Integrity and Compliance

One of the essential parts of implementing the strategy of law-based governance in China is to build “central state-owned enterprises under the rule of law”. The core value of SUMEC is “customer first and integrity based”. In accordance with the Guidelines on Compliance Management of Central State-owned Enterprises and centering on the management philosophy that “compliance creates value and compliance is everyone’s responsibility”, we are committed to establishing an effective compliance system through continuous investment in resources, to ensure that the philosophy of compliance development and requirements are implemented into the actual business processes.

The Company has established a compliance management system under the overall leadership of the Party Committee, top-down design by the Board of Directors, and proactive promotion by the management team; sets compliance objectives, identifies and evaluates risks, and formulates corresponding control measures for each business scenario in accordance with applicable laws and regulations; and ultimately implements them into business activities and processes to realize compliance management and supervision in each business link. In addition, the Company will test the effectiveness of the compliance management system through inspections and audits, and continuously optimize the Company’s compliance management system through reviews and the improvement of the existing system.

The Company places great importance on continuously enhancing employees’ awareness and capabilities in compliance. Through the establishment of a regular compliance training mechanism and the formulation of annual training plans, the Company has made compliance management a mandatory part of the training for managers, personnels at key positions, and new recruits. This ensures that employees can fully understand the compliance obligations and responsibilities at both the company and individual levels and that compliance is taking root in the behaviors and habits of all SUMEC people.

The Company is committed to engaging in proactive and open exchanges and cooperation with business partners and other stakeholders. By fully delivering SUMEC’s compliance philosophy and practices and continuously enhancing mutual understanding and trust, the Company aims to work with business partners to follow the integrity and compliance requirements together for reciprocity and mutual benefits.

SUMEC adheres to the strategic positioning of “building a digitally-driven international industrial chain and supply chain, and becoming a dual-circulation benchmark enterprise that promotes mutual reinforcement between domestic and international markets”, attaches importance to supply chain compliance management, and is committed to incorporating high standards of commercial, social and environmental responsibilities into all aspects of the supply chain. Therefore, the Company requires its subsidiaries and business partners to comply with the laws and regulations of the country/region where the products are sold, to respect human rights and protect the environment, and not to tolerate any form of violation of human rights, environmental pollution and other violations of laws and regulations. The Company encourages its suppliers and other business partners to implement the same quality, safety, labor and environmental protection requirements as SUMEC itself. The Company has taken or will take the following measures to ensure supply chain compliance:

1. Respect and protect human rights, commit to complying with the labor-related laws and regulations in China, in the countries where we operate, and in other countries and regions, and uphold the principles advocated by the International Labor Organization in which the employment and use of child labor and all forms of forced labor are prohibited. Adhere to the principle of equal employment, and fair and just treatment of employees of different nationalities, ethnic groups, races, religions, genders, ages, marital statuses, and pregnancy statuses, and promote respect for and protection of human rights in business activities, in the spirit of seeking common ground.

2. Adhere to and continuously promote green, low-carbon and circular development, abide by and implement environmental protection laws and regulations in China and related countries/regions, and strive for the coordinated development of production and operation and environmental protection. For this reason, the Company is making every effort to contribute to global sustainable development and the building of a community of shared future for mankind by vigorously promoting various environmental protection projects, providing a variety of clean energy facilities, and continually increasing the “green” elements in products.

3. Attach importance to compliance risk management in the supply chain and conduct due diligence reviews and professional judgment on the authenticity and reasonableness of transactions in the whole supply chain. The Company takes advantage of the Internet of Things, digitalization and other methods to track and manage logistics, information flow and capital flow, and to strengthen the intelligent risk control. The Company regularly conducts compliance assessment and audits of suppliers and partners, takes strict disciplinary measures for any non-compliant behaviors, and promptly reports them to relevant regulatory authorities.

The Company undertakes to comply with all applicable anti-corruption laws and regulations and prohibit any form of commercial bribery. The bribery refers not only to direct payments and receipts, but also to payments and receipts through a third-party.

The Company prohibits business personnel from funneling benefits to others for the purpose of obtaining business opportunities and benefits and prohibits employees from accepting or requesting benefits and interests from others in business activities. In addition, the Company requires our business partners to understand and comply with SUMEC’s anti-corruption requirement. This means refusing to provide, accept or offer any form of benefits to any person in order to prevent the influence on business decisions or the acquisition of unfair advantages.

In addition to establishing a compliance system in accordance with the Guidelines on Compliance Management of Central State-owned Enterprises, the Company has taken or will take the following measures to ensure anti-corruption compliance:

1. Issue anti-corruption policies and statements, anti-corruption code of conduct for business partners, and business-specific compliance guidelines that clarify a zero-tolerance stance towards bribery and corruption and outline the anti-corruption requirements for employees and third parties.

2. Design, establish and implement anti-corruption and anti-commercial bribery compliance systems, and systematically manage and control risks associated with corruption in accordance with anti-corruption laws and the requirements of the Guidelines on Compliance Management of Central State-owned Enterprises.

3. Continuously raise employees’ awareness of anti-corruption compliance, clarify anti-corruption requirements in compliance manuals, employee handbooks and other documents, and effectively convey anti-corruption requirements to employees through training and testing for all employees and the signing of commitment documents.

4. Place importance on anti-corruption management of business partners, and adopt risk assessment, due diligence, training, and signing of commitment documents for third parties with whom the Company has business connections, to effectively control anti-corruption risks.

5. Encourage employees and third parties to report any violations or misconduct to improve the effectiveness of the anti-corruption system.

The Company undertakes to comply with applicable laws and regulations on export control and sanction. The Company has established a compliance system in accordance with the Guidelines on Compliance Management of Central State-owned Enterprises, and has taken or will take the following measures to ensure export control and sanction compliance:

1. Organize all-round training on export control and sanction compliance, including but not limited to all-employee training, business-specific training, and training for key positions. The all-employee training focuses on introducing basic requirements of export control compliance, the business-specific training centers on the core requirements in each business process, and the training for key positions emphasizes the essential knowledge and skills that personnel in critical roles should possess. Through multi-level and all-encompassing training, the Company continuously enhances the compliance awareness of all employees and effectively communicates business-based compliance requirements in a differentiated manner.

2. Conduct due diligence on business partners and traded goods to fully understand the traded items and their use, and prohibit the unauthorized export or transfer of controlled products and technologies, as well as the use of products for military purposes or any other purposes that infringe upon human rights. The Company resolutely refuses to cooperate with partners or traded goods that violate relevant control and sanction laws.

3. Review any transaction, export and other business activities related to controlled products or technologies by the Compliance Management Department. In accordance with the relevant national export control laws and regulations and the Company’s export control compliance requirements, the Compliance Committee has the authority to exercise veto power over the execution of specific business activities.

4. Regularly conduct assessments of export control compliance risks on business processes, carry out compliance audits of key countries and critical business segments, and implements documentation requirements. Based on the audit results, the Company continuously optimizes its business processes and control plans, and imposes severe penalties on employees who violate export control policies.

5. Strictly implement the export control compliance program in accordance with the relevant laws and regulations, fulfill the compliance commitments to partners, and actively undertake corresponding export control compliance obligations.

Intellectual property rights are intangible assets with significant competitive value, including patents, trademarks, copyrights, trade secrets, etc. Adhering to the core values of “Innovation and Breakthrough” and the brand concept of “Quality is Life and Brand Builds the Future”, SUMEC has continuously invested in the innovation of brands and intellectual property rights. The Company encourages innovation, attaches great importance to the creation, protection and utilization of the Company’s intellectual property rights, and strives to promote the high-quality development of its brands while respecting and preventing infringement of the intellectual property rights of others. The Company has taken or will take the following measures to protect its intellectual property rights and ensure intellectual property rights compliance:

1. Apply for and register new intellectual property rights in a timely manner in accordance with the law, follows proper procedures for licensing and transferring intellectual property rights, and put forward explicit requirements for employees to protect their own intellectual property rights and those of others in business activities, to ensure that employees engage in all business activities in a legal, compliant, and contractual manner and effectively safeguard the intellectual property rights of the Company and its partners.

2. Respect, protect and prevent infringement of others’ intellectual property rights. When the intellectual property rights of others are involved in the domestic or international business, the Company will conduct risk investigation and retrieval analysis to identify potential intellectual property risks, and formulate corresponding protection plans and measures to avoid infringement. When there is a need to utilize the intellectual property rights of others, the Company will take the initiative to obtain the prior permission from the right holders.

3. Attach importance to the protection of trade secrets of the Company and its partners. The Company will establish and improve the confidentiality management system in accordance with the requirements of the relevant national laws and regulations on confidentiality, require employees to strictly abide by the confidentiality laws and regulations and the provisions of the Company’s confidentiality system, and properly keep and use work-related data and information, to protect the confidential information from being disclosed.

4. Carry out intellectual property awareness campaigns and training programs, to ensure that the employees are fully aware of their obligations and responsibilities for intellectual property rights compliance. The Company also supervises the protection of intellectual property rights by employees through inspections and audits, and incorporates violations on intellectual property rights into the Company’s accountability system, to hold violations on intellectual property rights accountable.

Any violation of laws and regulations in its business activities is strictly prohibited in the Company. For the purpose of effective implementation of various compliance requirements, the Company has set up a compliance audit team independent of the compliance organizational structure. Compliance audit mainly includes compliance auditing, non-compliance reporting and non-compliance investigation, that is, auditing the implementation of compliance in daily business operations and projects and investigating any instances of non-compliance.

The Company has issued regulations such as the Implementation Measures for Accountability for Non-compliance in Business Operations and Investments to provide guidelines and methods for compliance audits. Employees and business partners can contact the Compliance Audit Team through multiple reporting channels, including a dedicated hotline and reporting email address, in an anonymous, secure, and confidential manner.

You can report any non-compliance you find in the company or of its employees through the following channels:

E-mail: sumec-ombuds@sumec.com.cn

Tel.: 025-84539071

Mailbox: 18/F, SUMEC Building, No. 198 Changjiang Road, Xuanwu District, Nanjing, China

We promise that your report will not be disclosed to the involved parties and that you will be protected from retaliation.