2016 Annual Social Responsibility Report

　　The “2016 Social Responsibility Report of Ningbo Rian Valve Co. ,Ltd” (hereinafter referred to as the “Report”) has been prepared in accordance with relevant laws and regulations, including the Company Law, and reflects the company’s overall performance in 2016 in fulfilling its social responsibilities toward the nation and society, as well as to natural environments and resources, in its business management activities, and toward its stakeholders—including shareholders, creditors, employees, customers, consumers, suppliers, and the community. In 2016, while generating profits and being accountable to shareholder interests, the company treated suppliers, customers, consumers, and other stakeholders with integrity, actively engaged in public welfare initiatives such as environmental protection and community development, thereby promoting the coordinated and harmonious development of the company itself and the entire society.

　　I. Company Overview
　　After more than 30 years of development, the company has now become a leading brand in the valve industry. It has not only earned recognition from shareholders and society for its strong economic performance but has also actively embraced social responsibility, ensuring harmonious co-development with numerous stakeholders—including the government, employees, consumers/customers (owners), banks, and intermediary service agencies—by fostering mutually respectful, trustworthy, and mutually beneficial cooperative relationships. The company has taken on substantial social responsibilities, generated positive social benefits, and received widespread acclaim from all sectors of society. For many consecutive years, the company has been one of the largest taxpayers in Ninghai County and has been recognized as one of the top 50 tax-paying enterprises in Ninghai County.

　　II. Protection of Shareholders’ and Creditors’ Rights and Interests
　　The company has consistently upheld the principle of safeguarding the rights and interests of shareholders and creditors as a prerequisite for all its business and management activities, which is reflected in the following key areas: First, the company has taken steps to enhance corporate governance and improve internal control systems, thereby standardizing its operations and ensuring that all shareholders and creditors enjoy their legitimate rights and interests. Second, the company diligently fulfills its information disclosure obligations, ensuring that the disclosed information is truthful, accurate, timely, complete, and fair, with no instances of selective disclosure or premature release of non-public information. Third, the company places great importance on rewarding its shareholders: while maintaining normal business operations, it adopts an active dividend policy, providing shareholders with tangible returns and enabling them to share in the company’s business achievements. Fourth, the company promptly informs its creditors of significant information related to their creditor rights and actively cooperates with creditors to help them understand the company’s financial, operational, and managerial conditions. The company’s primary creditors include major commercial banks and holders of corporate bonds; the company enjoys a strong banking reputation and has never experienced any defaults on interest payments or late repayments. Fifth, the company continues to strengthen its customer relationship management, constantly improving the functionality of its website and establishing multi-channel communication platforms—such as online channels, telephone lines, and email—to create a favorable internal and external communication environment. This enables customers to gain a comprehensive understanding of the company’s business and management status, thus ensuring the healthy and harmonious development of the company’s relationships with its customers and other stakeholders.

　　III. Protect the legitimate rights and interests of employees and achieve common development between employees and the enterprise.
　　We firmly adhere to a people-oriented approach, actively providing employees with development platforms and environments that enable them to realize their full potential. In this way, every employee will be treated with respect, understanding, and appreciation within the company, fostering a positive and harmonious corporate culture. This ensures the joint growth of both the enterprise and its employees, allowing them to share in the fruits of the company’s success.
　　1. We legally safeguard the legitimate rights and interests of our employees. In accordance with the Labor Law and other relevant laws and regulations, the company has established a comprehensive human resources management system. We have put in place an open, equitable, competitive, and merit-based recruitment and employment mechanism, and have refined our compensation and benefits system—including social insurance and medical insurance. All registered employees have signed labor contracts and completed the necessary procedures for social insurance and medical coverage. We have never delayed or defaulted on the payment of employees’ wages or contributions to the five social insurances. At the same time, we continuously improve our compensation system by introducing incentive mechanisms into our remuneration management. On the basis of ensuring a stable base salary, we link employees’ performance directly to their bonus pay, so that those who work harder earn more. This approach has greatly boosted employees’ enthusiasm and creativity, thereby ensuring a harmonious and stable employer-employee relationship.
　　2. The company has established and perfected a sound system for occupational safety and health, strictly adheres to national occupational safety and health regulations and standards, and provides employees with comprehensive education on occupational safety and health to ensure their physical and mental well-being. At the same time, the company places great emphasis on construction site safety and has reported zero work-related accidents throughout the year.
　　3. The company actively conducts employee training to enhance the overall quality of its workforce. It encourages and supports employees in participating in part-time continuing education and training programs, providing them with more opportunities for personal and professional development. The company places great importance on protecting employees’ rights, steadily improves the effectiveness of trade union work, and fulfills the trade union’s responsibility to participate in the democratic management of the enterprise.

　　IV. Protecting the rights and interests of other stakeholders
　　The company adheres to a business philosophy of honesty, integrity, mutual benefit, and win-win cooperation. We continuously innovate our products and enhance our services to provide customers with value-for-money offerings. In project development, we consistently raise the technological content and intensify the application of energy-saving and environmentally friendly technologies, as well as new technologies and materials, across our product lines. At the same time, we continually refine our procurement processes and establish a fair and equitable procurement system, creating a favorable competitive environment for suppliers. By introducing innovative designs, rigorously controlling quality, and perfecting our after-sales service system, we elevate the customer experience, delivering high-quality products and satisfying services to consumers. As a result, we enhance the brand recognition and customer loyalty of brands such as Ri’an, achieving the goal of mutual benefits for all stakeholders.

　　V. Emphasize environmental protection and sustainable development
　　The company regards environmental protection as an important component of its corporate sustainability strategy, emphasizes fulfilling its environmental protection responsibilities, has introduced an environmental management system, and integrates environmental management into both production and daily life.
　　Establish and improve energy-saving and emission-reduction systems, make corresponding investments in technological upgrades, implement effective measures, and achieve significant results in energy conservation and emission reduction.
　　Strengthen environmental monitoring in the workplace and conduct regular health checkups for employees to ensure their occupational health. Conduct annual tests on wastewater and noise levels to ensure compliance with national standards and guarantee that emissions meet regulatory requirements. Properly collect, sort, and recycle solid waste, and entrust its disposal to qualified institutions. Maintain a clean and aesthetically pleasing factory environment, and continuously promote cleaner production practices.
　　To date, the company has never been penalized by the government or received complaints from local residents for damaging or polluting the environment.

　　6. Fulfill corporate social responsibility and actively participate in public welfare initiatives.
　　1. The company operates with integrity, pays taxes in accordance with the law, and makes significant social contributions. For many consecutive years, the company has been a major taxpayer in Ninghai County and has been recognized as one of the Top 50 Taxpayers in Ninghai County and as a AAA-rated “Contract-abiding and Creditworthy” enterprise in Zhejiang Province.
　　2. Actively organize and participate in social activities to foster harmonious interactions between the company and society. Over the years, the company has consistently maintained excellent communication with industry peers and various community organizations, fully leveraging the role of its internally elected representatives to the People’s Congress. It has also established close and collaborative ties with diverse social groups, carried out a wide range of social services and public welfare initiatives, and actively participated in the “Five-Water Co-Governance” campaign. The Chairman has taken the lead in the work of the Xidian Town Chamber of Commerce, achieving remarkable results.
　　3. The company places great emphasis on demonstrating its social value by actively engaging in public welfare activities such as poverty alleviation, helping those in need, and donating to education—showing compassion and giving back to society. Since 2009, the company has donated 3 million yuan to establish the “Rian” endowed fund; contributed 550,000 yuan to the Five-Water Co-Governance initiative; actively supported various festivals and sports events in Ninghai; and annually provides donations and care for local elderly residents on the Double Ninth Festival.

　　In summary, although the company has achieved certain successes in fulfilling its social responsibilities—including protecting the interests of shareholders and creditors, safeguarding employee rights, protecting the environment, and participating in public welfare initiatives—its current level of social responsibility still falls somewhat short of its vision and the standards expected of leading enterprises. To address this gap, the company will proactively fulfill its social responsibilities and strive to build a harmonious enterprise. Within its capabilities, it will increase its investment in social公益 activities, actively participate in local initiatives related to education, culture, community development, poverty alleviation, and assistance to those in need, thereby promoting the harmonious development of both the company and the regional economy and making new contributions to the construction of a harmonious society.

Board of Directors of Ningbo Rian Valve Co. ,Ltd
October 10, 2017