovement, and the development of other business activities.

In order to better improve the service level and respond to customer needs in a timely manner, regarding the management

of customer complaints, the company strictly implements in accordance with the enterprise standard C06005 “Customer

Complaint Handling Process”. Each subsidiary has formulated documents such as the “Customer Complaint and

Returned Product Handling Process”, the “400 Telephone Management Measures”, and the “Customer Communication

Management Measures”. The company timely receives customer complaints through channels such as the customer

feedback hotline and the company’s official website. All complaint information is classified by the company, and specific

response and handling time limits are set. At the same time, the service department supervises the handling process to ensure

that each complaint is resolved within the specified time limit.

The company has always attached great importance to customer feedback. It has formulated and strictly implementedthe “CX08-01 Customer Satisfaction Measurement Procedure” to measure customer satisfaction, mainly usingelectronic questionnaires to collect data and conducting telephone interviews. After the customer satisfactionsurvey is completed, the company requires each subsidiary to hold a summary and analysis meeting, reflect on themeasurement methods and survey results, and form a customer satisfaction report, so as to continuously improvethe company’s service quality and service level and enhance its market competitiveness. In addition, the companyregularly conducts training for personnel in the online and offline marketing systems, such as training courses likethe “Tempering Plan”, to continuously improve their marketing capabilities and customer service capabilities andenhance the quality of customer service.In 2024, HGTECH and its subsidiaries won awards such as the “Best Quality Award” from Ningbo Deye, the“Best Supplier in Terms of Quality Performance in 2024” from the Automotive Quality Industry Association, the“Excellence in Quality Award” from Skyworth Electric Appliance, the “Pioneering Spirit Award” from SAIC-GM-Wuling, the “Outstanding Supplier Award” from Sanden, the “NIO Quality Excellence Partner” from NIO, the “TCLAir Conditioning’s Steadfast Partner Award”, the “2023 Collective Wisdom and Effort Award” from Tianjin FuaoDenso, the “Best Quality Award” from Supor, the “Best Quality Award” from Yutong Colin, the “Best ServiceSupplier” from Changhong, the “2023 Outstanding Application Award for Intelligent Manufacturing in China” fromE-WORK, the “New Energy Million-unit Breakthrough Award” from SAIC-GM-Wuling, the Excellent Partner Awardfrom Haier Smart Home, the VAVE Contribution Award from Deepal Automobile, the “Rapid Response to SupplyAssurance in the Fourth Quarter of 2023” award from SAIC-GM-Wuling, the “Outstanding Quality Award” fromGAC Aion in 2023, the “Best Collaboration Award” from Geely Automobile in 2023, the “Quality Pinnacle Awardin 2023” from Leapmotor, the “GGII Golden Ball Award - Application of the Year 2024”, the Jungo TechnicalInnovation Award, the “Outstanding Quality Award for Suppliers” from Zhongke Electric, the commendation of the“Difficulties-overcoming Delivery Team” by a certain intelligent equipment company in Shanxi, the commendationof the “Outstanding Project Management Award” by a certain special equipment company in Luoyang, and thecommendation of the “Supplier with Outstanding Quality Contribution” by a certain intelligent equipment company inShanxi.

Customer Satisfaction Management

Cultivating GreenDevelopmentMomentum

HGTECH is deeply integrated into China’s national “dual carbon”strategic framework, consistently elevating green development as acornerstone of its corporate strategy. Guided by the new developmentphilosophy of innovation, coordination, green growth, openness,and sharing, the company advances its environmental managementsystems while strengthening resource circularity and energy efficiencycontrols. Through continuous exploration of innovative practices in low-carbon sustainable development, HGTECH remains fully committed toaccelerating the achievement of the “dual carbon goals”.

HGTECH integrates the concept of sustainable development into the company’s operation, deeply learns and implementsXi Jinping’s idea of ecological civilization and takes the company’s social responsibility work into overall consideration. Inresponse to the “dual carbon goals”, HGTECH integrates the concept of green, low-carbon and sustainable developmentinto the company’s high-quality development strategy. Complying with the trend of industry change under the concept ofgreen energy-saving, HGTECH further promotes the construction of green industrial manufacturing system, emphasizesthe catalytic role of industrial development in driving revitalization, and strictly implements regulations related to environmentalprotection, emission reduction, production safety and labor law, then promoting the sustainable development of the companyand whole society.

To ensure the orderly implementation of environmental management work, HGTECHhas formulated a series of environmental protection systems, such as Environment andOccupational Health and Safety Management Manual, Procedures for EnvironmentalFactors Identification, Evaluation and Control, Safe Production Responsibility Systemand Safety Management System, in accordance with Environmental Impact AssessmentLaw of the People’s Republic of China and other relevant regulations. According tothe requirements of GB/T 2400/ISO 14001 Environmental Management Systems—Requirements with Guidance for Use, GB/T 45001/ISO 45001 Occupational Healthand Safety Management Systems—Requirements with Guidance for Use, and AQ/T9006 Basic Specifications for Work Safety Standardization, and HGTECH adheresto the principle of safety first and environmental protection, combined with thecharacteristics of relevant EHS management activities involved in the company productdesign, development, production and service. Additionally, HGTECH establishesEHS management system and EHS Management Manual which clearly defines EHSmanagement system policies, objectives, and operational procedures, in accordance withrelevant laws, regulations and other requirements.HGTECH actively responds to the industrial green development plan— Made in China 2025, carries out standardized andnormalized management in strict accordance with ISO14001:2015 Environmental Management Systems—Requirements withGuidance for Use, firmly implements the national environmental policies and regulations, strictly enforces the national, local andindustrial standards, also analyses, predicts and evaluates the impact on the ecological environment in advance. HGTECHhas continuously increased investment in energy-saving, emission reduction and technological transformation, and takenthe initiative to phase out inefficient production equipment. Based on ensuring that discharge of wastewater, waste gas, noiseand solid waste meets the regulatory standards, HGTECH further promotes the lean management, continuously improvesthe products’ process to enhance the treatment efficiency of three-waste and energy utilization, finally implements greenmanufacturing, and commits itself to the creation of green factory.The safety and environmental protection departments of HGTECH and subsidiaries are responsible for the establishment,implementation, maintenance and improvement of the environmental protection system. In 2024, HGTECH was awardedthe Certificate of Environmental Management System, and all its subsidiaries passed the supervision and audit of theenvironmental management system and hold the certificates. HGTECH reviews the implementation of environmentalprotection related regulations and the operation of environmental protection facilities of each subsidiary from time to time,and corrects behaviors that are not in line with the company’s environmental protection policy, then proposes rectificationmeasures. HGTECH regularly environmentally monitors the ‘three wastes’ on key emission enterprises, and make surethat the annual environmental monitoring results falls within the requirements of relevant laws and regulations. HGTECH hasbuilt an energy statistics system and power consumption monitoring platform, which can conduct monthly statistical analysisto improve the secondary measurement of water and electricity. The Subsidiaries like HGGaoLi and HGImage both haveobtained pollutant discharge permits. For more information about environmental management performance, please refer to“Key Performance Table - Table 2”.

Environmental Compliance Management

Environmental Management System

HGLaser, a wholly-owned subsidiary of HGTECH, was awarded “Green Factory” in the “2024 Green Manufacturing List”issued by the Ministry of Industry and Information Technology of China. HGTECH has one more national honor! HGLasercontinues to adhere to the green development, implements the national “dual carbon goals”, and constantly improve thegreen manufacturing management system. HGLaser will leverage its leadership role to drive green collaborative developmentacross upstream and downstream industries, facilitating a comprehensive green transformation of the manufacturing sectortoward “greening, automation, and intelligence”.HGLaser establishes an energy management system in line with GB/T23331-2020/ISO50001:2018 standard RB/T 119-2015Energy Management Systems Certification Requirements for Machinery Enterprise, and was awarded Energy ManagementSystem Certification, Certificate of Greenhouse Gas Verification, and Certificate of Carbon Footprint of Products in 2024.Under the Notice of the General Office of the Ministry of Industry and Information Technology on the Construction of GreenManufacturing System (MIIT Section (2016) No. 586) and the Notice of the Ministry of Industry and Information Technology onthe Issuance of (Interim Measures for the Cultivation of the Green Factory Gradient and Management) (MIIT Section (2024)No. 13), the ‘Evaluation Requirements for Green Factories’ and other relevant laws and requirements, the third-partyevaluation agency, Central Union (Beijing) Certification Centre Limited conducts an evaluation of the establishment, operationand effect of the green factory of Wuhan HGLaser Engineering LLC. The whole evaluation process was strictly compliant withregulatory requirements and the internal management procedures of CEC. All requirements outlined in the evaluation criteriahave been comprehensively addressed in this assessment, and the evaluation process was conducted with authenticity andvalidity. Based on document reviews and on-site assessments, CEC confirms that the evaluated entity complies with theGreen Engineering requirements. The evaluated entity achieved a score of 93.7 points in the 2023 Green Factory EvaluationIndex, which meets the Green Factory Evaluation Requirements.

Hubei Huagong Image Technology Development LLC activelyexplores the construction of green factories, improves the company’sgreen factory organizational structure and personnel managementresponsibilities, establishes and improves the management system andincentive system for green factories, regularly organize green factorytrainings, carry out green factory audits, and improve the managementsystem, ensuring that the requirements for the construction of greenfactories are satisfied. In 2024, Hubei Huagong Image TechnologyDevelopment LLC was successfully awarded the green factorycertification of the provincial level in Hubei. Additionally, HGLaser wasalso awarded as a provincial-level green factory.

In the list of “Waste-free Factory” in Wuhanmodel units (the first batch of 2024) issuedby Wuhan Municipal Bureau of Economy andInformation Technology and Wuhan Ecologyand Environment Bureau, HGLaser wasrewarded the model unit of “Waste-freeFactory” in Wuhan.

National Green Factory

Provincial Green FactoryWaste-free factory

Response to Climate Change

Driven by “dual carbon goals”, new energy vehicles are entrusted as a historicmission of our era. As an advanced production tool, laser is widely used in the design,process and production of new energy vehicles, etc. HGTECH actively explores thetypical application of advanced laser technology in the manufacturing of new energyvehicles, and assisting the traditional automotive industry in the upgrading of intelligentmanufacturing.

Manufacturing Pioneers the Automotive Industry’s NewJourney Toward Low-Carbon Transition

3D 5-Axis Laser Cutting/Welding for Automotive A/B PillarsWeakening Process for Airbag Covers

Welding of Airbag InitiatorsWheel Hub Cutting/

WeldingBumper Beam &Crash Box Welding

Headlight/Taillight Cutting & Welding

Drivetrain Component Cutting/Welding

Floor Panel Welding for BIW

Battery Tray WeldingSide Panel Welding forBody-in-White4-Door & 2-Hood Cutting/Welding/Hemming/Sealing

Seat Systems Cutting/WeldingTailgate Welding forBody-in-WhiteRoof Panel Welding forBody-in-White

Cutting/Welding of Automotive Plastic

ComponentsLaser Drilling forAutomotive Bumpers

HGTECH devotes itself to achieving the “dual-carbon goals” by improvingprocesses, upgrading production equipment, building green factories, as well asresearching, developing lightweight and intelligent green products and services,and improving and strengthening management. HGTECH catalyzes the greentransition and upgrading of the manufacturing sector, drives green and low-carbondevelopment, and then contributes to the Beautiful China Initiative.

Greening Products toAchieve“Dual CarbonGoals”

Laser + Intelligent

On the basis of keeping strength and safety, automotive lightweighting is to reduce the overall vehicle mass asmuch as possible, improve the power performance of automotive and to reduce fuel consumption. HGTECHempowers the automotive industry transformation with “Laser + Intelligent Manufacturing”. The evolutiontoward automotive lightweighting—encompassing advanced material processing, structural and modular designmethodologies, and next-generation joining technologies—demands parallel innovations in manufacturingprocesses. HGTECH drives this industrial transformation through its “Laser + Intelligent Manufacturing”solutions, so laser cutting and welding technologies, with their unique advantages in efficiency, precision, flexibility,and non-contact processing, have emerged as critical enablers of automotive lightweighting.

Automotive Lightweighting

3D Five-Axis Laser Cutting Intelligent EquipmentSpecially developed for automotive hot-formed components, this intelligent laser processing system effortlesslycuts through ultra-high-strength steel up to 2000 MPa. It enables precision thinning of hot-formed high-strengthsteel sheets, achieving 20% weight reduction per component—making automotive materials thinner, lighter, yetharder and stronger.

PTC HeaterTypically, the weight of a single PTC heater is around2kg. By increasing the power density of the heatingpack, the heater’s volume can be reduced by 10%while maintaining the same power output, enabling anoptimal balance of high performance and light weight.

Integrated Laser Welding Equipment for Automotive Door RingsCompared with the traditional stamping-weldingtechnology, the application of the integrated doubledoor ring laser welding thermoforming solutionreduces the weight of the door ring parts by about 10k,increases the material utilization rate to 71.9%, andimproves the collision safety performance of the localarea, which is an important path for the lightweighting ofthe steel parts of the body-in-white to be realized.New Energy Battery Pack Module andBattery Box (Tray)Welding automation production line replaces steel withaluminum to achieve “weight reduction” of the body.The unique welding anti-deformation technology ofHGTECH can control the welding seam precision at1mm, which can be applied to all-aluminum batterypack shells. Also it can reduce the weight of the batterypack by about 26.7%, bringing a new choice of processwith lighter quality and higher strength.

Solar/Light/Rain/Defogging SensorIt is a multi-functional integrated sensor that combinessolar, rain, temperature & humidity monitoring andHUD functions into a compact unit. It compacts multipleseparate sensors into a single unit that weights lessthan 20g, enabling intelligent bus control and functionalintegration.Body-in-White Roof Panel Laser WeldingAutomation Production LineThe first all-aluminum body laser welding productionline independently built by HGTECH reduces the edgewidth of parts and connecting auxiliary materials byabout 20%, and further reduces the weight of thebody-in-white, and still maintains the stability of theequipment, welding speed and strength.

Application of Automotive Lightweighting

Low-carbon Automation,High-end Laser Equipment to Help Tire Industry Transformation

Pneumatic tires are the “feet” of automobiles. As an indispensable component in automotive manufacturing,pneumatic tires are vital to ensuring safety, water drainage, grip, and driving comfort during use—all of whichdepend on regular cleaning of tire molds. However, traditional tire mold cleaning methods suffer from lowefficiency, high energy consumption, and significant pollution, failing to meet modern tire production demandsfor energy savings, emission reduction, and low-carbon sustainability. Laser cleaning technology, non-contact,abrasion-free, and eco-friendly solution, will replace the traditional cleaning process inevitably.HGTECH independently researches and develops “Tire Mold Laser Cleaning Intelligent Equipment”. HGTECHhas overcome the laser, cleaning head, vision guidance technology and many other core components andprocesses, fearless of high temperature “baking test”. The equipment can make the dirt swept away if “notdismantle the mold”, also can clean a pair of tire molds online at 45 minutes. The equipment can effectively solvethose tough problems, such as “long standby time, repeated disassembly, mold wear and tear, non-completecleaning, environmental pollution, high energy consumption”, so as to reduce the downtime of vulcanizer,improve the production efficiency and tire quality. The equipment brings a new era of “low-carbon, automated”tire mold cleaning.

Tire Mold Laser Cleaning Intelligent Equipment

Manufacturing Empowers the Maritime Industry’s Low-CarbonExploration of the Oceans

The low-carbon requirements of the International Maritime Organization (IMO) are forcing shipyards to upgradeprocesses, but eco-friendly technologies often come with increased costs. For example, traditional cutting fumesaccount for more than 15% of total energy consumption, while laser technology inherently has a green DNA-zeroemissions and low energy consumption. The laser intelligent production line, compared with the traditional flamecutting, the emission of VOCs from laser cutting is reduced by 92%, and the dust capture efficiency is ≥99.5%after equipped with the activated carbon + HEPA filtration system, also the sound pressure level for laser cutting is≤75dB, which comply with the international environmental protection standards.As a leading domestic supplier of intelligent manufacturing system solutions， HGTECH directly addresses thepain points of the shipbuilding industry and independently developed intelligent equipment for ship hull componentmanufacturing, represented by high-end laser cutting equipment, laser cleaning equipment, comprehensivescribing machines, and laser hybrid welding equipment. HGTECH also offer intelligent production lines for shiphull component manufacturing, represented by flexible intelligent material preparation lines and flexible intelligentwelding lines, as well as industry digital products such as visual sorting and digital twins. We firmly believe that real“intelligent transformation and digitalization” do not simply replace manual labor, but rather leverage technology tomake manufacturing more efficient, greener, and more humanity. The intellectualization of the shipbuilding industryis a marathon, and HGTECH is willing to be a “long-term partner” beside the shipyards, using hard technology tohelp China move from being a major shipbuilding country to a powerful shipbuilding nation.

Practices in Shipbuilding Industry

In 2024, HGTECH continues to plough into the shipbuilding industry, successfully signing projectssuch as “Jining Energy Xinneng Shipbuilding All-process Intelligent Factory” and “JiangnanShipbuilding Factory Automated Cutting Production Line for Assembled Parts”. In June 2024, the“Wuhu shipyard Weihai base intelligent cutting and blanking production line” project has successfullycommenced operations. This innovative project has developed specialized processes for theshipbuilding industry including: 1.process information analysis, 2.inkjet marking, 3.bevel cutting, 4.edgechamfering, 5.automated material handling of semi-finished components. The system achieves fullautomation integration across all production stages: 1.part extraction from nesting diagrams, 2.steelplate marking and layout,3.automated cutting, 4.automated sorting, 5.automated beveling,6.automatededge chamfering,7.in-line buffering and palletizing via automated material handling. For the productionprocess of inland vessels, HGTECH innovatively applies self-developed high-end laser cuttingequipment, laser composite welding equipment and full-width multi-head marking and coding equipmentin the project of “New Energy Ship Manufacturing Base All-process Intelligent Factory”, and adoptsseveral self-developed new-generation information technologies such as cut-off line intelligentgeneration and identification technology, intelligent mixed-sleeve discharging technology, weak featureidentification and positioning technology, visual AI intelligent sorting system, yard management system,intelligent central control system and digital twin system. High-precision identification and positioningtechnology, AI + vision intelligent sorting system, yard management system, intelligent centralcontrol system, digital twin system and many other self-researched new generation of informationtechnology, to achieve the whole process from raw materials to the hull of the hull welding ship intelligentmanufacturing, the completion of the project to achieve the production efficiency of the hull componentshave increased by 50%, the overall design efficiency have increased by 10%, the operating cost havereduced by 20%, the product first-pass yield rate increased to 95%, energy consumption per unitoutput reduced by 15%, the key equipment CNC rate of more than 95%, the rate of digital acquisition ofmore than 98%, intelligent system solutions hardware and software autonomy rate of more than 95%.After the completion of the project, it will form the first green, intelligent, intensive and standardized newenergy shipbuilding base in China, realizing the standardized development, industrialized integrationand large-scale application of inland new energy ships.

Wuhu Shipyard Weihai Base Intelligent Cutting and

Blanking Production Line

Jining Energy Xinneng Shipbuilding All-process

Intelligent Factory

Self-Developed All-Purpose Line Marking and Printing

Machine

Shipbuilding Welding Production Line Solutions

Laser + Intelligent

HGTECH strictly abides by the Environmental Protection Law of the People’s Republic of China, Air Pollution Prevention andControl Law of the People’s Republic of China, Solid Waste Pollution Prevention and Control Law of the People’s Republicof China, Water Pollution Prevention and Control Law of the People’s Republic of China and other laws and regulationsto carry out pollutant management. HGTECH has formulated documents on sustainable development such as CarbonEmission Management System, Prevention and Control of Environmental Pollution, Energy Management Procedures, CleanProduction Management Procedures etc. For the wastewater, waste gas, hazardous wastes and general industrial solidwastes generated in the course of production and operation, the company has formulated an effective internal managementsystem, monitored all kinds of emission indexes in accordance with the national and regional emission standards, and carriedout strict emission management, making sure that all waste disposal is Compliance treatment and discharge. Clean productionis throughout the entire process of project planning and product planning, giving priority to the use of clean productiontechnologies, processes and equipment with high resource utilization and low pollutant generation, and giving priority to theselection of non-toxic, non-hazardous, easy to degrade or easy to recycle solutions. Through the reduction and control ofenvironmentally hazardous substances, promote green design and production, effectively preventing environmental pollution.Enhance energy performance and reduce greenhouse gas emissions by purchasing energy-saving equipment and products,improving processes and conducting energy-saving activities.

Waste Water

Management system: Wastewater Discharge Management Standards.Discharge category: domestic sewage, production wastewater.Pollution Prevention Measures: regular inspection of sewage discharge pipelines; regular samplingand monitoring; environmental pollution insurance coverage; establish a chemical wastewaterdepository; recycling and disposal by a qualified treatment center.Management System: Management Measures for Exhaust Gases, Norms for Air EmissionsManagement.Emission categories: volatile gases from chemical substances, exhaust gases from cutting andwelding processes, etc.Pollution prevention and control measures: open fume extraction equipment during production;Waste Gas

HazardousWaste

GeneralIndustrialWaste

Management System: Waste Management Regulations, Waste and Discarded Materials ManagementRegulationsDischarge categories: mercury-containing batteries, waste mixed hardware, waste electroniccomponents, waste activated carbon, chemicals, etc.Pollution prevention and control measures: set up corresponding waste storage areas and garbagecontainers, and mark them; use chemical crates when turn over or transport corrosive chemicalbottles.

Management System: Waste Management Regulation, Waste and Waste Management Regulations.Emission categories: waste cartons, waste metals, waste glass products, waste plastics, etc.Pollution prevention and control measures: for recyclable waste: sold to waste collectors or directrecycling on its own; for non-recyclable waste: managed through a sanitation service agreementbetween the property management company and local municipal sanitation department, ensuringcentralized processing in compliance with environmental regulations.In 2024, the enterprises under HGTECH have cumulatively invested over 17 million yuan in environmental governance, mainlyfor the disposal of hazardous waste, the construction and operation and maintenance of waste gas treatment facilities, theimprovement of on-site environmental facilities, environmental monitoring, regular monitoring of wastewater and waste, carbonemission compliance, the formulation of environmental contingency plans, environmental impact assessment and acceptance,and other environmental protection expenditures. The affiliated companies have paid environmental protection taxes inaccordance with the law.

Environmental Protection Investment

Waste Disposal

HGImage and its subsidiaries strictly comply with national laws and regulationsregarding the prevention and control of air, solid waste, noise, and waterpollution. For production waste gas, it has newly installed 4 sets of advancedRTO regenerative thermal oxidation systems. These systems can efficiently andcentrally collect and catalytically combust medium- to high-concentration organicwaste gas with air volumes of 20,000 m

, 30,000 m

, 40,000 m

, and 55,000 m

respectively, achieving 100% harmless discharge of waste gas in productionline and reducing VOC emissions by 21.472 tons. In addition, total hydrocarbon,methane, and non-methane total hydrocarbon concentration online monitoringdevices have been installed in the discharge pipelines of the RTO regenerativethermal oxidation systems to monitor in real-time whether the waste gas meetsthe standards after being treated by the RTO. These devices are also connectedonline to the data system of the Environmental Protection Bureau to achieve real-time data monitoring of the company’s waste gas emissions. The monitoringresults of waste gas, wastewater, and noise are all qualified every year.

HGImage and its subsidaries have established andstrictly implemented the Hazardous Waste Collection,Storage and Transfer Management System, EmergencyResponse Plan for Environmental Emergencies, andactively disposed hazardous wastes, such as hazardouschemicals. It also carries out chemical spillage emergencyresponse drill and other environmental emergencies toeffectively prevent hazardous waste from polluting theenvironment and jeopardizing the health of employees.

Waste gas

Hazardous Waste

RTO Regenerative Thermal Oxidation

System

Chemical Spillage Emergency Response Drill

Total hydrocarbon, methane, non-methane total hydrocarbon

concentration online monitoring device

Case

In order to implement the national environmental protection policy, HGGaoli, a wholly-owned subsidiary of HGTECH, hasformulated a series of sustainable development system documents, such as Carbon Emission Management System,Hazardous Waste Storage and Disposal Management System, Noise Control Management System, ManagementRegulations on Fixed-point Disposal of Park Garbage, Management System for Precursor (Highly Toxic) and ExplosiveHazardous Chemicals, and Energy Conservation and Consumption Reduction Management System. These documentsare used to conduct analysis, prediction and assessment of the impact on the ecological environment in advance. HGGaolicontinuously increases its investment in energy conservation and emission reduction, phases out outdated equipment, andensures that wastewater, waste gas, noise and solid waste are discharged in compliance with standards. At the same time,HGGaoli deeply promotes lean management, improves the production process, enhances the treatment efficiency of the threewaste (wastewater, waste gas and solid waste) and the utilization efficiency of energy, and actively creates a green factory.With strict management, HGGaoli successfully changed its sewage discharge permit to simplified management. In 2024,HGGaoli passed the renewal audit of the environmental management system and was rewarded the certificate. HGGaolihas achieved zero violations in pollutant emissions throughout the year, and there were no accidents at or above the minorinjury level or environmental accidents. What HGGaoli has done has effectively promoted the sustainable development of thecompany and whole society, setting an example for the green development of the industry.

Case 2：

In accordance with the self-monitoring requirements of pollutant discharge permit, HGGaoli entrusted a third-partyinstitution, Hubei Lanke Testing Technology Engineering Co., Ltd., to conduct environmental testing in 2024. Thecompany’s wastewater, waste gas, and noise at the factory boundary were tested, and the test results met thestandards. Among them, waste gas was tested twice a year, domestic wastewater and unorganized waste gaswere tested once a year, and the noise at the factory boundary was tested four times a year. The Fujuoduo tinplating workshop of HGGaoli conducts organized waste gas testing twice a year and unorganized waste gas testingonce a year.

Case 3：

Hubei Huagong Image Technology Development LLC conducts monitoring of waste gas, waste water and noisetwice a year. In June and November 2024, it has entrusted the qualified third-party company, Hubei MeichenTesting Co., Ltd., to sample and test waste gas, wastewater and noise, and all test results are qualified.

Pollutant Discharge

Circular Economy

HGTECH has always been an active responder to environmental protection. Adhering to the two-way management modelof “technological transformation and management”, it has formulated management systems such as Energy ManagementSystem and Management Specification for Resource and Energy Conservation. These systems aim to achieve the energymanagement goals of “refined energy management, scientific energy metering, energy conservation accountability, andvisual on-site management”. By doing so, the company reduces its resource and energy consumption, improves theutilization rate of resources and energy, minimizes resource waste, cuts costs, and fully realizes the scientific, rational, andeffective use of resources and energy. At the same time, it also enhances the modernization level of the company’s energymanagement.In accordance with the principle of recycling, reuse, cost reduction and waste reduction, Hubei Huagong Image TechnologyDevelopment LLC continues technological innovation and process optimization, and carries out the secondary reuse of PETfilm products after stripping. Hubei Huagong Image Technology Development LLC recycles 250 tons of PET film productsannually, further effectively reducing the amount of solid waste generation.

Rational Utilization of Resources

Resource Management and Energy Saving Measures

Lighting, Office ElectricityOffice area: Use natural light as the main lighting, and turn on 2/3(on cloudy days) or 1/3 (on sunny days) of the lighting during theday.Corridors, locker rooms, restrooms: natural light is the main sourceof illumination during the day; turn on 1/2 of the lights on cloudydays when there is insufficient light.Roads in the factory: keep lighting off during the day, and keeplighting on at night.Each production workshop:keep lighting on according to theworkforce and work part of the lights； in non-work areas, onlyopen a (or a row of) lights； during non-working hours, only part ofthe lights (a or a row) to ensure that the channel lighting to facilitatepersonnel’s movement .Office appliances (such as: computers, printers, water dispensers,etc.) must follow:turn on only when needed, shut down immediatelyafter use; computer monitors are automatically sleep after 3minutes of inactivity; computer monitors are manually power offwhen leaving workstations. unplug power cords at end of day.

Electricity Consumption of Productionand Power EquipmentAccording to centralized production, eachdepartment should avoid equipment empty run,and follow the three optimal energy - savingstatus labels for equipment startup frequency inthe Equipment Management Procedures (i.e.,use upon startup, intermittent shutdown, andkeep running for long - term use) to determinewhen to switch on or off. When the equipmentshuts down or not in use, it should be turned offand the power supply should be cut off.Power equipment: According to the temperatureand humidity of the workshop, refrigerationmainframe, boiler, humidifier, dehumidifier,wind cabinet, cooling water pump, chilled waterpump, shall be adjusted to the most energy-saving way.Air Conditioning ManagementDuring summer cooling, the temperatureshould not be set below 26°C; during winterheating, the temperature should not exceed18°C. When the air - conditioner turnson, the doors and windows connected withoutdoor area should be kept closed.The watersystem of the central air conditioner shouldbe cleaned once a year, improving heatexchange efficiency and reducing operationalload.

ElectricityConsumption

Case 1：

In accordance with the self - monitoring requirements of pollutant discharge permit, HGImage commissioned a third-party organization, Wuhan Jinglan Testing Co., Ltd., to carry out environmental testing in 2024. The company’swastewater, waste gas, and noise at the factory boundary were tested, and the test results met the standards.Among them, waste gas was tested twice a year, domestic wastewater was tested once a year, and noise at thefactory boundary and unorganized waste gas were tested once a year.

Cases of “Three Wastes” Management

The company purchases main raw and auxiliary materials according to the amount of usage and existing stock.The use of raw and auxiliary materials should strictly adhere to the principle of “first in, first out” to prevent fromineffective or deteriorating.Each department should avoid wasting reusable raw and auxiliary materials as well as leftover materials bydiscarding them casually. If these materials have the potential for reuse, they should be utilized again.

The company actively promotes office automation and networking, tries touse electronic documents and electronic mailboxes in work, and advocatesrevising manuscripts on electronic media to reduce paper consumption.A designated person should be assigned to manage the daily office suppliesof each department, and the system for requisitioning office suppliesshould be strictly implemented; except for the confidential information of thecompany, the paper materials should be utilized on both sides.Streamline documents. For matters that do not necessarily require issueofficial documents for deployment, try to deploy them through meetingsas much as possible. For matters that truly require the issuance of officialdocuments, the printing quantity should be accurately calculated to avoidreprinting and excessive printing.Economically use cleaning and sanitation tools. Mops, rags, waste paperbaskets should be properly stored to extend the service life.

In addition, the company implements lean production, supports agile management through informatization and digitaltools. The company continues to improve the turnover efficiency of products and the utilization rate of the site, whichpromotes quality improvement and reduces waste, effectively reduces production costs, and shortens the productdevelopment and production cycle.

Office supplies

Rawmaterials

Environmental Protection Initiatives at Overseas Bases

Oil Usage

Nitrogen, air pressure gas, etc.

During the operation of various types of equipment, attention should be paidto lubricating materials used (such as the lubricating oil for air compressors)to avoid waste. The company’s shuttle buses are electric vehicles, whichhelps reduce greenhouse gas emissions.When maintaining equipment and facilities, each department should payattention to the amount of lubricant to avoid excessive application, andwaste and leakage to the ground, polluting the environment.

All subsidiary equipmentmanagement departments mustperform regular maintenance ongas supply systems accordingto the Gas Supply EquipmentMaintenance Work Instructions.Each gas-consumingdepartment should adjust thegas pressure range and therequirements of the productionprocess to the minimumpressure, to reduce the flowrate and save gas.According to the requirementsof equipment and process, allgas-using departments do notuse nitrogen gas if they canuse air pressure gas, and donot use high-purity nitrogen ifthey can use general nitrogen,so as to reduce the cost of gassource.

GasesUsage

According to the water consumption plan issued by the Municipal Water Conservation Office, the company strictlycontrolls the clean water, water consumption and sewage discharge.Each subsidiary equipment management department is responsible for inspecting water supply pipe network, timelydiscovering and repairing leakage faults, and preventing leakage and water waste. Water usage in the restroomsshould be paid special attention. Close the valve in time after flushing the toilet. Only turn on the faucet halfway whenwashing hands and turn it off promptly after use.

WaterConsumption

Examples of Practice

Examples of Practice

HGGaoli, a wholly-own subsidiary of HGTECH, establishedElectronics (Thailand) Co., Ltd at 10th January, 2024, andinvested 45 million RMB. As, since establishment HGGaoliElectronics (Thailand) Co., Ltd has developed a series ofrules and regulations regarding to sustainability, includingRegulations on Hazardous Waste Storage and DisposalManagement, Regulations on Noise Control Management,Regulations on Designated Disposal of Site Scrap andWaste, Regulations on Controlled Substances (Toxic/Explosive Chemicals), Regulations on Energy Conservationand Consumption Reduction Management. All documentsare under ISO14001:2015&45001:2018 system and relevantlaw in Thailand. Throughout the year, there were zeroviolations in pollutant emissions, zero incidents of minorinjuries or above, and zero environmental accidents.

HGGenuine, a wholly-owned subsidiary of HGTECH,initiated the preparation of its overseas factory inThailand, covering a total area of 5,032 square meters.By November of the same year, the production line wasofficially operational, focusing on the mass production of800G/1.6T high-speed products. Since its establishment,the company has consistently paid close attention to andthoroughly researched Thailand’s environmental policiesand regulatory requirements, actively integrating thesestandards into daily operations. Adhering strictly to localenvironmental regulations, the company demonstrates astrong sense of responsibility and unwavering commitmentto environmental protection. Through continuous learning,it optimizes management practices to advance sustainabledevelopment goals and contribute positively to localcommunities and the environment.In compliance with Thai laws and regulations, including theFactory Act, National Environmental Quality PromotionAct, Hazardous Substances Act, Occupational Safety,Health, and Environment Act, and Wastewater DischargeStandards for Factories and Industrial Zones, the companyhas established a series of institutional documents focusedon sustainable development and environmental protection.These include but are not limited to Safety ProductionResponsibility Management Regulations, OccupationalHealth Management System, Fire Safety ManagementSystem, Chemical Usage Safety Operating Procedures,

Safety Operations Supervision System, Resource andEnergy Conservation Management Regulations, WastewaterDischarge Management Regulations, Air EmissionManagement Regulations, and Noise Emission ManagementRegulations. By rigorously implementing these systems, thecompany achieved zero violations of pollutant emissionsthroughout the year, with no environmental pollutionincidents or personnel casualties, fully demonstrating itssocial responsibility in environmental protection and safetymanagement.

Take Care ofEmployee andDevelopmentHGTECH cares, respects, safeguards the legitimate rights andinterests of every employee, and ensures that every employeecan find a platform for growth and development. The companyprovides a diversely flexible training system to help employeescontinuously improve themselves and achieve their careergoals. At the same time, HGTECH attaches great importanceto physically and mentally health of employees, strives tocreate a friendly and harmonious working environment, so thatall employees can feel the care and warmth of the companywhile working.

The company strictly complies with Labor Law of the People’s Republic of China, Labor Contract Law of the People’sRepublic of China, the Trade Union Law of the People’s Republic of China, and Personal Information Protection Law of thePeople’s Republic of China, as well as relevant laws and regulations applicable in overseas areas. In combination with theactual situation, the company has formulated a complete human resources management system and relevant regulations.The company adheres to the principle of equal employment and opposes all forms of discriminatory behaviors resulted fromdifferences such as gender, age, region, educational background, religious belief, nationality, race, and disability status. Thecompany devotes itself to striving to create a diverse and inclusive working environment. At the same time, the company hasestablished a fair, just, and open mechanism for selecting and employing personnel. Use of child labor, forced labor, overtimework, harassment, and abuse are definitely prohibited, and HGTECH firmly safeguards the legitimate rights and interests ofemployees.During the reporting period, the labor contract signing rate was 100%, and the social insurance payment rate for employeesunder the labor contract system was also 100%. There was no use of child labor or forced labor. For more information onemployee employment performance, please refer to “Key Performance Table - Table 5”.

Employee Employment and Basic Rights

Employees Rights & Management MethodsRecruitment: The company has formulated management systems such as the InterimProvisions on Recruitment Management and the Management Measures for Implementingthe Falcon Plan. Adhering to the principles of "open recruitment, fair competition, scientificevaluation, and selection of the best candidates", the company conducts recruitment activities,standardizes the employment procedures, protects employees’ privacy and informationsecurity. The company firmly prohibits employment of child labor, and resists all forms offorced labor.

Dismissal: The company conducts dismissal-related work with employees in accordancewith local laws and regulations.Salary: The company adheres to equal pay for equal work, continuously optimizes thesystem management system, and provides employees with competitive salary. A preciseincentive mechanism is set up according to different job categories, enabling those value-contributors to have a greater sense of fulfillment and fully stimulating employees’ potential.Promotion: The company implements the principles of open, fair and just promotionmanagement. There are four basic principles in managers selection:

having both ability and integrity, and integrity taking precedence;focusing on performance and conducting multi-position rotations;competing for employee with open procedures, keep flexible for both upward anddownward mobility;giving more chances to young cadres with professional expertise.

Recruitment andDismissal

Salary andPromotion

Employee Rights and Benefits

In accordance with relevant national laws and regulations, thecompany has formulated management systems such as the InterimProvisions on Unified Welfare Management to further optimize theemployee welfare system. Also the company provides employeeswith diverse welfare guarantees including statutory benefits, healthbenefits, living benefits, consolation benefits, and growth benefits.

The company adheres to the work philosophy of “Happy work and Healthy life”,devotes itself to creating a comfortable working environment for employees. Thecompany actively carries out various activities in employee care and consolation,creating a warm and harmonious workplace environment.The company continuously cares for the health and life of employees and theirfamilies, and provides supports to employees in difficulty. During the reportingperiod, the company spent a total of RMB222,100 on helping employees indifficulty.

Additionally, the company organizes symposiums for different employees:“Angel Interview” for new employees beforetheir regularization; “Falcon Symposium” for structural talents; “Youth Symposium” for school recruits;“TechnicalSymposium” for R&D personnel; “Engineering Master and Doctor Symposium” for engineering and technical experts; “ExpertSymposium” for technical experts. The company gain multi-dimensional understandings of employees’ evaluations ofthe company’s management as well as their suggestions. The company actively responds to the demands of employees,strengthens the sense of belonging of employees, and improves their satisfaction.Employee Benefits

Employee Care

Condolences During the High-Temperature PeriodWomen's Day Celebration

The Optics Valley Marathon in 2024Music Festival in the Middle Summer

Spring Sports Festival

Employee Birthday Party

Annual physical examinationSupplementary commercial insurance

Commuting shuttle busesCanteen services and meal allowancesTelephone bill subsidiesTeam - building activities and festival benefits, etc.Condolences to employees in difficult situationsCondolences to retired employeesCondolences to sick employeesCondolences for the death of employees’ near kin, etc.

Learning allowancesRemuneration for in - house trainersAllowances for in - house trainersEvaluation for excellence and commendation

Statutory holidaysMarriage leaveMaternity leave and paternity leaveAnnual leave, etc.

Talent EchelonConstruction

On June 28, 2022, General Secretary Xi Jinping emphasized that technologicalinnovation depends on investment and talent during his inspection to HGTECH.HGTECH has always holds the concept of “the future of enterprise lies in innovation,the key to innovation lies in investment, and the focus of investment is talent”. Basedon the principle of “introducing and cultivating at the same time, and incentivizing andrestraining synergistically”, HGTECH has set up an employee career developmentsystem, so as to manage effectively and create a favorable environment for the growthof talents.As a high-tech enterprise, HGTECH advocates that “To be a manager whounderstands technology, to be a technical expert who understands management”,and always insists on two promotion paths of management and profession. Thecompany prioritizes character, core competencies, and primary strengths in talentselection, embracing the following principles: No perfectionism – Valuing growthpotential over flawless track records; Merit-based advancement – Rejecting seniority-driven promotion systems; The company has consistently built the qualificationsystem, regularly gives evaluation of employees, which helps employees improveprofessionalism. In addition, the company encourages cross-department rotations todevelop multi-skilled talent.

Employee Development and Training

Living BenefitsConsolation Benefits

Growth BenefitsHealth Benefits

Statutory Benefits

Working Hours: The company has formulated management systems to ensure that workinghours in different locations comply with local regulations. Different shifts are set according toproduction needs, and employees’ rights and interests are protected as stipulated.Overtime: The company advocates "Happy Work, Healthy Life" and opposes all forms ofperfunctory overtime. There is an application for overtime work in advance if necessary. Thecompany aims to continuously improve work efficiency by enhancing employees’ professionalqualities, optimizing processes, promoting informatization, and carrying out productionautomation transformations, enabling employees to strike a good balance between work and life.

Vacation: In accordance with local laws and regional policies of the working locations, the

company provides employees with paid annual leave, marriage leave, maternity leave for femaleemployees, nursing leave, etc.

Working Hours,Overtime,and Vacation

Multi-dimensionalTalent CultivationSystem

As the starting point —— “making the best use of everyone’s talents and creatingvalue together”. The company innovatively put up with many talent cultivationmethods under the philosophy that “everyone can succeed”. HGTECH has activelyestablished a three-level training system: Young Talent Training, Elite Training,Senior Management Refresher Workshop. Special talent cultivation programs havebeen innovatively advocated: Product Line General Manager Training Camp, MobileClassroom for Salesman, Academician Online, Growth Plan, 91 Talent Classroom.Also HGTECH has explored and established: Reverse mentoring post-95, Youngercadre team, Online training methods, OPE Micro Academy, Online and offline training.HGTECH has been encouraging employees to learn independently and empowerthemselves, and building a learning organization where “everyone can learneverywhere at any time if wanted”. At the same time, HGTECH has formed a talentcultivation model with joint efforts from the government, universities, and enterprises,by focusing on the construction of HGTECH CENTRAL RESEARCH INSTITUTE,the cultivation of outstanding engineers, and the training of engineering masters anddoctors.

OfflineTraining

SessionsPersonhourClass

Micro ClassesCreatedTrainingAttendances

Average TrainingHours Per Person

11,00015,2003,67513.7

Youth PlanNew employeesin campus recruitment

Elite ClassMiddle managers

Youth ClassYoung employees

Jumping PlanSkilled personnel

Mobile Classroomfor SalesmenMarketing personnel

Academician OnlineTechnician &Managers

Laser forFirst Lecture

New employees and

trainees outside ofcompany

Executive Charging

WorkshopSenior managers

New Hire TrainingNewly hired employees

Reverse mentoring post - 95

Employees born after 1995

AI trainingAll staff

Xin Xin Xiangrong

All staff

91 Talent Classroom

All staff

2024TrainingProjectspartially

Training Systems for Employee

AcademicianOnline

TrainingGroup Photo

Research &Development

Marketing ManagersGeneral Training

Academician OnlineIPDTechnical Night TalkEngineeringLaser First Classroom

Mobile Classroom for SalesmanWolf ClassIndustry ShowSales ToolkitHardening Program

Executive Charging WorkshopProduct Line General ManagerTraining CampElite ClassYouth Class

New Employee TrainingLean Office91 Talent ClassroomBook Reading ClubXin Xin Xiangrong

The company advocates “let value contributors have more sense of achievements, let valuecontributors stand in the center of the stage”, establish the precise incentive management system,make smaller accounting unit, designs more attractive material incentive and spiritual incentives, suchas annual salary assessment for managers, five firewalls for management personnel, regularly conductperformance assessment openly and fairly every year, constantly update the method of selecting andappointing managers, integrate the performance appraisal into job promotion, which effectively identifiesoutstanding talents, and realizes precise incentives. At the same time, according to employees’ willingand needs career development, the company improves the qualification system, internal transfer, internalcompetition, exchange of space and other mechanisms. Besides, the company gives full play to theleading role of independent evaluation, as to accelerate the growth of employees.

Company Performance Management Model

Employee Promotion and Incentives

ProductionSafety

In terms of production safety, the company comply with relevant laws such as the WorkSafety Law, Fire Safety Law. Safety policy: safety first, prevention first, comprehensivemanagement. Requirements: full coverage, zero tolerance, and emphasis on effective.All men should be responsible for production safety. The company has clearly definedthe division of responsibilities, and signed 977 safety responsibility certificates involvingmore than 8,300 personnel. The company has issued systems to standardize themanagement process of work safety, such as Accident Management System, TenProhibitions on Safety, Training for Work Safety Education and Labor Safety SuppliesManagement.Closely focusing on the company’s annual plan, we further improve the responsibilitymanagement system, establish safety and defense responsibility system. To enhancesafety awareness and ability, the company carried out 25 safety trainings throughoutthe year, with a total of 5,165 training attendance. HGTECH has deeply carried outthe “dual control” work of safety risk control and hidden danger investigation,adhering to the combination of special inspections and daily investigation. A total of26 comprehensive safety inspections have been organized, more than 260 safetyproduction hidden dangers have been investigated, and 253 have been rectified andclosed, with a rectification completion rate of 97%.

Main Incentives

Occupational Health and Safety

Occupational Health

In order to prevent, control and eliminate occupational hazards effectively, and protect thehealthy and other interests of the employees, the company has formulated the OccupationalHealth Management System, Occupational Health Physical Examinations and other systemsin accordance with Law on the Prevention and Control of Occupational Diseases. By systemstandardization, training, education, and occupational health publicity, etc. HGTECH has beencontinuously strengthening the management and detection of occupational hazards, and itsprevention and control. The main occupational diseases involved in the company are noise,dust, chemical substances, laser radiation and so on. In daily work, the company employees areequipped with personal protective equipment (such as earplugs, ear muffs, dust masks, anti-virusmasks, etc.), also protective facilities such as dust removal, ventilation, soundproof walls, etc.,HGTECH supervises the employees to receive and wear daily labor protection products to protectthe health and safety of the employees in working. In addition, in accordance with the TechnicalSpecification for Occupational Health Surveillance and other standards, the company hascommissioned a third-party qualified medical examination organization to carry out occupationalhealth tests for employees in occupationally hazardous positions, build up a file for monitoring, andimmediately inform the results of tests.In 2024, HGTECH was awarded the Certificate of Occupational Health and Safety ManagementSystem. Throughout the year, there is no incidents which have adverse effects on social andinternal security and instability. There is no fire safety accident, explosion accident, serious securityaccident, and unsettling incidents seriously jeopardizing the society. HGTECH has successfullycompleted the annual work of production safety.

Emergency Response

Fire Safety Drill

Safety Escort, "Rescue" AroundYouSpecial Training on First AidFirefighting Skills Competition

In order to strengthen the ability to respond to emergencies, the company has formulated the EmergencyDisposal Plan for Safety Emergency. HGTECH carries out firefighting drills and special emergency drillsfor key processes, by simulating safety accidents, rehearsing disposal and rescue actions. To strengthenour safety production team, we have organized all kinds of training related to safety production, such asmechanical injury prevention training, first aid training, fire safety training and drills, traffic safety training,forklift use safety training, etc. Besides our daily safety work:monthly inspection, annual replacementof firefighting equipment,annual inspection of gas body detectors, various types of special equipmenton schedule, “Special Equipment Safety Management System”, “Temporary Electricity OperationManagement System”, “Management System of Operations at Height”, “Management Systemof Fire Operation”, etc. HGTECH still have completed: re-filing of the emergency plan for work safetyaccidents, strengthen limited space management, make a numbered record on all limited space, clarifysafety management requirements, post warnings in public.

Practice SocialResponsibility

HGTECH actively undertakes social responsibility, firmly integratesthe fulfillment of social responsibility into the production management.Throughout the synergistic development of industrial regions,popularization science education, public welfare practice, etc., HGTECH isalways giving back to the society with its own actions.

Under the guidance of Hubei Province’s Strategy--“Rise of Central China”, HGTECH gives full play to the driving effectof leading role: take application scenarios as the traction; strengthen the deployment of industrial forward-looking system;increase innovation investment; promotes cross-industry and cross-regional integration of innovation resources; promotesinnovation and collaboration of industrial chain supply chain; drives the development of industrial clusters by extending,supplementing, and strengthening the chain. HGTECH has promoted the development of local electronics industry andadvanced equipment manufacturing industry. HGTECH has become a model of Wuhan’s high-tech industry radiating anddriving the surrounding area, injecting a strong impetus for the synergistic development of regional economy.With an investment of more than 1 billion RMB, the company has established HG Xiaogan Electronics Industrial Park andEzhou Advanced Equipment Manufacturing Base in Xiaogan, Ezhou and Jingmen, which not only promotes the acceleratedtransformation of innovation achievements and the rapid development of key industrial clusters, but also expands newdevelopment space for all enterprise and the city. Jingmen New Anti-Counterfeit Packaging Material Manufacturing Base hasemployed the poor and disabled people in the neighboring area. It provides more suitable jobs, and contributes to the disabledpeople. Xiaogan Sensor Manufacturing Base has employed the disabled, and takes the lead in joining the Xiaogan Love andHelp the Disabled Employment and Entrepreneurship Enterprise Union. The company takes care of the disabled from allaspects, and creates a favorable atmosphere for the whole society to help the disabled.In addition, as a major taxpayer, HGTECH pays full taxes timely, which providing stable tax support for the local economy. Thecompany has awarded the honor of Top Ten Taxpayers in the East Lake High-tech Development Zone for many consecutiveyears. Recently, HGTECH has been deeply exploring into the high-end markets in emerging fields, continuously increasingits investment in research and development, and creating a highland for gathering high-quality talents. Amid the newdevelopment paradigm where domestic and international circulations mutually reinforce each other, we will strengthen existingadvantages, address weaknesses, forge new competitive edges, and catalyze the emergence of cutting-edge technologies,innovative products, and transformative directions to inject robust momentum into sustained regional economic growth.

As the first science and technology exhibition hall in China to displaylaser science and technology, laser technology application and intelligentmanufacturing, HGLaser is committed to providing the public with colorfulscience education and training and practical activities, with the goal of“spreading laser science knowledge and promoting laser technologyapplication”, Since its completion in June 2020 and officially open publiclyin early 2021, for the national public, Laser Technology Museum carries outthe “National Popularization of Science”, “Public Open Day” and otherscience education activities. Through interactive exhibitions, explanations,demonstrations, practical operations and other forms, visitors can gain adeeper understanding of the development of laser technology, applicationfields and future trends. In 2024, HGLaser Technology Museum hosted 1,500sessions for Industry professionals (automotive, aerospace sectors), generalpublic visitors, student groups, with almost 24,000 visitors’ attendance;delivered 142 customized science programs for domestic school groupsand leading higher education institutions; conducted live-streamed sciencedemonstrations with Optics Valley Suspended Monorail, Wuhan Open TennisTournament, Hubei Provincial Science Museum, to provide more interestingscience experience.

Public Benefit Science Education Outreach

Technology Serves for Social Development

Social ContributionsIn order to enrich the extracurricular reading resources of rural students andbroaden their knowledge horizons, the 8th Youth Class of HGTECH plannedseveral thematic activities such as “bookmarks with love and creativity”, “wasteto treasure”, “auction with love”, “salted fish exchange” in 3 months.On March 5, 2024, at the closing ceremony of the 8th Youth Class, all thestudents of the 8th Youth Class donated their earnings to Wuhan YouthDevelopment Foundation, which support the construction of the “ProjectHope Library” in the central elementary school of Fenghuang Town, XinzhouDistrict, Wuhan City. At present, the plaque-unveiling ceremony of the “ProjectHope Library” has been completed in Fenghuang Town Central PrimarySchool, Xinzhou District, Wuhan City.In addition, in 2024, members of the Youth League Committee of HGTECHand young volunteers formed six loving teams and went to Chongyang Countyin Xianning City, Jieheshi Town and Xizhai Town in Songzi City, to carry outthe Ruby Public Welfare Campaign. They visited more than 25 families in need,paid a visit to and offered condolences to more than 40 school-age children.They delivered love funds, school supplies, daily necessities and living items toeach child, and assigned love liaison officers in a ratio of one to two.

Public Welfare Practices and Rural Revitalization

Guided by the aim of “providing satisfactory products to society, creatingan innovative space for employees, and generating substantial returns forshareholders”, the company takes responsibility for stakeholders such asshareholders, investors, customers, employees, and value-chain partners.HGTECH keeps regular communications with stakeholders in various ways, andcollects their opinions.

Communications with Stakeholders

Shareholders and

investors

Government andregulatory agencies

Client

Standardize corporate governanceEconomic performanceResearch and innovationProtecting shareholder rights and interestsInvestor Relation Management

Operation legallyProduct quality and SafetyPromoting economic developmentEnvironmental managementSocial responsibility

Product Quality and SafetyPromote product and service innovationIntellectual Property ProtectionInformation Security and Privacy ProtectionProtect clients’ rights and interests

Shareholders’ Meeting andBoard of DirectorsRegular informationdisclosureExpand communicationmethods for investors

Research and investigationSymposium betweengovernment and enterpriseDaily communication andinformation report

Online official website/WeChat accountOffline exhibitions andpromotional activitiesProfessional sales teamFactory open dayafter-careRegular visitsSurvey on satisfaction

StakeholdersTopic Concerned

Communications and

Response

HGTECH has established a multi-layered compliance system to combat bribery and corruption, treating this as thefoundational imperative of ethical operations. The company gives full play to the leading role of the “key minority”:themanagers of HGTECH and its subsidiaries sign compliance commitments for senior executives every year; conductcompliance oaths; publicly demonstrate their attitudes towards compliance management; establish systems such asthe “Compliance Management System of HGTECH” and the “Administrative Measures for Penalties in InternalAudits of HGTECH”; improve an integrity self-discipline system, highlighting the requirements for anti-bribery and anti-corruption;distribute “Integrity and Compliance Manual” and carry out training;The company prohibits employees frombribery and corruption in any behaviors, including but not limited to directly or indirectly giving and accepting:cash, gift money,marketable securities,physical items, kickbacks, expenses for tourism and entertainment, non-property interests, e.g. jobopportunities.The company publicly announces reporting hotline and email address through public channels, and issues integrity initiativeletters on important festivals. The company exposes non-compliant incidents on the “Compliance Exposure Platform”and tracks the accountability and handling process. HGTECH updates the compliance evaluation criteria every year andincorporates them into the annual salary assessment of managers, HGTECH devotes to the implementation of compliancemanagement from top to bottom.

The company adheres to those principles: honesty and trustworthiness, equalconsultation, and mutual benefit win-win results. The company scrupulouslyabides by business ethics, complies with relevant laws and regulations, andconducts market competition in accordance with the law. The company attachesgreat importance to p fair competition in operation, and prohibits behaviors thatviolate business ethics and disrupt the market competition order, such as unfaircompetition.The company fulfills the requirements of anti-unfair competition through regulartraining, warning cases and other ways.

Anti-Bribery and Anti-Corruption

Anti-Unfair Competition

Employee

Suppliers and

partners

Medium

Public andCommunity

Occupational Health and SafetySafeguarding employee’s rights andbenefitsGood working environmentEstablish a sound career developmentsystemInformation Security and Privacy Protection

Continuous and stable cooperationOpen and fair procurement proceduresAdhere to business ethics

Information disclosure in truth and accuracyProduct development and innovationKeep good cooperation

Carry out public welfare and charity activitiesPromote industry developmentEnvironmental management

Establish a reasonable salaryand welfare systemDiverse training systemSmooth communicationchannelsCultural JournalHolidays and sports activitiesSurvey on satisfaction

Fulfill the contract legallyTechnical SeminarBidding and review supplierSupplier training

Online official website/WeChat accountMedia Open DayStrengthen dailycommunication

Social welfare projectsCommunity VolunteerActivitiesStrengthen environmentalmanagement

Index

Index2024

Unit

202220232024

1,687,847.371,201,102.88

81,830.54

0.81

1,751,509.121,030,973.30100,747.60

2,082,432.871,170,917.55122,074.99

1.21

Energy usage managementTotal electricity consumptionTotal natural gas consumptionWater resource utilization managementTotal water consumptionPackaging usage managementTotal amount of packaging materialsRecyclable packaging usage ratioPollutant discharge managementTotal greenhouse gas emissionsTotal amount of industrial wastewater dischargeTotal amount of domestic sewage dischargeWaste managementThe amount of hazardous waste disposalThe amount of general industrial solid wasteTotal amount of household wasteEnvironmental protectionAnnual environmental investment expenditureNumber of incidents punished for violating environmentalprotection laws and regulations

linear measurecubic metercubic meterton%tontontontontonton

Ten thousand yuanpiece

1105071165387915950683456.6943%37506.02

239189

2022.418841784.94

Key Performance TableTable 1: Economic Performance

Table 2: Environmental Performance

Total AssetsOperating Revenue

Belonging to Shareholders ofthe Parent Company Net profitBasic Earnings per share

Ten thousand yuanTen thousand yuanTen thousand yuanYuan per share

Unit

Index

Index

Unit

Unit

202220232024

2024

Total number of suppliersNumber of supplier training sessionsPassing rate of supplier qualification review

Product R&D investmentR&D investment growth rateR&D investment as a percentage of revenueTotal number of R&D personnelNumber of patent applicationsNumber of authorized patents

Total number of employees

Proportion of male employeesProportion of female employeesTotal number of production personnelTotal number of Sales staffTotal number of financial staffTotal number of technicianTotal number of administrative personnelProportion of Under 30 years old employeesProportion of 30 to 50 years old employeesProportion of Over 50 years old employees

//%

Ten thousand yuan

%%personnel//

person%%personpersonpersonpersonperson%%%

60,845

35.02%

5.07%

2032

80,232

31.86%

7.78%

2176

99,270

23.73%

8.48%

2483

3108

83.96%

8823

63.7

36.3

43111141

2483

65.5

5.5

By Gender

ByPersonnelType

By Age

Table 3: Supply Chain Management Performance

Table 4: Product R&D and Innovation Performance

Table 5: Employee Management Performance

IndexUnit2024

Table 2 Covers First-Tier Subsidiaries and Select Second-Tier Subsidiaries of HGTECH.

Proportion of female employees in managementProportion of male employees in the management teamProportion of employees under the age of 30 in the management teamProportion of employees aged 30 to 50 in the management teamProportion of employees aged 50 and above in the management teamEmployee Rights ManagementCoverage rate of employee labor contractsSocial security coverage rateExpenditure amount for supporting financially distressed employeesEmployee Health and Safety

Health check-up coverage rateThe Amount of safety accidents and environmental pollution incidentsEmployee safety training coverage rateCoverage rate of supplier employee safety trainingEmployee training managementEmployee training coverage rateAverage training hours for employeesProportion of senior administratorsProportion of intermediate administratorsProportion of ordinary employees

%%%%%%%%%Ten thousand yuan

%次%%%hour

%%%

16.6

41.5

24.9

75.1

9.7

5.3

22.21

13.7

Proportion of employees with a master’s degree or aboveProportion of employees with a bachelor’s degree

By EducationalBackground

IndexUnit2024

Employee Management Performance

Comparative Index Report on the Self-Regulatory Guidelines for Mainboard Listed Companies No. 1 – StandardOperations of the Shenzhen Stock ExchangeBenchmarking Index Table

8.1: Overview

8.2: Business Principles

8.3: Social Responsibility Strategic Planning and Working Mechanism

8.4: Disclosure of Social Responsibility Reports

8.5: Protection of Employee Rights and Interests

8.6: (Ⅰ) Comply with environmental protection laws, regulations, and

industry standards

8.6: (II) Environmental Protection Plan

8.6: (III) Natural Resource Utilization

8.6: (IV)Pollutants disposal in compliance with laws

8.6: (V) Pollution Prevention Facilities

8.6: (VI) Taxes and fees payment related to environmental protection

8.6: (VII) Supply Chain Security

8.6: (Ⅷ) Other environmental protection responsibilities

8.7 and 8.9: Environmental Information Disclosure

8.8: Implementation Situation and Corrective Measures of Environmental

Protection Policies

8.10: (Ⅰ) Laws, Regulations, and Industry Standards about Product Safety

8.10: (II) Production Environment and Production Process

8.10: (III) Safety Assurance Mechanism for Product Quality and Accident

Emergency Plan

8.10: (IV) Other production and product safety responsibilities

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

Violations

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

Measures

8.11: (III) Employee Training

8.11: (IV) Protection Responsibilities of Other Employee Rights

8.12: Scientific Ethics Standards

8.13: Content of Social Responsibility Report

Stakeholder communicationCompliance constructionConcise Overview of ESG ManagementInformation disclosureEmployee Rights and BenefitsEnvironmental management systemResponse to climate changeReasonably utilize resourcesWaste DisposalWaste DisposalEnvironmental investmentSupply chain securityEnvironmental management systemCultivating Green Development MomentumEnvironmental management systemProducts and Services, Safety and QualitySafe productionEmergency responseOccupational Health and SafetyEmployee Rights and BenefitsOccupational Health and SafetyEmployee Development and TrainingEmployee Care and DevelopmentNot ApplicablePractice social responsibility

Content of NormCorresponding chapters

1.For HGTECH, what is your identity?

□Employee □Client □Shareholder/Investor □Supplier

□Government/Regulatory Department □Media

□Other (please specify): ___________________

2.What is your evaluation about this year’s ESG Report?

□Excellent □Good □Fair □Poor □Very Poor

3.How does the Report address to stakeholders’ concerns?

□Excellent □Good □Fair □Poor □Very Poor

4.What’s your evaluation of the information, indicators, and data in the Report,

is it clear, accurate, and complete?

□Excellent □Good □Fair □Poor □Very Poor

5.What’s your evaluation of the language and wording, structural organization,

and layout and design of this report?

□Excellent □Good □Fair □Poor □Very Poor

6.What’s your most satisfactory parts in this Report?

7.What additional information would you want in later reports?

8.What other comments or suggestions do you have regarding our ESG practices and sustainable

development management?

Feedback Form

Tel: 027-87180126Fax: 027-87180139Email: 0988@hgtech.com.cn

Thank you for reading 2024 Environmental, Social and Governance ESG Report of HUAGONG TECH COMPANY LIMITEDTo continuously improve our ESG practices and provide more valuable information to stakeholders, we sincerely inviteyou to share your feedback and suggestions with us via the following channels. Your support for our ESG efforts is greatlyappreciated!

Address: No. 1, 6th Road, Huazhong University of Science and Technology Science Park,East Lake High-Tech Development Zone, Wuhan City, Hubei ProvinceContact Person: Office of the Board of Directors in HGTECH

HUAGONG TECH COMPANY LIMITED

Contact InformationOffice of the Board of Directors in HGTECHTel: 027-87180126Fax: 027-87180139Email: 0988@hgtech.com.cn