Qingdao Haier Co., Ltd. 2015 Annual Report
Stock Code: 600690 Short Name: Qingdao Haier
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Qingdao Haier Co., Ltd.
2015 Annual Report
Stock Code: 600690
Qingdao Haier Co., Ltd. 2015 Annual Report
Important Notice
I. The Board, the supervisory committee and directors, supervisors and senior management of the Company hereby assure that the content set out in the annual report is true, accurate and complete, and free from any false content, misleading statement or material omission, and are individually and collectively responsible for the content set out therein.
II. Information of Directors absent from Meeting
|||||
|-|-|-|-|
|Position of directorabsent from meeting|Name of director absentfrom meeting|Reason for the absence ofdirector from meeting|Name of proxy|
|Director|Peng Jianfeng|Personal affair|Wu Changqi|
|Independent Director|Chen Yongzheng|Personal affair|Wu Cheng|

III. Shandong Hexin Certified Public Accountants (special general partnership) has issued a standard and unqualified audited report for the Company.
IV. Liang Haishan (legal representative of the Company), Gong Wei (chief accountant) and Yin Wenjun (person in charge of accounting department or director of accounting department) hereby certify that the financial report set out in the annual report is true, accurate and complete.
V. Proposal of profit distribution and proposal of capitalizing capital reserves for the reporting period examined and reviewed by the Board
Proposal of profit distribution and proposal of capitalizing capital reserves for the reporting period examined and reviewed by the Board: to declare a cash dividend of RMB2.12 per 10 shares (tax
inclusive) based on the total number of shares as at the registration date in respect of future proposal for profit distribution.
VI. Disclaimer in respect of forward-looking statements
Forward-looking statements such as future plans, development strategies as set out in this report do not constitute our substantial commitment to investors. Investors are advised to pay attention to investment risks.
VII. Is there any fund occupation by controlling shareholders and their related parties for non-operational purposes?
No
VIII. Is there any provision of external guarantee in violation of prescribed decision-making procedures?
No
IX. Important Risk Warnings
For the contents of risk which the Company may be subject to, please refer to the relevant
information set out in the section of Management Discussion and Analysis in this report.
Qingdao Haier Co., Ltd. 2015 Annual Report
Chairman: Liang Haishan Qingdao Haier Co., Ltd. 28 April 2016
Qingdao Haier Co., Ltd. 2015 Annual Report
Contents
SECTION I DEFINITIONS .................................................................................................................... 5 SECTION II GENERAL INFORMATION OF THE COMPANY AND FINANCIAL INDICATORS 7
SECTION III SUMMARY OF THECOMPANY’S BUSINESS ............................................................. 13 SECTION IV Management Discussion and Analysis ...................................................................... 21 SECTION V SIGNIFICANT EVENTS .................................................................................................... 47 SECTION VI CHANGES IN SHARE CAPITAL OF ORDINARY SHARES AND INFORMATION ABOUT SHAREHOLDERS .................................................................................................................... 75 SECTION VII THE RELEVANT INFORMATION OF PREFERRED SHARES ................................... 87 SECTION VIII DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES ....... 88 SECTION IX CORPORATE GOVERNANCE ...................................................................................... 101 SECTION X RELEVANT INFORMATION ON CORPORATE BONDS .................................. 110 SECTION XI FINANCIAL REPORT .................................................................................................... 111 SECTIONⅩII DOCUMENTS AVAILABLE FOR INSPECTION ...................................................... 239
Qingdao Haier Co., Ltd. 2015 Annual Report
SECTION I DEFINITIONS
I. Definitions
Unless otherwise stated in context, the following terms should have the following meanings in this report:
||||
|-|-|-|
||Definition of frequently used terms||
|CSRC||China Securities Regulatory Commission|
|MOFCOM||Ministry of Commerce of the PRC|
|SSE||Shanghai Stock Exchange|
|CSDCCL||China Securities Depository and Clearing Corporation Limited ShanghaiBranch (the ―CSDCCL‖)|
|The Company,Qingdao Haier||Qingdao Haier Co., Ltd.|
|Four MajorSecuritiesNewspapers||China Securities Journal, Shanghai Securities News, Securities Times,Securities Daily|
|KKR (GROUP)||KKR & Co. L.P. and its subsidiary, KKR & Co. L.P., is a limitedpartnership incorporated and existed in accordance with the laws of thestate of Delaware, USA. KKR & Co. L.P. is listed on the New York StockExchange (short name and stock code: KKR)|
|KKR, KKR(Luxembourg)||KKR Home Investment S.àr.l., a wholly owned subsidiary of KKR ChinaGrowth Fund L.P., is a project company incorporated in Luxembourg inaccordance with international practices for the sole purpose of strategicinvestment in the Company|
|Haier Electrics,1169||Haier Electronics Group Co., Ltd. (a company listed in Hong Kong, stockcode: 01169.HK)|
|FPA||Fisher & Paykel Appliances Holdings Limited (Chinese Name:裴雪派克)was established in 1934 and is known as the national appliance brand ofNew Zealand, the global top-level kitchen appliance brand and the famousluxury brand of the world. It has products including ventilator, gas stove,oven, dishwasher, microwave oven, freezer, washing machine, clothesdryer and etc. Business scope covers over 50 countries/areas of the world.In 2012, it became a wholly owned subsidiary of Haier Group. In order toperform the undertaking of Haier Group in respect of eliminatinghorizontal competition, the Company entered into the Trust Agreement onFisher & Paykel Appliances Holdings Limited between Haier GroupCorporation and Qingdao Haier Co., Ltd. on 25 May 2015, whereby HaierGroup entrusted its assets held in Fisher & Paykel Appliances HoldingsLimited to the Company for operation and management.|
|DCS||high-end kitchen electronic brand under FPA|
|CMM||China Market Monitor Co., Ltd., established in 1994, has been focusing onresearch on retail sales in Chinese consumption market for a long term andis the nationally recognized market research institute in terms of appliance|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||
|-|-|
||area.|
|Euromonitor|Euromonitor, established in 1972, is the leading strategic marketinformation supplier and owns over 40-years’ experience in respect ofpublishing market report, commercial reference data and on-line database.Data and analysis offered by it involve the whole world and coverthousands of product/service kinds.|

Qingdao Haier Co., Ltd. 2015 Annual Report
SECTION II GENERAL INFORMATION OF THE COMPANY AND FINANCIAL INDICATORS
I. Information of the Company
|||
|-|-|
|Chinese name|青岛海尔股份有限公司|
|Chinese short name|青岛海尔|
|English name|QINGDAO HAIER CO., LTD.|
|English short name|HAIER|
|Legal representative|Liang Haishan|

II. Contact Person and Contact Information
||||
|-|-|-|
||Secretary of the Board|Representative of securities affairs|
|Name|Ming Guozhen|Liu Tao|
||Department of Securities of QingdaoHaier Co., Ltd.Haier Information Industrial Park, No.1Haier Road, Qingdao City|Department of Securities of Qingdao HaierCo., Ltd.Haier Information Industrial Park, No.1Haier Road, Qingdao City|
|Address|||
|Tel|0532-88931670|0532-88931670|
|Fax|0532-88931689|0532-88931689|
|Email|finance@haier.com|finance@haier.com|

III. General Information
|||
|-|-|
|Place of incorporation|Haier Industrial Park, Laoshan District, Qingdao City|
|Zip code of place of incorporation|266101|
|Place of office|Haier Information Industrial Park, Laoshan District,Qingdao City|
|Zip code of place of office|266101|
|Website|http://www.haier.net/cn/|
|Email|9999@haier.com|

IV. Place for Disclosure and Deposit of Information
|||
|-|-|
|Designated newspaper for information|Shanghai Securities News, Securities Times, ChinaSecurities Journal, Securities Daily|
|disclosure||
|Website for publishing of annual report as|www.sse.com.cn|
|designated by the CSRC||
||Department of Securities of Qingdao Haier Co., Ltd.Haier Information Industrial Park, No.1 Haier Road,Qingdao City|
|Deposit place of annual report||

V. Summarized Information of Shares of the Company
||||||
|-|-|-|-|-|
|Summarized information of shares of the Company|||||
|Type of Shares|Stock Exchange|Short name|Stock Code|Short name before|
|||||change|
|A shares|Shanghai StockExchange|Qingdao Haier|600690|/|

VI. Other Related Information
||||
|-|-|-|
|Accounting firm engaged by the||Shandong Hexin Certified Public Accountants(special general partnership)|
||Name||
|Company (domestic)|||

Qingdao Haier Co., Ltd. 2015 Annual Report
||||
|-|-|-|
|||26 – 27 Floor, Century Building, No.39Donghai Road West, Qingdao City|
||Place of office||
||Name of signing|Zhao Bo, Wang Lin|
||accountant||
|||China International Capital CorporationLimited|
||Name||
|||27 and 28 Floor, China World Towers 2, No.1Jianguomenwai Avenue, Chaoyang District,Beijing|
||Place of office||
|Sponsor responsible for|||
|continuing supervision during|Name of signing|Sun Lei, Chen Jingjing (note)|
|the reporting period|representative of||
||sponsor||
||Period of|17 July 2014 --31 December 2015|
||continuing||
||supervision||

Note: On 24 October 2015, the Company issued the Announcement on Replacing Representative of Sponsor Responsible for Continuing Supervision on Non-Public Issuance of A Shares in 2013 from Qingdao Haier Co., Ltd., the Company received the Report on Job Change of Representative of Sponsor Liu Shulin and Replacement of Representative of Sponsor Responsible for Continuing Supervision on Non-Public Issuance of A Shares in 2013 of Qingdao Haier Co., Ltd. delivered by China International Capital Corporation Limited(―CICC‖), the sponsor of the Company, whereby the original representative of sponsor Mr. Liu Shulin ceased to be the representative of sponsor responsible for continuing
supervision on non-public issuance of A shares in 2013 due to his job change. In order to assure the operation of continuing supervision, CICC decided to designate the representative of sponsor Ms. Chen Jingjing to replace Mr. Liu Shulin to perform continuing supervision.
Qingdao Haier Co., Ltd. 2015 Annual Report
VII. Major accounting data and financial indicators of the Company for the recent three years
(I) Major accounting data
Unit and Currency: RMB
|||||||
|-|-|-|-|-|-|
|Major accounting data|2015|2014||Increase/decrease for theperiod compared with thecorresponding period of lastyear (%)|2013|
|||After adjustment|Before adjustment|||
|Operating revenue|89,748,320,410.91|96,929,763,894.36|88,775,444,479.11|-7.41|86,605,646,350.15|
|Net profits attributable toshareholders of listed companies|4,300,760,542.82|5,337,541,039.32|4,991,557,360.87|-19.42|4,174,017,416.61|
|Net profits after deduction ofnon-recurring profit or lossattributable to shareholders of listedcompanies|3,674,952,510.15|4,324,036,509.60|4,324,036,509.60|-15.01|3,759,087,361.58|
|Net cash flows from operatingactivities|5,579,600,612.93|6,769,361,298.35|7,006,580,362.98|-17.58|6,511,435,468.47|
||As at the end of2015|As at the end of 2014||Increase/decrease as at theend of the period comparedwith the correspondingperiod of last year (%)|As at the end of2013|
|||After adjustment|Before adjustment|||
|Net assets attributable toshareholders of listed companies|22,693,976,160.95|24,608,468,130.41|21,840,024,641.14|-7.78|14,494,163,523.45|
|Total assets|75,960,672,801.38|82,348,719,644.44|75,006,457,051.45|-7.76|61,092,788,947.70|
|Total share capital as at the end ofthe period|6,123,154,268.00|3,045,935,134.00|3,045,935,134.00|101.03|2,720,835,940.00|

(II) Major financial indicators
|||||||
|-|-|-|-|-|-|
|Major financial indicators|2015|2014||Increase/decreasefor the periodcompared with thecorrespondingperiod of last year(%)|2013|
|||Afteradjustment|Beforeadjustment|||

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||||
|-|-|-|-|-|-|
|Basic earnings per share (RMB per share)|0.705|0.933|1.740|-24.44|1.534|
|Diluted earnings per share (RMB per share)|0.705|0.932|1.738|-24.36|1.532|
|Basic earnings per share after deductingnon-recurring profit or loss (RMB per share)|0.603|0.754|1.508|-20.03|1.382|
|Weighted average return on net assets (%)|16.22|29.34|27.58|Decreased by 13.12pct. pt.|32.88|
|Weighted average return on net assets after deductingnon-recurring profit or loss (%)|13.86|23.89|23.89|Decreased by 10.03pct. pt.|29.62|

Explanation of the major accounting data and financial indicators of the Company as at the end of the reporting period for the previous three years
① During the reporting period, the Company completed acquisition of overseas white goods assets of Haier Group, which resulted in the merger of enterprises under the same control. In accordance with the accounting standards for business enterprise, the Company restated respective financial data of 2014.
②Zhangqiu Haier Electrical Engineering Co., Ltd. and Haier Medical and Laboratory Products Co., Ltd. were not included in the consolidated statements of the Company for the period, and the adjustment to business model for equipment products affected revenue of the Company. The revenue of the Company for the reporting period would decrease by about4.5% as compared to the corresponding period of last year when excluding above factors.
Qingdao Haier Co., Ltd. 2015 Annual Report
Ⅷ. Differences of accounting data under domestic and overseas accounting standards
（Ⅰ）Differences of net profit and net asset attributable to shareholders of listed company in financial report disclosed simultaneously according to international accounting standards and according to accounting standards generally accepted in the PRC
□ Applicable√ Not Applicable
(Ⅱ) Differences of net profit and net asset attributable to shareholders of listed company in financial report disclosed simultaneously according to overseas accounting standards and according to accounting standards generally accepted in the PRC
□Applicable√ Not Applicable
IX. Major financial data of 2015 in quarters
Unit and Currency: RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
|||||||||The Fourth|
|||||The Second|||||
|||The first Quarter||||The Third Quarter||Quarter|
|||||Quarter|||||
|||(January-March)||||(July-September)||(October-Decemb|
|||||(April-June)|||||
|||||||||er)|
|Operating revenue|24,241,302,156.92||23,044,558,239.03||23,632,762,187.91||18,829,697,827.05||
|Net profitsattributable toshareholders oflisted companies|1,082,457,346.59||1,649,550,850.32||857,206,581.52||711,545,764.39||
|Net profits afterdeduction ofnon-recurringprofit or lossattributable toshareholders oflisted companies|939,292,861.15||1,570,396,549.42||642,186,945.81||523,076,153.77||
|Net cash flowsfrom operatingactivities|1,765,299,717.34||80,454,058.21||-641,305,603.84||4,375,152,441.22||

Explanation of difference between quarterly data and disclosed regular reporting data
√Applicable□ Not Applicable
During the reporting period, the Company completed the acquisition of overseas white goods assets from Haier Group, which resulted in the merger of enterprises under the same control. Under the
relevant requirements of Accounting Standards for Business Enterprises, the Company restated the financial data for each quarter.
X. Non-recurring Profit or Loss Items and Amount
√Applicable□ Not Applicable
Unit and Currency: RMB
|||||
|-|-|-|-|
||Non-recurring profit or loss items||Amount of 2015|
|Losses and profits from disposal of non-current assets||13,327,370.03||
|Government grants included in current profit or loss, except that||95,078,644.93||

Qingdao Haier Co., Ltd. 2015 Annual Report
|||
|-|-|
|closely related to the normal operating business, complied withrequirements of the national policies, continued to be grantedwith the amount and quantity determined under certainstandards||
|Current net profit and loss of subsidiaries occurred as a result ofmerger of enterprises under the same control from the beginningof the period up to the date of merger|223,063,608.99|
|Other non-operating net income and expenses other than theaforementioned items|205,936,250.61|
|Gain from disposal of long-term equity investment|338,388,556.06|
|Gain from disposal of financial assets available for sale|54,535,164.73|
|Profit of remaining equity occurred from re-measurement at fairvalue after loss of control|49,201,148.46|
|Amount of minority shareholders’ equity effect|-257,738,419.70|
|Amount of income tax effect|-95,984,291.44|
|Total|625,808,032.67|

 XI. Items Measured through Fair Value
Unit and Currency: RMB
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||||||||Change for the||Amount of current|
||Name of item||Opening balance||Closing balance|||||
||||||||current period||profit affected|
|Forward foreigncurrency contract||103,626,200.86||14,362,482.92||-89,263,717.94||-40,519,146.53||
|Available-for-salefinancial assets||1,394,842,730.44||1,453,993,243.39||59,150,512.95||96,453,929.29||
|Total||1,498,468,931.30||1,468,355,726.31||-30,113,204.99||55,934,782.76||

Qingdao Haier Co., Ltd. 2015 Annual Report
SECTION III SUMMARY OF THECOMPANY’S BUSINESS
I. Explanation of Major Business, Operating Mode and Information of Industry Where the Company Engaged in during the Reporting Period
(I) Major Business of the Company
The Company mainly engages in research, development, production and sales of white home appliances with product portfolios covering refrigerators/freezers, washing machines, air-conditioners, water heaters, kitchen appliances products, small home appliances, U-home smart home business, etc., which enable the Company to offer integrated solutions for smart homes to our consumers. Channel integration service business includes logistics, after sale, home appliances and other products distribution business. Since its establishment, the Company has been always upholding the concept of―taking the user as right and ourselves aswrong‖. Through continuing strategic transformation and constant creation and innovation, the Company has become the leading white home appliances company of the world. According to the retail sales statistics on the large home appliances for the year 2015 published by Euromonitor, an internationally recognized market research institute, in 2015, sales ofHaier’s large home appliances represented a global market share of9.8%, ranked first in the world for the seventh time. Meanwhile, global sales ofHaier’s refrigerators, washing machines, wine cellars and freezers continued to rank first in the world.
Global market shares represented by theCompany’s products
|||||
|-|-|-|-|
|Percentage of Haierwashing machines|Pf|ercentage of Haierreezers|Percentage of Haierwine cellars|

Source: Euromonitor, data on retail volume shares of 2015
For domestic market, theCompany’s products of refrigerator, freezer, washing machine and water heater captured the largest market shares while products of home air conditioner ranked the third.
Chinese market shares represented by theCompany’s products
|||||||
|-|-|-|-|-|-|
||||Percentage of washing Pemachines he|Pehe|rcentage of wateraters|
|Percentage of refrigerators|Pe|rcentage of freezers|Pema|||

Source: China Market Monitor (CMM), data on retail volume shares of 2015
For overseas markets, the Company remained committed to brand creation strategy, promoted
multi-brands operation, improved operation capacity through localization ofR&D, manufacture and
Qingdao Haier Co., Ltd. 2015 Annual Report
marketing and also actively seized development opportunities and acquired white appliances assets of original Sanyo Asia Pacific, managed FPA, integrated GE home appliance business to enhance competitiveness in the global market.
Facing to the opportunities and challenges brought by the Internet era, the Company built an externalU+ Smart Life platform and an internal smart connected factory ecosystem platform, and explored and practiced the transformation to the platform-type enterprise providing smart life integrated solutions.U+ Smart Life platform established of scene business ecosystem and built diversified profit model by exploration and practice of business model of―Internet appliance+ application+ service+platform‖, while smart-connected factory focused on providing the best customized experience in
overall procedure of users need, innovation, experience, pre-sale, smart manufacture, iteration,
independently researched and developed the leading smart-connected factory cloud platform of COSMO in the world, integrated fragmented needs under the Internet era with http://diy.haier.com/ as interactive window, implemented large-scale customization to meet individual need of users.
(Ⅱ) Industry Situation Description
1. Global white appliances markets: global economy went through profound adjustment, industry growth suffered pressure in 2015 and regional differentiation was obvious.
In 2015, affected by profound adjustment of global economy, weak recovery, substantial fluctuation in financial and commodity market, geopolitical risks, the whole global white appliances market showed a decline trend. According to the statistics offered by Euromonitor, global retail sales of refrigerators, washing machines and home air conditioners in 2015 respectively recorded a year-on-year decline by2%,4% and3%. For major areas, Europe, Latin America and Central& Eastern Africa markets showed negative growth. Only America market maintained relatively rapid growth, in which, retail sales of refrigerators, washing machines and home air conditioners respectively recorded a year-on-year increase by5%,4% and2%. Asia Pacific market overall maintained stable, and retail sales of refrigerators, washing machines recorded a slight year-on-year increase by2% and1% respectively, while retail sales of home air conditioners recorded a year-on-year decline by3%.
2. Domestic white appliances market: affected by higher penetration rate, slow economic growth and sluggish real estate market, white appliances sector in 2015 experienced weak growth. (1) After over 30 years of rapid development, domestic white home appliances showed a higher penetration rate, updating needs became dominant, the industry went into a stage of stable growth, and the driving factor for industry growth changed from sales increase to structural improvement with consumption upgrade. Since the macro economy entered into phase of new norm, affected by factors including slow economic growth and sluggish real estate market in 2015, the industry showed a weak growth. For subsectors,①Air conditioner market experienced an extremely depressed demand due to reasons including relatively cool summer. According to the data released by CMM, in 2015, industry-wide retail sales and retail volume of air-conditioners decreased by4.8% and1.1% respectively
Qingdao Haier Co., Ltd. 2015 Annual Report
compared with the corresponding period of last year. For output from factories, according to the China Industry Online data, in 2015, volume in domestic market decreased by10.39% compared with the corresponding period of last year. A number of reasons, such as the increasing industry-wide channel inventory compared with 2014, sluggish demand and price competition, all substantially weakeneddealers’ willingness to restock.②Industry-wide retail sales of refrigerators and washing machines respectively recorded slight decline and slight growth. Benefiting from improved average price as result of structural upgrade of products, retail sales of refrigerators and washing machines achieved better retail sales than retail volume. According to the data released by CMM, in 2015, industry-wide retail sales and retail volume of refrigerators decreased by1.2% and4.9% compared with the corresponding period of last year, while the retail sales and retail volume of washing machines increased by4.0% and0.6% compared with the corresponding period of last year.
Given that the industry went through short-term weakness, to most extent, growth is driven largely by seizing market shares, which led to increasingly tense competition, especially in mid-end and low-end markets where the products were highly commoditized, air conditioners sector, in particular experienced several price wars as a results of inventory building up.
(2) Domestic product mix upgraded significantly, mid-end and high-end products maintained rapid growth. Increased percentage of update demand, life concept change brought by the emerging middle class, increasing attention on quality, design, function, brand, all drove the improvement of product mix with strong potential of long-term industrial upgrading. For example, in 2015, multi-door refrigerator was gaining popularity and the industry-wide retail sales of multi-door refrigerators topped to a percentage of27.1%, representing a year-on-year increase of 8.4 pct. pt. In washing machine industry, front-loading and high-capacity type trend was obvious and the industry-wide retail sales of front-loading washing machines topped to a percentage of41.8%, representing a year-on-year increase of 5.1 pct. pt. High-capacity inverter washing machines maintained rapid growth. In air conditioner industry, artistic, high-efficiency and intelligent (WIFI) type trend was obvious, such as the retail sales of artistic air conditioners topped to a percentage of40.3%, representing a year-on-year increase of 14 pct. pt. For the water heater sector, gas water heaters showed a relatively favorable growth with a year-on-year increase of13.4%.
(3) Rapid development of Internet technology led to industrial transformation and upgrading and reestablishment of business mode. The rapid development and application of the mobile Internet, IOT, big data, cloud platform technologies deeply changedpeople’s living and consumption habit, and also would reestablish the operating mode and profit mode of white appliance sector, and forced the corporate strategy, operation and structure to go through transformation and upgrading.①In respect of products, in 2015, white appliances became more intelligent. Appliance companies strengthened the intelligence of products. More and more Internet companies provided intelligent hardware. Cross sector cooperation became popular, and smart home appliance industry was accelerated on base of resources integration. With the improvement of smart home appliance industry,
Qingdao Haier Co., Ltd. 2015 Annual Report
profit mode was expected to transform from simple hardware sales income mode to―hardware+content+service‖ diversified income mode, injecting new energy into the industrial development.②For channels, e-commerce marks the rise of multi-channel strategy, where e-commerce channel maintained rapid growth and O2O transformation was actively promoted offline to keep up with the new era.③For supply chain, Made in China 2025 plan would deeply promote the extensive integration of information and industrialization, accelerate the industry-wide transformation of smart manufacture, advance home appliance to transform from large-scale manufacture to large-scale customization and personalized C2B custom pattern to raise added value of products.
Industry Outlook:
In 2016, domestic white appliance industry still faces relatively high challenge, white appliances market maintains a strong potential in structural upgrading in the middle and long term. In 2016, the whole economy of China is going into new growth stage and structural adjustment period, factors including high market inventory and weak demand brings challenges for the growth of white appliance industry, while recovered sales and declined inventory in real estate market are expected to reduce some adverse factors and promote the industry to go back to normal status.
In the medium and long term, domestic white appliances market still maintains relatively large space in industrial upgrading.①Domestic white appliances market keeps large potential in structural upgrading compared with developed countries. Under the promotion of factors including consumption concept change and resident income improvement, high-end oriented product trend remains unchanged and the average price and added value of products are accordingly increased.② New business mode is expected to be established due to rapid development of smart home and increase of maturity of relevant industry chain, bringing new growth space for the industry.③Resident consumption focus transforms from material to spirit, which will accelerate the release of individual and diversified demand for products. Individual customization will raise the added value of single product. Large-scale customization era may come and promote the improvement of industrial value.④As integration in the industry is accelerated, and enterprises which lack innovation and hold highly homogenized products will be eliminated. Technologic innovation will become a core and competitive factor. Positive leading companies obtain more shares, which will improve their influence and power and right in the industry.
Competitiveness of Chinese leading white appliance companies in global market continues to improve, bringing room for the development in overseas. After over 30 years of development, on the base of large Chinese market, competitiveness of Chinese leading white appliance companies in global market continues to improve. Excellent companies further improves their competitiveness and industrial position through internal productiveness construction and external merger, which does good
Qingdao Haier Co., Ltd. 2015 Annual Report
to the global resources integration and market expansion and helps to bring room for the development of Chinese enterprises in foreign market.
II. Explanation on significant change on major assets of the Company during the reporting period During the reporting period, the Company completed its acquisition of overseas white appliance assets in Haier Group. As of 31 December 2015, the overseas assets of the Company were RMB 8,059,495,169.77, representing10.61% of the total assets.
III. Analysis on core competitiveness during the reporting period
Since the foundation of the Company in 1984, it always adhered to the principle of driving the sustainable and healthy development with innovation system centered on the needs of users, and it has successfully turned itself from a debt-burdened collective small factory which was on the verge of shutdown into one of the largest home appliances manufacturers in the world. The Company is committed to realizing sustainable development across different cycles through continued innovations on development strategy and operating mode, brand, research and development, products, construction of foreign and domestic market to achieve competitiveness adaptive to ever-changing conditions.
(I) Brand competitiveness: According to the data published by Euromonitor, Haier has been ranked first among global large home appliances brands for 7 years, refrigerators, washing machines, wine cellars, freezers continue to be ranked the first in the world. In response to the personalization and diversification of users' needs, Haier persists in promoting multi-brands operating strategy and building a multi-level system of brands. In domestic market, the Company mainly operates Haier, Casarte and Leader brands, in which, Casarte has become the first choice among high-end home appliance brands for 3 successive years. In markets of different overseas areas, the Company promotes dual-brands operating strategy to comprehensively cover markets of different levels. Currently, Haier has expanded its brand popularity in overseas markets to over60%, while in Pakistan and Nigeria, Haier popularity tops at99% and95% respectively.Haier’s core competitiveness lies in the global presence of its brand, and the recognition of consumers. Leveraging on these advantages, Haier is able to maintain its leading position amidst ever-changing industry landscape as it faces competition from various brands home and abroad and the emergence of e-commerce.
(II)R&D competitiveness: Stick to the open innovative strategy of―The world is myR&Ddepartment‖, focus onconsumers’ needs to promote innovation, reform conventionalR&D to iterationR&D, meanwhile, establish open innovation platform with integration of on-line and off-line modes to support such transformation, so as to realize zero distance interaction among global users, innovators as well as creative resources and support to produce revolutionary solutions.①On-line open innovation platform, HOPE, could realize matching between innovation sources and resources in the course of innovation transformation and continuously produce cross sector and revolutionary creative results. It has become a leading domestic open innovation platform. Currently, this platform could connect
Qingdao Haier Co., Ltd. 2015 Annual Report
3,200,000 leading resources of the world with 370,000 registered resources and on average produce over 6,000 innovative ideas every year.R&D matching period has been shortened to six weeks from previous eight weeks.②the Company has built five topR&D centers in the world, which are located in Qingdao, Kyoto& Kumagaya, Nuremburg, Evansville, New Zealand Auckland& Dunedin, established global open innovation resources network and realized off-line interaction and products transformation and iteration. The Company constantly keeps its technology, products and innovation ability advanced and competitive and it has accumulatively obtained 90 international design awards and 14 national science and technology awards. In addition, the Company led the establishment of the first work team for international standards of refrigerator, which was first such team in domestic refrigerator area. Patents application which represents theCompany’s innovation ability maintains leading position in the home appliance industry.
(III)Product competitiveness: The Company adheres to the product-oriented strategy and adapts to the trend of the era, and promotes the transition from selling products to providing integrated smart home appliance solutions to consumers. The Company has developed comprehensive product lines, covering refrigerators, freezers, washing machines, air-conditioners, water heaters, kitchen electrical appliances, small home appliances, U-home smart home business, etc., which enable it to offer integrated solutions for smart homes to consumers. The Company has continuously launched innovative products to lead the development of the industry with theconsumer’s complaints and new pain points of needs in mind. These products include Haier Tianzhun air-conditioners, Haier self-cleaning air-conditioners, Haier maglev central air-conditioners, Haier clean-free washing machines, Casarte Gemini washing machines, Casarte Yunzhen refrigerators and Casarte Legend water heaters, etc. The core of itsproducts’ competitiveness lies in the precise targeting of the pain point of consumers against the backdrop of the trend towards high-end, customized and diversified products. Over the years, the Company ranked the first in terms of market shares in refrigerator, freezer, washing machine and water heater business, and the Company ranked the third in the industry in terms of the market share of air-conditioning products.
(IV)Network competitiveness: establishment of diversified channel system: maintain long-term favourable strategic cooperation with channels including Gome, Suning and regional home appliance chain stores. In respect of its own channels, Haier has established more than 8,000 county-level stores, and more than 30,000 stores within town and country-level network. The logistic system across the nation guarantees the distribution to counties within 24 hours and to towns within 48 hours, thus achieving distribution on demand and one-stop service of distribution and installation. The network comprising of more than 20,000 service providers is always available for service, which enable the Company to offer comprehensive, timely and care-free services. In respect of e-commerce channel with rapid development, the Company maintains favorable cooperation with e-commerce platforms including Tmall and JD, and advances business development through individual and different products layout.
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(V) Supply chain competitiveness: The Company owns advanced manufacture capability and process technologies to provide consumers with high-quality home appliance products. Facing with challenges bring by Internet era, the Company initiatively promotes large-scale customization transformation to satisfyconsumers’ increasing personal and customized needs forproducts.① Initiatively launch a platform that delivers connected customization experience for user community, namely Creative Convergence (http://diy.haier.com/), which provides users with information channels and solutions through various modes including module customization, crowd-sourcing customization and special customization.②Set up seven connected factories and establish connecting factory system to realize direct delivery of orders from users to factory and direct delivery of products from factory to users.③Establish an open platform called Haidayuan that delivers connected experience for module suppliers. Through such platform, suppliers are transformed from retailers to module suppliers, who participate in design and provide module-oriented solutions to meet individual needs and create best user experience.
(VI) Overseas market competitiveness: Stick to own brand development strategy and develop competitive advantages based on localization, low cost and high-quality service via a localization mode of integrated design, manufacture and marketing.①Localized supply chain system includes nine overseas factories covering Europe, America, Asia, Middle East and Africa;②Continuously improved brand awareness and reputation: According to survey data provided by Millward Brown, a world-renowned brand information consulting company, Haier brand awareness in overseas market has exceeded60%. In Europe, America, Japan, Korea and other developed countries, while Haier brand awareness is improving stably year by year, the design, quality and innovative elements of Haier refrigerator and washing machine are well known and recognized by local users.③Channel layout appropriate for different regional characters: Our products are sold to over 100 countries, the overseas sales network covers over 43,000 entities. In developed markets, such as Europe and America, Haier brand has successfully been introduced to top 10 retail chains while significant effort has been put into expanding home appliance franchised stores in developing countries. In view of channel transformation opportunities brought by rapid development of e-commerce in Internet era, Haier actively promotes the synchronous development of conventional off-line channels and on-line e-commerce channels.
(VII) Cultural competitiveness: Credibility culture based on quality and service is the core driver ofHaier’s growth, and is also the essential reason of constant success of Haier. Leveraging on credibility culture of―user-oriented‖ and―persistenthonesty‖, Haier has turned itself from a small collective factory which was on the verge of shutdown into one of the largest white goods manufacturers in the world, while keeping leading position in world-wide innovation in Internet era. Haier upholds the concept of―always take the users as right and ourselves aswrong‖. This concept stimulates the spirit of innovation, revolution and entrepreneurship of Haier and motivates it to follow the times and continuously improve and challenge itself, so as to always seize development opportunities. The win-win model of combining individual and goal is the assurance of sustainable operation of Haier. In
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exploring the―individual-goal combination 2.0, Co-create and Win-winecosystem‖, Haier endeavors to build win-win ecosystem based on user value interaction in new stage of e-commerce era to make every employee his/her own CEO and realize their own value while creating value for users, so as to achieve win-win situation which is critical to parties in system.
Qingdao Haier Co., Ltd. 2015 Annual Report
SECTION IV
Management Discussion and Analysis
I. Management Discussion and Analysis
There are no successful enterprises but only the enterprises of the time. Flexible adjustment of strategic orientation based on the change of time is essential for long-term sustainable development. At present, the Company is operating at the network strategic stage and endeavoring to transform into a real Internet enterprise, overturn the self-contained and closed system of traditional enterprises to become a node in the network interconnection, interconnect and exchange various resources, and build the win-win ecosystem in the post e-commerce time based on the user value interaction, so as to provide smart home appliance solution for consumers and realize win-win appreciation for all parties concerned. In 2015, the Company carried out transformation of―platformisation, maker culture among the staff and userpersonalization‖; thus the Company was no longer the self-closed system but comprehensively integrated into the Internet, made access to global high-quality resources without boundary to share interests and risks with related parties and jointly create the win-win Internet platform. Staff became the―makers‖ for entrepreneurship and innovation as well as partners growing up with the enterprise rather than those being led. A large number of consumers and users became the prosumers who participated in the whole process of production and innovation rather than passive commodity purchasers.
In 2015, theCompany’s principle operating activities were as follows:① The Company constantly made strategic investment in the construction ofU+ Smart Life platform and its industrial ecological cycle, connecting factories and customized platform of Creative Convergence, exploration of business development mode in the era of Internet to expand the business growth space;② In the domestic market, the Company pushed forward the rapid development of product leading strategy and brand Casarte, accelerated the product, brand and channel layout in the mid-end and high-end markets with great growth potential, and grasped the industrial development trend; in order to enhance the retail competitiveness of market terminal, the Company positively adjusted the operating mechanism to improve the consumer confidence, reputation among users and organizational efficiency;③ the Company steadily propelled the overseas market development, adhered to its own brand strategy, and promoted the localization operating mode integrated withR&D, manufacturing and sales; it took the opportunity to initiate the integration of GE home appliance business, improved and upgraded the global market layout.
In 2015, the Company recorded revenue of RMB89.7 billion, representing a decrease of7.41% as compared to the corresponding period of last year (revenue of the Company was affected by the fact that Zhangqiu Haier Electrical Engineering Co., Ltd. and Qingdao Haier Special Electrical Appliance Co., Ltd. were excluded from consolidated statements during the reporting period and the distribution mode of partial equipment components business was adjusted; if excluding the above influencing factors, theCompany’s revenue in the whole year was decreased by around4.50% year-on-year. During the reporting period, revenue was affected to some extent by constant industrial downturn and positive
Qingdao Haier Co., Ltd. 2015 Annual Report
adjustment made by the Company. On a quarterly basis, driven by the gradual reflection of adjustment effect, revenue growth in Q4 improved as compared to the last quarter and revenue for the single quarter increased by1.3%. If the Company strengthened its market terminal competitiveness and gained growth through launching the cost-effective Jin Chu air-cooling refrigerators while theCompany’s refrigerator business maintained its leading position in the mid-end and high-end market for the fourth quarter of 2015, the domestic revenue for the fourth quarter would gain double-digit growth as compared with the same period of last year.
The gross profit margin increased by 0.35 pct. pt. to27.96% compared with the corresponding period of last year. During the reporting period, the sales expense increased by4.15% compared with the corresponding period of last year. An increase in sales expense was attributable to theCompany’s consolidated construction of high-end brand Casarte and channels, and increased investment in market user interaction based on the change of market competitive environment.
According to data released by the third statistical institution CMM, the market share of refrigerators and washing machines of the Company in 2015 were continuously improved. Specifically, the share of retail sales of refrigerators was27.4%, increased by 1.4 pct. pt. year-on-year; the share of retail sales of washing machines was26.5%, increased by 0.33 pct. pt. year-on-year; and the share of retail sales of air conditioners was12.01%, slightly decreased by 0.30 pct. pt. year-on-year and basically maintained stable.
II. Principle operating conditions during the reporting period
The principle operating activities during the reporting period were as follows:
1. EnhancingR&D and setting up standards: Depending on the global leadingR&D system, the Company maintained investment inR&D, possessed leading industrial technologies and standards, supported the upgrading of product structure, and continuously led the industrial development.
Refrigerator business: The Company made breakthrough and innovation through the main technologies of intelligence, health, energy conservation and frostless feature, led the ultimate freshness and spatial art, and defined the manufacturing standard for high-end refrigerators. In the first quarter of 2015, the Company launched theworld’s first refrigerator with air-suspending oil-free power refrigerating system to create the new energy-saving and spatial utilization solution in the industry and provides the experience of―cell-levelfreshness‖ under zero temperature difference. Compared with common frequency-converter refrigerators, such refrigerator saved more than30% energy, and the effective volume was increased 10-20L. With the unique calculus smart control technology, the temperature fluctuation scope was controlled within±0.05℃ to approach the constant temperature state, so as to preserve food under accurate, stable and constant refrigeration with constant temperature. Promoting upgrade of industrial standard. In the first quarter of 2015, the Company launched theworld’s first refrigerator with separate storage for dry and wet items, and led to formulate the standards
Qingdao Haier Co., Ltd. 2015 Annual Report
of frostless refrigerator with separate storage for dry and wet items. The plant fiber characteristics of HCS transparent and wet film initiated by technology of separate storage for dry and wet items maintained the relative humidity of high wet zone at90-95% for a long term without drops of water, so as to preserve fruits and vegetables against decomposition. In the valuable food dry zone, the relative humidity was maintained at around45% stably through change of saturated air pressure, to satisfy theuser’s demand for dry food storage. In March 2015, the standards for frostless and separate storage for dry and wet items which were formulated under the leadership of Haier Refrigerators were released in Beijing. In December 2015, the international refrigerator preservation standards which were formulated under the leadership of Haier Refrigerators were officially established under the witness of international authoritative standard institutions such as IEC, VDE, UL, and BVQI and industrial experts, and the Company became the first Chinese home appliance enterprise which led to nominate and formulate international standards and successfully set up the project. In the fourth quarter of 2015, the application of technology of separate storage for dry and wet items on refrigerators was awarded the first scientific and technological progress prize by Home Appliance Association, and was identified as international pioneered technology by the expert team in the science and technology achievement appraisal of the Ministry of Light Industry.
Haier refrigerator was respectively granted 2015 Germany IF Design Award, Germany Plus X―2015 Most Innovative BrandAward‖ and other authoritative international awards depending on its excellent innovative design and product quality. In the Chinese Smart Home Conference and Wisenjoy Annual Awards Ceremony for 2015 organized by CHEARI, the first launched Internet refrigerator Xinchu was awarded the―Best Smart Refrigerator of China in2015‖. Meanwhile, Haier Xinchu refrigerator and Casarte Dingji Yunzhen refrigerator was also awarded―Annual BestRefrigerator‖, and Haier became the unique enterprise obtaining 3 prizes in the industry.
Home air-conditioner business: Based on theusers’ demand, the Company gradually attached attention from energy conservation, refrigeration and heating, noise and other basic performance to health and comfort, and the smart and personalized customization became the key factors that affected the purchase. Haier initiated the comfortable and smart air-conditioner research in the industry and originally created 8 core technologies that filled in the gap of the industry, including air jet technology, PMV human thermal comfort technology and smart control technology based on 3 major innovative concepts of comfort, energy saving, and smart to drive the technical progress of air-conditioning industry. The Company also brought ultimate smart air-conditioning experience to users based on smart air-conditioning hardware through APP software operation and introduction of third-party service related to air. On 8 January 2016, in the National Awards for Science and Technology, Haier Refrigerators was granted the National Science and Technology Progress Award depending on the project of―air-conditioner comfortable and smart control technology research andindustrialization‖, and became the unique awarded enterprise in the home appliance industry this time. In 2015, Haier captured higher market share in the smart air-conditioner industry. According to the statistics of
Qingdao Haier Co., Ltd. 2015 Annual Report
national home appliance website, Haier smart air-conditioner captured market share of70.31% as of December 2015.
Under the industrial environment of high inventory and fierce price war in 2015, the Company insisted on leading technology to create differential consumption experience and differential core competitiveness and focused on the launch of efficient, healthy and smart new products: (1) the Company launched new products with self-cleaning and air purification function in the healthy sub-sectors:①The new Jinbo wall-mounted air conditioner launched in 2015 firstly adopted self-cleaning function of patented cold expansion technology, patented condensation technology, patented sapphire coating and patented antibiosis technology to effectively remove the dirt accumulated on the heat exchanger of air-conditioner for a long term and prevent the secondary pollution of interior air;②The new Dizun packaged air conditioner adopted air purification integrated design, realized real-time monitoring of air condition, positively recorded the use habit and positively started up the purification function through Haier smart cloud service. Air purification and regulating function could be used independently or jointly, and the purification ability card value reached 397.8m3/h. Such product also was equipped with the gesture control switch, self-cleaning and low-frequency noise function, and its properties and technology kept ahead of similar products in the industry. (2) For comfortable air-conditioning field, the Company created the unique fourth generation air-conditioner in the industry, Tianzun packaged air-conditioner, which settled the―air-conditionerdisease‖ that has disturbed the industry and users over a hundred years through innovative application of healthy and constant air technology; in 2015, to satisfyuser’s comfortable demand for bedroom-used air-conditioner, the Company launched Tianbo air-conditioner with healthy and constant air function used for bedroom. Its innovative design was granted Germany IF Design Award and Appliance Prize.
Central air-conditioner business: Based on energy conservation and intelligence, the Company realized maglev leading iteration and released innovative MX wireless multi-split machines through sharing resources. TheCompany’s key technology and industrialization of large-scale energy-saving and environmental maglev centrifugal central air-conditioners were awarded the First Prize of Shandong Scientific and Technological Progress in 2015.
In the energy-saving field, maglev continuously led and iterated. The Company launched theindustry’s first large-volume and full falling-film maglev air-conditioner. With the highest IPLV of 13.18 in the industry, it became the most energy-saving product in the central air-conditioning industry. With the largest cooling capacity of single machine, it effectively expanded the service field of maglev air-conditioners. The Company cooperated with the National Energy Conservation Center to release the white paper on the development of maglev, which caused the industrial imitation. To resolveconsumers’ complaint about large occupying area and high energy consumption of common central air-conditioners, it launched Y-shaped module machine, which saved half occupying area and the EER reached 3.39, which is the highest level among similar products in the industry.
Qingdao Haier Co., Ltd. 2015 Annual Report
Regarding intelligence, the new generation of MX wireless multi-split machine was released, which promote the multi-split machine to transmit from cabled era to wireless era. Meanwhile, the innovative business development mode - Haier central air-conditioning cloud service was upgraded to 2.0 generation, realized central air-conditioning networking and set up the first big data platform of the industry, to provide real-time monitoring, fault early warming, smart maintenance, energy-saving report, and other value-added services for users and realized real-time interaction with the third-party resources. Thanks to the continuous product innovation, theCompany’s central air-conditioner business grew5% compared with10% decline of the industry, which was 15 pct. pt. higher than the industry.
Washing machine business: In order to meetconsumers’ upgrading demand for health, clothes care and separate washing, the Company made breakthrough in the key technology of washing machines with reference to global first-class technical resources and launched washing-free smart ball solution and solution of washing clothes in different zones to push forward the industrial development. In the test on international first-class washing machine brands conducted by STIWA, a Germany authoritative commodity test institution, Haier washing machine gained the highest scores in the indicators of energy consumption, water consumption and noise test, and its service life had reached the international first-class brand level. In 2015, theCompany’s roller washing machines captured higher domestic market share than Germany brands and ranked top in the industry, which had broken the market pattern of foreign brands leading the roller washing machine industry.
① The Company researched and developed the first double-cylinder partition washing machine in the world, which was called Casarte Gemini Ella washing machine. As the first double-layer partition washing machine in the world, Casarte Gemini Ella split-cylinder washing machine could wash clothes in the upper and lower cylinders separately; the upper layer had 12 professional washing modes designed forinfant’s clothes, silky underwear and other small clothes and softly cared for the luxurious fabrics; the lower layer had 18 procedures for cleaning of daily cotton and linen clothes and large clothes. Such product had excellent performance on energy conservation and noise reduction, and realized 45DB low noise and60% energy conservation. For the fashionable aspect, Casarte Gemini Ella washing machine had obtained two IF design awards, and became the first product that obtained two IF awards in the industrial record. The product also obtained the―Product InnovationAward‖ in IFA. After this product was launched in the market, theCompany’s market share of roller washing machine priced more than RMB10,000 increased more than 10 pct. pt. year-on-year, and the share exceeded50%;② The Company upgraded the crystal roller washing machine product platform, and developed the roller washing machine with the largest inner cylinder diameter of global standard dimension, which was called crystal generation II. Its ultra-thin design and large volume resolved the problem of insufficient space for placing roller washing machine. After such product was successfully launched in the market, Haier roller washing machine continuously maintained its leading position among products of the high-end price.③ The
Qingdao Haier Co., Ltd. 2015 Annual Report
launch of clean-free washing machine increased the share of Haier pulsator washing machine priced more than RMB3,000 from25.3% to52.6%, which also increased the market share at such price from the original10% to21% in the industry.④ The Company created smart washing. In order to meet the demand for washing clothes, the Company, based onusers’ demand andU+ platform, conducted research and integrated all washing related fields from clothes, washing machine and washing supplies, such as cloth materials, stain, water quality, laundry detergent anduser’s laundry habit to realize the development from washing machine to clothes washing. Haier Washing Machine cooperated withP&G, Unilever and other global wash supplies leading brands in the research and development of the special laundry detergent. It developed campus laundry APP to conduct remote reservation, setting, regulation and payment for the required laundry service through a mobile APP, and established the comprehensive application system integrated with Internet of Things technology and Internet to provide opportunities for college students to start up business on the platform.
Water heater business: For the purpose of safety, health, intelligence and energy conservation, the Company continuously sustained technical advantage in electric water heater field, accelerated the development of gas water heater business, and arranged for new growth from heat pump.① For electric water heaters featuring safe, healthy and intelligence, the Company successfully researched and developed the first product with the―washing in cleanwater‖ technology in the industry, which may effectively remove more than90% residual chlorine and sediment and impurity with diameter larger than 0.12 MM to meetusers’ demand for healthy bath. With scientific and technological elements, the Company developed the Bluetooth music water heater with the singing and calling function, voice water heater with voice interaction control, heat storage and water purification all-in-one machine for kitchen, and a series of high-end differential products. The newly researched water volume customized technology was identified to reach international leading level.② For gas water heaters, the Company launched high air-resisting technology for users living in high floor and having the problem of using hot water in the heavy wind weather. The Company researched and developed smart home technology to customize water temperature and water flow according tousers’ demand for hot water, and also customize demand for hot water in different scenarios; it researched and developed double safety technology as the first company that may apply double-air safety monitoring technology in the heating stove industry; it launched two offline major series products: T1S series with high wind load resistance (windforce 10) and Smart Home E2S series. The self-developed NOCO technology and smart gas control system were identified to reach the international leading level. NOCO technology was granted the Light Industry Scientific and Technological Progress Award, and smart gas control system technology was granted Qingdao Scientific and Technological Progress Award.③ For heat pump products, to resolveusers’
Qingdao Haier Co., Ltd. 2015 Annual Report
limited space for use of the product, the Company developed the integrated wall-mounted product. It was the first time to increase the energy efficiency of wall-mounted heat pump to more than 3.4 in the industry to enable it to become the real heat pump water heater. The self-developed CO2 trans-critical circulation ventilation control technology was identified to reach the international leading level and awarded the Third Prize for Home Appliance Scientific and Technological Progress.④ Smart bathroom product was launched to create smart bath life for users, which led the industrial trend after being displayed in the home expo, and abstracted several real estate enterprises to engage in cross-border resource cooperation. Kitchen appliance business: Fast upgrading through product research and development to gain better feedback from market.
Smoke exhauster: The Company developed self-cleaning smoke exhauster star products for better cleaning of kitchen, promoted Casarte Nebula and Yundian smoke exhausters, Haier MINI deep cavity/WIFI deep cavity/ C390 movable side-draught products and other mid-end and high-end products to drive the growth of market share. For stove, the Company vigorously promoted mid-end and high-end products with low-to-high prices. It launched smart anti-dry stove to enhance the safety of kitchen. In the first month of the release of new product, the product ranked No. 1 in the CMM new product ranking list. For oven, the Company launched Lechu oven, steamer and microwave oven, leading the industry with 3D heating, high temperature steaming and evenly hearing technologies. The Company launched Casarte high-temperature self-cleaning oven to realize product leadership, and launched air fryer and other new products. For disinfection cabinet, in 2015, Haier was the first company to launch smart disinfection cabinet series products featured remote control, process monitoring and smart remind. In the meantime, the Company conducted joint development with leading resources to launch the even light wave disinfection cabinet and realize360° sterilization without dead band.
2. Leading and making high-end arrangement: In the high-end home appliance market with continuous growth potential, the Company fully, continuously and rapidly improved competitiveness and led revolution of high-end lifestyle. Casarte brand home appliance revenue increased by27% year-on-year.
Surrounding Casarte brand connotation of―technology, delicacy andart‖, the Company enhanced the targetusers’ recognition of Casarte brand through resource focus and accurate marketing communication: Became the first sponsor brand in home and kitchen appliance industry through strategic cooperation with The 12 Front of ZJTV, and improved brand reputation and popularity through Casarte family run, tennis challenge match of Business School. According to Nilson Report, in 2015, Casarte brand popularity was increased by41% and33% in the first-tier and second-tier cities, respectively. The brand popularity reached58%, and brand reputation reached95%. Theusers’ satisfaction to the product was at the highest level in the industry.
Qingdao Haier Co., Ltd. 2015 Annual Report
The Company propelled Casarte store construction for user experience to lead the revolution of high-end lifestyle: In 2015, the Company set up 1,440 stores, including 153 large-scale experience stores and the entire network fully covered the primary and secondary markets; it provided the differential products to satisfyusers’ demand, established professional smart manufacturing factory, and set up quality and service system to satisfy high-endusers’ demand.
The Company launched Casarte Yunzhen refrigerator, Casarte Ella washing machine, Casarte Legend and Linglong Legend gas water heater and other innovative products. The share of Casarte refrigerators increased from3.7% to5.1%, of which multi-door refrigerator priced more than
RMB20,000 accounted for27.7% as industrial leader; the share of Casarte washing machines increased from2.3% to4.8%, of which roller washing machines pried more than RMB10,000 accounted for57.3%, ranking No. 1 in the industry; the share of Casarte wine cabinets accounted for40%, ranking No. 1 in the industry; the share of Casarte ice bar accounted for62%, ranking No. 1 in the industry; Casarte Legend and Linglong Legend and other high-end gas water heaters achieved good sales with significant increase. The sales of high-end products priced more than RMB3,600, with an increase of up to55%.
3. Optimizing mechanism in the domestic market: The Company deepened offline channel cooperation mode, improved marketing terminal competitiveness, and accelerated the development of e-commerce channels.
Offline channel construction: innovative mode of cooperation and improvement of business development: (1) The Company made intensive and innovative cooperation with Gome, Suning and other KA channels in the aspects of smart retail construction, secondary market expansion, and big data information sharing, differentiated product customization, co-marketing and Haier brand festival to maintain and improve the advantage in share. (2) Self-channel: At the end of 2015, the Company held New Year―GreatEvent‖ marketing activity across the country to stimulate terminal retail and improvedistributors’ confidence. It optimized and integrated internal organizational system and operating mechanism to realize uniform team objective and resource focus, and improve operating efficiency. (3) Comprehensive store channel: The Company established V90 consumer club for core consumers and established special model customized platform; it deeply integrated consumer resources and conducted a complete set of marketing and innovative activities to improve the retail performance.
In response to industrial trend, the Company accelerated the construction of emerging channels, such as e-commercial channel to gain rapid development. In 2015, the revenue from e-commerce
channel increased by nearly50%. In Tmall November 11 activity held in 2015, theCompany’s retail sales reached RMB1.17 billion, which ranked top among major appliance brands. (1) Channel
construction: the Company newly established official flagship stores for refrigerator, washing machine and air-conditioner in Tmall; it entered into 300 stations of Egou service, promoted Haier cloud store to realize O2O transformation of self-channel, and established 500 flagship stores. (2) Operation:①The Company set up excellent sales-oriented consumer service team, and improved the shopping experience through unifying standard and regulation and optimizing process;② Delivery: The Company forced
Qingdao Haier Co., Ltd. 2015 Annual Report
product distribution in the principle of―salary paid byusers‖, improved comprehensive after-sale service, and improved ultimate experience and gained reputation;③ Technology: Through data direct
connection and establishment of sales data model, the Company realized data precipitation and protected efficient operation.
4. Building brand in the global market.①Based on the global brand strategy in the local market, the Company improved the localized operation integrated with regional market,R&D and manufacturing;② the Company acquired GE home appliance business to expand its global layout.
Affected by the constantly sluggish global home appliance market, in 2015, sales revenue in the overseas market amounted to RMB18.65 billion, representing a slight decrease of0.2% as compared with the corresponding period of last year.
The Company implemented Haier and Fisher& Paykel dual-brand strategy in the Australian market. Both parties made win-win cooperation in several aspects, such asR&D, manufacturing and marketing, to intensively realize localization and internationalization. In 2015, the market share of Crystal roller washing machines was improved from―0‖ to22% after it was launched, and became the first brand among local washing machines.
The Company positively promoted Haier and AQUA dual-brand strategy in Japanese and Southeast Asian markets. In the Japanese market, the shares of refrigerator and washing machine of the Company have been ranked No. 3 and No. 4 respectively. For the market share of washing machine below 6kg, the total shares of Haier and AQUA reached more than30% and ranked No. 1 in the market.
The Company promoted Haier and DCS by Fisher& Paykel dual-brand strategy in American market. Haier home appliance has successfully entered into top ten main chain sales channels in the US. Haier home air-conditioners ranked No. 2 in the American market with20% market share, of which mobile air-conditioner and window air-conditioner respectively ranked No. 1 and No. 2 with26% and
Qingdao Haier Co., Ltd. 2015 Annual Report
16% market share. DCS Dishdrawer was positioned as high-end kitchen ware and has obtained good market performance.
The Company positively responded to the national development strategy of―One Belt and OneRoad‖. In the European market, the Company invested in the establishment of refrigerator factory in Russia, and adopted the operation mode integrated with local design, manufacturing and sale. In Pune, India, the Company established an industrial zone covering an area of 160,000 square meters to accelerate the distribution in the markets of India and South Asia.
During the reporting period, the Company started to acquire GE home appliance. As the second largest white appliance company in the US, GE home appliance has strong brand influence and higher market share in American market. According to the statistics published by Euromonitor, in 2015, GE home appliance ranked No. 2 among American home appliance brands with nearly20% market share. It was seen from product segmentation that, kitchen appliance, refrigerating product and dish-washing machine of GE home appliance were deeply recognized and trusted by consumers; the market share of kitchen appliances ranked No. 1 in the US; refrigerators and dish-washing machines ranked No. 2 in the US; and washing machine ranked No. 4 in the US. This acquisition would help the Company enter and expand American market, and provide the full series of brands for low, mid-end and high-end consumers. Meanwhile, the Company improved its three-in-one layout in the Latin American market through
holding minority interests in Mabe, constantly promoted and optimized the global strategic layout of the Company to further consolidate the leading position of the Company in global home appliance industry. After the completion of this acquisition, both parties would complement eachother’s advantages in sales, production,R&D, procurement and supply chain, realize revenue synergies through network
complementation, sub-sector expansion, new product development and improvement of bargaining ability, and realize cost synergies through advantage in procurement scale, improvement of quality and productivity, to lay a solid foundation for becoming the global leader of home appliance industry in eastern and western hemispheres. Meanwhile, this acquisition would also create more abundant and superior products and services for global consumers.
5. Making transformation to embrace the future—U+ platform to expand the base and to live a smart life. The Company accelerated the transition of white goods towards―Internet appliance", promotedU+ APP of Haier and improved the coverage of hardware and interaction. The Company deeply built the basic capacities ofU+ platform to support the implementation of the seven smart ecological cycles such as food, air, washing and other ecological cycle, shifted from the pattern of simple sales of hardware to the pattern of Internet―appliance+ interaction+ service+platform‖ to give community users the best experiences.
2.1 million smart white goods of Haier were sold in 2015, an increase of169% compared to last year. SinceU+ APP of Haier was officially launched in April 2015, the number of users exceeded 10 million with the number of active users surpassing 1 million.
Qingdao Haier Co., Ltd. 2015 Annual Report
U+ cloud platform has achieved interconnectivity by Apple Homekit, Allseen, Google Brillo/Weave, Huawei hilink and other protocols and the variety of accessible intelligent hardware exceeded 120. The Company completed the construction of basic structure of cloud platform and uploaded 100 million pieces of equipment data messages every day based on which the abilities such as big data analysis and interactive processing of artificial intelligence were formed to promote the optimization of products and the improvement of user experience. Over 120 third-party resources were introduced into the resources of the ecological cycle. Strategic and business cooperation were made with Microsoft, Huawei, Meizu and other enterprises by hardware, software and service interface. More than 100,000 makers were gathered and over 800 entrepreneurship and innovation programmes were formed by maker competition. Investment and resources of the ecological cycle were put into over 50 programmes around O2O services, artificial intelligence, sensor, big data and other areas. The income of the ecological cycle surpassed600% as compared to last year.
Bases onU+ platform, the Company actively pushed forward the construction of food, air, washing, water and other ecological cycle and explored the transformation of the business model from simple sales of hardware to the pattern of―Internet application+ application+ service+platform‖. The Company launched a brand new Internet refrigerator Haier Xinchu refrigerator in October 2015. The refrigerator brought people new experience of control by its 10.1-inch TFT touch screen and body sensor module. And its exclusive functions such as food DIY, food material management, video entertainment and farm to table and the gather of Suning, DouguoRecipe, IQiyi, QingtingFM and many other resource suppliers brought people new experience of smart kitchen. Xinchu refrigerator became new entry of social contact because of its more convenient services and safer products. Many resource suppliers could interact with consumers by Xinchu refrigerator that became the entry of electronic commerce, media and O2O community service of thousands of households.
Qingdao Haier Co., Ltd. 2015 Annual Report
6. Making transformation to embrace the future - interconnected factories led the industry and customized products grew quickly. The ecological system of interconnected industries was built and transformation was made from mass manufacturing to mass customization to meetconsumers’ personalized demands and to upgrade the industry.
The Company was the first to push forward the intelligence transformation of supply chains in the industry and established nearly 70 unmanned lines with nearly 2,000 robots in the whole-machine factories. The system of interconnected factories was preliminarily established and 7 interconnected factories were built including five whole-machine factories: Shenyang Refrigerator, Foshan Roller Washing Machine, Zhengzhou Air-Conditioner, Jiaozhou Air Conditioner and Qingdao Water Heater, and two modular factories: Qingdao Mould and Qingdao FPA Electrical Machine that achieved―seamless process, visualization andtransparency‖. The interconnected factories of the Company were chosen as the comprehensive demonstration project of smart manufacturing pilot of the Ministry of Industry and Information Technology in 2015; it was the only enterprise in the white goods industry. The interconnected factories were the first to be selected as standard special projects of smart manufacturing of the Ministry of Industry and Information Technology in 2015 and participated in the formulation of standards ofChina’s smart manufacturing system.
The Company launched its first user community experience platform of interaction and customization of the industry - Creative Convergence (http://diy.haier.com/) in 2015. The platform provided users with over 100 customized products and solutions by module customization, Creative Convergence customization, exclusive customization and other modes. The 1.0 version of the APP was released online and launched at Appliance World Expo in March 2015. It was officially launched in PC and mobile phone M station in the fourth quarter of 2015. After the launch, its monthly average flow increased obviously from about 2,000 in October to 350,000 in December. While the functions of the platform were upgraded and extensive products were provided, the user flow and customized orders synchronously increased, and the orders of customized products reached 150,000 in 2015. By using open community mode, Creative Convergence created a platform for face-to-face communication among users, designers and suppliers and transformed the product demands and ideas of users into product programs. From the demand end to the manufacturing end, Creative Convergence of Haier created customized experience of visualization in the whole process based on the interconnected factories system to realize interconnection between users and interconnected factories. Users were turned from simple demanders into idea initiators, design participants and decision makers, participating in the whole process of product customization and releasing their potential creativity by the unique and new experience.
Qingdao Haier Co., Ltd. 2015 Annual Report
13.31
||
|-|
|9.9|
|4.30.9|
|5Q1 15Q2 15Q3 15Q4 16Q1d fast growth: the Company expanded the logistics of the industries such asiance, furniture and cold chain and constantly improved the distribution capacityry and last mile to support the fast growth of business.rt Logistics efficiently completed most of large home appliance orders in Tmall.com|
|s quick distribution and installation capacities. Its delivery timeliness hit record high tothe E-commerce user experience and push forward the rapid growth of E-commerceon the great development of home appliance and e-commerce logistics business, theously expanded the e-commerce logistics business of other large-format productsre, bathroom fixture and fitness equipment.|
|apacities were reinforced to constantly secure the leading position of logistics businessproducts. Six warehouse constructions were newly built and put into use in 2015 and 21tructions were accumulatively finished. The third and fourth tier markets continuouslyut was quickly extended to further raise the speed of distribution from the third andets to villages and households. Goodaymart Logistics kept its leading position in the|
|third-level DC deep Internet layout of large-format products logistics. The fusion ofes: Seamless connection capacity of distribution service from artery to districts and lastwas improved and the network of regular bus nationwide was built to provide one-stopice of the dry warehouse distribution. The upgrading of platform network and coree upgrading of solutions of large-format products logistics. The change of new business|
|er demand end was taken into full account and integrated SCM solution of the wholet proposed and put into practice.33 / 239|

Qingdao Haier Co., Ltd. 2015 Annual Report
8. Keeping promises. Capital market commitments were fulfilled. The Company acquired the overseas assets of Haier Group and minority interests held in Mitsubishi and Carrier Joint Venture in cash to promote global development and increase shareholder value.
The Announcement of Qingdao Haier Co., Ltd. on the Acquisition of Shares of Haier Singapore Investment Holding Pte Ltd. and Connected Transactions and related matters were passed at the 2014 Annual General Meeting of the Company held on 10 June, 2015. After the transactions were completed, the system of combination of the research and development of overseas white goods, manufacturing and sale of Haier Group in main countries and regions of the world such as Asia, Europe, America and Africa would be incorporated into the system of the listed company. It would help the Company to further integrate global resources of research and development, manufacturing and sale and to create a global brand by its resources to become a global leader of the appliance industry with influence of first-class brand and comprehensive service strength.
The Announcement of Qingdao Haier Co., Ltd. on the Acquisition of Equity in Sino-foreign Joint Venture Held by Haier Group Corporation and Connected Transaction was passed at the 28th meeting of the 8th session of the Board of Directors of the Company held on 22 December, 2015 to acquire49% of the equity of Qingdao Haier Carrier Refrigeration Equipment Co., Ltd. and45% of the equity of Mitsubishi Heavy Industries Haier (Qingdao) Air-conditioners Co., Limited. The acquisition further enriched the product lines of the Company, strengthened the coordination of theR&D technology system of the Company, and provided a platform for the ongoing deep cooperation between the Company and theworld’s leading household appliance manufacturing companies. The acquisition was made in cash, which was helpful for improving profitability and capital utilization efficiency of the Company.
Since 2011 listed companies have accumulatively used RMB9.7 billion to acquire high quality appliance assets of Haier Group in cash to establish listed flagship company, to fulfill capital commitments and to increase shareholder value.
(I) Analysis of principal business
Table of movement analysis on the related items in income statement and cash flow statement Unit and Currency: RMB
|||||
|-|-|-|-|
|Items|Current period|Correspondingperiod of last year|Change (%)|
|Operating revenue|89,748,320,410.91|96,929,763,894.36|-7.41|
|Operating cost|64,658,463,207.53|70,170,401,158.93|-7.86|
|Sales expense|13,101,282,436.95|12,579,781,619.54|4.15|
|Administrative expenses|6,549,193,839.44|6,813,114,797.83|-3.87|
|Financial expenses|-498,120,405.83|-256,648,580.46|-94.09|
|Net cash flows generating fromoperating activities|5,579,600,612.93|6,769,361,298.35|-17.58|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||
|-|-|-|-|
|Net cash flows generating frominvesting activities|-10,273,403,690.47|-3,639,278,256.98|-182.29|
|Net cash flows generating fromfinancing activities|-1,895,610,696.23|7,153,737,060.71|-126.50|
|Research and development expense|2,461,440,962|2,331,312,280.00|5.58|
|Loss of impairment on assets|318,011,645.05|223,184,511.75|42.49|
|Interests of changes on fair value|-90,223,059.50|112,363,366.12|-180.30|
|Non-operating income|618,457,263.82|378,335,366.09|63.47|
|Income tax expense|1,052,769,417.97|1,527,486,745.62|-31.08|
|Other comprehensive income, net oftax|73,297,094.11|511,746,848.93|-85.68|
|Effect of change of exchange rate oncash and cash equivalent|151,920,567.09|-137,950,662.95|210.13|

Presentation of significant changes:
1) Loss in assets impairment increased by42.49% compared with the corresponding period of last year, which was mainly attributable to the increase of loss from price drop in inventory;
2) Income from change in fair value decreased by180.30% compared with the corresponding period of last year, which was mainly attributable to the change in fair value of derivative financial instruments such as future exchange;
3) Non-business income increased by63.47% compared with the corresponding period of last year, which was mainly attributable to the increase of government subsidies of the current period;
4) Income tax expense decreased by31.08% compared with the corresponding period of last year, which was mainly attributable to the decrease of pretax profit;
5) Other comprehensive income, net of tax decreased by85.68% compared with the corresponding period of last year, which was mainly attributable to the decrease of income from change in fair value of available-for-sale financial assets compared with the corresponding period of last year; 6) The influence of fluctuation in exchange rate on cash and cash equivalents increased by210.13% compared with the corresponding period of last year, which was mainly attributable to influence of fluctuation in exchange rate.
(1). Operating activities by industries, products and regions
Unit:RMB0’000
||||||||
|-|-|-|-|-|-|-|
|Principle operating activities by products|||||||
|Product|Operatingrevenue|Operatingcost|Grossprofitmargin(%)|Operatingrevenueincreased/decreased whencompared withlast year (%)|Operatingcostincreased/decreasedwhencomparedwith lastyear (%)|Gross profitmarginincreased/decreased whencomparedwith last year(%)|
|Air-conditioners|1,625,089|1,166,236|28.24|-20.62|-16.47|Decreased by3.56 pct. pt.|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Refrigerators|2,758,853|1,861,059||32.54||-2.40||-2.58||Increased by0.13 pct. pt.||
|Kitchenware andsanitaryware|662,060|373,080||43.65||1.87||1.22||Increased by0.36 pct. pt.||
|Washingmachines|1,746,985|1,147,257||34.33||1.22||0.63||Increased by0.38 pct. pt.||
|Equipmentcomponents|181,804|157,667||13.28||-58.18||-61.02||Increased by6.33 pct. pt.||
|Channelintegratedservicesbusinessand others|1,942,099|1,748,079||9.99||0.33||-1.17||Increased by1.37 pct. pt.||
|Principle operating activities by regions||||||||||||
|Region|Operatingrevenue||Operating cost||Gross profitmargin (%)||Revenueincreased/decreasedwhencomparedwith lastyear (%)||Operatingcostincreased/decreasedwhencomparedwith lastyear (%)||Gross profitmarginincreased/decreasedwhencomparedwith lastyear (%)|
|Domesticmarket|7,051,844||4,910,852||30.36||-9.01||-9.16||Increasedby 0.11 pct.pt.|
|International market|1,865,046||1,542,526||17.29||-0.24||-2.51||Increasedby 1.92 pct.pt.|

(2). Analysis of production and sales
Unit: 10k units / set
||||||||
|-|-|-|-|-|-|-|
|Mainproducts|Production|Salesvolume|Inventory|Productionincreased/decreasedwhencomparedwith lastyear (%)|Salesvolumeincreased/decreasedwhencomparedwith lastyear (%)|Inventoryincreased/decreasedwhencomparedwith lastyear (%)|
|Homeappliance|4550, 10kunits / set|5517, 10kunits / set|477, 10kunits / set|-1.57|-0.75|1.32|

(3). Cost analysis table
Unit:RMB0’000
|||||||||
|-|-|-|-|-|-|-|-|
|Industry||||||||
|Sub-industry|Componentof cost|Currentamount|Proportionover totalcost for|Correspondingperiod of|Proportion overtotal cost|Changesin currentamount|Remarks|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||||||
|-|-|-|-|-|-|-|
||||thecurrentperiod (%)|last year|forcorrespondingperiod oflast year(%)|over thesameperiod oflast year(%)|
|Householdelectricapplianceindustry|Rawmaterials|4,040,052|88.84|4,321,500|89.75|-6.51|
||Labor|148,587|3.27|147,239|3.06|0.92|
||Depreciation|54,300|1.19|35,585|0.74|52.59|
||Energy|39,694|0.87|36,908|0.77|7.55|
||Others|264,999|5.83|273,984|5.69|-3.28|

1. Expense
(1) Financial expenses decreased by94.09% as compared with the corresponding period of last year, which was mainly attributable to increase of interest income in the current period.
2. R&D expenditure
Table ofR&D expenditure
Unit: RMB
|||
|-|-|
|R&D expenditure for the period|2,344,436,742|
|Capitalised R&D expenditure for the period|117,004,220|
|Total R&D expenditure|2,461,440,962|
|Percentage of total R&D expenditure over operatingrevenue (%)|2.7|
|Number of R&D staffs in the Company|10,097|
|Number of R&D staffs over the total number in theCompany (%)|15.8|
|Proportion of capitalization of R&D expenditure(%)|4.8|

The direction ofR&D investment of the Company: 1.User demands and research of core technology were focused on. The medium and long term technology and product competitiveness of the whole category industry were improved to keep the leading position of products; 2. Online open innovative platform was established and upgraded where all kinds of global innovation resources were gathered including universities,R&D institutions, top 500 companies, Internet enterprises, top innovation institutions, experts and geeks in the sub-sectors; 3. Innovation ability of fiveR&D centers was improved. Haier set upR&D centers in China, America, Asia, Europe and Australia. Each center was an open platform attracting resources and user interaction and thus an innovation resource network worldwide was formed.
3. Cash flows
(1) Net cash flows from investing activities decreased by182.29% compared with the
corresponding period of last year, which was mainly attributable to the performance of capital
commitment, the acquisition of overseas home appliance assets of Haier Group, the increase of payment
Qingdao Haier Co., Ltd. 2015 Annual Report
in cash for investment activities including investment in Sinopec Marketing Co., Ltd. and the acquisition of Fujian Shengfeng Logistics Group Co. Ltd;
(2) Net cash flows from financing activities decreased by126.50% compared with the
corresponding period of last year, which was mainly attributable to the investment of Alibaba in Haier Electronics Group Co. Ltd, theCompany’s holding subsidiary;
(3) The influence of fluctuation in exchange rate on cash and cash equivalents increased by
210.13% compared with the corresponding period of last year, which was mainly attributable to the influence of exchange rate fluctuation.
（II） Explanation of non-operating business leading to significant changes in profit
□Applicable√Not Applicable
（III） Analysis of assets and liabilities
Unit: RMB
|||||||
|-|-|-|-|-|-|
|Name ofproject|At the end ofcurrent period|Percentageof theamount atthe end ofcurrentperiod overtotal assets(%)|At the end ofprevious period|Percentage ofthe amount atthe end ofpreviousperiod overtotal assets(%)|Change inthe amountat the endof currentperiod overthat at theend ofpreviousperiod (%)|
|Financial assets atfair value andchange of whichincluded in thecurrent profit or loss|22,069,897.04|0.03|103,668,887.71|0.13|-78.71|
|Prepayments|556,872,003.39|0.73|836,083,992.96|1.02|-33.40|
|Dividends receivables|85,826,158.26|0.11|54,524,472.84|0.07|57.41|
|Other current assets|1,451,065,197.30|1.91|791,018,741.65|0.96|83.44|
|Available-for-salefinancial assets|2,837,318,201.20|3.74|1,430,621,348.35|1.74|98.33|
|Long-term equityinvestments|4,958,908,333.93|6.53|3,582,596,477.92|4.35|38.42|
|Investment properties|3,449,331.95|0.00|30,582,852.72|0.04|-88.72|
|Disposals of fixedassets|74,096,355.04|0.10|31,624,205.58|0.04|134.30|
|Intangible assets|1,453,470,715.09|1.91|1,008,290,734.35|1.22|44.15|
|Goodwill|392,484,932.55|0.52|74,530,241.86|0.09|426.61|
|Financial liabilitiesat fair value andchange of whichincluded in thecurrent profit or loss|7,707,414.12|0.01|42,686.85|0.00|17,955.71|
|Tax payable|909,937,816.09|1.20|1,531,384,978.58|1.86|-40.58|
|Interests payable|15,081,416.34|0.02|7,921,318.87|0.01|90.39|
|Non-current|72,898,028.33|0.10||||

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||||
|-|-|-|-|-|-|
|liabilities due withinone year||||||
|Long-term borrowing|297,241,293.20|0.39||||
|Debentures payable|1,107,734,516.43|1.46|1,800,700,630.05|2.19|-38.48|
|Long-term Payables|59,916,852.02|0.08||||
|Long-term payablesfor staff’sremuneration|33,209,406.02|0.04|24,531,136.34|0.03|35.38|
|Deferred income|264,120,554.33|0.35|135,707,501.91|0.16|94.62|
|Share capital|6,123,154,268.00|8.06|3,045,935,134.00|3.70|101.03|
|Capital reserve|83,383,194.51|0.11|5,978,787,439.45|7.26|-98.61|
|Treasury stock|77,604,544.70|0.10|47,160,730.00|0.06|64.55|
|Minority interests|9,708,285,895.93|12.78|7,314,528,029.80|8.88|32.73|

 Explanation of changes:
1) Financial assets measured at fair value and changes of which included in current profit and loss decreased by78.71% from the beginning of the period, which was mainly attributable to the influence of change in fair value of derivative financial instruments such as future exchange; 2) Prepaid amount decreased by33.40% from the beginning of the period, which was mainly attributable to the decrease of prepayment to supplier;
3) Dividend receivable increased by57.41% from the beginning of the period, which was mainly attributable to the increase of the declaration of unpaid dividend by participating companies. 4) Other current assets increased by83.44% from the beginning of the period, which was mainly due to the increase of taxes to be deducted at the end of the period;
5) Available-for-sale financial assets increased by98.33% from the beginning of the period, which was mainly due to the increase of investment such as the investment of China Petrochemical Marketing Co. Ltd;
6) Long-term equity investments increased by38.42% from the beginning of the period, which was mainly due to the increase of investment in many associated companies including Haier Tongchuang Investment Partnership (Limited Partnership) and the increase of profits of associated companies using equity method;
7) Investment properties decreased by88.72% from the beginning of the period, which was mainly due to the turn of some investment properties into disposals of fixed assets;
8) Disposals of fixed assets increased by134.30% from the beginning of the period, which was mainly due to the turn of some investment properties into disposals of fixed assets;
9) Intangible assets increased by44.15% from the beginning of the period, which was mainly due to the increase of land use right acquired in the period;
10) Goodwill increased by426.61% from the beginning of the end, which was mainly due to the acquisition of the subsidiary of the Company, Fujian Shengfeng Logistics Group Co., Ltd under different controlling parties;
11) Financial liability measured at fair value and changes of which included in current profit and loss
increased by17955.71% from the beginning of the period, which was mainly due to the influence
of change in fair value of derivative financial instruments such as future exchange;
Qingdao Haier Co., Ltd. 2015 Annual Report
12) Taxes payable decreased by40.58% from the beginning of the period, which was mainly due to the decrease of value added tax payable at the end of the period;
13) Interests payable increased by90.39% from the beginning of the period, which was mainly due to the increase of unpaid loan interest;
14) Non-current liabilities due within one year increased by100% from the beginning of the period, which was mainly due to the increase of payments due within one year because of the acquisition of equity interests of minority interests;
15) Long-term borrowings increased by100% from the beginning of the period, which was mainly due to the increase of long-term borrowings of subsidiaries;
16) Debentures payable decreased by38.48% from the beginning of the period, which was mainly due to the turn of some convertible bonds issued by subsidiaries into equities;
17) Long-term payable increased by100% from the beginning of the period, which was mainly due to the fund investment of China Development Bank in subsidiaries;
18) Long-term employee benefits payable increased by35.38% from the beginning of the period, which was mainly due to the increase of long-term termination benefits of some overseas subsidiaries; 19) Deferred income increased by94.62% from the beginning of the period, which was mainly due to the increase of government grant programs related to assets;
20) Share capitals increasedby101.03% from the beginning of the period, which was mainly due to the conversion of capital reserve into the increase in share capital;
21) Capital reserve decreased by98.61% from the beginning of the period, which was mainly due to the conversion of capital reserve into the increase in share capital and the elimination of share premium by enterprise combinations under common control;
22) Treasury stock increased by64.55% from the beginning of the period, which was mainly due to the repurchase of stock of the Company from the open market;
23) Minority interest increased by32.73% from the beginning of the period, which was mainly due to the increase in profit or loss attributable to minority shareholders.
Qingdao Haier Co., Ltd. 2015 Annual Report
（IV） Analysis on Investment
1. Overall analysis on external equity investment
During the reporting period, the external equity investment of the Company amounted to
RMB6,130.26 million.
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||||||||||Amount|||
||||||Percentage of|||||||
||||||||||of|||
||||||the||||||Amounted|
||||Principle||||||investme|||
||Name of company||||equity interest||||||invested|
||||operating||||Remark||nt|||
||invested||||of||||||(RMB0’0|
||||activities||||||(RMB0’|||
||||||the company||||||00)|
||||||||||000|||
||||||invested (%)|||||||
||||||||||)|||
|Haier SingaporeInvestment HoldingPte Ltd.||InvestmentHolding||100||For more details, please refer to theAnnouncement of Qingdao Haier Co.,Ltd. on the Acquisition of Shares ofHaier Singapore Investment HoldingPte. Ltd and Connected Transactions(No.: L 2015-014) published on fourmajor securities newspapers and theShanghai Stock Exchange website on 26May 2015 and other relatedannouncements published on the sameday.||487,370||487,370||
|Shenzhen MTC Co.,Ltd.||Electronic productmanufacturing, etc.||1.61||For more details, please refer to theSuggestive Announcement of QingdaoHaier Co., Ltd. on the Subscription ofNon-public Offering of Shares byShenzhen MTC Co., Ltd. (No.: L2015-023) and SuggestiveAnnouncement of Qingdao Haier Co.,Ltd. on the Adjustment to the Plan ofNon-public Offering of Shares byShenzhen MTC Co., Ltd. (No.: L2015-036) published on four majorsecurities newspapers and the ShanghaiStock Exchange website on June 19 and19 August 2015 respectively.||37,078||0||
|Mitsubishi HeavyIndustries Haier(Qingdao)Air-conditionersCompany Limited(Referred to as"Mitsubishi HeavyIndustries")||Manufacturing ofairconditioner and itsparts andcomponents, etc.||45||For more details, please refer to theAnnouncement of Qingdao Haier Co.,Ltd. on the Acquisition of Equity inSino-foreign Joint Venture Held byHaier Group Corporation and ConnectedTransaction (L 2015-062) published onfour major securities newspapers and theShanghai Stock Exchange website on 23December 2015.||54,334||0||
|Qingdao HaierCarrier RefrigerationEquipment Co., Ltd.(Referred to as "Carrier Equipment")||Design,manufacturing andinstallation of units||49||||34,244||0||

Notes:
(1) Relevant motions on the acquisition of all shares of Haier Singapore Investment Holding Pte.
Ltd held by Haier (Hong Kong) Investment Co., Ltd. were considered and approved at Board of
Qingdao Haier Co., Ltd. 2015 Annual Report
Directors and general meeting of stockholders on 26 May 2015 and 10 June 2015. According to the meeting resolutions, the total consideration paid by the Company to Haier (Hong Kong) Investment Co. Ltd for the equity interest transfer will be RMB4.8737 billion. The transfer has been finished up to as at the end of the reporting period.
(2) On 18 June 2015, general manager office meeting of the Company considered and approved the participation in acquiring 30 million non-public offering of shares by Shenzhen MTC Co., Ltd with self-owned funds of RMB370.78 million as a consideration. The acquisition has not been finished up to the end of the reporting period.
(3) Relevant motions of the acquisition of minority shares of Mitsubishi Heavy Industries Haier (Qingdao) Air-conditioners Co., Limited and Qingdao Haier Carrier Refrigeration Equipment Co., Ltd. were considered and approved at Board of Directors and general meeting of stockholders on 22 December 2015 and 7 January 2016. According to the meeting resolutions, the total consideration paid by the Company to Haier Group for the equity interest transfer was RMB841.492 million. The transfer has not been finished as of the end of the reporting period.
(1) Significant equity investment
See―1. Overall analysis on external equityinvestment‖ for the equity investment of the Company during the reporting period.
(2) Significant non-equity investment
None
(3) Financial assets measured at fair value
|||||||
|-|-|-|-|-|-|
|Financial assetsmeasured at fairvalue|Initial cost ofinvestment|Sources offunds|Purchase /sale duringthereportingperiod|Investmentincome duringthe reportingperiod|Changes infair valueduring thereportingperiod|
|Bank ofCommunications(601328)|1,803,769.50|Own funds||367,808.04|-490,410.72|
|BAILIAN (600827)|154,770.00|Own funds|||-787.76|
|Eastsoft (300183)|18,713,562.84|Own funds|||2,368,508.58|
|Bank of Qingdao(003866)|890,308,859.84|Own funds||96,086,121.25|38,434,448.50|
|Others|1,041,212.42|Own funds|121,165.41||8,415.70|
|Derivative financialinstruments||||49,201,148.46|-90,223,059.50|
|Total|912,022,174.60||121,165.41|145,655,077.75|-49,902,885.20|

（V） Material Assets and Equity Disposal
During the reporting period, to improve the cost competitiveness of special steel plate of the
Company and promote the strategy transformation from mass manufacturing to mass customization, the
Qingdao Haier Co., Ltd. 2015 Annual Report
Company and its wholly-owned subsidiary Haier Shareholdings (Hong Kong) Limited (hereinafter referred to as―Haier HongKong‖) signed agreement with Qingdao Hebei Iron& Steel New Material Technology Co. Ltd (hereinafter referred to as―Hebei Iron& SteelTechnology‖), a subsidiary of Hebei Iron& Steel Group Co. Ltd (hereinafter referred to as―Hebei Iron& SteelGroup‖) on 29 September 2015 to transfer70% of the equity of Qingdao Special Steel and70% of the equity of Hefei Special Steel jointly held by the Company and Haier Hong Kong to Hebei Iron& Steel Technology (the foregoing transaction collectively referred to as the―Transaction‖). The amount of the Transaction was RMB490 million. After the completion of the Transaction, the Company still held30% of the equity of Qingdao Special Steel and Hefei Special Steel. For details, please refer to Suggestive Announcement of Qingdao Haier Co. Ltd. on the Transfer of Controlling Equities in Subsidiaries (L 2015-045) disclosed on 1 October 2015.
(VI) Analysis on Major Controlling Companies
Unit and Currency: RMB
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||||Registered|||||||
|||Scope of|||Total||Net||Net|
||Name of company||capital|||||||
|||business|||assets||assets||profit|
||||(RMB0’000)|||||||
|Haier Electronics Group Co.,Ltd.||Production and||3,006,424||1,564,730||282,129||
|||sale of home|0|||||||
|||appliances||||||||
|Qingdao Haier Air ConditionerGen Corp., Ltd||Air conditioner||351,592||319,388||40,796||
|||manufacturing|21835.5|||||||
|Qingdao Haier SpecialRefrigerator Co., Ltd.||The refrigerator|USD20.00|113,162||67,932||25,588||
|||manufacturing|million|||||||
|Chong Qing HaierAir-Conditioner Co., Ltd||Air conditioner||197,843||155,996||23,481||
|||manufacturing|13000|||||||
|Hefei Haier Refrigerator Co.,Ltd.||The refrigerator||150,193||97,776||20,732||
||||4900|||||||
|||manufacturing||||||||
|Qingdao HaierAir-Conditioner ElectronicsCo., Ltd.||Air conditioner||336,678||254,817||20,539||
||||USD11.96|||||||
|||manufacturing||||||||
||||million|||||||

Note: The financial data of Haier Electronics Group Co., Ltd. is determined in accordance with the accounting standards generally accepted in the PRC and the accounting policies of the Company. (VII) Information on the Main Structure Controlled by the Company
Nil
III. Discussion and Analysis on the Future Development of the Company
（I） Development Strategy of the Company
TheCompany’s transformation strategic direction: the Company will transform from the
traditional enterprise manufacturing home appliance products to the platform incubating maker to the
whole society, which will commit to become the Internet enterprise, thus it will overturn the closed
system that traditional enterprises establish for themselves into the node in network interconnection, and
Qingdao Haier Co., Ltd. 2015 Annual Report
then the Company will achieve the connectivity of various resources, create the co-creation and win-win ecological cycle based onusers’ value interaction in the post-electric business time, thus it will provide intelligent household solutions for consumers, so as to achieve the win-win and value increase of all the parties.
In 2016, the Company will continue to promote the transformation and implementation of Internet enterprises, according to the development topic of―new state of interconnection and interworking, new platform of co-creation andwin-win‖, the Company deeply will promote the change, focus onU+ Smart Life platform and interconnected factory and personalized customization platform, so as to establish the co-creation and win-win platform of business experience in intelligent life scene. Then the Company will construct the interconnected factory ecological system, achieve the seamless, transparency and visualization of users' experience, thus it will promote the implementation and development of new mode; the Company will continue to implement product leading strategy, promote structure upgrading, and depend on the advantages in technology, scale and cost to extend the market share; the Company will promote to form the operation system and mechanism construction in domestic market with focusingusers’ praise and improvingconsumers’ value as the guidance, so as to enhance market efficiency and respond ability; the Company will focus on creating local competitiveness in overseas market, and promote the unified listing of global leading product platform; it will promote to integrate withGE’s home appliance products, thus it will smoothly complete project delivery and business cooperation.
（II） Operation Plan
The Company will insist on product leading, fully depend on the leading technology, the Company design advantage in the world, then it will continue to increase the high-end market share, and keep on promoting the business development of Casarte; the Company will actively master the upgrading trend of industry, enrich the product category layout of T-type multi-door refrigerator, roller washing machine and other products with rapid growth rate; as for middle and low end market. The Company will depend on the advantages of technology and scale to enhance cost competitiveness and market competitiveness; then it will keep and enlarge the scale advantage and share advantage in the industry.
Domestic market: according to users' experience improvement and consumers' value addition, the Company will change the operation system and mechanism, through strengthening market terminal staff training, upgrading the on-site standard and display, promoting precision market and many other methods to improve the market competitiveness in first-line. The Company will keep the industry position of KA and other traditional advantage pipelines; then it will enrich the product layout of electricity pipelines and improve the competitiveness in comprehensive shop and boutique; in its own pipeline:① the Company will insist on the concept of―honestyforever‖ of Haier,―serving consumers and satisfying theusers‖, thus the Company will promote the upgrading and reaching standard work of service provider, strengthen the service ability on county and town of service provider;② the Company will comprehensively promote and launch the E-Store3.0 system,
Qingdao Haier Co., Ltd. 2015 Annual Report
through the informationization means to put pressure on the terminal retail transformation;③Haier’s mobile terminal e-commerce platform―Shunguang‖ will achieve integration to construct the first home appliance mobile terminal E-commerce platform in China.
Overseas market: the Company will focus on creating local team with competitiveness, promote the implementation of localization mechanism by connecting the sales force with their orders; it will strengthen the global planning of differentiation products and resources, implement the unified listing of global leading refrigerator and washing machine product platforms, and then the Company will enhance the terminal market image. The Company will smoothly achieve the delivery and business cooperation with the home appliance business of GE, and then it will fully release the potential of cooperation.U+ Smart Life platform– implementation ofU+ Smart Life 2.0 strategy focusing on scenario business. The Company will strengthen the construction five platforms including united cloud platform, HaierU+ APP user interaction,U+ Smart Life brain, and source open platform: then it will achieve the infinite loop of the four dimensions including entrance, scenario, community and data; the Company will focus on the three key duties to enhanceusers’ experience, and then it will optimize the diversified business model:① it will use Internet appliance ecology to bring the full implementation of new business model– from selling product to selling service / content;② it will use the new service mode– the first smart life personalized customization platform (to provide home appliances management, electronic warranty card, whole scene visual service process for users) brought by HaierU+ APP 2.0, thus it will make the whole process service and smart interaction platform;③U+ Smart Life brain will bring the ability of new smart interaction for the homeappliances– to initiatively understand the requirement of users and initiatively provide service.
In the aspect of interconnected factory system establishment and personalized customization: (1) the Company will continue to promote updating and reforming of interconnected factory; it will launch interconnected factory COSMO (Cloud of Smart Manufacturing Operation) platform to achieve the zero distance interaction between users and interconnected factory and enable users to participate in the whole process of customization; the Company will establish―Haier Industrial Smart ResearchInstitute‖, accumulate theCompany’s interconnected factory modes, standards and methodologies, and upgrade the industrial smart cloud service platform and provide the overall solutions. (2) Personalized customization: it will conduct technology and structure upgrade, big data platform access and virtual reality access, apply big data analysis, and implement the accurate marketing based on the user attributes of each channel / entrance, enhance order conversion rate; it will continue to improve platform experience, deeply satisfy all kinds of customization demands; pay attention to the establishment ofusers’ platform experience and interaction of community fans, so as to create zero distance and zero cost communication mechanism among users, interconnected factories and designers and build the win-win customized ecological cycle.
Logistics business: based on the great development of Goodaymart Logistics in home appliances logistics field, it will greatly expand the delivery of non-home appliances category. By applying the established national delivery network, especially the―lastmile‖ service network, Goodaymart Logistics
Qingdao Haier Co., Ltd. 2015 Annual Report
will set up market dominating position in furniture, sanitary ware, fitness equipment, electric vehicle and other large items, and make great effort to develop cold chain logistics industry.
（III） Funds Required for Maintaining Current Business and Completing Project under Construction
In 2016, theCompany’s funds will be used for the normal production and operation of the Company, the construction of smart interconnected factories andU+ platform, small entrepreneurial incubation and acquisition of GE home appliance assets. The required funds will be implemented upon review by decision-making organization in accordance with theCompany’s strategies and operations. The Company will establish the capital structure with multi-channel and multi-level to fully utilize the financial leverage and its own funds to rationally allocate the resources.
（IV） Potential risks
1. Risk of sluggish market demand due to slowdown in growth of macro economy. As white home appliance products fall into the category of consumer electronic products, the income level and expectation on future income growth will have an effect on the purchase of white goods. In the event of slowdown in the growth of the macro economy resulting in the decrease in the purchasing power of consumers, growth of the industry will be adversely affected. In addition, uncertainties on the property market will have some negative effect on market demand, which will in turn have some indirect demand for home appliance products.
2. Price war risk caused by intensifying industry competition. In a long term, the market concentration of white home appliance industry continues to rise, but in short-term, due to the imbalance between supply and demand caused by high capacity generated from industry expansion and decreasing of industry demand in recent years, the industry inventory amount rises, under the background of product homogeneity, price war will become the means to drive the promotion of share in the short term.
3. The smart trend of white home appliance will fuzzy the boundaries of industries and intensify industry competition; Internet companies will enter into the field of smart home appliance, which will intensify the industry competition and overturn the current profit model of the industry.
4. Risk of rise in price of raw materials. Bulk raw materials such as copper, aluminum, steel plate, and oil-related plastic particles and foam materials account for a large proportion in the costs of white goods production. The surge in the price of bulk raw material will increase the cost pressure, and therefore have negative effect on the performance of enterprises.
IV. Explanation of failure to disclose in accordance with the standards and reasons due to not applicable to rules and regulations or special reasons
□Applicable√Not Applicable
Qingdao Haier Co., Ltd. 2015 Annual Report
SECTION V SIGNIFICANT EVENTS
I. Proposal for Profit Distribution or Capital Reserve Conversion of Ordinary Shares
（I） The development, implementation or adjustment of the cash dividend policies
TheCompany’s 2014 profit distribution plan was passed on the 2014 Annual General Meeting of the Company held in June 2015: based on the share capital of 3,046,125,134 shares at the time of distributing, distribute RMB4.92 (tax inclusive) for every 10 shares and convert to 10 shares to all shareholders, with a total amount of dividend before tax of RMB1,498,693,565.93 and the total share capital after the implementation of 6,092,250,268 shares. The plan has been implemented and completed in July 2015. Details are set out in the Announcement of Qingdao Haier Co., Ltd. on the Implementation of Profit Distribution and Capital Reserve Conversion for 2014 (L 2015-025) published by the Company on the four major securities newspapers and the website of Shanghai Stock Exchange on 10 July 2015.
The Company has always applied the continuous and stable profit distribution policy. During the reporting period, the Company strictly followed the requirements set out in the Articles of Association and the newly formulated―Shareholder Return Plan for the Next Three Years (2015-2017)‖. During the formulation of the profit distribution plan, the Company took full account of return for investors, the long-term interests of the Company, overall interests of all shareholders and sustainable development of the Company, and provided investors with the opportunity to share in the growth of value, so that investors could form the expectation of a stable return. The procedures and mechanisms for decision-making such as Articles of Association and planning system of return of shareholders were complete and in compliance with laws and regulations. The process was open and transparent, the standard and ratio of dividends was clear. Responsibilities of independent directors were clear during the policy-making process, and independent directors were given the opportunities to play their roles. Minority shareholders were also given the opportunity to fully express their views and demands, and the legitimate interests of minority shareholders were adequately protected.
The dividend distribution plan of 2015 of the Company: on the basis of the total share capital as at the date of profit distribution , distribute cash dividend of RMB2.12 per 10 shares (tax inclusive) with expected cash dividend of RMB1,292,697,714.12. The remaining reserved profits were carried forward to the next year. The amount of this distribution accounts for30% of the net profit attributable to parent company of the Company in 2015. All dividend of bonus scheme is paid in cash.
（II） Plans or Proposals for Profit Distribution and Plans or Proposals for Capital Reserve Conversion into the Increase in Share Capital of the Company in the Recent Three Years (Including the Reporting Period)
Unit and Currency: RMB
||||||||
|-|-|-|-|-|-|-|
|Year ofdistribution|Numberof bonusshare for|Amountofdividend|Numberof sharesconverted|Amount ofcash dividend(tax inclusive)|Net profitsattributable toshareholders of|Percentageof the netprofit|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||||||
|-|-|-|-|-|-|-|
||every 10shares(share)|for every10 shares(RMB)(taxinclusive)|for every10 shares(share)||listed companiesin theconsolidatedfinancialstatement duringthe year ofdistribution|attributableto theshareholdersof the listedcompanies intheconsolidatedfinancialstatement(%)|
|2015|0|2.12|0|1,340,094,420.82|4,300,760,542.82|31.16|
|2014|0|4.92|10|1,498,693,565.93|4,991,557,360.87|30.02|
|2013|0|4.60|0|1,251,584,532.40|4,168,152,892.92|30.03|

（III） Share Repurchase by Cash and Included in Cash Dividend
Unit and Currency: RMB
||||
|-|-|-|
||Amount of cash dividends|Percentage (%)|
|2015|47,396,706.70|3.54|

（IV） The Company made profits and the profits for distribution to the ordinary shareholders of the parent company was positive during the reporting period, but no cash profit distribution plan for ordinary shares was proposed; the Company should disclose the reasons in detail and the purpose and use plan of undistributed profits
□Applicable√Not applicable
Qingdao Haier Co., Ltd. 2015 Annual Report
II. Performance on Undertakings
√Applicable□Not applicable
（I） Undertakings made by companies, shareholders, actual controlling shareholders, purchasers, directors, supervisors, senior management or other related parties during or lasted to the reporting period
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|Undertakingrelated tomaterial assetreorganization||Eliminatelandpropertydefect||HaierGroupCorporation||During the period from September 2006 to May 2007, theCompany issued shares to Haier Group Corporation (―HaierGroup‖) to purchase the controlling equity in its four subsidiaries,namely Qingdao Haier Air-Conditioner Electronics Co., Ltd., HefeiHaier Air-conditioning Co., Limited, Wuhan Haier Electronics Co.,Ltd., Guizhou Haier Electronics Co., Ltd.. With regard to the landand property required in the operation of Qingdao HaierAir-Conditioner Electronics Co., Ltd., Hefei HaierAir-conditioning Co., Limited, Wuhan Haier Electronics Co., Ltd.(the ―Covenantees‖), Haier Group made an undertaking (the ―2006Undertaking‖). According to the content of 2006 Undertaking andcurrent condition of each Covenantee, Haier Group will constantlyassure that Covenantees will lease the land and property owned byHaier Group for free. Haier Group will make compensation in theevent that the Covenantees suffer loss due to the unavailability ofsuch land and property.||27 September2006, long term||YES||YES||
|Undertaking related torefinancing||Eliminateland||HaierGroup||Haier Group Corporation undertakes that it will assure QingdaoHaier and its subsidiaries of the constant, stable and unobstructed||24 December2013, long term||YES||YES||

Qingdao Haier Co., Ltd. 2015 Annual Report
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||propertydefect|Corporation|use of the leased property. In the event that Qingdao Haier or anyof its subsidiaries suffers any economic loss due to the fact thatleased property has no relevant ownership certificate, Haier GroupCorporation will make compensation to impaired party in a timelyand sufficient way and take all reasonable and practicable measuresto support the impaired party to recover to normal operation beforethe occurrence of loss. Upon the expiration of relevant leasingperiod, Haier Group Corporation will grant or take practicablemeasures to assure Qingdao Haier and its subsidiaries of priority tocontinue to lease the property at a price not higher than the rent incomparable market at that time. Haier Group Corporation willassure Qingdao Haier and its subsidiaries of the constant, stable,free and unobstructed use of self-built property and land of theGroup. In the event that Qingdao Haier or any of its subsidiariesfails to continue to use self-built property according to its own willor in original way due to the fact that self-built property has norelevant ownership certificate, Haier Group Corporation will takeall reasonable and practicable measures to eliminate obstructionand impact, or will support Qingdao Haier or its affected subsidiaryto obtain alternative property as soon as possible, provided thatHaier Group Corporation anticipates it is unable to cope with oreliminate the external obstruction and impact with its reasonableeffort. For details, please refer to the Announcement of QingdaoHaier Co., Ltd. on the Formation, Current Situation of theDefective Property, the Influence on Operation of Issuer Caused byUncertainty of Ownership, Solution for the Defect and GuaranteeMeasures (L 2014-005) published by the Company on the fourmajor securities newspapers and the website of Shanghai StockExchange on 29 March 2014.||||
|Undertakingrelated torefinancing|Eliminatelandpropertydefect|QingdaoHaier Co.,Ltd.|The Company undertakes that it will eliminate the property defectsof the Company and main subsidiaries within five years withreasonable business effort since 24 December 2013, so as toachieve the legality and compliance of the Company and mainsubsidiaries in terms of land and property. For details, please referto the Announcement of Qingdao Haier Co., Ltd. on the Formation,|24December2013, five years|YES|YES|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||||||
|-|-|-|-|-|-|-|
||||Current Situation of the Defective Property, the Influence onOperation of Issuer Caused by Uncertainty of Ownership, Solutionfor the Defect and Guarantee Measures (L 2014-005) publishedby the Company on the four major securities newspapers and thewebsite of Shanghai Stock Exchange on 29 March 2014.||||
|Undertakingrelated to theShare OptionIncentiveScheme|Other|QingdaoHaier Co.,Ltd.|With regard to the Share Option Incentive Scheme launched by theCompany, the Company has undertaken not to provide loan or anyother kind of financial support to incentive object in exercisingoption under the Share Option Incentive Scheme or purchase ofrestricted shares, including providing guarantee for its loan.|11 April 2014,long term|YES|YES|
|Otherundertakings|Assetinjection|HaierGroupCorporation|Inject the assets of Fisher&Paykel to the Company or dispose suchassets through other ways which accord with the requirements ofthe domestic supervision before June 2020. For more details,please refer to the Announcement of Qingdao Haier Co., Ltd. onthe Changes of Funding Commitment (L 2015-015) published onthe four major securities newspapers and the website of ShanghaiStock Exchange on 26 May 2015.|May 2015-June2020|YES|YES|
|Otherundertakings|Assetinjection|HaierGroupCorporation|Inject the assets of Haier Photoelectric to the Company or disposesuch assets through other ways which accord with the requirementsof the domestic supervision before June 2020. For more details,please refer to the Announcement of Qingdao Haier Co., Ltd. onthe Changes of Funding Commitment of Haier Group Corporation(L 2015-063) published on the four major securities newspapersand the website of Shanghai Stock Exchange on 23 December2015.|December2015-June 2020|YES|YES|
|Otherundertakings|Profit forecastandcompensation|HaierGroupCorporation|In December 2015 and January 2016, the meeting of the Board ofDirectors and general meeting of the Company considered andapproved the matters in relation to the acquisition of minorityinterest of Mitsubishi Heavy Industries Haier and CarrierRefrigeration Equipment held by Haier Group. The Companysigned the Profit Compensation Agreement with Haier Group toforecast the profits achieved by the aforementioned two companiesin 2015 - 2018. If the profits are not reached during thecommitment period, the difference part will be made up to theCompany by Haier Group in cash. For more details, please refer to|December 2015-December 2018|YES|YES|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||||||
|-|-|-|-|-|-|-|
||||the Announcement of Qingdao Haier Co., Ltd. on the Acquisitionof Equity in Sino-foreign Joint Venture Held by Haier GroupCorporation and Connected Transaction (L 2015-062) published onthe four major securities newspapers and the website of ShanghaiStock Exchange on 23 December, 2015||||
|OtherUndertakings (note)|Assetinjection|HaierGroupCorporation|In January 2011, the Company received the Letter on FurtherSupporting Qingdao Haier to Develop and Solve HorizontalCompetition Problem and Reduce Connected Transactions fromthe controlling shareholder Haier Group Corporation (―HaierGroup‖), whereby Haier Group undertook to make Qingdao Haieras its electronics business integration platform in order to furtheraccelerate Qingdao Haier to constantly and soundly grow to theleading electronics enterprise of the world. Since 2011, HaierGroup planned to support Qingdao Haier to solve horizontalcompetition problem, reduce connected transactions, enlarge andstrengthen its business by various methods including assetsinjection and equity restructuring within five years. For details,please refer to the Announcement of Qingdao Haier on the FurtherSupport of Development of Qingdao Haier, Solutions of HorizontalCompetition and Decrease of Connected transactions byControlling Shareholder (L2011-001) published by the Companyon the four major securities newspapers and the website ofShanghai Stock Exchange on 8 January 2011 and theAnnouncement of Qingdao Haier Co., Ltd. on the Content ofUndertaking in respect of Solving Horizontal CompetitionProblem, Status of Performed Matters, Performance Plan onMatters Not Yet Completed and Performance Guarantee Measures(L 2014-003), the Announcement of Qingdao Haier Co., Ltd. onDecision-making Procedure and Information Disclosure of MajorConnected Transaction in the Reporting Period and Measures onReducing Connected Transactions (L 2014-004) published on 29March 2014.|7 January 2011,five years|YES|YES|
||Eliminatehorizontalcompetition||||YES|YES|
||Solveconnectedtransactionproblem||||YES|YES|

Qingdao Haier Co., Ltd. 2015 Annual Report
Note: As of 7 January 2016, Haier Group Corporation has implemented the commitments on―further Supporting Qingdao Haier Development to Resolve Horizontal Competition and Reduce ConnectedTransactions‖ in five years made in January 2011. The remaining parts that were not implemented have been extended after the deliberation of the shareholders' meeting. The contents of commitments and its implementing are as follows:
Content I of the commitment: to inject the assets, businesses and related equity of the white goods of Haier Group and to comprehensively resolve the problem of horizontal competition
(1) To acquire the assets of oversea white goods: on 25 May 2015, the 22th meeting of the 8th session of the Board of Directors of the Company considered and passed the motion to acquire the entire shares of Haier Singapore Investment Holding Pte Ltd held by the subsidy of Haier Group at a consideration of RMB4.874 billion. After the completion of this acquisition, except for the related assets ofFisher&Paykel (since it was still in the integration period and its financial performance did not reach the expectation of the Company), the Company will obtain and possess other overseas white goods assets of Haier Group. Besides, the Group has presented commitment to theFisher&Paykel assets that it will inject the assets ofFisher&Paykel to the Company or dispose such assets through other ways which accord with the requirements of the domestic supervision before June 2020 and authorize the assets to the Company for management. For more details, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Acquisition of Shares of Haier Singapore Investment Holding Pte. Ltd and Connected Transactions (L 2015-014) and Announcement of Qingdao Haier Co., Ltd. on the Changes of Funding Commitment (L 2015-015) announced on 26 May 2015 and Announcement of Qingdao Haier Co., Ltd. on the Resolutions Passed at the AGM for 2015 (L 2015-021) announced on 11 June 2015 as well as other related announcements. Until the end of the reporting period, this event has been approved by theshareholders’ meeting of the Company and the competent supervision authority.
(2) To acquire the minority interests of Mitsubishi and Carrier: on 22 December 2015, the 28th meeting of the 8th session of the Board of Directors of the Company considered and passed the motion to acquire49% equity of Qingdao Haier Carrier Refrigeration Equipment Co., Ltd. and45% equity of Mitsubishi Heavy Industries (Qingdao) Haier Air Conditioner Co., Ltd. held by Haier Group at a consideration of RMB841 million. For more details, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Acquisition of Equity in Sino-foreign Joint Venture Held by Haier Group Corporation and Connected Transaction (L 2015-062) announced on 23 December 2015 and Announcement of Qingdao Haier Co., Ltd. on the Resolutions Passed at the First EGM in 2016 (L 2016-002) announced on 8 January 2016 as well as related announcements. Until now, this event has been approved by passed theshareholders’ meeting. The procedure of the change of equity is still under transacting.
Qingdao Haier Co., Ltd. 2015 Annual Report
Above all, the related contents under this commitment have been fulfilled.
Content II of commitment: to inject upstream assets and businesses of household appliance, to decrease connected transactions and to promote the integrated development of the upstream and downstream industries of Qingdao Haier
(1) To acquire the upstream assets and businesses of mould: in June 2011, the 13th meeting of 7th session of the Board of Directors had considered and passed the motion to acquire the equity of ten companies including Qingdao Haier Mould Co., Ltd. Held by Haier Group Corporation and its subsidies at a consideration of RMB1.88 billion. For more details, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Assigning of Equity in Ten Companies Including Qingdao Haier Mould Co., Ltd. Held by Haier Group Corporation and Its Subsidies and Connected Transaction (L2011-021) announced on 17 June 2011 and related announcements.
(2) To increase the autonomous procurement and to alter the exports into autonomous exports: the Company established autonomous sourcing platforms including―Qingdao Haidarui Procurement Service Co.,Ltd.‖ and―Qingdao Haidayuan Procurement Service Co.,Ltd.‖ respectively in 2009 and 2012 to constantly increase the autonomous procurement. Until the end of 2015, both companies had decreased RMB127.3 billion of connected transactions related to procurement for the Company. In 2015, connected transaction related to procurement amounted to RMB27.6 billion and the proportion of connected transactions related to procurement accounted for32.8% of similar transactions. In 2015, the acquisition of overseas white goods assets was completed. The export business of the Company was implemented by the trading company under the abovementioned white goods assets and the connected transactions related to sale decreased constantly: in 2015, the connected transactions related to sale amounted to RMB7.56 billion and the proportion of connected transactions related to sale further decreased to8.4% of similar transactions. Above all, the proportion of connected transactions in similar transactions has been optimized greatly.
Above all, the related contents under this commitment have been fulfilled.
Content III of the commitment: to inject other household appliance related assets and to promote Qingdao Haier to be bigger and stronger
The changes of the color TV assets injection of the Company: On 22 December 2015, the 28th meeting of the 8th session of Board of Directors considered and passed the Bill of Qingdao Haier Co., Ltd. on the Commitment of Agreeing Haier Group Corporation to Change Its Partial Assets Injection. Since the entity of Haier Group to undertake the color TV business -- Qingdao Haier Photoelectric Co., Ltd. and its subsidies (hereinafter referred to as―HaierPhotoelectric‖) were still 54 / 239
Qingdao Haier Co., Ltd. 2015 Annual Report
in the transforming and integrating period and its financial performance did not reach the expectation of the Company. Therefore, the Company proposes to agree: (1) Haier Group will put off to inject the related assets of Haier Photoelectric; (2) Haier Group promises that it will inject the related assets of Haier Photoelectric to the Company or dispose such assets through other ways which accord with the requirements of the domestic supervision by June 2020. This event has been considered and passed by the first EGM of the Company in 2016. For more details, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Changes of Funding Commitment of Haier Group Corporation (L 2015-063) and Notice of Qingdao Haier Co., Ltd. on the Resolutions Passed at the First EGM in 2016 (L 2016-002) as well as the related contents.
Above all, the related contents under this commitment have been changed upon necessary approval.
Content IV of commitment: when Haier Group acquires and invests new household appliance businesses, Qingdao Haier has the priority to choose During the commitment period, Haier Group acquired the washing machine, refrigerator and other household appliance business of Japan Sanyo Electric Co., Ltd. (hereinafter called as―SanyoElectric‖) in such areas as Japan and Indonesia and the equity of Fisher& Paykel (Fisher& Paykel Appliance Holding Co., Ltd., hereinafter called as―FPA‖) in New Zealand. However, the Company gave up the priority to the acquisition mentioned above through the deliberation of the Board of Directors based on the necessary investigation and research into the abovementioned acquisition conducted by the Company due to the unstable overseas economy and related force majeure factors, the target assets and businesses requiring integration and uncertain performance during the integrating period as well as the strategic plan of the Company on integrating the overseas assets of Haier Group in the future and other related factors. On 25 May 2015, the Company considered and passed the motion to acquire the entire shares of Haier Singapore Investment Holding Pte. Ltd held by the subsidy of Haier Group at a consideration of RMB4.874 billion. This acquisition target included the related assets of Sanyo Electric. Because FPA was still in the integration period and its financial performance did not reach the expectation of the Company, the Company has presented commitment to FPA that it would inject the related assets to the Company or dispose such assets through other ways which accord with the requirements of the domestic supervision before June 2020 and authorized the assets to the Company for management.
Above all, the related contents under this commitment have been fulfilled.
Qingdao Haier Co., Ltd. 2015 Annual Report
（II） There exist earnings forecasts in theCompany’s assets or programs. The reporting period is still in the period of predictive profit. So the Company made explanations for achieving the predictive profit and its reasons on the assets and programs.
In December 2015 and January 2016, the meeting of the Board of Directors/shareholders’ meeting of the Company considered and passed the related bills to acquire45% equity of Mitsubishi Heavy Industries Haier (Qingdao) Air Conditioner Co., Ltd. (hereinafter referred to as―Mitsubishi Heavy IndustriesHaier‖) and49% equity of Qingdao Haier Carrier Refrigeration Equipment Co., Ltd. (hereinafter referred to as―HaierCarrier‖) held by Haier Group. According to the Profit Compensation Agreement signed between the Company and Haier Group, the corresponding predictive profits from 2015 to 2018 of Mitsubishi Heavy Industries Haier are RMB90.6612 million, RMB92.8607 million, RMB100.6592 million and RMB108.6862 million, respectively and the corresponding predictive profits from 2015 to 2018 of Haier Carrier are RMB76.047 million, RMB76.0472 million, RMB76.7156 million, and RMB76.984 million respectively. If the net profit after audit in any year of the target companies during the commitment period is lower than the predictive net profit, the differential part will be compensated by Haier Group in the way of cash (For more details, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Acquisition of Equity in Sino-foreign Joint Venture Held by Haier Group Corporation and Connected Transaction (L 2015-062) published on the four major securities newspapers and the website of Shanghai Stock Exchange on 23 December 2015).
According to the Special Verification Report on the Completion of the Predictive Profit[―Hexin Zhuan Zi (2016) No.020008‖ and―Hexin Zhuan Zi (2016) No.020009‖] and Special Statement of Qingdao Haier Co., Ltd on the Completion of the Predictive Profit in 2015 issued by Shandong Hexin Accountants LLP (Special General Partnership), the actual net profit of Mitsubishi Heavy Industries Haier in 2015 was RMB97.7839 million and that of Haier Carrier was RMB87.0247 million. The actual amount of net profit of the target equity companies in 2015 exceeded the predictive profit.
III. Misappropriation and repayment plan of funds during the reporting period
□Applicable√Not Applicable
IV. Explanation of the Board of Directors on the―non-standard auditreport‖ issued by the CPA（I） Explanation of the Board of Directors and Board of Supervisors on the―non-standard auditreport‖ issued by the CPA
□Applicable√Not Applicable
（II） Analysis of the Board of Directors on the reasons of change of accounting policies, accounting estimates or accounting methods and effects
□Applicable√Not Applicable
Qingdao Haier Co., Ltd. 2015 Annual Report
（III） Analysis of the Board of Directors on the reasons of correction of important previous errors and effects
□Applicable√Not Applicable
V. Appointment and Dismissal of Accounting Firm
Unit and Currency:RMB0’000
|||
|-|-|
||Current appointment|
|Name of domestic accountingfirm|Shandong Hexin Accountants LLP (Special General Partnership)|
|Remuneration of domesticaccounting firm|400|
|Audit period of domesticaccounting firm|3|

||||
|-|-|-|
||Name|Remuneration|
|Internal control audit accountingfirm|Shandong Hexin AccountantsLLP (Special GeneralPartnership)|110|
|Sponsor|China International CapitalCorporation Limited|0|

Relevant Information on Remuneration Paid to Sponsor
In July 2014, the Company completed introduction of strategic investor KKR by privately placing of shares. According to relevant agreement between the Company and the Sponsor, namely China International Capital Corporation Limited(―CICC‖), the Company paid RMB62,346,900 of underwriting and sponsor expense to CICC. For details, please refer to the Capital Verification Report of Qingdao Haier Co., Ltd. (Hexin Yan Zi (2014) No. 000016) disclosed on 22 July 2014 and other announcements disclosed on the same date. In 2015, theCompany’s project still in the period under continuous supervision, thus the sponsor has to perform its responsibility of continuous supervision. Information on Appointment and Dismissal of Accounting Firm
√Applicable□Not Applicable
Shandong Hexin Accountants LLP (Special General Partnership) owns audit qualification in business related to securities and futures. Its service team is equipped with sufficient experience and capability with several years of audit service offered to the Company. The firm sticks to the independent audit principle in conducting its business, and the financial report given by it could accurately, truly and objectively reflect the financial position and operation results of the Company, also could meet the requirements in annual financial and internal control audit work of the Company.
In order to ensure the financial and internal control audit work of the Company for the year of 2015 to be conducted in a smooth and continuous way, in accordance with the Motion on Appointment of Accounting Firm from Qingdao Haier Co., Ltd. considered and approved at the 2014 AGM of the
Company, the Company appointed Shandong Hexin Accountants LLP (Special General Partnership) as
our audit agency for the financial report and internal control report for the year of 2015, at an equal
Qingdao Haier Co., Ltd. 2015 Annual Report
service fee as last year. The Company agreed to pay to Shandong Hexin Accountants LLP (Special General Partnership) RMB5.10 million of audit expense (RMB4 million for financial report and RMB1.10 million for internal control report) for last year. During the reporting period, the Company acquired overseas companies and other projects and Shandong Hexin provided audit for the target companies; therefore, the Company paid audit expenses of the project according to agreements.
VI. Risk of suspension of listing
（I） Reasons of suspension of listing and measures adopted by the Company to eliminate the suspension of listing
Not Applicable
VII. Matters relating to bankruptcy and restructuring
√Applicable□Not Applicable
VIII. Material litigation and arbitration matters
□Applicable√Not Applicable
Qingdao Haier Co., Ltd. 2015 Annual Report
IX. Penalties to the Listed Company and its Directors, Supervisors, Senior Management, Controlling Shareholders, Ultimate Controller, Acquirer and the Issue of Rectification
√Applicable□Not Applicable
X. Explanation of the integrity status of the Company and its controlling shareholders and actual controllers during the reporting period
During the reporting period, the Company and its controlling shareholders and actual controllers failed to perform the effective judgment of the court and failed to pay the relatively large amount of debt overdue.
XI. TheCompany’s equity incentive plan, employee shareholding plan or other employee incentive measures and its Influence
√Applicable□Not Applicable
（I） Matters disclosed in temporary announcement and without any subsequent progress or change
|||||
|-|-|-|-|
||Summarized Explanations||Index for details|
|Reserved Equity Granting under Phase IV Share OptionIncentive Scheme: in February 2015, the Company introduced thereserved equity granting under Phase IV Share Option IncentiveScheme to grant 650,000 share options to 7 participants and grant190,000 restricted shares to 3 participants.||For details, please refer to the Qingdao Haier Co., Ltd.'s Announcement of RelevantMatters in Relation to the Grant of the Reserved Share Options and Restricted Share of thePhase IV Share Option Incentive Scheme published on 27 February 2015, theAnnouncement of Qingdao Haier Co., Ltd. on the Completion of Registration of ReservedRestricted Shares Granted under the Phase IV Share Option Incentive Scheme publishedon 9 April and related announcements.||
|The First Exercise/Unlocking of Initial Granting of Equity underPhase IV Share Option Incentive Scheme: in July 2015, the Board||For details, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Exerciseand Unlocking Arrangement of the First Exercise and Unlocking Period of the Equity||

Qingdao Haier Co., Ltd. 2015 Annual Report
|||
|-|-|
|of Directors of the Company considered and adopted the firstexercise/unlocking of initial granting of equity under Phase IV ShareOption Incentive Scheme, with the first exercise of 30.904 millionshares in total, and unlocking of 4.8808 million shares.|Granted for the First Time under the Phase IV Share Option Incentive Scheme publishedon July 18, 2015, the Announcement of Qingdao Haier Co., Ltd. on the Share OptionIncentive Exercise Result and New Shares Listing under the Phase IV Share OptionIncentive Scheme published on July 30 and related announcements.|

（II） Share incentives not disclosed in temporary announcements or with subsequent progress
Share Option Incentive
□
√Applicable Not Applicable
Phase IV Share Option Incentive Scheme of Qingdao Haier
Incentive method: Stock Option
Resources of target shares: shares issued to Participants
Unit: Shares
|||||
|-|-|-|-|
|Exercise|Number ofoptions granted|Number ofoptionsexercised|Explanation|
|The first exercise period of the equity grantedinitially under the Phase IV Share OptionIncentive Scheme: 20 June 2015 to 19 June 2016|17,071,600|30,904,000|An aggregate of 42.679 million share options were granted initially and 40%or 17.0716 million shares can be exercised in the first exercise period. Becausethe Company implemented the profit distribution plan for 2014 in May 2015(distribute 10 shares per 10 shares and declare a cash dividend of RMB4.92),the number of share options granted was adjusted to 85.358 million shares, andthe number of shares to be exercised in the first exercise period was adjusted to34.1432 million shares. Because some incentive targets were not eligible andthe exercise was cancelled, as well as part of the incentive targets suspendedthe exercise, the actual number of shares exercised was 30.904 million.|
|The second exercise period of the equity grantedinitially under the Phase IV Share OptionIncentive Scheme: 20 June 2016 to 19 June 2017|25,607,400|0|This exercise has not yet entered the exercise period. An aggregate of 42.679million share options were granted initially, and 60% or 25.6074 million sharescan be exercised in the second exercise period.|
|The first exercise period of the equity reservedunder the Phase IV Share Option IncentiveScheme: 26 February 2016 to 25 February 2017|260,000|0|This exercise has not yet entered the exercise period. An aggregate of 650,000share options were granted by the reserved equity and 40% or 260,000 sharescan be exercised in the first exercise period.|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||
|-|-|-|-|
|The second exercise period of the equity reservedunder the Phase IV Share Option IncentiveScheme: 26 February 2017 to 25 February2018|390,000|0|This exercise has not yet entered the exercise period. An aggregate of 650,000share options were granted by the reserved equity and 60% or 390,000 sharescan be exercised in the second exercise period.|
|Change of share capital as a result of the exerciseof rights by Participants|During the reporting period, the Company’s equity granted initially under the Phase IV Share Option IncentiveScheme was exercised for the first time and an aggregate of 30.904 million shares of stock options wereexercised. After this exercise, the share capital of the Company was changed from 6,092,250,268 shares (afterthe implementation of the 2014 annual dividend distribution program, the Company’s share capital waschanged from 3,046,125,134 shares to 6,092,250,268 shares) to 6,123,154,268 shares. For more details, pleaserefer to the Announcement of Qingdao Haier Co., Ltd. on the Share Option Incentive Exercise Result and NewShares Listing under the Phase IV Share Option Incentive Scheme disclosed by the Company on 30 July 2015.|||
|Measurement methods of the fair value of theequity instrument|On each balance sheet date within the vesting period, the services obtained in the current period shall beincluded in cost or expenses and capital reserve, based on the best estimate of the number of vested equityinstruments, at the fair value of the equity instruments on the date of the grant.|||
|Model, parameters and selective standards appliedin the valuation technique|Adopting the B-S model to determine the fair value of the equity instrument by valuation technique withfollowing parameters: (1) exercise price of share option; (2) duration of share option; (3) price of Target Shareson the granting date; (4) interest free of risk; (5) dividend yield of the Target Shares; (6) expected fluctuationrate of share price.|||
|Apportion period and result for fair value of equityinstrument|As of 31 December 2015, the accumulated amount of the equity-settled share-based payment in theimplementation of Phase I-IV Share Option Incentive Scheme - Restricted Stocks of the Company whichaffected the share capital was RMB307.36 million.|||

Phase IV Share Option Incentive Scheme of Qingdao Haier
Incentive method: Restricted Stocks
Resources of target shares: shares issued to Participants
Unit: Shares
|||||
|-|-|-|-|
|Unlock|Number ofshares granted|Number ofsharesunlocked|Explanation|
|The first unlocking period of the equitygranted initially under the Phase IV ShareOption Incentive Scheme: 20 June 2015 to 19June 2016|2,440,400|4,880,800|An aggregate of 6.101 million restricted shares were granted initially and 40% or2.4404 million shares can be unlocked in the first unlocking period. Because theCompany implemented the profit distribution plan for 2014 in May 2015(distribute 10 shares per 10 shares and declare a cash dividend of RMB4.92), sothe number of restricted shares granted was adjusted to 12.2 million shares, and|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||
|-|-|-|-|
||||the number of shares to be unlocked in the first unlocking period was adjusted to4.8808 million shares. The actual number of shares unlocked was 4.8808 millionshares.|
|The second unlocking period of the equitygranted initially under the Phase IV ShareOption Incentive Scheme: 20 June 2016 to 19June 2017|3,660,600|0|This unlocking has not yet entered the unlocking period. An aggregate of 6.101million restricted shares were granted initially, and 60% or 3.6606 million sharescan be unlocked in the second unlocking period.|
|The first unlocking period of the equityreserved under the Phase IV Share OptionIncentive Scheme: 26 February 2016 to 25February 2017|76,000|0|This unlocking has not yet entered the unlocking period. An aggregate of 190,000restricted shares were granted by the reserved equity and 40% or 76,000 sharescan be unlocked in the first unlocking period.|
|The first unlocking period of the equityreserved under the Phase IV Share OptionIncentive Scheme: 26 February 2017 to 25February 2018|114,000|0|This unlocking has not yet entered the unlocking period. An aggregate of 190,000restricted shares were granted by the reserved equity and 40% or 114,000 sharescan be unlocked in the second unlocking period.|
|Change of share capital as a result of theexercise of rights by Participants|1. During the reporting period, with regard to the Company’s equity granted by the reserved portion under thePhase IV Share Option Incentive Scheme, an aggregate of 650,000 share options were granted and 190,000restricted shares were granted. After the registration and transfer of the aforementioned restricted shares, the sharecapital of the Company was changed from 3,045,935,134 shares to 3,046,125,134 shares. For more details, pleaserefer to the Announcement of Qingdao Haier Co., Ltd. on the Completion of Registration of Reserved RestrictedShares Granted under the Phase IV Share Option Incentive Scheme disclosed by the Company on 9 April 2015 andrelated announcement.2. After the first unlocking of restricted shares granted initially under the Phase IV Share Option Incentive Scheme,an aggregate of 4.8808 million shares were unlocked. The number of limited tradable shares and tradable shares ofthe Company increased or decreased respectively, but the total share capital of the Company did not change.|||
|Measurement methods of the fair value of theequity instrument|On each balance sheet date within the vesting period, the services obtained in the current period shall be includedin cost or expenses and capital reserve, based on the best estimate of the number of vested equity instruments, atthe fair value of the equity instruments on the date of the grant.|||
|Model, parameters and selective standardsapplied in the valuation technique|Adopting the B-S model to determine the fair value of the equity instrument by valuation technique with followingparameters: (1) exercise price of share option; (2) duration of share option; (3) price of Target Shares on thegranting date; (4) interest free of risk; (5) dividend yield of the Target Shares; (6) expected fluctuation rate of shareprice.|||
|Apportion period and result for fair value ofequity instrument|As of 31 December 2015, the accumulated amount of the equity-settled share-based payment in the implementationof Phase I-IV Share Option Incentive Scheme - Restricted Stocks of the Company which affected the share capitalwas RMB12 million.|||

Qingdao Haier Co., Ltd. 2015 Annual Report
Employee shareholding plan
□
Applicable√Not Applicable
Other incentives
□
Applicable√Not Applicable
XII. Major Connected Transactions
□Applicable√Not Applicable
（I） Connected Transaction Related to Daily Operation
1. Matter disclosed in temporary announcement and with subsequent progress or change
The Company made estimation on the daily connected transaction matters of the Company for the year of 2015 at the 22th meeting of the 8th session of Board Meeting held on 25 May 2015, and relevant motions were considered and approved at 2014 AGM on 10 June 2015. For details, please refer to the Announcement of Qingdao Haier Co., Ltd. regarding the Anticipation on the Renewal of Daily Connected Transactions Agreement and Daily Connected Transactions for 2015 and relevant announcement on the resolutions of the Board disclosed on 26 May 2015 and the announcement on the resolutions passed at 2014 AGM disclosed by the Company on 11 June 2015.
For the actual implementation of the connected transaction of 2015, please see note XII–Connected Parties and Connected Transactions under section XI - Financial Report set out in this report.
2. Matter not disclosed in temporary announcement
□
Applicable√Not Applicable
（II） Connected Transactions Related to Asset or Equity Acquisition and Disposal
1. Matters disclosed in temporary announcement and without any subsequent progress or
change
|||
|-|-|
|Summarized Explanations|Index for details|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||
|-|-|
|Acquisition of overseas white goods assets of theGroup: Relevant motions on the acquisition of all sharesof Haier Singapore Investment Holding Pte. Ltd held bythe subsidiary of Haier Group at a price of RMB4.874billion in cash were considered and approved at the Boardof Directors and general meeting of stockholders in Mayand June 2015. Upon completion of the acquisition, inaddition to assets related to Fisher & Paykel (because it isstill in the consolidation and its financial performance hasnot reached the expectation of the Company), theCompany will acquire and own other overseas whitegoods assets of Haier Group.|For more details, please refer to the Announcementof Qingdao Haier Co., Ltd. on the Acquisition ofShares of Haier Singapore Investment Holding Pte.Ltd and Connected Transactions (L 2015-014),Announcement of Qingdao Haier Co., Ltd. on theChanges of Funding Commitment of Haier GroupCorporation (L 2015-015) disclosed on 26 May2015, Announcement of Qingdao Haier Co., Ltd.on the Resolutions Passed at the AGM for 2015 (L2015-021) disclosed on 11 June 2015 and otherrelated announcements.|
|Acquisition of minority interests of Mitsubishi andCarrier: Relevant motions on the acquisition of 49%shares held by Haier Group in Qingdao Haier CarrierRefrigeration Equipment Co., Ltd. and 45% shares inMitsubishi Heavy Industries Haier (Qingdao)Air-conditioners Company Limited at a price of RMB841million were considered and approved at the Board ofDirectors and general meeting of stockholders inDecember 2015 and January 2016.|For more details, please refer to the Announcementof Qingdao Haier Co., Ltd. on the Acquisition ofEquity in Sino-foreign Joint Venture Held by HaierGroup Corporation and Connected Transaction (L2015-062) disclosed on 23 December 2015,Announcement of Qingdao Haier Co., Ltd. on theResolutions Passed at the First EGM in 2016 (L2016-002) disclosed on 8 January 2016 and otherrelated announcements.|

2. Matter not disclosed in temporary announcement
□
Applicable√Not Applicable
3. If performance agreement is involved, the performance achieved during the reporting period shall disclosed
For more details of performance agreement on acquisition of minority interests of Mitsubishi and Carrier, please refer to the relevant statements in―(II) There exists earnings forecasts in theCompany’s assets or programs. The reporting period is still in the period of predictive profit. So the Company made explanations for achieving the predictive profit and its reasons on the assets and programs." in "Section V. Significant Events".
Qingdao Haier Co., Ltd. 2015 Annual Report
XIII. Major Contracts and Status of Performance
（I） Custody, undertaking and leasing
□
Applicable√Not Applicable
1. Custody
(1) According to the 2011 Haier Group's commitment to further support the development of Qingdao Haier and resolve intra-industry competition to reduce connected transactions, Haier Group should strive to resolve the problems of intra-industry competition with the Company within five years. However, based on the current market and financial factors of FPA, Haier Group cannot transfer the assets under custody to the Company before the completion of the aforementioned commitment. In order to resolve the problems of intra-industry competition between Haier Group and the Company, Haier Group intends to entrust the Company with the management and operation of assets under custody and will pay RMB1 million custodian fees to the Company each year during the period of custody.
(2) According to the 2011 Haier Group's commitment to further support the development of Qingdao Haier and resolve intra-industry competition to reduce connected transactions, since the entity engaged in undertaking the TV business of Haier Group - Qingdao Haier Photoelectric Co., Ltd. and its subsidiaries are still in the transition and consolidation period and the financial performance has not reached the expectations of the Company, Haier Group cannot complete the transfer before the completion of the preceding commitment period. Haier Group intends to entrust the Company with the management and operation of assets under custody and will pay RMB1 million custodian fees to the Company each year during the period of custody.
2. Undertaking
□
Applicable√Not Applicable
3. Leasing
□
Applicable√Not Applicable
Qingdao Haier Co., Ltd. 2015 Annual Report
（II） Guarantee
□
√Applicable Not Applicable
Unit and Currency:RMB0’000
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|External guarantees of the Company (excluding guarantees for subsidiaries)||||||||||||||
|||||Date of||||||||||
||Relationship|||occurrence||||||||||
|||||||||Whether||||||
||between the||Amount|of the||||||Overdue|Whether|Whether||
|||||||||the|Whether the||||Connect|
||guarantor|Secured|of|guarantee|Starting date|Expiration date|Type of|||amount of|there is a|related party||
|Guarantor||||||||guarantee|guarantee is||||ed|
||and the|party|guarante|(date of|of guarantee|of guarantee|guarantee|||the|counter-g|guarantee or||
|||||||||has been|overdue||||relation|
||listed||e|signing||||||guarantee|uarantee|not||
|||||||||fulfilled||||||
||company|||agreement||||||||||
|||||)||||||||||
|Total amount of guarantee occurred during the report period (excludingguarantees for subsidiaries)||||||0||||||||
|Total balance of guarantee at the end of the reporting period (A) (excludingguarantees for subsidiaries)||||||0||||||||
|Guarantees provided by the Company and its subsidiaries for subsidiaries||||||||||||||
|Total amount of guarantees for subsidiaries occurred during the reportingperiod||||||4,764||||||||
|Total balance of guarantees for subsidiaries at the end of the reporting period(B)||||||4,764||||||||
|Total amount of guarantees provided by the Company (including guarantees for subsidiaries)||||||||||||||
|Total guarantee(A + B)||||||4,764||||||||

Qingdao Haier Co., Ltd. 2015 Annual Report
|||
|-|-|
|Ratio of total amount of guarantees to net assets of the Company (%)|0.21|
|Among which:||
|Amount of guarantees for shareholders, actual controllers and their relatedparties (C)|0|
|Amount of debt guarantees provided directly or indirectly for the secured partywith asset-liability ratio exceeding 70% (D)|0|
|The amount of total amount of guarantee in excess of 50% of net assets (E)|0|
|Total amount of the above three guarantees (C + D + E)|0|
|Explanation of possibly bearing related discharge duty for premature guarantees|Not applicable|
|Explanation of guarantee status|During the reporting period, external guarantees provided by the Company were all for subsidiaries.For more details of consideration, please refer to the Announcement of Qingdao Haier Co., Ltd. onthe Security Provided by Subsidiary Special Refrigerator for the Company (L 2015-065) and theAnnouncement of Qingdao Haier Co., Ltd. on the Security Provided by Subsidiary ZhengzhouAir-Conditioner for Subsidiary Air-Conditioner Corporation (L 2015-066) disclosed on 23December 2015.|

Qingdao Haier Co., Ltd. 2015 Annual Report
（III） Entrusted others to manage cash assets
1. Entrusted wealth management
□
√Applicable Not Applicable
Unit and Currency: RMB
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Trustee|Type ofentrustedwealthmanagementproduct|Amount ofentrustedwealthmanagement|Commencement dateofentrustedwealthmanagement|Expirationdate ofentrustedwealthmanagement|Determination ofreturn|Actualamount ofprincipalreceived|Actual gains|Through legalproceedingsor not|Provision forimpairmentloss|Connectedtransaction ornot|Involvedinlitigationornot|Connectedrelation|
|Mitsubishi TokyoUFJ Bank (China)Co., Ltd|Structured deposit|242,400,000|2014/4/6|2015/4/8|Fixedrate ofreturn4.18%|242,400,000|10,132,320.00|Yes|0|No|No||
|Mitsubishi TokyoUFJ Bank (China)Co., Ltd|Structured deposit|250,000,000|2015/4/24|2016/4/25|Fixedrate ofreturn4.1%|0|7,048,630.14|Yes|0|No|No||
|Total|/|492,400,000|/|/|/|242,400,000|17,180,950.14|/|0|/|/|/|
|Accumulated past due unrecovered principal and income (RMB)||||||0|||||||
|Explanation of entrusted wealth management||||||None|||||||

Qingdao Haier Co., Ltd. 2015 Annual Report
2. Entrusted loans
□
√Applicable Not Applicable
Unit and Currency: RMB
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Name ofborrower|Amountofentrusted loan|Loan term|Loaninterestrate|Use of theloan|Collateralorguarantor|Overdue ornot|Connectedtransactionor not|Whetherextension ornot|Involvedinlitigationor not|Connectedrelation|Investmentgainsandlosses|
|Qingdao JSHNetworkTechnologyCo. Ltd.|10million|1 year|5.60%|Dailyoperation|None|No|Yes|No|No|Whollyownedsubsidiaryof theparentcompany||
||15m il lion|1 year|4.85%|Dailyoperation|None|No|Yes|No|No|||
||2million|1 year|4.60%|Dailyoperation|None|No|Yes|No|No|||

Qingdao Haier Co., Ltd. 2015 Annual Report
3. Other investment wealth management and derivatives investment
□
Applicable√Not Applicable
XIV. Other Major Events
√Applicable□Not applicable
During the Reporting Period, the Company disclosed the following information and all the information will be disclosed on SSE (www.sse.com.cn):
|||||||
|-|-|-|-|-|-|
||Name of Announcement||Name of Newspaper and Page||Date|
|Qingdao Haier Co., Ltd.’s Announcement ofRelevant Matters in Relation to the Grant of theReserved Share Options and Restricted Share of thePhase IV Share Option Incentive Scheme (L2015-001)||Securities Times page B030, Shanghai Securities Newspage B8, China Securities Journal page B017,Securities Daily page C14||27 February 2015||
|Announcement of Qingdao Haier Co., Ltd. on theResolution of the 11th Meeting of the EighthSession of the Board of Supervisors (L 2015-002)||Securities Times page B030, Shanghai Securities Newspage B8, China Securities Journal page B017,Securities Daily page C14||27 February 2015||
|Announcement of Qingdao Haier Co., Ltd.regarding the Shareholdings Increase by PersonsActing in Concert to the Beneficial Controller (L2015-003)||Securities Times page B51, Shanghai Securities Newspage B32, China Securities Journal page B030, pageSecurities Daily C25||4 March 2015||
|Announcement of Qingdao Haier Co., Ltd.regarding the Release of the 2014 Annual Resultsby the Holding Subsidiary Haier Electronics GroupCo., Ltd. (L 2015-004)||Securities Times page B44, Shanghai Securities Newspage 340, China Securities Journal page A29,Securities Daily page D16||27 March 2015||
|Announcement of Qingdao Haier Co., Ltd. on theResolutions Passed at the 20th Meeting of the 8thSession of the Board of Directors (L 2015-005)||Securities Times page B099, Shanghai Securities Newspage 580, China Securities Journal page B466,Securities Daily page D85||31 March 2015||
|Announcement of Qingdao Haier Co., Ltd. on theResolutions Passed at the 12th Meeting of the 8thSession of the Board of Supervisors (L 2015-006)||Securities Times page B099, Shanghai Securities Newspage 580, China Securities Journal page B466,Securities Daily page D85||31 March 2015||
|Announcement of Qingdao Haier Co., Ltd. on theAppointment of the Accounting Firm (L 2015-007)||Securities Times page B099, Shanghai Securities Newspage 580, China Securities Journal page B466,Securities Daily page D85||31 March 2015||
|Announcement of Qingdao Haier Co., Ltd.regarding the Anticipation on the Renewal of DailyConnected Transactions Agreement and DailyConnected Transactions for 2015 (L 2015-008)||Securities Times B099 page, Shanghai Securities Newspage 580, China Securities Journal page B466,Securities Daily page D85||31 March 2015||
|Announcement of Qingdao Haier Co., Ltd.regarding the Modification on the Articles of theCompany (L 2015-009)||Securities Times page B099, Shanghai Securities Newspage 580, China Securities Journal page B466,Securities Daily page D85||31 March 2015||
|Notice on 2015 AGM of Qingdao Haier Co., Ltd. (L2015-010)||Securities Times page B099, Shanghai Securities Newspage 580, China Securities Journal page B466,Securities Daily page D85||31 March 2015||
|Announcement of Qingdao Haier Co., Ltd. on theCompletion of Registration of Reserved RestrictedShares Granted under the Phase IV Share OptionIncentive Scheme (L 2015-011)||Securities Times page B042, Shanghai Securities Newspage B32, China Securities Journal page B032,Securities Daily page D41||9 April 2015||
|The First Quarter Report for 2015 of Qingdao HaierCo., Ltd.||Securities Times page B050, Shanghai Securities Newspage 140, China Securities Journal page B069,Securities Daily page C76||30 April 2015||
|Announcement of Qingdao Haier Co., Ltd. on theResolutions Passed at the 20th Meeting of the 8thSession of the Board of Directors (L 2015-012)||Securities Times page B62/63, Shanghai SecuritiesNews page B25/26, China Securities Journal page B65,Securities Daily page D38/39||26 May 2015||

Qingdao Haier Co., Ltd. 2015 Annual Report
||||
|-|-|-|
|Announcement of Qingdao Haier Co., Ltd. on theResolutions Passed at the 14th Meeting of the 8thSession of the Board of Directors (L 2015-013)|Securities Times page B62/63, Shanghai SecuritiesNews page B25/26, China Securities Journal page B65,Securities Daily page D38/39|26 May 2015|
|Announcement of Qingdao Haier Co., Ltd. on theAcquisition of Shares of Haier SingaporeInvestment Holding Pte. Ltd and ConnectedTransactions (L 2015-014)|Securities Times page B62/63, Shanghai SecuritiesNews page B25/26, China Securities Journal page B65,Securities Daily page D38/39|26 May 2015|
|Announcement of Qingdao Haier Co., Ltd. on theChanges of Funding Commitment (L 2015-015)|Securities Times page B62/63, Shanghai SecuritiesNews page B25/26, China Securities Journal page B65,Securities Daily page D38/39|26 May 2015|
|Announcement of Qingdao Haier Co., Ltd. on theEntrusted Management of Fisher&PaykelAppliances Holdings Limited and ConnectedTransaction (L 2015-016)|Securities Times page B62/63, Shanghai SecuritiesNews page B25/26, China Securities Journal page B65,Securities Daily page D38/39|26 May 2015|
|Announcement of Qingdao Haier Co., Ltd. on theCapital Increase to Haier (Hong Kong) Co., Ltd. (L2015-017)|Securities Times page B62/63, Shanghai SecuritiesNews page B25/26, China Securities Journal page B65,Securities Daily page D38/39|26 May 2015|
|Announcement of Qingdao Haier Co., Ltd.regarding the Anticipation on the Renewal of DailyConnected Transactions Agreement and AnticipatedDaily Connected Transactions for 2015 (L2015-018)|Securities Times page B62/63, Shanghai SecuritiesNews page B25/26, China Securities Journal page B65,Securities Daily page D38/39|26 May 2015|
|Announcement of Qingdao Haier Co., Ltd.regarding the Election of Independent Directors (L2015-019)|Securities Times page B62/63, Shanghai SecuritiesNews page B25/26, China Securities Journal page B65,Securities Daily page D38/39|26 May 2015|
|Announcement of Qingdao Haier Co., Ltd.regarding the Correction and Supplementation ofthe AGM for 2014 (L 2015-020)|Securities Times page B62/63, Shanghai SecuritiesNews page B25/26, China Securities Journal page B65,Securities Daily page D38/39|26 May 2015|
|Announcement of Qingdao Haier Co., Ltd. on theResolutions Passed at the AGM for 2014 (L2015-021)|Securities Times page A012, Shanghai Securities Newspage B33, China Securities Journal page B031,Securities Daily page B3|11 June 2015|
|Announcement of Qingdao Haier Co., Ltd. on theResolutions Passed at the 23th Meeting of the 8thSession of the Board of Directors (L 2015-022)|Securities Times page A012, Shanghai Securities Newspage B33, China Securities Journal page B031,Securities Daily page B3|11 June 2015|
|Suggestive Announcement of Qingdao Haier Co.,Ltd. on the Subscription of Non-public Offering ofShares by Shenzhen MTC Co., Ltd. (L 2015-023)|Securities Times page B46, Shanghai Securities Newspage B112, China Securities Journal page B018,Securities Daily page D14|19 June 2015|
|Announcement of Qingdao Haier Co., Ltd.regarding the Implementation Result ofShareholdings Increase by Persons Acting inConcert to the Beneficial Controller (L 2015-024)|Securities Times page B67, Shanghai Securities Newspage 40, China Securities Journal page B022, SecuritiesDaily page C8|27 June 2015|
|Announcement of Qingdao Haier Co., Ltd. on theImplementation of Profit Distribution andCapitalization of Capital Reserves for 2014 (L2015-025)|Securities Times page B034, Shanghai Securities Newspage 37, China Securities Journal page B012, SecuritiesDaily page D40|10 July 2015|
|Announcement of Qingdao Haier Co., Ltd. on theResolutions Passed at the 24th Meeting of the 8thSession of the Board of Directors (L 2015-026)|Securities Times page B079, Shanghai Securities Newspage 33, China Securities Journal page B017, SecuritiesDaily page C22|18 July 2015|
|Announcement of Qingdao Haier Co., Ltd. on theResolutions Passed at the 15th Meeting of the 8thSession of the Board of Supervisors (L 2015-027)|Securities Times page B079, Shanghai Securities Newspage 33, China Securities Journal page B017, SecuritiesDaily page C22|18 July 2015|
|Announcement of Qingdao Haier Co., Ltd. on theAdjustment of the Number of Equity Interests andPrice under the Phase IV Share Option IncentiveScheme (L 2015-028)|Securities Times page B079, Shanghai Securities Newspage 33, China Securities Journal page B017, SecuritiesDaily page C22|18 July 2015|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||
|-|-|-|
|Announcement of Qingdao Haier Co., Ltd. on theExercise and Unlocking Arrangement of the FirstExercise and Unlocking Period of the EquityGranted for the First Time under the Phase IV ShareOption Incentive Scheme (L 2015-029)|Securities Times page B079, Shanghai Securities Newspage 33, China Securities Journal page B017, SecuritiesDaily page C22|18 July 2015|
|Announcement of Qingdao Haier Co., Ltd. on theRestricted Stock Unlocking and Listing under thePhase IV Share Option Incentive Scheme (L2015-030)|Securities Times page B079, Shanghai Securities Newspage 33, China Securities Journal page B017, SecuritiesDaily page C22|18 July 2015|
|Announcement of Qingdao Haier Co., Ltd. on theShare Option Incentive Exercise Result and NewShares Listing under the Phase IV Share OptionIncentive Scheme (L 2015-031)|Securities Times page B019, Shanghai Securities Newspage 36, China Securities Journal page B029, SecuritiesDaily page B2|30 July 2015|
|Announcement of Qingdao Haier Co., Ltd. on theResolutions Passed at the 25th Meeting of the 8thSession of the Board of Directors (L 2015-032)|Securities Times page B18, Shanghai Securities Newspage 33, China Securities Journal page B030, SecuritiesDaily page C26|8 August 2015|
|Plan of Qingdao Haier Co., Ltd. on the Repurchaseof Shares by Centralized Bidding (L 2015-033)|Securities Times page B18, Shanghai Securities Newspage 33, China Securities Journal page B030, SecuritiesDaily page C26|8 August 2015|
|Announcement of Qingdao Haier Co., Ltd.regarding the Modification on the Articles of theCompany (L 2015-034)|Securities Times page B18, Shanghai Securities Newspage 33, China Securities Journal page B030, SecuritiesDaily page C26|8 August 2015|
|Notice of Qingdao Haier Co., Ltd. on the First EGMin 2015 (L 2015-035)|Securities Times page B18, Shanghai Securities Newspage 33, China Securities Journal page B030, SecuritiesDaily page C26|8 August 2015|
|Suggestive Announcement of Qingdao Haier Co.,Ltd. on the Adjustment to the Plan of Non-publicOffering of Shares by Shenzhen MTC Co., Ltd. (L2015-036)|Securities Times page B2, Shanghai Securities Newspage 76, China Securities Journal page A14, SecuritiesDaily page C28|19 August 2015|
|Announcement of Qingdao Haier Co., Ltd. on theTop 10 Shareholders of Unlimited Sales Conditions(L 2015-037)|Securities Times page B15, Shanghai Securities Newspage 53, China Securities Journal page B020, SecuritiesDaily page C42|20 August 2015|
|Notice of Qingdao Haier Co., Ltd. on theResolutions Passed at the First EGM in 2015 (L2015-038)|Securities Times page B096, Shanghai Securities Newspage 92, China Securities Journal page B032, SecuritiesDaily page D62|25 August 2015|
|Announcement of Qingdao Haier Co., Ltd. on theNotice to the Creditor regarding Repurchase ofCompany Shares by Centralized Bidding (L2015-039)|Securities Times page B096, Shanghai Securities Newspage 92, China Securities Journal page B032, SecuritiesDaily page D62|25 August 2015|
|Suggestive Announcement of Qingdao Haier Co.,Ltd. on the Circulation of 2015 Interim Result bythe Subsidiary Haier Electronics Group Co., Ltd. (L2015-040)|Securities Times page B096, Shanghai Securities Newspage 92, China Securities Journal page B032, SecuritiesDaily page D62|25 August 2015|
|Report of Qingdao Haier Co., Ltd. on theRepurchase of Shares by Centralized Bidding (L2015-041)|Securities Times page B008, Shanghai Securities Newspage 33, China Securities Journal page B064, SecuritiesDaily page C15|12 September 2015|
|Announcement of Qingdao Haier Co., Ltd. on theImplementation of Repurchase of Shares for theFirst Time (L 2015-042)|Securities Times page B4, Shanghai Securities Newspage B72, China Securities Journal page B030,Securities Daily page D25|15 September 2015|
|Announcement of Qingdao Haier Co., Ltd.regarding the Online Investor Reception Day in2015 (L 2015-043)|Securities Times page B023, Shanghai Securities Newspage B41, China Securities Journal page B035,Securities Daily page D14|17 September 2015|
|Announcement of Qingdao Haier Co., Ltd.regarding the Signing of License Agreement withDisney (L 2015-044)|Securities Times page B023, Shanghai Securities Newspage B41, China Securities Journal page B035,Securities Daily page D14|17 September 2015|
|Suggestive Announcement of Qingdao HaierCo., Ltd. on the Transfer of ControllingEquities in Subsidiaries (L 2015-045)|Securities Times page B39, Shanghai Securities Newspage 32, China Securities Journal page B023, SecuritiesDaily page C4|8 October 2015|
|Announcement of Qingdao Haier Co., Ltd.regarding the Progress of Repurchase of Shares (L2015-046)|Securities Times page B59, Shanghai Securities Newspage 72, China Securities Journal page B034, SecuritiesDaily page C25|10 October 2015|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||
|-|-|-|
|Announcement of Qingdao Haier Co., Ltd.regarding the Suspension due to Major Issues (L2015-047)|Securities Times page B39, Shanghai Securities Newspage 48, China Securities Journal page B030, SecuritiesDaily page C28|17 October 2015|
|Announcement of Qingdao Haier Co., Ltd.regarding the Continuous Suspension due to MajorIssues (L 2015-048)|Securities Times page B003, Shanghai Securities Newspage 56, China Securities Journal page B275, SecuritiesDaily page C35|24 October 2015|
|Announcement of Qingdao Haier Co., Ltd. onReplacing of the Sponsor Representative forContinued Supervision regarding 2013 Non-publicOffering of A Shares (L 2015-049)|Securities Times page B003, Shanghai Securities Newspage 56, China Securities Journal page B275, SecuritiesDaily page C35|24 October 2015|
|Announcement of Qingdao Haier Co., Ltd.regarding the Suspension due to Major AssetsRestructuring (L 2015-050)|Securities Times page B217, Shanghai Securities Newspage 184, China Securities Journal page B210,Securities Daily page C85|31 October 2015|
|The Third Quarter Report for 2015 of QingdaoHaier Co., Ltd.|Securities Times page B217, Shanghai Securities Newspage 184, China Securities Journal page B210,Securities Daily page D5|31 October 2015|
|Announcement of Qingdao Haier Co., Ltd.regarding the Progress of Repurchase of Shares (L2015-051)|Securities Times page B059, Shanghai Securities Newspage B24, China Securities Journal page A10,Securities Daily page D6|4 November 2015|
|Announcement of Qingdao Haier Co., Ltd.regarding the Progress of Major AssetsRestructuring (L 2015-052)|Securities Times page B27, Shanghai Securities Newspage 64, China Securities Journal page B021, SecuritiesDaily page C21|7 November 2015|
|Announcement of Qingdao Haier Co., Ltd.regarding the Progress of Major AssetsRestructuring (L 2015-053)|Securities Times page B038, Shanghai Securities Newspage 57, China Securities Journal page B013, SecuritiesDaily page C5|14 November 2015|
|Announcement of Qingdao Haier Co., Ltd.regarding the Progress of Major AssetsRestructuring (L 2015-054)|Securities Times page B042, Shanghai Securities Newspage 41, China Securities Journal page B010, SecuritiesDaily page B4|21 November 2015|
|Announcement of Qingdao Haier Co., Ltd.regarding the Progress of Major AssetsRestructuring (L 2015-055)|Securities Times page B034, Shanghai Securities Newspage 64, China Securities Journal page B010, SecuritiesDaily page C12|28 November 2015|
|Announcement of Qingdao Haier Co., Ltd.regarding the Continuous Suspension due to MajorAssets Restructuring (L 2015-056)|Securities Times page B047, Shanghai Securities Newspage B33, China Securities Journal page B026,Securities Daily page D22|2 December 2015|
|Announcement of Qingdao Haier Co., Ltd.regarding the Progress of Repurchase of Shares (L2015-057)|Securities Times page B047, Shanghai Securities Newspage B33, China Securities Journal page B026,Securities Daily page D22|2 December 2015|
|Announcement of Qingdao Haier Co., Ltd.regarding the Progress of Major AssetsRestructuring (L 2015-058)|Securities Times page B051, Shanghai Securities Newspage B108, China Securities Journal page B015,Securities Daily page C26|9 December 2015|
|Announcement of Qingdao Haier Co., Ltd.regarding the Progress of Major AssetsRestructuring (L 2015-059)|Securities Times page B042, Shanghai Securities Newspage B88, China Securities Journal page B007,Securities Daily page C35|16 December 2015|
|Announcement of Qingdao Haier Co., Ltd. on theResolutions Passed at the 28th Meeting of the 8thSession of the Board of Directors (L 2015-060)|Securities Times page B083, Shanghai Securities Newspage B25, China Securities Journal page B058,Securities Daily page C33/C34|23 December 2015|
|Announcement of Qingdao Haier Co., Ltd. on theResolutions Passed at the 18th Meeting of the 8thSession of the Board of Supervisors (L 2015-061)|Securities Times page B083, Shanghai Securities Newspage B25, China Securities Journal page B058,Securities Daily page C33/C34|23 December 2015|
|Announcement of Qingdao Haier Co., Ltd. on theAcquisition of Equity in Sino-foreign Joint VentureHeld by Haier Group Corporation and ConnectedTransaction (L 2015-062)|Securities Times page B083, Shanghai Securities Newspage B25, China Securities Journal page B058,Securities Daily page C33/C34|23 December 2015|
|Announcement of Qingdao Haier Co., Ltd. on theChanges of Funding Commitment of Haier GroupCorporation (L 2015-063)|Securities Times page B083, Shanghai Securities Newspage B25, China Securities Journal page B058,Securities Daily page C33/C34|23 December 2015|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||
|-|-|-|
|Announcement of Qingdao Haier Co., Ltd. on theEntrusted Management of Qingdao HaierPhotoelectric Co., Ltd. (L 2015-064)|Securities Times page B083, Shanghai Securities Newspage B25, China Securities Journal page B058,Securities Daily page C33/C34|23 December2015|
|Announcement of Qingdao Haier Co., Ltd. on theSecurity Provided by Subsidiary SpecialRefrigerator for the Company (L 2015-065)|Securities Times page B083, Shanghai Securities Newspage B25, China Securities Journal page B058,Securities Daily page C33/C34|23 December 2015|
|Announcement of Qingdao Haier Co., Ltd. on theSecurity Provided by Subsidiary ZhengzhouAir-Conditioner for Subsidiary Air-ConditionerCorporation (L 2015-066)|Securities Times page B083, Shanghai Securities Newspage B25, China Securities Journal page B058,Securities Daily page C33/C34|23 December2015|
|Notice of Qingdao Haier Co., Ltd. on the First EGMin 2016 (L 2015-067)|Securities Times page B083, Shanghai Securities Newspage B25, China Securities Journal page B058,Securities Daily page C33/C34|23 December2015|
|Announcement of Qingdao Haier Co., Ltd.regarding the Progress of Major AssetsRestructuring (L 2015-068)|Securities Times page B083, Shanghai Securities Newspage B25, China Securities Journal page B058,Securities Daily page C33/C34|23 December 2015|
|Announcement of Qingdao Haier Co., Ltd.regarding the Progress of Major AssetsRestructuring (L 2015-069)|Securities Times page B097, Shanghai Securities Newspage 52, China Securities Journal page B044, SecuritiesDaily page C27|30 December 2015|
|Announcement of Qingdao Haier Co., Ltd.regarding the Continuous Suspension due to MajorAssets Restructuring (L 2015-070)|Securities Times page B051, Shanghai Securities Newspage 116, China Securities Journal page B055,Securities Daily page D33|31 December2015|

XV. Proactive Performance of Social Responsibilities
（I） Performance of social responsibilities
Details are set out in the Social Responsibility Report of Qingdao Haier Co., Ltd. for 2015
disclosed on the same date with this report.
XVI. Convertible corporation bonds
□Applicable√Not Applicable
Qingdao Haier Co., Ltd. 2015 Annual Report
SECTION VI CHANGES IN SHARE CAPITAL OF ORDINARY SHARES AND INFORMATION ABOUT SHAREHOLDERS I. CHANGES IN SHARE CAPITAL OF ORDINARY SHARES
（I） Table of Changes in Ordinary Shares
1. Table of Changes in Ordinary Shares
Unit: share
|||||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||||||||||||||||Subsequent to the|||
|||Prior to the change||||Increase and decrease of the change (＋,－)||||||||||||
||||||||||||||||change|||
|||||||New|||Shares|||||||||
|||||Percent|||Bonus||||||||||Percent|
|||Number||||shares|||converted||Others||Sub-total||Number|||
|||||age (%)|||shares||||||||||age (%)|
|||||||issued|||from reserves|||||||||
|I. Shares subject to selling restrictions|309,093,994||10.148||190,000|||309,283,994||-4,880,800||304,593,194||613,687,188||10.022||
|1. State-owned shares||||||||||||||||||
|2. State-owned legal person shares||||||||||||||||||
|3. Other domestic shares|6,101,000||0.200||190,000|||6,291,000||-4,880,800||1,600,200||7,701,200||0.126||
|Including: shares held by domestic||||||||||||||||||
|non- state-owned legal person||||||||||||||||||
|Shares held by domestic natural|6,101,000||0.200||190,000|||6,291,000||-4,880,800||1,600,200||7,701,200||0.126||
|person||||||||||||||||||
|4. Foreign shares|302,992,994||9.947|||||302,992,994||||302,992,994||605,985,988||9.897||
|Including: shares held by foreign legal|302,992,994||9.947|||||302,992,994||||302,992,994||605,985,988||9.897||
|person||||||||||||||||||
|Shares held by foreign natural||||||||||||||||||
|person||||||||||||||||||
|II. Tradable shares not subject to|2,736,841,140||89.852||30,904,000|||2,736,841,140||4,880,800||2,772,625,940||5,509,467,080||89.978||
|selling restrictions||||||||||||||||||
|1. RMB ordinary shares|2,736,841,140||89.852||30,904,000|||2,736,841,140||4,880,800||2,772,625,940||5,509,467,080||89.978||
|2. Domestic listed foreign shares||||||||||||||||||
|3. Overseas listed foreign shares||||||||||||||||||
|4. Others||||||||||||||||||
|III. Total ordinary shares|3,045,935,134||100.000||31,094,000|||3,046,125,134||0||3,077,219,134||6,123,154,268||100.000||

Qingdao Haier Co., Ltd. 2015 Annual Report
2. Statement on the changes in ordinary shares
(1) Restricted shares granted by the reserved portion under the Phase IV Share Option Incentive Scheme: on 26 February 2015, the 19th meeting of the 8th session of the Board of Directors considered and adopted the Motion on Granting of Share Options and Restricted Share in the Reserved Portion of the Phase IV Share Option Incentive Scheme to Incentive Targets to determine 26 February 2015 as the date of granting of share options and restricted share in the reserved portion of the Phase IV Share Option Incentive Scheme, and grant 650,000 share options to 7 incentive targets and 190,000 restricted shares to 3 incentive targets. On 18 March 2015, Shandong Hexin Accountants LLP (Special General Partnership) issued the Hexin Yan Zi (2015) No. 000012 Verification Report. On 8 April 2015, the Company has completed the granting and registration of above 190,000 shares of restricted stocks and the total share capital of the Company was changed from 3,045,935,134 shares to 3,046,125,134 shares. For more details, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Completion of Registration of Reserved Restricted Shares Granted under the Phase IV Share Option Incentive Scheme (L 2015-011) published on the website of the Shanghai Stock Exchange on 9 April 2015.
(2) Implementation of 2014 annual profit distribution plan: in June 2015, theCompany’s 2014 Annual General Meeting adopted the Company's plan of 2014 annual profit distribution and capitalization of capital reserves: on the basis of 3,046,125,134 shares, the Company will declare cash dividend of RMB4.92 (including taxes) for every 10 shares and increase 10 shares for every 10 shares by way of capitalization of capital reserves. In July 2015, the Company implemented the profit distribution plan and the total share capital of the Company was changed from 3,046,125,134 shares to 6,092,250,268 shares. The increased shares will be traded in the market on 17 July 2015. For more details of the implementation of profit distribution plan, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Implementation of Profit Distribution and Capitalization of Capital Reserves for 2014 (L 2015-025) published in four securities journals and the Shanghai Stock Exchange website (www.sse.com.cn) on 10 July 2015.
(3) Listing of restricted shares under the Share Option Incentive Scheme: in July 2015, the 24th meeting of the 8th session of the Board of Directors considered and adopted the Motion on the Exercise/ Unlocking Arrangement for Equity Initially Granted under Phase IV Share Option Incentive Scheme during the First Exercise/ Unlocking Period. According to the arrangement, an aggregate of 4.8808 million shares of restricted stocks initially granted under Phase IV Share Option Incentive Scheme will be unlocked during the first unlocking period and the listing date of the unlock shares is 23 July 2015. This unlocking had an impact on the number of tradable shares in the share capital structure and the total number of 6,092,250,268 shares of the Company remained unchanged. For details of the listing of restricted shares, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Restricted Stock Unlocking and Listing under the Phase IV Share
Qingdao Haier Co., Ltd. 2015 Annual Report
Option Incentive Scheme (L 2015-030) published in the four major securities newspapers and the Shanghai Stock Exchange website (www.sse.com.cn) on 18 July 2015.
(4) Listing of exercised shares under the Share Option Incentive Scheme: in July 2015, the 24th meeting of the 8th session of the Board of Directors considered and adopted the Motion on the Exercise/ Unlocking Arrangement for Equity Initially Granted under Phase IV Share Option Incentive Scheme during the First Exercise/ Unlocking Period. According to the arrangement, an aggregate of 31.04 million share options initially granted under Phase IV Share Option Incentive Scheme will be exercised during the first exercise period. According to the results of the exercise, 30.904 million shares were actually exercised; the total share capital of the Company changed from 6,092,250,268 shares to 6,123,154,268 shares, and the listing date of the exercised shares is 5 August 2015. For details of the results of the share option incentive exercise, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Share Option Incentive Exercise Result and New Shares Listing under the Phase IV Share Option Incentive Scheme (L 2015-031) published in the four major securities newspapers and the Shanghai Stock Exchange website (www.sse.com.cn) on 30 July 2015.
3. Other contents which the Company deems necessary to disclose or securities regulatory institution requires to disclose
In February 2016, the Company canceled 18,050,341 shares repurchased by way of concentrated bidding. Therefore, up to know, the share capital of the Company has changed to 6,105,103,927 shares.（II） Changes in shares subject to selling restrictions
√Applicable□ Not Applicable
Unit: share
||||||||
|-|-|-|-|-|-|-|
|Name ofshareholder|Numberof sharessubject tosellingrestrictionsat thebeginningof theyear|Number ofsharesreleasedfromsellingrestrictionsin theyear|Number ofnewsharessubject tosellingrestrictionsin the year|Number ofsharessubject tosellingrestrictionsat the end ofthe year|Reasonsforsellingrestrictions|Date of releasefrom sellingrestrictions|
|KKR HOMEINVESTMENT S.AR.L.|302,992,994||302,992,994|605,985,988|Strategicinvestment|17 July 2017|
|Natural personshareholders (targetfor the first grantand retained part ofthe fourth shareoption incentive ofthe Company)|2,440,400|4,880,800|2,440,400|0|ShareOptionIncentiveSharessubject torestrictions|23 July 2015|
||3,660,600|0|3,660,600|7,321,200||20 June 2016|
||0||152,000|152,000||26 February 2016|
||0||228,000|228,000||26 February 2017|
|Total|309,093,994|4,880,800|309,473,994|613,687,188|/|/|

Notes:
Qingdao Haier Co., Ltd. 2015 Annual Report
(1) Because the Company implemented the profit distribution plan for 2014 (distribute 10 shares per 10 shares and declare a cash dividend of RMB4.92), the number of non-tradable shares of the Company increased to 618,187,988 shares from 309,093,994 shares in the beginning of the year. For details of implementation of the profit distribution plan, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Implementation of Profit Distribution and Conversion of Provident Funds to Share Capital for 2014 (L 2015-025) published in the four major securities newspapers and the Shanghai Stock Exchange website (www.sse.com.cn) on 10 July 2015.
(2) Since the conditions of the first unlocking of restricted stocks initially granted under Phase IV Share Option Incentive Scheme were fulfilled, the Company handled the unlocking and listing procedures for a total of 4.8808 million shares (there were 2.4404 million shares actually at the beginning of the year; because the Company implemented 2014 annual profit distribution plan, the number of shares was adjusted to 4.8808 million shares) of restricted stocks in July 2015. For details, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Restricted Stock Unlocking and Listing under the Phase IV Share Option Incentive Scheme (L 2015-030) published in the four major securities newspapers and the Shanghai Stock Exchange website (www.sse.com.cn) on 18 July 2015. II. ISSUE AND LISTING OF SECURITIES
（I） Issuance of securities as of the reporting period
Unit:0’000 shares Currency: RMB
||||||||
|-|-|-|-|-|-|-|
|Type ofshares andits derivativesecurities|Date ofissue|Issueprice(orinterests rate)|Issuenumber|Date oflisting|Numberof sharesunderlistingapproval|Date oftermination|
|Ordinary shares|||||||
|RMB ordinaryshares- exercise ofshare option underthe Share OptionIncentive Scheme|2013-01-10|5.07|718.44|2013-01-18|718.44||
||2013-01-11|10.94|359.76|2013-01-18|359.76||
||2013-12-06|4.70|971.04|2013-12-13|971.04||
||2013-12-06|10.57|361.8|2013-12-13|361.8||
||2 0 1 3 - 1 2 -06|10.82|1,159.8|2013-12-13|1,159.8||
|RMB ordinaryshares- grant ofrestricted sharesunder the ShareOption IncentiveScheme|2014-07-07|7.73|244.04|2015-06-20|488.08||
||2014-07-07|7.73|366.06|2016-06-20|/||
|Non PublicIssuance of RMBordinary shares|2014-07-17|10.83|30,299.3|2017-07-17|/||
|RMB ordinaryshares- exercise ofshare option andgrant ofrestricted sharesunder the ShareOption IncentiveScheme|2014-11-25|10.11|477.92|2014-12-02|477.92||
||2014-11-25|10.36|1,122.6|2014-12-02|1,122.6||
||2015-04-08|10.06|19|2015-8-5|/||
||2015-07-28|8.07|3,090.4|2015-8-5|3,090.4||

Qingdao Haier Co., Ltd. 2015 Annual Report
Details of issuance of securities as of the reporting period (please specify separately for bonds with different interest rates within the duration):
(1) In December 2012, the conditions for the third exercise period of Phase I Share Option Incentive Scheme and first exercise period of Phase II Share Option Incentive Scheme of the Company have been fulfilled. On 10 and 11 January 2013, the Company directionally issued additional 7,184,400 and 3,597,600 RMB ordinary shares to determined and qualified participates of Phase I and Phase II Share Option Incentive Scheme respectively at a price of RMB5.07 per share and RMB10.94 per share, respectively. The aggregate 10,782,000 shares above mentioned were listed on 18 January 2013. For details, please refer to Announcement on the Exercise Arrangement for the Third Exercise period of Phase I Share Option Incentive Scheme by the Board of Qingdao Haier Co., Ltd. (L 2012-030), Announcement on the Exercise Arrangement for the First Exercise period of Phase II Share Option Incentive Scheme by the Board of Qingdao Haier Co., Ltd. (L 2012-031) and Announcement on the Results of the Third Exercise period of Phase I Share Option Incentive Scheme and the First Exercise period of the Phase II Share Option Incentive Scheme by Qingdao Haier Co., Ltd. and Listing of New Shares (L 2013-001) published by the Company on the four major securities newspapers and the website of Shanghai Stock Exchange (www.sse.com.cn) on 25 December 2012 and 15 January 2013, respectively.
(2) In November 2013, the conditions for the fourth exercise period of Phase I Share Option Incentive Scheme, the second exercise period of Phase II Share Option Incentive Scheme and the first exercise period of Phase III Share Option Incentive Scheme of the Company have been fulfilled. On 6 December 2013, the Company directionally issued additional 9,710,400, 3,618,000 and 11,598,000 RMB ordinary shares to determined and qualified participates of Phase I, Phase II and Phase III Share Option Incentive Scheme, respectively at a price of RMB4.70 per share, RMB10.57 per share and RMB10.82 per share. The aggregate 24,926,400 shares above mentioned were listed on 13 December 2013. For details, please refer to Announcement on the Exercise Arrangement for the Fourth Exercise period of Phase I Share Option Incentive Scheme by the Board of Qingdao Haier Co., Ltd. (L 2013-034), Announcement on the Exercise Arrangement for the Second Exercise period of Phase II Share Option Incentive Scheme by the Board of Qingdao Haier Co., Ltd. (L 2013-035) and Announcement on the Exercise Arrangement for the First Exercise period of Phase III Share Option Incentive Scheme by the Board of Qingdao Haier Co., Ltd. (L 2013-036) and the Announcement on the Exercise Result for the share Option Incentive Scheme and the Listing of Additional shares of Qingdao Haier Co., Ltd. (L 2013-039) published by the Company on the four major securities newspapers and the website of Shanghai Stock Exchange (www.sse.com.cn) on 21 November 2013 and 10 December 2013, respectively.
(3) In April 2014, the Company introduced Phase IV Share Option Incentive Scheme. The Scheme involves 54,560,000 options, of which, 49,110,000 options (including 42,879,000 share options and 6,231,000 restricted shares) were granted under the first grant and 5,450,000 options (including 4,761,000 share options and 689,000 restricted shares) were reserved shares. After no objection filing
Qingdao Haier Co., Ltd. 2015 Annual Report
with the CSRC and the approval of the Scheme at a general meeting of the Company, the Board determined the date of the First Grant was 20 June 2014 and 48,780,000 options (including 42,679,000 share options at the exercise price of RMB16.63 per share; and 6,101,000 restricted shares at the grant price of RMB7.73 per share) were granted to scheme participants (adjusted after one participant left the Company) under the first grant. The registration of transfer of the abovementioned restricted shares was completed on 7 July 2014. For details, please refer to the Announcement of Completion of Registration of Restricted Shares Granted under the Phase IV Share Option Incentive Scheme of Qingdao Haier Co., Ltd. (L 2014-038) published by the Company on the four major securities newspapers and the website of Shanghai Stock Exchange (www.sse.com.cn) on 8 July 2014.
(4) In September 2013, the Company induced a proposal on the introduction of the strategic investor through non-public issue, proposing to issue not more than 305 million additional A shares to KKR (Luxembourg) with proceeds of not more than RMB3.447 billion. After obtaining approval of the proposal from the general meeting of the Company, Ministry of Commerce and CSRC, the Board of the Company conducted relevant share transfer procedures in July 2014 and determined 302,992,994 shares to be issued at the issue price of RMB10.83 per share. The listing of the relevant share will be effective on 17 July 2017. For details, please refer to Announcement on Results of Non-public Issuance of Shares and Change in Share Capital of Qingdao Haier Co., Ltd. (L 2014-041) published by the Company on the four major securities newspapers and the website of Shanghai Stock Exchange (www.sse.com.cn) on 22 July 2014.
(5) In November 2014, the conditions for the third exercise period of Phase II Share Option Incentive Scheme and the second exercise period of Phase III Share Option Incentive Scheme of the Company have been fulfilled. On 25 November 2014, the Company directionally issued additional 4,779,200 and 11,226,000 RMB ordinary shares to determined and qualified participates of Phase II and Phase III Shares Option Incentive Scheme at a price of RMB10.11 per share and RMB10.36 per share. The listing of the aggregate 16,005,200 shares was effective on 2 December 2014. For the details, please refer to the Announcement on the Exercise Arrangement for the Third Exercise period of Phase II Share Option Incentive Scheme by the Board of Qingdao Haier Co., Ltd. (L 2014-064), the Announcement on the Exercise Arrangement for the Second Exercise period of Phase III Share Option Incentive Scheme by the Board of Qingdao Haier Co., Ltd. (L 2014-065) and the Announcement on the Exercise Result for the Share Option Incentive Scheme and the Listing of Additional Shares of Qingdao Haier Co., Ltd. (L 2014-067) published by the Company on the four major securities newspapers and the website of Shanghai Stock Exchange (www.sse.com.cn) on 12 November 2014 and 27 November 2014, respectively.
(6) In February 2015, in theCompany’s equity granted by the reserved portion under the Phase IV Share Option Incentive Scheme, an aggregate of 650,000 share options were granted, with the exercise price of RMB20.44/share; and 190,000 restricted shares were granted, with the granting price of RMB10.06/share. The Board of Directors considered that the granting/authorizing date was determined on 26 February 2015. Registration and transfer issues of the said restricted stocks have been completed
Qingdao Haier Co., Ltd. 2015 Annual Report
on 8 April 2015. For details, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Completion of Registration of Reserved Restricted Shares Granted under the Phase IV Share Option Incentive Scheme (L 2015-011) published in the four major securities newspapers and the Shanghai Stock Exchange website (www.sse.com.cn) on 9 April 2015.
(7) In July 2015, the conditions of the first exercise/unlocking of equity initially granted under Phase IV Share Option Incentive Scheme were fulfilled. The Company determined the first exercise of equity initially granted under Phase IV Share Option Incentive Scheme on 28 July 2015 and assessed the qualified incentive object to make private placement of RMB ordinary shares of 30.904 million shares at a price of RMB8.07/share. The above shares were listed on 5 August 2015. For details, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Share Option Incentive Exercise Result and New Shares Listing under the Phase IV Share Option Incentive Scheme (L 2015-031) published in the four major securities newspapers and the Shanghai Stock Exchange website (www.sse.com.cn) on July 30, 2015.
（II） Changes in total number of shares and shareholding structure and changes in the assets and liabilities structure of the Company
1) On 8 April 2015, the Company granted restricted shares involved under Phase IV Share Option Incentive Scheme, and the total number of shares of the Company changed from 3,045,935,134 shares to 3,046,125,134 shares;
2) On 17 July 2015, with the implementation of the annual bonus plan of the Company in 2014 (10 shares for every 10 shares and with a dividend of RMB4.92), the total number of shares of the Company changed from 3,046,125,134 shares to 6,092,250,268 shares;
3) On 5 August 2015, the first exercise of Phase IV Share Option Incentive Scheme of the Company was completed, and the total number of shares of the Company changed from 6,092,250,268 shares to 6,123,154,268 shares;
In summary, during the reporting period, the capital of the Company changed from 3,045,935,134 shares at the beginning of the period to 6,123,154,268 shares at the end of the period.
III. Shareholder and the ultimate controller
（I） Total number of shareholders
|||
|-|-|
|Total number of ordinary shareholders up to the end of thereporting period|213,207|
|Total number of ordinary shareholders as at the end of the lastmonth prior to the disclosure day of the annual report|214,152|

（II） Table of shareholdings of top ten shareholders, top ten circulation shareholders (or the shareholders not subject to selling restrictions) up to the end of the reporting period Unit: share
||||||||
|-|-|-|-|-|-|-|
|Shareholdings of top ten shareholders|||||||
||Increasing/|Number of||Number of|Status of|Nature|
|Name of|||Percent||||
||decreasing|shares held||shares|shares|of|
|shareholder (full|||age||||
||during the|at the end of||held|pledged|shareh|
|name)|||(%)||||
||reporting|the period||subject|or frozen|older|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||period||||to selling|||||
||||||restriction||Status|Number||
||||||s|||||
|Haier ElectricAppliancesInternational Co.,Ltd.||1,258,684,824|20.56|||Nil|||Domesticnon-state-ownedlegalperson|
|Haier GroupCorporation||1,072,610,764|17.52|||Nil|||Domesticnon-state-ownedlegalperson|
|KKR HOMEINVESTMENT S.AR.L.||605,985,988|9.90|605,985,988||Nil|||Foreignlegalperson|
|Hong KongSecuritiesClearing Co., Ltd.||340,928,012|5.57|||Unknown|||Unknown|
|China SecuritiesFinance CorporationLimited||173,837,311|2.84|||Unknown|||Unknown|
|Qingdao HaierVenture &InvestmentInformation Co.,Ltd.||160,597,760|2.62|||Nil|||Domesticnon-state-ownedlegalperson|
|Central Huijin AssetManagement Ltd.||69,539,900|1.14|||Unknown|||Unknown|
|China LifeInsuranceCompany Limited－ dividend －personal dividend－ 005L － FH002Hu||54,910,696|0.90|||Unknown|||Unknown|
|Industrial &Commercial Bankof China Limited –China SouthernConsumptionVitality FlexibleAllocation HybridInitiated SecuritiesInvestment Fund||37,864,701|0.62|||Unknown|||Unknown|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|China LifeInsuranceCompanyLimited–traditional–general insuranceproducts －005L－CT001 Hu||36,136,934|0.59|||Unknown||||Unknown|
||Shareholdings of top ten shareholders not subject to selling restrictions||||||||||
||||||Number of|||Class and number of shares|||
||||||shares held||||||
||Name of shareholder||||subject||||||
|||||||||Class|Number||
||||||to no selling||||||
||||||restrictions||||||
|Haier Electric Appliances International Co., Ltd.||||1,258,684,824|||RMB ordinaryshares||||
|Haier Group Corporation||||1,072,610,764|||RMB ordinaryshares||||
|Hong Kong Securities Clearing Co., Ltd.||||340,928,012|||RMB ordinaryshares||||
|China Securities Finance Corporation Limited||||173,837,311|||RMB ordinaryshares||||
|Qingdao Haier Venture & InvestmentInformation Co., Ltd.||||160,597,760|||RMB ordinaryshares||||
|Central Huijin Asset Management Ltd.||||69,539,900|||RMB ordinaryshares||||
|China Life Insurance Company Limited－dividend－personal dividend－005L－FH002 Hu||||54,910,696|||RMB ordinaryshares||||
|Industrial & Commercial Bank of China Limited –China Southern Consumption Vitality FlexibleAllocation Hybrid Initiated Securities Investment Fund||||37,864,701|||RMB ordinaryshares||||
|China Life Insurance Company Limited－–traditional–general insurance products－005L－CT001 Hu||||36,136,934|||RMB ordinaryshares||||
|National social security fund, Portfolio 104||||36,000,000|||RMB ordinaryshares||||
|||||(1) Haier Electric Appliances International Co.,Ltd. is a holding subsidiary of Haier GroupCorporation. Haier Group Corporation holds51.20% of its equity. Qingdao Haier Venture &Investment Information Co., Ltd. is a party actingin concert with Haier Group Corporation;(2) Both the general insurance products andpersonal dividend of China Life are managed byChina Life;(3) The Company is not aware of the existence ofany connections of other shareholders.|||||||
||Connections or parties acting in concert among the||||||||||
||aforesaid shareholders||||||||||
||Explanation of preferential shareholders with|||Nil|||||||
||restoration of voting rights and their shareholdings||||||||||

Number of shares held by top ten shareholders subject to selling restrictions and the selling restrictions Unit: share
||||||
|-|-|-|-|-|
||Name of shareholder subject to|Number of|Listing status of shares|Selling|
|No.|||||
||selling restrictions|shares held|subject to selling restrictions|restrictio|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|||||subject to||||Number of|ns|
|||||selling||Eligible||additional||
|||||restrictions||listing||shares to||
|||||||time||be||
|||||||||listed||
|1||KKR HOME INVESTMENTS.A R.L.|605,985,988||17 July 2017||0||Alock-upperiod ofthreeyears|
|2||Objects of the firstly grantedand reserved portion of thePhase IV Share OptionIncentive Scheme|7,321,200||20 June 2016||0||Unlockdepending on theperformance andevaluation resultsof theCompany|
|3|||152,000||26 February 2016||0|||
|4|||228,000||26 February 2017||0|||
||Connections or parties acting in||None|||||||
||concert among the aforesaid|||||||||
||shareholders|||||||||

（III） Strategic investors or general legal persons who became the top ten shareholders due to placing of new shares
||||
|-|-|-|
|Name of strategic investor or generallegal person|Starting date ofagreed share-holding|Expiration date ofagreed shareholding|
|KKR HOME INVESTMENT S.A R.L.|17 July 2014|17 July 2017|
|Statement of the terms of the agreedshare-holding of the strategic investors orordinary legal persons involved in placingnew shares|According to the Share Purchase Agreement entered intobetween the Company and KKR in 2013, the shares of theCompany subscribed by it shall not be transferred within 36months after the date of issuance. The summary of theagreement sets out in the announcement regarding thePrivate Issuance of A-share of Qingdao Haier Co., Ltd. ( (L2013-023) of the Company dated 8 October 2013.||

IV. Controlling shareholder and the ultimate controller
（I） Status of controlling shareholder
1 Legal person
|||
|-|-|
|Name|Haier Electric Appliances International Co., Ltd|
|The person in charge of theCompany or legal representative|Zhang Ruimin|
|Establishment date|1988-06-30|
|Principal operations|Manufacturing of freezer, electromagnetic stove, houseelectrical fan, hairdryer, freezing machine, gas fire, air cleaner,dishwasher, electric heater, electric cooker, water dispenser,vacuum cleaner, kitchen ventilator, gas stove and oven focal; theexport of the products produced by the Company, the import andexport of technology and equipment for the Company's own useand the import business of raw materials for production.|

Qingdao Haier Co., Ltd. 2015 Annual Report
2 The ownership and controlling relationship between the Company and its controlling shareholder
Haier Electric Appliances
International Co., Ltd.
Qingdao Haier Co., Ltd.
（II） Status of the ultimate controller
1 Legal person
|||
|-|-|
|Name|Haier Group Corporation|
|The person in charge of the Companyor legal representative|Zhang Ruimin|
|Establishment date|1980-03-24|
|Principal operations|Manufacturing of home appliances, digital products,communication equipment, electronic computers andaccessories, ordinary machineries, kitchen utensils andindustrial use robots; domestic commercial wholesaledistribution and retail sale (excluding those operated exclusivelyby the State, which are dangerous and limited by the State); theimport and export business (please refer to Foreign TradeEnterprise Validation Certificate for details).|

2 Framework of ownership and controlling relationship between the Company and the ultimate controllers
Haier Group
Corporation
|||||
|-|-|-|-|
||Acting in concert|||
|Qingdao Haier Venture & InvestmentQingInformation Co., LtdLtd||||
|||entQingLtd|dao Haier Kitchen Facilities Co.,|

Qingdao Haier Co., Ltd.
（III） Other information about the controlling shareholder and the ultimate controllers
Haier Group Corporation was registered as a joint venture in industrial and commercial registration.
Pursuant to a statement issued by Qingdao State-Owned Assets Administration Office on 1 June 2002,
Haier Group Corporation is a collectively-owned enterprise.
Qingdao Haier Co., Ltd. 2015 Annual Report
V. Other corporation shareholders holding more than10% of theCompany’s shares
Unit and Currency: RMB
|||||||
|-|-|-|-|-|-|
|Name ofcorporationshareholder|The person incharge of theCompany orlegalrepresentative|Date ofincorporation|Organizationcode|Registeredcapital|Principleoperations andmanagementactivities|
|KKR Home InvestmentS.à r.l.|William J.Janetschekand otherperson|3 September2013|/|US$18,000|Investment andinvestmentmanagementbusiness|
|Note|KKR Home Investment S.àr.l. is a project company incorporated inLuxembourg under the international practice exclusively for strategicinvestment in the Company, and a wholly-owned subsidiary of KKR ChinaGrowth Fund L.P..|||||

VI. EXPLANATION OF RESTRICTION ON REDUCED SHAREHOLDING
□Applicable√ Not Applicable
Qingdao Haier Co., Ltd. 2015 Annual Report
SECTION VII THE RELEVANT INFORMATION OF PREFERRED SHARES
□Applicable√ Not Applicable
Qingdao Haier Co., Ltd. 2015 Annual Report
SECTION VIII DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES
I. Changes of Shareholding and Remuneration
(I) Changes of shareholding and remuneration of current and retired directors, supervisors and senior management during the reporting period
√Applicable□Not applicable
Unit: share
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Name|Position(note)|Gender|Age|Appointment date|End date ofappointment|Shareholdings at thebeginningof the year|Shareholdings at theend of theyear|Increase/decrease inshares for theyear|Reason forincrease/decrease|Totalremunerationreceived fromthe Companyduring thereportingperiod(RMB0’000)(before tax)|Whetherreceiveremunerationfrom theCompany’srelated party|
|LiangHaishan|President，generalmanager|male|50|2013-04-19|2016-04-19|5,489,920|12,779,840|7,289,920|OptionexerciseunderPhase IVShareOptionIncentiveSchemeandimplementof bonusscheme oftheCompany|167|No|
|Tan LiXia|Vicepresident|female|46|2013-04-19|2016-04-19|2,571,680|6,203,360|3,631,680||No receipt ofremunerationfrom theCompany|Yes|
|WangXiaonan|Director|female|53|2013-04-19|2016-04-19|148,000|473,600|325,600|||Yes|
|PengJianfeng|Director|male|55|2013-04-19|2016-04-19|||||20|No|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|WuChangqi|Director|male|61|2013-04-19|2016-04-19|||||20|No|
|ZhouHongbo|Director|male|54|2013-04-19|2016-04-19|||||20|No|
|LiuHaifengDavid|Director|male|46|2013-09-29|2016-04-19|||||0|No|
|Liu Feng|Independent director|male|50|2013-04-19|2016-06-09|||||14.2|No|
|WuCheng|Independent director|male|76|2013-04-19|2016-04-19|||||20|No|
|DaiDeming|Independent director|male|54|2015-06-10|2016-04-19|||||7.5|No|
|ShiTiantao|Independent director|male|54|2014-05-20|2016-04-19|||||20|No|
|TimothyYungChengChen|Independent director|male|60|2014-09-29|2016-04-19|||||20|No|
|WangPeihua|Chairmanof thesupervisorycommittee|male|59|2013-04-19|2016-04-19|||||No receipt ofremunerationfrom theCompany|Yes|
|MingGuoqing|Supervisor|male|56|2013-04-19|2016-04-19||||||Yes|
|WangYuqing|Supervisor|female|41|2013-04-19|2016-04-19|||||13.8|No|
|Gong Wei|Chieffinancialofficer,vicegeneralmanager|male|43|2013-04-19|2016-04-19|700,000|1,568,000|868,000|OptionexerciseunderPhase IVShareOptionIncentiveSchemeand|55|No|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||||||||||implementation ofbonusscheme oftheCompany|||
|MingGuozhen|Secretaryto theboard ofdirectors,vicegeneralmanager|female|52|2013-04-19|2016-04-19|670,000|1,006,000|336,000|implementation ofbonusscheme oftheCompanyandreductionin thesecondarymarket|55|No|
|Total|/|/|/|/|/|9,579,600|22,030,800|12,451,200|/|432.5|/|

|||||
|-|-|-|-|
||Name||work experience|
|LiangHaishan||Male, born in 1966, is a senior engineer. He has served as director of enterprise management office of Qingdao Refrigerator General Factory, head of thequality department of Qingdao Haier Refrigerator Co., Ltd., director of personnel department of certification center of Haier Group Corporation, generalmanager and party secretary of Qingdao Haier Air Conditioner Gen Corp., Ltd, head and party secretary of Haier logistics department, senior vice president ofHaier Group, executive vice president of Haier Group. He is Vice President of Haier Group and the chairman and general manager of 8th session of the Boardof Qingdao Haier Co., Ltd. and was awarded Shandong Province Outstanding Contribution Leader of Light Industry of the ―Eleventh Five-year Plan‖ andSenior Expert of Qingdao in 2011; National May 1st Labor Medal, Outstanding Leadership Award of the National Light Industry Enterprise Information, Top10 Leaders in China Strategic Emerging Industries in 2012; Prize of Technology Advancement for China Household Appliances, First Prize Award of Scienceand Technology Progress of China National Light Industry Council in 2013.||
|Tan Li Xia||Female, born in 1970, has served as assistant director and general manager assistant of Haier Air Conditioning Electronics Import and Export Company,the head, deputy director, director of department of overseas market development of Haier Group, and head of department of financial management of Haier||

Qingdao Haier Co., Ltd. 2015 Annual Report
|||
|-|-|
||Group; currently serves as the vice executive president of Haier Group, chief financial officer of the Group, the vice president of the 8th session of the Boardof Qingdao Haier Co., Ltd.. In recent years, she was awarded various titles, such as Model Worker of Shandong Province, Outstanding Entrepreneur of theState, "March 8 Red-Banner Holders of the State ", PRC CFO of the Year, China Top Ten Women in Economic Area, China Top Ten Brand Female and so on.|
|WangXiaonan|Female, born in 1963, has served as the director of human resources of Orica China region, director of human resources of Orica North Asia region. Currently is the vice president of Haier Group, director of the 8th session of the Board of Qingdao Haier Co., Ltd. She has abundant theoretical knowledge and practical experiences in human resources management and human capital strategic management such as corporate restructuring, acquisition, M&A. She has been awarded the ―Annual Character Awards for the First Humanism China of the China Human Resource Development Association‖, ―HR Team Innovation Award‖, ―HR Team Innovation Awards‖ and ―Ten Best Practices Awards for China HR Management‖, ―Best Organizational Reform of the Year‖ and ―Best HR Team of the Year‖ for the near three years.|
|PengJianfeng|Male, born in 1961, professor and tutor of doctorate students of School of Labor and Human Resources of Renmin University of China, president of ChinaStone Management Consulting Group, vice chairman of China Human Resource Development Association, vice director of Management ConsultingCommittee of China Enterprise Confederation, director of the 8th session of the Board of Qingdao Haier Co., Ltd.. He once was the deputy dean of School ofLabor and Human Resources of Renmin University of China.|
|WuChangqi|Male, born in 1955, professor and tutor of doctorate students of department of Strategic Management of Guanghua School of Management of PekingUniversity. He graduated from Shandong University in 1982 with a bachelor degree in economics. He graduated from Katholieke Universiteit Leuven inBelgium in 1990, with a MBA degree and a doctorate degree in applied economics successively. He was an assistant professor and associate professor ofDepartment of Economics of School of Business and Management of The Hong Kong University of Science and Technology, professor and director ofDepartment of Strategic Management of Guanghua School of Management of Peking University, deputy dean of Guanghua School of Management, PekingUniversity, Director of EMBA degree programme center and so on. Currently he is the president of the National Hi-Tech Industrial Development ZoneStrategy Research Institute of Peking University and president of The Guanghua Leadership Institute (in collaboration with CISCO), director of the 8th sessionof the Board of Qingdao Haier Co., Ltd.|
|ZhouHongbo|Male, born in 1962, general manager of UbiLink, member of the board of directors of Beijing Hanbang Technology Co., Ltd., member of SandHillAngelsin America, partner of venture capital funds in WingPlus, America; he was once the general manager of Beiqi iFoton Co., Ltd. , chief software specialist ofTsinghua Tongfang, senior engineer / manager of research and development of IBM / BEA and other companies in the United States, postdoctoral researcher|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||
|-|-|
||of Oak Ridge National Laboratory of America etc.; member of Committee of Experts of IOT and System Integration of The Chinese Institute of Electronicsand so on; distinguished expert of Beijing and other municipal government; part-time professor of Beijing Jiaotong University, University of ElectronicScience and Technology of China, Beihang University and other colleges; member of experts and advisors of many domestic and foreign consultation bodies;one of the nine global IOT experts interviewed by the internationally renowned magazine "Economist". He is currently a director of the 8th session of theBoard of Qingdao Haier Co., Ltd..|
|LiuHaifengDavid|Male, born in 1970, KKR global partner, co-head of KKR Asian Private Equity Investment and president of Greater China Region, and member of KKR'sAsian Private Equity Investment Committee, Asia Portfolio Management Committee and China Growth Fund Investment Committee. He once served as themanaging director of Morgan Stanley and co-head of the Direct Investment Department of Morgan Stanley Asia. In years of direct investment career, heachieved an excellent long-term investment performance, he was responsible for and led a number of successful and pioneering direct investment projects inthe Greater China region, such as: China Mengniu Dairy, Ping An Insurance, Qingdao Haier, Belle International, Far East Horizon, Nanfu Battery, ChinaModern Dairy, United Envirotech Ltd., China Cord Blood Corporation, Yongle Household Appliances, Hengan International, Shanshui Cement, RundongAuto, Sunner Development, 58 Home, Tarena Technology and Guangdong Feed. He graduated from Columbia University, and achieved the highest honor ofscience degree in Department of Electronic Engineering; he is a member of Tau Beta Pi (National Engineering Honor Society of America) , and he has won theEdwin Howard Armstrong Award as the most outstanding electronic engineering student of Columbia University.|
|Liu Feng|(Retired upon the expiry of term of office) Male, born in 1966, he was the professor of College of Management of Sun Yat-sen University, directorof Modern Accountancy and Finance Research Center of Sun Yat-sen University, and currently is the professor of Accounting School of XiamenUniversity, and independent director of the 8th session of Board of Qingdao Haier Co., Ltd..|
|WuCheng|Male, born in 1940, expert in informationization and automation, academician of Chinese Academy of Engineering. He graduated from TsinghuaUniversity in 1962 and got a postgraduate degree of Tsinghua University in 1966. He is a professor and doctoral supervisor of department ofAutomation of Tsinghua University, head of National CIMS Engineering Research Center, independent director of Kingdee (International) SoftwareGroup Co., Ltd., and independent director of the 8th session of the Board of Qingdao Haier Co., Ltd..|
|DaiDeming|Male, born in 1962. He is a professor and doctoral supervisor of the accounting department of School of Business at Renmin University of China.He also concurrently holds other positions such as a vice-chairman of Accounting Society of China, and a vice-chairman of Beijing Society of|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||
|-|-|
||Auditing. He served as an independent director for CSR Corporation Limited and other companies.|
|ShiTiantao|Male, born in 1962. He currently serves as a professor and doctoral supervisor of the School of Law at Tsinghua University as well as director ofFinance & Law Research Center under the School of Law at Tsinghua University. He also serves on the 8th Session of the Board of Directors ofQingdao Haier as an independent director. Meanwhile, he concurrently holds other positions such as a vice president of the Chinese ResearchAssociation of Securities Law, an arbitrator of CIETAC, a specially-designated supervisor of the Supreme People's Court and a member of the CaseGuidance Committee. He was a deputy dean of the School of Law at Tsinghua University.|
|TimothyYungChengChen|Male, born in 1956, holds an American citizenship. He is the president of Telstra International Group and the general manager of the Group. Heholds a MBA degree of University of Chicago, and a master's degree in Computer Science and Mathematics of The Ohio State University. He onceserved as the president of Motorola Inc. and Microsoft (China) Co., Ltd. in China and executive vice president of the headquarters, and he served in theAT & T Bell Laboratory of the United States for nine years.|
|WangPeihua|Male, born in 1957, senior political analyst, he has served as the deputy secretary of Party Committee of Haier Group Air-Conditioner Head Office,Washing Machine Head Office, and Haier Group Freezer & Heater Head Office, chairman of the labor union of Haier Group Technology andEquipment Head Office, etc.. He is the head of the Organizational Department of Haier Group, the president of the 8th session of the Board ofSupervisors of Qingdao Haier Co., Ltd..|
|MingGuoqing|Male, born in 1960, senior political analyst, has served as deputy secretary of Discipline Inspection Committee of Qingdao Refrigerator GeneralFactory, party branch secretary and assistant manager of Qingdao Haier Transportation Company, deputy director of organization section of QingdaoHaier Co., Ltd., head of the comprehensive department, deputy secretary of party committee and secretary of discipline inspection committee of HaierRefrigerator Products Head Office, chairman of the labor union of Qingdao Haier Co., Ltd.. He is the chairman of the labor union of Haier Group,and the supervisor of the 8th session of the board of supervisors of Qingdao Haier Co., Ltd..|
|WangYuqing|Female, born in 1975, has served as the worker supervisor of the Board of Supervisors of Qingdao Haier Co., Ltd. and the office secretary ofQingdao Haier Co., Ltd.. She is a supervisor of the 8th session of the board of supervisors of Qingdao Haier Co., Ltd., and head of the general manageroffice of Qingdao Haier Co., Ltd..|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||
|-|-|
|Gong Wei|Male, born in 1973, has served as the financial manager of Qingdao Haier Co., Ltd., senior financial manager and senior financial analyst of HaierGroup, chief financial officer of Haier Washing Machine Head Office, chief financial officer of Haier Air-Conditioner Head Office, chief financialofficer of White Goods Group, he is the vice general manager and chief financial officer of Qingdao Haier Co., Ltd.. He was granted the honorary titlessuch as Outstanding Youth in Post of Qingdao City, Outstanding Accounting Workers of Shandong Province, National Outstanding AccountingWorkers and so on, and won the awards of Top Ten CFO in China as appraised by "New Money" Magazine in 2011.|
|MingGuozhen|Female, born in 1964, senior economist, was the lecturer of the investment department of China Institute of Finance, deputy head of the Teachingand Research section of Investment Economy Department, a clerk of treasury department of Everbright International Investment ConsultancyCompany, deputy director and director of general manager office, general manager of business management department and general manager ofpersonnel department, assistant to the general manager of the Company, executive vice president of Everbright International Investment ConsultancyCompany; she was the office director of analysts professional committee of the Securities Association of China, vice director of QualificationManagement Department of the Association, vice director of Practice Standards Committee of the Association. She is currently the vice generalmanager and secretary to the Board of Directors of Qingdao Haier Co., Ltd..|

(II) Incentive share option granted to directors, supervisors and senior management during the reporting period
√Applicable□Not applicable
Unit: share
||||||||||
|-|-|-|-|-|-|-|-|-|
|Name|Position|Number ofrestricted sharesheld at thebeginning of theyear|Number of shareoptions newlygranted duringthe reportingperiod|Sharesexercisableduring thereporting period|Shares exercisedby the shareoption during thereporting period|Exercisingprice of shareoptions (RMB)|Number ofshare optionsheld at the endof the period|Market price atthe end of thereportingperiod (RMB)|
|LiangHaishan|President,general manager|4,500,000|0|1,800,000|1,800,000|8.07|2,700,000|9.92|
|Tan LiXia|Vice president|2,650,000|0|1,060,000|1,060,000|8.07|1,590,000|9.92|
|WangXiaonan|Director|444,000|0|177,600|177,600|8.07|266,400|9.92|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||||||||
|-|-|-|-|-|-|-|-|-|
|GongWei|Chief financialofficer, vicegeneral manager|420,000|0|168,000|168,000|8.07|252,000|9.92|
|MingGuozhen|Secretary to theboard ofdirectors, vicegeneral manager|340,000|0|136,000|0|8.07|340,000|9.92|
|Total|/|8,354,000|0|3,341,600|3,205,600|/|5,148,400|/|

 Unit: share
||||||||||
|-|-|-|-|-|-|-|-|-|
|Name|Position|Number ofrestricted sharesheld at thebeginning of theyear|Number ofrestricted sharesnewly grantedduring thereporting period|Granting priceof restrictedshares (RMB)|Unlocked shares|Locked shares|Number ofrestricted sharesheld at the endof the period|Market price atthe end of thereportingperiod (RMB)|
|LiangHaishan|President, generalmanager|4,500,000|0|3.62|1,800,000|2,700,000|2,700,000|9.92|
|Tan LiXia|Vice President|2,650,000|0|3.62|1,060,000|1,590,000|1,590,000|9.92|
|WangXiaonan|Director|296,000|0|3.62|118,400|177,600|177,600|9.92|
|GongWei|Chief financialofficer, vicegeneral manager|280,000|0|3.62|112,000|168,000|168,000|9.92|
|MingGuozhen|Secretary to theboard of directors,vice generalmanager|220,000|0|3.62|88,000|132,000|132,000|9.92|
|Total|/|7,946,000|0|/|3,178,400|4,767,600|4,767,600|/|

 Note: During the Reporting Period, the 2014 Annual Profit Distribution Plan was implemented. The Company distributed a cash dividend of RMB4.92 (inclusive of tax) for every 10 shares and made a bonus issue by way of capitalizing its capital reserve on the basis of 10 shares for every 10shares on the basis of 3,046,125,134 shares. Pursuant to which, the Company convened a Board meeting to adjust the number of share options and restricted shares and their exercising price/grant price. The numbers presented in the above table have been adjusted.
Qingdao Haier Co., Ltd. 2015 Annual Report
II. Positions Held by Current and Retired Directors, Supervisors and Senior Management during the Reporting Period
(I) Positions held inshareholders’ entities
√Applicable□Not Applicable
||||||
|-|-|-|-|-|
|Name|Company|Position|Appointment date|End date of appointment|
|Liang Haishan|Haier Electric Appliances InternationalCo., Ltd.|Director|November 1997||
|Tan Li Xia|Haier Electric Appliances InternationalCo., Ltd.|Director|||
|Tan Li Xia|Qingdao Haier Venture & InvestmentInformation Co., Ltd.|Supervisor|March 2009||
|Tan Li Xia|Haier Group Corporation|Senior vice president, chieffinancial officer|December 2007||
|Wang Xiaonan|Haier Group Corporation|Vice president|||
|Wang Peihua|Haier Group Corporation|Head of OrganizationalDepartment|||
|Ming Guoqing|Haier Group Corporation|Chairman of the Labor Union|||
|Liu Haifeng David|KKR Investment Company in Asia|Global partners|February 2006||
|Positions in shareholdersentities|Nil||||

(II) Positions held in other entities
√Applicable□Not Applicable
||||||
|-|-|-|-|-|
|Name|Company|Positions|Appointment date|End date of appointment|
|Liang Haishan|Haier Group Electric Appliance IndustryCo., Ltd.|Executive director|||
|Liang Haishan|Qingdao Haier Photoelectronic Co., Ltd.|Executive director|||
|Liang Haishan|Fisher & paykel Appliances HoldingsLimited|Director|||
|Ming Guozhen|Qingdao Overseas Chinese Industrial|Director|July 2008||

Qingdao Haier Co., Ltd. 2015 Annual Report
||||||
|-|-|-|-|-|
||Joint Stock Co., Ltd.||||
|Tan Li Xia|Haier Group Finance Co., Ltd.|Supervisor|||
|Tan Li Xia|Qingdao Haier Investment andDevelopment Co., Ltd.|Supervisor|||
|Tan Li Xia|Haier Group Electric Appliance IndustryCo., Ltd.|Director|||
|Tan Li Xia|Fisher & paykel Appliances HoldingsLimited|Director|||
|Tan Li Xia|Bank of Qingdao|Director|10 April 2012||
|Wu Cheng|Tsinghua University|Professor|||
|Wu Changqi|Peking University|Professor|||
|Wu Changqi|Huaxia Bank Co., Ltd.|Supervisor|12 May 2015|11 May 2018|
|Wu Changqi|Beijing Electronic Zone Investment andDevelopment Co., Ltd.|Independent director|28 December 2012|27 December 2018|
|Wu Changqi|Tianjin Keyvia Electric Co., Ltd.|Independent director|1 December 2011|30 November 2017|
|Peng Jianfeng|Renmin University of China|Professor|||
|Peng Jianfeng|Beijing China Stone ManagementConsulting Group|President|||
|Peng Jianfeng|Chinese Universe Publishing and MediaCo., Ltd.|Independent director|5 December 2010|4 December 2016|
|Zhou Hongbo|Beijing Hanbang Technology Co., Ltd.|Director|November 2014|November 2017|
|Timothy Yung Cheng Chen|Asia Pacific Telecom Co., Ltd.|General manager|January 2016||
|Timothy Yung Cheng Chen|China Communication Media GroupCo., Ltd.|Director|||
|Shi Tiantao|Tsinghua University|Professor|2000||
|Liu Haifeng David|Far East Horizon Limited|Non-executive director|October 2009||
|Liu Haifeng David|China International Capital CorporationLimited|Non-executive director|February 2015||
|Liu Haifeng David|United Envirotech Ltd.|Non-executive director|October 2011||
|Liu Haifeng David|China Rundong Auto Group Limited|Non-executive director|January 2014||
|Dai Deming|Shanxi Taigang Stainless Steel Co., Ltd.|Independent director|August 2011||
|Dai Deming|Beijing Xinwei Telecom TechnologyGroup Co., Ltd.|Independent director|September 2014||
|Dai Deming|Beijing Capital Development Co., Ltd.|Independent director|September 2015||

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||
|-|-|-|-|
|Dai Deming|China Zheshang Bank Co., Ltd.|Independent Non-executivedirector|March 2016|
|Positions in other units|Nil|||

III. Remuneration of Directors, Supervisors and Senior Management
|||
|-|-|
|Decision-making procedures of the remunerationof directors, supervisors and senior management|The procedures for decision- making of remuneration of directors , supervisors and senior management of theCompany are establishing platform, clearing standards, communication and consultation, and making objectivedecision. The Remuneration Committee of the Company formulate remuneration standards, adjust principles andassess the principles of realizing, then propose them to the board of directors fo r approval, thus form a systemplatform, then to determine the actual remuneration of that year according to the examination results of the betaginst cycle and the annual exammination results.|
|Determination basis of the remuneration ofdirectors, supervisors and senior management|The management personnel salary system of the Company in 2015 is linked to the strategic income statement, ofwhich the tool is the two-dimensional lattice model. The two-dimensional lattice could reflect the strategicundertaking and upgrade and development of staffs vertically, and the market competitiveness horizontally. Thehighest allowance of outside directors of the 8th session of the board of directors of the Company is RMB200,000(before tax) in total per year, including the fixed allowances of RMB150,000 per year, the highest performanceallowance is RMB50,000 per year, and the exact amount of performance allowance will be determined based on thecomprehensive consideration of the contribution of directors to the Board decision making, the effectiveness of theproposals and recommendations to the board of directors, the participation of the meetings of the Board, attendancerate of all Board meetings and other factors. The travelling expense for attending the meetings of the board ofdirectors and shareholders and other expenses necessary for performing their duties pursuant to the Articles ofAssociation shall be fully reimbursed.|
|Remuneration payables of directors, supervisorsand senior management|Paid as required.|
|Total actual remuneration of all the directors,supervisors and senior management at the end ofthe reporting period|4.325 million|

IV. Changes in Directors, Supervisors and Senior Management of the Company
|||||
|-|-|-|-|
|Name|Position|Change|Reason for change|
|Liu Feng|Independent director|Resigned|Expiry of terms of appointment|
|Dai Deming|Independent director|Elected|Take over directors at expiry|

Qingdao Haier Co., Ltd. 2015 Annual Report
V. Punishment by the Securities Supervisory Institute for the near three years
□Applicable√Not applicable
Qingdao Haier Co., Ltd. 2015 Annual Report
Ⅵ. Staff of the Parent Company and Principal Subsidiaries
(I) Staff information
|||
|-|-|
|Number of staff of the parent company|2,286|
|Number of staff of principle subsidiaries|61,516|
|Total number of staff|63,802|
|Number of employees whose retirement expenses areborne by the parent company and the principlesubsidiaries|0|
|Professional structure||
|Professional Class|Number|
|Manufacturing staff|38,987|
|Marketing staff|12,883|
|Technical staff|10,097|
|Financial staff|874|
|Administrative staff|961|
|Total|63,802|
|Educational structure||
|Educational Class|Number|
|Bachelor education and above|12,899|
|College education|16,030|
|Vocational education and below|34,873|
|Total|63,802|

 Note: During the Reporting Period, the Company acquired Haier (Singapore) Investment Holding Pte. Ltd. and other companies, and the number of employees of such companies was added to the
headcount of the Company.
(II) Remuneration policies
The Company conducted the system of individual paid separately and entirety paid in advanced, which originates from the strategic balance sheet of Haier, it includes the evaluation of the creation of user resources, operation ability of autonomous management entity, budget implementation, continuous optimization, the incentive system guide the behavior of employees, it exactly includes three aspects as below:①create and share: I create my users, I share my appreciation, which lead to innovation;② three first-rates: first-rate consumer (user resources), first-rate people, first-rate remuneration;③three highs: high efficiency, high appreciation and high remuneration.
(III) Personnel training
Please also refer to relevant content set out in "Qingdao Haier Corporate Social Responsibility Report in 2015" published on the same date as this announcement.
Qingdao Haier Co., Ltd. 2015 Annual Report
SECTION IX CORPORATE GOVERNANCE
I. EXPLANATION OF CORPORATE GOVERNANCE
During the reporting period, the Company strictly complied with the requirements under the Company Law, the Securities Law, Code on Corporate Governance for Listed Companies and the requirements of the relevant laws and regulations, to improve its corporate governance structure, regulate its operation, improve its information disclosure system, strengthen the communication with investors and elevate the standard of theCompany’s corporate governance. In respect of corporate governance structure, the general meeting, the Board and the management standardized its operation to practically guarantee the legal interests of the Company and its shareholders; all Directors duly discharged their duties in a diligent way; each committee of the Board of the Company performed their work according to their respective detailed working rules to ensure that the Board operate in a more effective and scientific way; independent Directors fulfilled their duties independently and issued independent opinion on major matters in order to effectively protect the interests of the Company as a whole and the lawful rights and interests of medium and small investors. In respect of information disclosure, the Company strictly executed the registration and management system for insiders, achieved the management of inside information on significant events and eliminating the act of using theCompany’s inside information for stocks trading by insider. Meanwhile, the Company reinforced the accountability of people who are responsible for annual report disclosure and enhanced the quality and transparency of information disclosure in annual reports. The Company has placed a lot of emphasis on information disclosure and disclosed relevant information on a true, accurate, complete and timely basis strictly in accordance with the requirements of laws and regulations to ensure all shareholders have equal access to such information. In respect of the management of investor relation, in accordance with guideline of the Management System for Investor Relation, the Company integrated business and financial resources by the office of board secretary and realized positive and all-around access to investors in a multi-layer and diversified format through introduction reference, result announcement conference and online forum. Meanwhile, the Company replied investors on a timely basis by ways of interview, e-mail, phone, fax and the website (http://sns.sseinfo.com) and enhanced interaction with investors, so as to respect and protect the interests of various investors, with the aim of achieving harmonious and mutual success with the Company, staff and investors. The corporate governance structure of the Company is sound and there is no difference between the corporate governance structure and the requirement of relevant documents from CSRC.
1) Shareholders andshareholders’ general meeting:
The Company could ensure that all shareholders, especially the minority shareholders enjoy equal treatment and are able to fully exercise their rights; during the reporting period, the Company convened and held twoshareholders’ general meetings in compliance with the requirements of the Articles of Association and Rules GoverningShareholders’ General Meeting of the Company. Attendance of
Qingdao Haier Co., Ltd. 2015 Annual Report
Shareholders at the meeting is relatively high, which ensured that the shareholders fully excised voting rights; the Company also engaged lawyers who possess the qualification to engage in securities business to attend and witness theshareholders’ general meeting; the resolutions were considered and approved in accordance with legal procedures, which could guarantee the power and rights of minority shareholders. 2) Relationship between controlling shareholders and the listed companies:
The controlling shareholders acted normatively and did not interfere with theCompany’s management decisions and operations, directly or indirectly. The Company and the controlling shareholders are independent of each other in terms of their staff, assets, finance, organization and business. Their respective board of directors, the supervisory committee and internal administrative departments are all independent of each other. The specific requirements for regulating connected transactions and fund flow are set out in the Articles of Association, Fair Decision-Making System for Connected Transactions and the Administrative System for Regulation of Fund Flow between the Company and Related Parties, Risk Control System for Connected Transaction with Haier Group Finance Co., Ltd., and Proposal for Emergency Response System for Risk of Deposits with Haier Group Finance Co., Ltd., which guaranteed the interests of investors. The daily connected transactions are subject to the consideration and approval at the annual general meeting and set specialized execution procedure. The basis of pricing and reasonability of operation agreement shall be supervised and reviewed by special departments, so as to regulate the connected transactions and protect the interests of minority shareholders and non-related shareholders. During the reporting period, the Group strictly performed its undertaking in respect of promotion of―solution of business competition and reduction of connectedtransactions‖ of listed companies, by which the Company completed the acquisition of overseas assets and the acquisition of minority shareholdings in Mitsubishi and Carrier, and further enhanced self-procurement capability and scope of the self-procurement companies Qingdao Haidarui Procurement Service Co., Ltd. and Qingdao Haidayuan Procurement Service Co., Ltd. and strengthened the procurement capability of the Company, which further reduced connected transactions. The revenue of the above two companies amounted to RMB11.3 billion and RMB22.4 billion respectively in 2015. 3) Directors and the Board:
During the reporting period, the 8th session of the Board of the Company operated in accordance with rules and continued to perform their duties under the Articles of Association and relevant laws and regulations better and practically implement relevant decisions at theshareholders’ general meeting. The number and composition of the members of the Board complied with relevant laws and regulations; the re-election of one independent director and the election procedures are strictly in accordance with the laws and regulations and rules and regulations of the Company; the Directors attended the board meeting andshareholders’ general meeting with diligent and responsible attitude and protected the interests of the Company. In accordance with the requirements in the Code of Corporate Governance for Listed Companies, the Company has 8 external Directors, of which four are independent Directors, representing approximately three quarters of the total number of the Directors (11 in total) of the
Qingdao Haier Co., Ltd. 2015 Annual Report
Company. Each of the independent Directors of the Company respectively acted as member of the nomination committee, remuneration and appraisal committee and audit committee of the Board and practically carried out their duties.
During the reporting period, all Directors and independent Directors performed their duties earnestly strictly in compliance with the Articles of Association, the Rules of Procedure for the Board of Directors, the System for Independent Directors and relevant requirements under laws and regulations and each committees of the Board operated normatively according to its own work rules. During the reporting period, the Board of the Company considered and approved the following matters: promoting the exercising/unlocking of share options, acquisition of theGroup’s overseas assets, acquisition of minority interests, and periodical reports, so as to encourage the Company to further consolidate its resources to better implement the networking and globalize development strategy. The Company made amendments to the Rules of Procedure ofShareholders’ General Meeting of the Company, the Implementing Rules for the Audit Committee under the Board of Directors of the Company and the Investment Management System of the Company in accordance with the relevant requirements of the CSRC and the SSE.
4) Supervisors and the Supervisory Committee:
During the reporting period, the 8th session of the Supervisory Committee operated in accordance with rules and continued to practically perform their duties under the Articles of Association and relevant laws and regulations. The number and composition of the members of the Supervisory Committee complied with requirements under laws and regulations. During the reporting period, the Supervisors of the Company performed their duties earnestly and adhered to the principle of being responsible to the Company and all shareholders to supervise legality and compliance on finance matters of the Company and performance of duty by theCompany’s Directors, managers of the Company and other senior management strictly in accordance with requirements under the Articles of Association , the Rules of Procedure for the Supervisory Committee and relevant laws and regulations.
5) Performance evaluation and incentive and disciplinary mechanism:
In accordance with the Articles of Association, the Board shall appoint or remove the general manager and the secretary of the Board; the Board shall appoint or remove the deputy general manager and other senior management (including the chief financial officer) of the Company based on the nomination by the general manager and determine their remunerations and rewards and penalties. The human resource department of the Company shall make routine appraisal and evaluation on the performance of Directors, supervisors and senior management and Remuneration and Appraisal Committee shall make inspection and evaluation on their performance to determine their remunerations at the end of the year.
During the reporting period, the Company adopted the equity completion grant for the reserved portion of Phase IV of the Share Incentive Scheme and the first exercise/unlocking work of the interest of the first grant portion has been completed successfully, which further perfected the incentive and disciplinary mechanism and mechanism of the shareholders shares benefits and risks with the
Qingdao Haier Co., Ltd. 2015 Annual Report
management of the Company, so as to enhance the competitiveness and promote the sustainable and sound development of the Company.
6）Stakeholders:
The Company was able to fully respect and protect the lawful rights and interests of banks, other creditors, employees, consumers and other stakeholders. Meanwhile, the Company actively took part in public welfare undertaking in such place where it operates, placed a lot of emphasis on environment protection, performed its social duties earnestly and worked together with these stakeholders actively with good communication to promote the sustainable and sound development of the Company. For details, please refer to relevant information in 2015 Social Responsibility Report of Qingdao Haier Co., Ltd. published on the same date of this report.
7) Information disclosure and transparency:
During the reporting period, the Company positively disclosed the relevant information in a true, accurate and complete manner strictly in accordance with relevant laws and regulations including the Articles of Association, Administrative Measure for Information Disclosure and requirements in the Information Disclosure Management System of the Company, Work Rules and Procedures Regarding the Annual Report and the Management System for Investor Relation, proactively communicated with regulatory authorities and investors and designated newspapers including Shanghai Securities News, China Securities Journal, Securities Times and Securities Daily for information disclosure to ensure that all shareholders access to such information equally. The Company authorized the secretary to the Board to in charge of information disclosure, reception of visits by shareholders and handling of shareholder's enquiries. Meanwhile, the Company broadened the communication channel for investors to know relevant information of the Company through telephone conference calls after periodical reporting and occasionally holding on-site and online forums; the Company could disclose the particulars about the substantial shareholders and ultimate controller and changes in shareholding of the Company on a timely basis in accordance with relevant requirements. With respect to the significant connected transactions, the Company performed necessary approval procedures and disclosed relevant information strictly in compliance with the Articles of Association and Fair Decision-Making System for Connected Transactions to protect the interests of investors. During the reporting period, the Company further perfected the confidentiality procedure for information disclosure strictly in complied with the Registration System of Insiders, the Responsibility System for Major Errors in Information Disclosure in Annual Reports and the Management System of External Information Users to ensure the fair and equity of information disclosure.
8) Implementation of corporate governance campaign in 2015:
During the reporting period, the Company continued to carry out works relating to―solution of business competition and reduction of connectedtransactions‖. In 2015, trading volume of connected transactions regarding procurement amounted to RMB27.6 billion, which accounted for32.8% of the similar transactions, representing a decrease of 3.8 pct. pt. as compared to the same period of the previous year. Trading volume of connected transactions regarding sales amounted to RMB7.56 billion,
Qingdao Haier Co., Ltd. 2015 Annual Report
which accounted for8.4% of the similar transactions, representing a decrease of 3.6 pct. pt. as compared to the same period of the previous year. The optimization of the connected transactions has been effective. The Company will continue to increase investment in independent purchase and promote the continuous optimization of connected transactions.
Leveraging on the further implementation of governance campaign and enhancing the establishment of fundamental systems, the Company further improved the corporate governance structure and improved the corporate governance. The Company carried out various activities to strengthen the consciousness of learning and further strengthened the consciousness on regulating governance in listed companies among Directors, Supervisors and senior management of the listed companies with organizational training to improve the ability to regulate governance and continuously improve and perfect corporate governance of the Company, thus to protect the minority interests and to guarantee and promote the healthy, stable and sustainable development of the Company.
II. Introduction to theShareholders’ General Meeting
|||||
|-|-|-|-|
|Meeting|Date|Index for details of websites designatedfor publishingresolutions|Date ofdisclosure|
|2014 AnnualGeneralMeeting|10 June 2015|For details, please refer to theAnnouncement on Resolutions Passed atthe 2014 Annual General Meeting ofQingdao Haier Co., Ltd. (L2015-021)published by the Company on thewebsite of Shanghai Stock Exchange(www.sse.com.cn) and the four majorsecurities newspapers|11 June 2015|
|2015FirstExtraordinaryGeneralMeeting|24 August 2015|For details, please refer to theAnnouncement on Resolutions Passed atthe 2015 First Extraordinary GeneralMeeting of Qingdao Haier Co., Ltd.(L2015-038) published by the Companyon the website of Shanghai StockExchange (www.sse.com.cn) and thefour major securities newspapers|25 August 2015|

Explanation ofShareholders’ general meetings
(1) The 2014 Annual General Meeting of the Company (the―2014AGM‖) was held by way of on-site voting and network voting by poll at Room A108, Haier University, Haier Information Park, No.1 Haier Road, Qingdao, the PRC at the afternoon on 10 June 2015. TheCompany’s share capital in aggregate amounted to 3,046,125,134 shares. There were 271 shareholders of the Company in attendance either in person or by proxy at the 2014 AGM, holding a total of 1,961,943,063 shares, representing64.40% of the total number of shares of the Company with voting rights. The Directors, Supervisors and senior management of the Company as well as the lawyers engaged by the Company
also attended the 2014 AGM. The 2014 AGM was convened by the Board of the Company. Mr. Liang
Haishan, Chairman of the Board, presided over the 2014 AGM. The Company had 11 Directors, of
whom 4 Directors attended the 2014 AGM (Director Wu Changqi, Liu Haifeng David, Zhou Hongbo,
Qingdao Haier Co., Ltd. 2015 Annual Report
Peng Jianfeng, Wu Cheng, Shi Tiantao, Timothy Yung Cheng Chen was unable to attend the 2014 AGM due to personal engagement); the Company had 3 Supervisors, all of whom attended the 2014 AGM. The secretary to the Board of the Company attended the 2014 AGM and other members of senior management of the Company were invited to attend the 2014 AGM as non-voting participants.
(2) The 2015 First Extraordinary General Meeting of the Company (the―2015 FirstEGM‖) was held by way of on-site voting and network voting by poll at Room A108, Haier University, Haier Information Park, No.1 Haier Road, Qingdao, the PRC at afternoon on 24 August 2015. TheCompany’s share capital in aggregate amounted to 6,123,154,268 shares. Attendance of shareholders and proxies at the 2015 First EGM is as follows: there were 77 shareholders of the Company in attendance either in person or by proxy at the 2015 First EGM, holding a total of 3,336,244,008 shares, representing54.48% of the total number of shares of the Company with voting rights. The Directors, Supervisors and senior management of the Company as well as the lawyers engaged by the Company also attended the 2015First EGM. The 2015 First EGM was convened by the Board of the Company. Mr. Liang Haishan, Chairman of the Board, presided over the 2015 First EGM. The Company had 11 Directors, of whom 4 Directors attended the 2015 First EGM (Director Wang Xiaonan, Wu Changqi, Zhou Hongbo, Wu Cheng, Shi Tiantao, Timothy Yung Cheng Chen, Liu Haifeng David was unable to attend the 2015 First EGM due to personal engagement); the Company had 3 Supervisors, all of whom attended the 2015 First EGM. The secretary to the Board of the Company attended the 2015 First EGM and other members of senior management of the Company were invited to attend the 2015 First EGM.
III. Performance of Duties by Directors
(I) Attendance of Board meetings and general meetings by Directors
||||||||||
|-|-|-|-|-|-|-|-|-|
|NameofDirector|WhetheranIndependentDirectoror not|Attendance of Board meetings||||||Attendanceof generalmeetings|
|||Requiredattendances ofBoardmeetings|Attendance inperson|Attendancesby wayofcommunication|Attendance byproxy|Absence|Absencefrom twoconsecutivemeetingsinperson ornot|Attendancesat generalmeetings|
|LiangHaishan|No|10|10|4|0|0|No|2|
|Tan LiXia|No|10|10|4|0|0|No|2|
|WangXiaonan|No|10|10|5|0|0|No|1|
|PengJianfeng|No|10|9|9|1|0|No|1|
|WuChangqi|No|10|10|9|0|0|No|0|
|ZhouHongbo|No|10|10|8|0|0|No|0|
|Liu|No|10|9|9|1|0|No|0|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||||||||
|-|-|-|-|-|-|-|-|-|
|HaifengDavid|||||||||
|LIUFeng|Yes|4|4|3|0|0|No|1|
|DaiDeming|Yes|6|6|5|0|0|No|1|
|WUCheng|Yes|10|10|9|0|0|No|0|
|ShiTiantao|Yes|10|10|9|0|0|No|0|
|TimothyYungChengChen|Yes|10|9|9|1|0|No|0|

|||
|-|-|
|Number of Board meetings held in the year|10|
|Of which: Number of on-site meetings|0|
|Number of meetings held by way ofcommunication|4|
|Number of meetings held both on site and by wayof communication|6|

(II) IndependentDirectors’ objection to the relevant matters of the Company
Nil
IV. Major Opinions and Suggestions of the Special Committees of the Board in Performing their Duties during the Reporting Period
(1) Audit Committee: during the reporting period, the Company convened 8 meetings of the Audit Committee to consider the annual report audit-related work for three times, namely, pre-audit, mid-audit and post audit and made relevant arrangement. The Audit Committee believed that the 2014 financial and accounting statement issued by the Company was in compliance with the requirements of the Accounting Standards for Business Enterprises, and gave a true and fair view of theCompany’s assets and liabilities for the year ended 31 December 2014 and operating results and cash flow for the year 2014. There was no significant unresolved disagreement between accounting and auditing. There was no material risk affecting theCompany’s operation. The Company operated prudently and would be able to continue as a going concern. Other meetings considered the annual budget of connected transactions, internal control self-assessment reports, profit distribution plan, appointment of accounting firm, acquisition of assets overseas White Goods of the Group, acquisition of minorityshareholder’s interest from Mitsubishi/Carrier, and the first quarterly report, the semi-annual report and the third quarterly report of 2015. The Audit Committee agreed the above resolutions and submitted the same to the Board for consideration.
(2) Remuneration and Appraisal Committee: during the reporting period, the Company
convened 3 meetings of the Remuneration and Appraisal Committee to consider the grant of interest
of the reserved portion of the Phase IV Share Incentive, the first exercise/unlocking of the first grant
portion and the annual remuneration package of Directors, supervisors and senior management. The
Qingdao Haier Co., Ltd. 2015 Annual Report
Remuneration and Appraisal Committee agreed the above resolutions and submitted the same to the Board for consideration.
(3) Nomination Committee: during the reporting period, the Company convened 2 meetings of the Nomination Committee to summarize the annual performance of duties by Directors, supervisors and senior management and consider resolution to re-elect independent directors. The Nomination Committee agreed the above resolutions.
(4) Strategy Committee: during the reporting period, the Company convened 3 meetings of the Strategy Committee to consider the plan for return of shareholders in the next three years, acquisition of assets of overseas White Goods of the Group, trusted management assets and acquisition of minority shareholdings from Mitsubishi/Carrier. The Strategy Committee agreed the above resolutions and submitted the same to the Board for consideration.
V. SupervisoryCommittee’s Explanation on Risks about the Company
During the reporting period, the Supervisory Committee had no disagreement on any supervisory matters.
VI. Statements of the Company on Inability to Maintain the Independence or the Ability of Independent Operations between the Company and the Controlling Shareholders with respect to Business, Personnel, Assets, Organization and Finance
Corresponding solutions, working progress and subsequent working plans of the Company in case of horizontal competition
In recent years, the Company made constant efforts in optimizing connected transactions: In 2015, the Company further reduced the number of connected transactions by acquiring overseas WhiteGoods’ assets and setting up an independent platform for exports and sales. In 2015, the trading amount of connected transactions regarding procurement amounted to RMB27.6 billion, which accounted for32.8% of similar transactions, representing a year-on-year decrease of 3.8 pct. pt.; the trading amount of connected transactions regarding sales amounted to RMB7.6 billion, which accounted for8.4% of similar transactions, representing a year-on-year decrease of 3.6 pct. pt. . The optimization of connected transactions was obvious. So far, the Company continued to promote work in respect of reducing connected transactions and solving horizontal competition according to relevant commitment set out in the Announcement of Qingdao Haier on the further support of development of Qingdao Haier, solutions of horizontal competition and decrease of connected transactions by controlling shareholder (L2011-001).
Qingdao Haier Co., Ltd. 2015 Annual Report
VII. Establishment and Implementation of Appraisal and Incentive Mechanism for Senior Management during the Reporting Period
In 2015, the Company adopted an overall compensation system connecting sales force with their orders and remuneration and tied to the strategic income statement for the compensation system of the management. This system was based on the strategic income statement and used Vertical and Horizontal Two-dimensional Lattice Model, in which the vertical dimension reflected the strategy support and minor self-evolvement and upgrading, while the horizontal dimension reflected the competitiveness of market. The competitiveness of compensation was determined by such elements as―support forstrategy‖,―competitiveness of markettarget‖ and―minor self-evolvement andupgrading‖. The senior management receives annual appraisal, which was the key factor to performance bonus and development. On one hand, theCompany’s overall compensation system of connecting sales force with their orders and remuneration diversified the way of salary distribution of the management, and made the compensation mechanism for management more flexible on the other hand, which drove the innovation of management. Meanwhile, theCompany’s salary incentive system was further improved, the incentive and restriction mechanism was strengthened and a mechanism that shares interests and risks with shareholders and management was formulated by implementing incentive tools such as Share Option Incentive Scheme.
Ⅷ. Whether to disclose the self-assessment report on internal control
√Applicable□Not applicable
For details, please refer to the 2015 Internal Control Assessment Report of Qingdao Haier Co., Ltd disclosed on the same date of this report.
Explanations on Material Defects Found in Internal Control during the Reporting Period
□Applicable√Not applicable
Ⅸ. Relevant Explanations on the Audit Report of Internal Control
TheCompany’s auditor Shandong Hexin Accountants LLP has audited the efficiency of internal control relating to the financial report of the Company, and has issued its standard unqualifiedauditor’s report for theCompany’s internal control (Hexin Shen Zi (2016) No.000366).
For further details of the Audit Report of Internal Control of Qingdao Haier Co., Ltd., please refer to relevant announcements published on the website of the Shanghai Stock Exchange (www.sse.com.cn) on 29 April 2016.
Whether to disclose the audit report on internal control: Yes
Qingdao Haier Co., Ltd. 2015 Annual Report
SECTION X RELEVANT INFORMATION ON CORPORATE
BONDS
□Applicable√Not applicable
Qingdao Haier Co., Ltd. 2015 Annual Report
SECTION XI FINANCIAL REPORT
I.Auditors’ Report
√Applicable□Not applicable
Auditors’ Report
Hexin Shen Zi (2016) No. 000366 To Shareholders of Qingdao Haier Co., Ltd.:
The Company have audited the accompanying financial statements of Qingdao Haier Co., Ltd. (hereinafter referred to as―HaierCompany‖), which comprise the consolidated and parent company balance sheets as at 31 December 2015, and the consolidated and parent company income statements for the year of 2015, the consolidated and parent company cash flow statements, the consolidated and parent company statements of changes inshareholders’ equity and the notes to the financial statements.
I.Management’s Responsibility for the Financial Statements
Management of Haier Company is responsible for the preparation and fair presentation of these financial statements. This responsibility includes:
(1) preparing these financial statements in accordance with the requirements of Accounting Standards for Business Enterprises, and presenting fairly;
(2) designing, implementing and maintaining the internal control necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
II.Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. The Company conducted our audit in accordance with China Standards on Auditing. Those standards require the Company to comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on theauditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to theentity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
The Company believes that the audit evidence it has obtained is sufficient and appropriate to provide a basis for our audit opinion.
Qingdao Haier Co., Ltd. 2015 Annual Report
III. Opinion
In our opinion, the accompanying financial statements of Haier Company present fairly, in all material respects, the consolidated and parentcompany’s financial position of Haier Company as at 31 December 2015, and consolidated and parentcompany’s operating results and consolidated and parentcompany’s cash flows for the year of 2015 in accordance with the requirements of Accounting Standards for Business Enterprises.
Shandong Hexin Accountants LLP China Certified Public Accountant: Zhao Bo
Jinan, the PRC China Certified Public Accountant: Wang Lin
28 April 2016
Qingdao Haier Co., Ltd. 2015 Annual Report
II. Financial Statements
Consolidated Balance Sheet
31 December 2015
Prepared by: Qingdao Haier Co., Ltd.
Unit and Currency: RMB
|||||||||
|-|-|-|-|-|-|-|-|
||Items||Notes||Closing balance||Opening balance|
|Current Assets:||||||||
|Monetary Capital||VII. 1||24,714,814,951.97||31,225,415,815.88||
|Clearing settlement funds||||||||
|Placements with banks||||||||
|Financial assets measured at fairvalue and changes of whichincluded in current profit and loss||VII.2||22,069,897.04||103,668,887.71||
|Derivative financial assets||||||||
|Bills receivables||VII. 3||12,673,651,612.86||16,474,120,740.17||
|Trade receivables||VII.4||6,141,390,930.87||6,736,377,962.77||
|Prepayments||VII.5||556,872,003.39||836,083,992.96||
|Premiums receivable||||||||
|Reinsurance accounts receivables||||||||
|Reinsurance contract reservesreceivable||||||||
|Interests receivables||VII.6||183,731,216.46||178,522,845.11||
|Dividends receivables||||85,826,158.26||54,524,472.84||
|Other receivables||VII.7||478,574,109.77||604,590,457.24||
|Financial assets purchased underresale agreements||||||||
|Inventories||VII.8||8,559,244,039.09||9,021,640,940.91||
|Assets classified as held for sale||||||||
|Non-current assets due within oneyear||||||||
|Other current assets||VII.9||1,451,065,197.30||791,018,741.65||
|Total current assets||||54,867,240,117.01||66,025,964,857.24||
|Non-current assets:||||||||
|Loans and advances granted||||||||
|Available-for-sale financial assets||VII.10||2,837,318,201.20||1,430,621,348.35||
|Held-to-maturity investments||||||||
|Long-term receivables||||||||
|Long-term equity investments||VII.11||4,958,908,333.93||3,582,596,477.92||
|Investment properties||VII.12||3,449,331.95||30,582,852.72||
|Fixed assets||VII.13||8,420,548,468.52||7,372,658,455.93||
|Construction in progress||VII.14||1,391,471,823.07||1,341,216,468.78||
|Construction materials||||||||
|Disposals of fixed assets||VII.15||74,096,355.04||31,624,205.58||
|Biological assets for production||||||||
|Fuel assets||||||||
|Intangible assets||VII.16||1,453,470,715.09||1,008,290,734.35||
|Development expenses||VII.17||78,064,195.82||68,341,844.86||
|Goodwill||VII.18||392,484,932.55||74,530,241.86||

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||
|-|-|-|-|
|Long-term deferred expenditures|VII.19|113,053,145.87|106,330,304.35|
|Deferred income tax assets|VII.20|971,483,089.80|919,731,174.63|
|Other non-current assets|VII.21|399,084,091.53|356,230,677.87|
|Total non-current assets||21,093,432,684.37|16,322,754,787.20|
|Total assets||75,960,672,801.38|82,348,719,644.44|
|Current liabilities:||||
|Short-term borrowings|VII.22|1,873,108,241.50|2,291,941,025.91|
|Borrowings from central bank||||
|Absorbing deposit and deposit ininter-bank market||||
|Placements from banks||||
|Financial liabilities measured atfair value and changes of whichincluded in current profit and loss|VII.23|7,707,414.12|42,686.85|
|Derivative financial liabilities||||
|Bills payable|VII.24|11,596,885,346.06|14,243,037,672.77|
|Trade payables|VII.25|14,713,516,620.92|15,312,971,646.36|
|Payments received in advance|VII.26|3,170,457,870.50|4,336,427,690.63|
|Disposal of repurchased financialassets||||
|Handling charges andcommissions payable||||
|Staff remuneration payable|VII.27|1,233,544,265.57|1,128,162,573.11|
|Taxes payable|VII.28|909,937,816.09|1,531,384,978.58|
|Interests payable|VII.29|15,081,416.34|7,921,318.87|
|Dividends payable|VII.30|133,382,009.73|147,312,376.11|
|Other payables|VII.31|6,056,795,354.04|7,083,921,880.47|
|Reinsurance accounts payable||||
|Deposits for insurance contracts||||
|Consumer deposits for trading insecurities||||
|Amounts due to issuer forsecurities underwriting||||
|Liabilities classified as held forsale||||
|Non-current liabilities due withinone year|VII.32|72,898,028.33||
|Other current liabilities||||
|Total current liabilities||39,783,314,383.20|46,083,123,849.66|
|Non-current liabilities:||||
|Long-term borrowings|VII.33|297,241,293.20||
|Debentures payable|VII.34|1,107,734,516.43|1,800,700,630.05|
|Including: preference shares||||
|Perpetual bonds||||
|Long-term payable|VII.35|59,916,852.02||
|Long-term employee benefitspayable|VII.36|33,209,406.02|24,531,136.34|
|Special payable||||
|Estimated liabilities|VII.37|1,899,543,637.19|2,251,547,010.98|
|Deferred income|VII.38|264,120,554.33|135,707,501.91|
|Deferred income tax liabilities|VII.20|113,330,102.11|130,113,355.29|
|Other non-current liabilities||||
|Total non-current liabilities||3,775,096,361.30|4,342,599,634.57|
|Total liabilities||43,558,410,744.50|50,425,723,484.23|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||
|-|-|-|-|
|Owners’ equity||||
|Share capital|VII.39|6,123,154,268.00|3,045,935,134.00|
|Other equity instruments||||
|Including: preference shares||||
|Perpetual bonds||||
|Capital reserve|VII.40|83,383,194.51|5,978,787,439.45|
|Less: Treasury stock|VII.41|77,604,544.70|47,160,730.00|
|Other comprehensive income|VII.42|633,183,460.03|577,613,439.63|
|Special reserve||||
|Surplus reserve|VII.43|2,026,085,301.23|2,024,105,532.62|
|General risk provisions||||
|Undistributed profits|VII.44|13,905,774,481.88|13,029,187,314.71|
|Total equity attributable toowners of the parent company||22,693,976,160.95|24,608,468,130.41|
|Minority interests||9,708,285,895.93|7,314,528,029.80|
|Total owners’ equity||32,402,262,056.88|31,922,996,160.21|
|Total liabilities and owners’equities||75,960,672,801.38|82,348,719,644.44|

Legal representative: Liang Haishan Chief accountant: Gong Wei Person in charge of accounting department: Yin Wenjun(尹文峻) Balance Sheet of the Parent Company
31 December 2015
Prepared by: Qingdao Haier Co., Ltd.
Unit and Currency: RMB
||||||||
|-|-|-|-|-|-|-|
||Items|Notes||Closing balance||Opening balance|
|Current Assets:|||||||
|Monetary Capital|||562,827,007.96||2,574,988,196.28||
|Financial assets measured at fairvalue and changes of whichincluded in current profit and loss|||||||
|Derivative financial assets|||||||
|Notes receivables|||199,998,373.14||233,249,781.27||
|Trade receivables||XVII.1|208,603,253.46||418,826,810.97||
|Prepayments|||12,540,384.04||18,947,243.80||
|Interests receivables|||||19,480,111.12||
|Dividends receivables|||230,081,082.42||1,041,461,029.41||
|Other receivables||XVII.2|61,344,421.55||948,024.95||
|Inventories|||57,403,412.46||37,191,061.86||
|Assets classified as held for sale|||||||
|Non-current assets due withinone year|||||||
|Other current assets|||||||
|Total current assets|||1,332,797,935.03||4,345,092,259.66||
|Non-current assets:|||||||
|Available-for-sale financialassets|||522,942,584.08|||509,283,509.72|
|Held-to-maturity investments|||||||
|Long-term receivables|||||||
|Long-term equity investments||XVII.3|14,141,733,112.49|||8,597,830,164.76|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||
|-|-|-|-|
|Investment properties||||
|Fixed assets|127,222,054.64||136,611,658.02|
|Construction in progress|17,551,808.87||3,445,371.41|
|Construction materials||||
|Disposals of fixed assets||||
|Biological assets for production||||
|Fuel assets||||
|Intangible assets|7,679,047.68||8,351,664.99|
|Development expenses||||
|Goodwill||||
|Long-term deferred expenditures||||
|Deferred income tax assets|9,952,751.78||7,475,901.26|
|Other non-current assets||||
|Total non-current assets|14,827,081,359.54||9,262,998,270.16|
|Total assets|16,159,879,294.57||13,608,090,529.82|
|Current liabilities:||||
|Short-term borrowings||||
|Financial liabilities measured atfair value and changes of whichincluded in current profit and loss||||
|Derivative financial liabilities||||
|Bills payable||||
|Trade payables|792,433,118.67|183,884,607.65||
|Payments received in advance|1,599,348.89|||
|Staff remuneration payable|35,094,333.55|27,049,426.39||
|Taxes payable|29,967,928.75|50,814,082.00||
|Interests payable||||
|Dividends payable||||
|Other payables|2,597,200,912.54|1,370,247,395.86||
|Liabilities classified as held forsale||||
|Non-current liabilities due withinone year||||
|Other current liabilities||||
|Total current liabilities|3,456,295,642.40|1,631,995,511.90||
|Non-current liabilities:||||
|Long-term borrowings||||
|Debentures payable||||
|Including: preference shares||||
|Perpetual bonds||||
|Long-term payable|20,000,000.00|||
|Long-term employee benefitspayable||||
|Special payables||||
|Estimated liabilities||||
|Deferred income|17,700,000.00|||
|Deferred income tax liabilities|3,325,062.74|4,198,218.27||
|Other non-current liabilities||||
|Total non-current liabilities|41,025,062.74|4,198,218.27||
|Total liabilities|3,497,320,705.14|1,636,193,730.17||
|Owners’ equity：||||
|Share capital|6,123,154,268.00|3,045,935,134.00||
|Other equity instruments||||
|Including: preference shares||||

Qingdao Haier Co., Ltd. 2015 Annual Report
||||
|-|-|-|
|Perpetual bonds|||
|Capital reserve|2,229,511,649.19|5,045,616,941.16|
|Less: Treasury stock|77,604,544.70|47,160,730.00|
|Other comprehensive income|18,842,022.25|7,231,809.03|
|Special reserve|||
|Surplus reserve|1,332,647,187.44|1,138,128,545.32|
|Undistributed profits|3,036,008,007.25|2,782,145,100.14|
|Total owners’ equity|12,662,558,589.43|11,971,896,799.65|
|Total liabilities and owners’equities|16,159,879,294.57|13,608,090,529.82|

Legal representative: Liang Haishan Chief accountant: Gong Wei Person in charge of accounting department: Yin Wenjun(尹文峻) Consolidated Income Statement
January-December 2015
Unit and Currency: RMB
|||||||||
|-|-|-|-|-|-|-|-|
||Items||Notes||Current amount||Prior amount|
|Ⅰ. Total operating revenue||||89,748,320,410.91||96,929,763,894.36||
|Including: operating revenue||VII.45||89,748,320,410.91||96,929,763,894.36||
|Interest income||||||||
|Insurance premiums earned||||||||
|Fee and commission income||||||||
|Ⅱ. Total cost of operations||||84,526,081,762.99||89,934,380,570.26||
|Including: operating cost||VII.45||64,658,463,207.53||70,170,401,158.93||
|Interest expenses||||||||
|Fee and commission expenses||||||||
|Insurance withdrawal payment||||||||
|Net payment from indemnity||||||||
|Net provisions for insurance contract||||||||
|Insurance policy dividend paid||||||||
|Reinsurance cost||||||||
|Business taxes and surcharge||VII.46||397,251,039.85||404,547,062.67||
|Selling expenses||VII.47||13,101,282,436.95||12,579,781,619.54||
|Administrative expenses||VII.48||6,549,193,839.44||6,813,114,797.83||
|Financial expenses||VII.49||-498,120,405.83||-256,648,580.46||
|Loss in assets impairment||VII.50||318,011,645.05||223,184,511.75||
|Add: income from change in fair value(losses are represented by ―-‖)||VII.51||-90,223,059.50||112,363,366.12||
|Investment income (losses arerepresented by ―-‖)||VII.52||1,320,302,216.61||1,192,580,008.87||
|Including: investment income ofassociates and joint ventures||||||||
|Exchange gain (losses are representedby ―-‖)||||||||
|Ⅲ. Operating profit (losses are represented by―-‖)||||6,452,317,805.03||8,300,326,699.09||
|Add: non-operating income||VII.53||618,457,263.82||378,335,366.09||
|Including: gain from disposal ofnon-current assets||||||||

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||
|-|-|-|-|
|Less: non-operating expenses|VII.54|95,916,162.05|102,273,976.56|
|Including: Loss from disposal ofnon-current assets||||
|Ⅳ. Total profit (total losses are representedby ―-‖)||6,974,858,906.80|8,576,388,088.62|
|Less: income tax expense|VII.55|1,052,769,417.97|1,527,486,745.62|
|Ⅴ. Net profit (net losses are represented by―-‖)||5,922,089,488.83|7,048,901,343.00|
|Net profit attributable to owners of theparent company||4,300,760,542.82|5,337,541,039.32|
|Profit or loss attributable to minorityshareholders||1,621,328,946.01|1,711,360,303.68|
|VI. Other comprehensive income, net of tax|VII.56|73,297,094.11|511,746,848.93|
|Other comprehensive income attributable toowners of the parent company, net of tax||55,715,670.67|412,138,693.29|
|(I) Other comprehensive income thatwill not be reclassified subsequently to profitor loss||-6,265,217.22|22,971,042.62|
|1. Changes in net liabilities or netassets arising from re-measurement of definedbenefit plans||-6,265,217.22|22,971,042.62|
|2. Share of other comprehensiveincome of investees that cannot be reclassifiedto profit or loss under equity method||||
|(II) Other comprehensive income to bereclassified subsequently to profit or loss||61,980,887.89|389,167,650.67|
|1. Share of other comprehensiveincome of investees that will be reclassifiedsubsequently to profit or loss under equitymethod||39,584,241.91|40,068,730.03|
|2. Gain or loss from change in fairvalue of available-for-sale financial assets||33,989,723.80|322,632,665.08|
|3. Gain or loss arising fromreclassification from held-to-maturityinvestments to available-for-sale financialassets||||
|4. Effective portion of gain or lossarising from cash flow hedging instruments||||
|5. Exchange differences on translationof financial statements denominated inforeign currencies||-11,593,077.82|26,466,255.56|
|6. Other||||
|Other comprehensive income attributable tominority shareholders, net of tax||17,581,423.44|99,608,155.64|
|Ⅶ. Total comprehensive income||5,995,386,582.94|7,560,648,191.93|
|Total comprehensive income attributable tothe shareholders of parent company||4,356,476,213.49|5,749,679,732.61|
|Total comprehensive income attributable tothe minority shareholders||1,638,910,369.45|1,810,968,459.32|
|Ⅷ . Earnings per share:||||
|(I) Basic earnings per share (RMB/share)|XVIII.1|0.705|0.933|
|(II) Diluted earnings per share(RMB/share)|XVIII.1|0.705|0.932|

Qingdao Haier Co., Ltd. 2015 Annual Report
For the business combination under common control effected in the current period, the net profit recognized by the merged party before the combination was RMB223,063,608.99, and the net profit recognized by the merged party in the previous period was nil.
Legal representative: Liang Haishan Chief accountant: Gong Wei Person in charge of accounting department: Yin Wenjun(尹文峻)
Income Statement of the Parent Company
January-December 2015
Unit and Currency: RMB
|||||||||
|-|-|-|-|-|-|-|-|
||Items||Notes||Current amount||Prior amount|
|Ⅰ. Operating revenue||XVII.4||2,573,182,435.31||2,192,966,394.66||
|Less: Operation cost||XVII.4||1,926,771,620.58||1,624,174,850.41||
|Business taxes and surcharge||||12,977,177.74||7,363,098.35||
|Selling expenses||||145,447,543.14||93,645,130.26||
|Administrative expenses||||363,775,327.41||364,227,286.05||
|Financial expenses||||-84,722,654.35||-33,860,962.14||
|Loss in assets impairment||||-4,996,712.21||9,261,395.48||
|Add: income from change in fair value(losses are represented by ―-‖)||||||||
|Investment income (losses arerepresented by ―-‖)||XVII.5||1,695,629,598.98||648,275,569.64||
|Including: investment income ofassociates and joint ventures||||||||
|Ⅱ. Operating profit (losses are represented by―-‖)||||1,909,559,731.98||776,431,165.89||
|Add: non-operating income||||66,879,624.47||47,160,881.21||
|Including: gain from disposal ofnon-current assets||||||||
|Less: non-operating expenses||||3,549,905.23||862,828.21||
|Including: Loss from disposal ofnon-current assets||||||||
|Ⅲ. Total Profit (losses are represented by ―-‖)||||1,972,889,451.22||822,729,218.89||
|Less: income tax expense||||27,703,030.06||89,016,122.71||
|Ⅳ. Net Profit (net losses are represented by―-‖)||||1,945,186,421.16||733,713,096.18||
|V. Other comprehensive income, net of tax||||11,610,213.22||5,212,175.21||
|(I) Other comprehensive income will not bereclassified subsequently to profit or loss||||||||
|1. Changes in net liabilities or net assetsarising from re-measurement of definedbenefit plans||||||||
|2. Share of other comprehensive incomeof investees that cannot be reclassified toprofit or loss under equity method||||||||
|(II) Other comprehensive income to bereclassified subsequently to profit or loss||||11,610,213.22||5,212,175.21||
|1. Share of other comprehensive incomeof investees that will be reclassified||||||||

Qingdao Haier Co., Ltd. 2015 Annual Report
||||
|-|-|-|
|subsequently to profit or loss under equitymethod|||
|2. Gain or loss from change in fair valueof available-for-sale financial assets|11,610,213.22|5,212,175.21|
|3. Gain or loss arising fromreclassification from held-to-maturityinvestments to available-for-sale financialassets|||
|4. Effective portion of gain or lossarising from cash flow hedging instruments|||
|5. Exchange differences on translation offinancial statements denominated in foreigncurrencies|||
|6. Other|||
|VI. Total comprehensive income|1,956,796,634.38|738,925,271.39|
|VII. Earnings per share:|||
|(I) Basic earnings per share (RMB/share)|||
|(II) Diluted earnings per share(RMB/share)|||

Legal representative: Liang Haishan Chief accountant: Gong Wei Person in charge of accounting department: Yin Wenjun(尹文峻)
Consolidated Cash Flow Statement
January-December 2015
Unit and Currency: RMB
||||||||
|-|-|-|-|-|-|-|
||Items|Notes||Current amount||Prior amount|
|Ⅰ. Cash flows from operatingactivities：|||||||
|Cash received from the sale of goodsand rendering of services|||110,869,088,852.15||102,934,215,503.17||
|Net increase in consumer andinterbank deposits|||||||
|Net increase in borrowing fromPBOC|||||||
|Net cash increase in borrowing fromother financial institutes|||||||
|Cash received from premiums underoriginal insurance contract|||||||
|Net cash received from reinsurancebusiness|||||||
|Net increase in deposits of policyholders and investment|||||||
|Net increase from the disposal offinancial assets measured at fair valueand changes of which included incurrent profit and loss|||||||

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||
|-|-|-|-|
|Cash paid for interest, bank chargesand commissions||||
|Net increase in cash borrowed||||
|Net increase in cash received fromrepurchase operation||||
|Refunds of taxes||612,217,878.12|374,918,483.82|
|Cash received from other relatedoperating activities|VII.57|985,008,101.39|758,897,048.75|
|Sub-total of cash inflows fromoperating activities||112,466,314,831.66|104,068,031,035.74|
|Cash paid on purchase of goods andservices||81,161,991,549.29|73,667,726,571.88|
|Net increase in loans and advances||||
|Net increase in deposits in PBOC andinterbank||||
|Cash paid for compensation paymentsunder original insurance contract||||
|Cash paid for interest, bank chargesand commissions||||
|Cash paid for insurance policydividend||||
|Cash paid to and on behalf ofemployees||7,864,497,365.88|7,522,736,415.84|
|Cash paid for all types of taxes||7,272,435,363.68|6,271,581,316.51|
|Cash paid to other operation relatedactivities|VII.58|10,587,789,939.88|9,836,625,433.16|
|Sub-total of cash outflows fromoperating activities||106,886,714,218.73|97,298,669,737.39|
|Net cash flows from operatingactivities|VII.63|5,579,600,612.93|6,769,361,298.35|
|Ⅱ. Cash flows from investingactivities:||||
|Cash received from disposal ofinvestments||1,053,008,693.06|11,578,295.58|
|Cash received from return oninvestments||108,134,781.31|70,236,329.50|
|Net cash received from the disposalof fixed assets, intangible assets andother long term assets||11,208,475.16|98,915,961.08|
|Net cash received from disposal ofsubsidiaries and other operatingentities||498,099,921.65|404,649,672.19|
|Cash received from otherinvestment related activities|VII.59|10,972,523.38|43,084,247.15|
|Sub-total of cash inflows frominvesting activities||1,681,424,394.56|628,464,505.50|
|Cash paid on purchase of fixedassets, intangible assets and other longterm assets||2,491,741,022.92|2,269,936,328.78|
|Cash paid for investments||3,709,219,060.70|1,864,948,812.60|
|Net increase in secured loans||||
|Net cash paid on acquisition ofsubsidiaries and other operating entities||5,672,266,259.21||
|Cash paid on other investmentrelated activities|VII.60|81,601,742.20|132,857,621.10|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||
|-|-|-|-|
|Sub-total of cash outflows frominvesting activities||11,954,828,085.03|4,267,742,762.48|
|Net cash flows from investingactivities||-10,273,403,690.47|-3,639,278,256.98|
|Ⅲ. Cash flows from financingactivities:||||
|Cash received from investment||342,479,145.89|7,110,116,929.58|
|Including: cash received bysubsidiaries from minority shareholders’investment||||
|Cash received from borrowings||6,603,489,224.90|6,697,670,732.73|
|Cash received from issuing bonds||||
|Cash received from other financingrelated activities|VII.61|17,063,242.50||
|Sub-total of cash inflows fromfinancing activities||6,963,031,613.29|13,807,787,662.31|
|Cash paid on repayment ofborrowings||6,939,990,302.96|5,074,669,053.08|
|Cash paid on distribution ofdividends, profits, or interest expenses||1,764,209,204.58|1,490,783,422.99|
|Including: dividend, profit paid tominority shareholders by subsidiaries||||
|Cash paid on other financingactivities|VII.62|154,442,801.98|88,598,125.53|
|Sub-total of cash outflows fromfinancing activities||8,858,642,309.52|6,654,050,601.60|
|Net cash flows from financingactivities||-1,895,610,696.23|7,153,737,060.71|
|Ⅳ. Effect of fluctuations in exchangerates on cash and cash equivalents||151,920,567.09|-137,950,662.95|
|Ⅴ. Net increase in cash and cashequivalents||-6,437,493,206.68|10,145,869,439.13|
|Add: balance of cash and cashequivalents at the beginning of theperiod|VII.64|31,120,319,710.77|20,974,450,271.64|
|Ⅵ. Balance of cash and cashequivalents at the end of the period|VII.64|24,682,826,504.09|31,120,319,710.77|

Legal representative: Liang Haishan Chief accountant: Gong Wei Person in charge of accounting department: Yin Wenjun(尹文峻) Cash Flow Statement of the Parent Company
January-December 2015
Unit and Currency: RMB
||||||||
|-|-|-|-|-|-|-|
||Items|Notes||Current amount||Prior amount|
|Ⅰ. Cash flows from operatingactivities：|||||||
|Cash received from the sale ofgoods and rendering of services|||2,217,575,422.31||1,531,868,775.27||

Qingdao Haier Co., Ltd. 2015 Annual Report
||||
|-|-|-|
|Refunds of taxes|42,146,929.16|9,618,928.65|
|Cash received from other relatedoperating activities|74,003,814.39|60,881,420.48|
|Sub-total of cash inflows fromoperating activities|2,333,726,165.86|1,602,369,124.40|
|Cash paid on purchase of goodsand services|909,137,414.20|749,469,031.82|
|Cash paid to and on behalf ofemployees|272,442,543.99|240,702,656.68|
|Cash paid for all types of taxes|161,291,640.06|68,998,341.67|
|Cash paid to other operationrelated activities|215,727,364.29|163,752,431.09|
|Sub-total of cash outflows fromoperating activities|1,558,598,962.54|1,222,922,461.26|
|Net cash flows fromoperating activities|775,127,203.32|379,446,663.14|
|Ⅱ. Cash flows from investingactivities:|||
|Cash received from disposal ofinvestments|315,000,000.00|730,101,800.00|
|Cash received from return oninvestments|1,996,893,804.09|133,380,745.79|
|Net cash received from thedisposal of fixed assets, intangibleassets and other long term assets|||
|Net cash received from disposalof subsidiaries and other operatingentities|||
|Cash received from otherinvestment related activities|2,889,970,671.77||
|Sub-total of cash inflows frominvesting activities|5,201,864,475.86|863,482,545.79|
|Cash paid on purchase of fixedassets, intangible assets and other longterm assets|30,576,458.90|15,690,271.41|
|Cash paid for investments|6,685,765,290.81|1,656,892,514.09|
|Net cash paid on acquisition ofsubsidiaries and other operatingentities|||
|Cash paid on other investmentrelated activities|||
|Sub-total of cash outflows frominvesting activities|6,716,341,749.71|1,672,582,785.50|
|Net cash flows frominvesting activities|-1,514,477,273.85|-809,100,239.71|
|Ⅲ. Cash flows from financingactivities:|||
|Cash received from investment|251,306,680.00|3,426,507,421.81|
|Cash received from borrowings|||
|Cash received from otherfinancing related activities|||
|Sub-total of cash inflows fromfinancing activities|251,306,680.00|3,426,507,421.81|
|Cash paid on repayment ofborrowings|||

Qingdao Haier Co., Ltd. 2015 Annual Report
||||
|-|-|-|
|Cash paid on distribution ofdividends, profits, or interest expenses|1,483,786,310.61|1,251,584,532.40|
|Cash paid on other financingactivities|47,397,554.88|-|
|Sub-total of cash outflows fromfinancing activities|1,531,183,865.49|1,251,584,532.40|
|Net cash flows fromfinancing activities|-1,279,877,185.49|2,174,922,889.41|
|Ⅳ. Effect of fluctuations in exchangerates on cash and cash equivalents|7,066,067.70|-1,690,872.78|
|Ⅴ. Net increase in cash and cashequivalents|-2,012,161,188.32|1,743,578,440.06|
|Add: balance of cash and cashequivalents at the beginning of theperiod|2,574,988,196.28|831,409,756.22|
|Ⅵ. Balance of cash and cashequivalents at the end of the period|562,827,007.96|2,574,988,196.28|

Legal representative: Liang Haishan Chief accountant: Gong Wei Person in charge of accounting department: Yin Wenjun(尹文峻)
Qingdao Haier Co., Ltd. 2015 Annual Report
Consolidated Statement of Changes in Equity
January-December 2015
Unit and Currency: RMB
||||||||||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||||Current period||||||||||||||||||||
||||Equity attributable to owners of the parent company||||||||||||||||||||
|||||Other equity||||||||||||||||||Total|
||Items|||||||||||Other||||General||||Minority|||
|||||instruments||||||Less:||||||||Undistri||||owners’|
||||Share|||||Capital||||compreh|Special||Surplus|risk||||interests|||
|||||Preferen|Perpetua|||||Treasury||||||||buted||||equity|
||||capital|||||reserve||||ensive|reserve||reserve|provisio|||||||
|||||ce|l|Others||||stock||||||||profits|||||
|||||||||||||income||||ns|||||||
|||||share|bonds||||||||||||||||||
|Ⅰ. Closingbalance for theprevious year||3,045,935,134.00|||||3 ,5 82,932,123.87||47,160,730.00||378,701,521.23|||2 ,0 24,105,532.62|||1 2 ,855,511,059.42||7,279,942,332.91||29,119,966,974.05||
|Add: changes inaccountingpolicies|||||||||||||||||||||||
|Correctionof previous errors|||||||||||||||||||||||
|Theconsolidation ofenterprises undercommon control|||||||2,493,270,671.16||||1 0 1,496,562.82||||||1 7 3,676,255.29||34,585,696.89||2,803,029,186.16||
|Others|||||||-97,415,355.58||||9 7 ,415,355.58||||||||||||
|Ⅱ. Openingbalance for thecurrent year||3,045,935,134.00|||||5 ,9 78,787,439.45||47,160,730.00||577,613,439.63|||2 ,0 24,105,532.62|||1 3 ,029,187,314.71||7,314,528,029.80||31,922,996,160.21||
|Ⅲ.Increase/decreaseand change ofamount for thecurrent period(decrease isrepresented by―-‖)||3,077,219,134.00|||||- 5 , 895,404,244.94||30,443,814.70||55,570,020.40|||1 ,9 79,768.61|||8 7 6,587,167.17||2,393,757,866.13||479,265,896.67||
|(I) Totalcomprehensive|||||||||||55,715,670.67||||||4 , 3 00,760,542.82||1,638,910,369.45||5,995,386,582.94||

Qingdao Haier Co., Ltd. 2015 Annual Report
||||||||||
|-|-|-|-|-|-|-|-|-|
|income|||||||||
|(II) Capital injection andreduction by owners|31,094,000.00|- 2 , 849,424,761.21|30,443,814.70||- 1 9 2,538,873.51|- 1 ,732,849,861.60|979,763,087.99|-3,794,400,223.03|
|1. Ordinary shares investedby shareholders|31,094,000.00|2 2 0,212,680.00|-16,952,892.00||||9 9 5,974,570.73|1,264,234,142.73|
|2. Capital injected byholders of other equityinstruments||-|||||-|-|
|3. Amount of sharespayment credited to owner’sequity||2,490,000.00||||||2,490,000.00|
|4．Others||-3,072,127,441.21|47,396,706.70||-192,538,873.51|- 1 ,732,849,861.60|-16,211,482.74|-5,061,124,365.76|
|(III) Profit distribution|||||1 9 4,518,642.12|- 1 ,691,323,514.05|-224,915,591.31|-1,721,720,463.24|
|1. Appropriation to surplusreserves|||||194,518,642.12|- 1 94,518,642.12|||
|2．Provisions for generalrisks|||||||||
|3．Distribution to owners (orshareholders)||||||- 1 ,496,804,871.93|-224,915,591.31|-1,721,720,463.24|
|4．Others|||||||||
|(IV) Internal transfer ofowner’s equity|3,046,125,134.00|- 3 , 046,125,134.00|||||||
|1. Transfer of capitalreserves into capital (orshare capital)|3,046,125,134.00|- 3 , 046,125,134.00|||||||
|2. Transfer of surplusreserves into capital (orshare capital)|||||||||
|3. Surplus reserves used forremedying loss|||||||||
|4．Others|||||||||
|(V) Special reserve|||||||||
|1. Appropriated for thecurrent period|||||||||
|2. Utilized for the currentperiod|||||||||
|(VI) Others||1 4 5,650.27||-145,650.27|||||
|Ⅳ. Closing|6,123,154|8 3 ,383,19|77,604,54|633,183,4|2 ,0 26,085,|1 3 ,905,77|9,708,285,895|32,402,262,05|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||||||||
|-|-|-|-|-|-|-|-|-|
|balance for the currentperiod|,268.00|4.51|4.70|60.03|301.23|4,481.88|.93|6.88|

||||||||||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||||Previous period||||||||||||||||||||
||||Equity attributable to owners of the parent company||||||||||||||||||||
||Items|||Other equity||||||||Other|||||||||||
|||||||||||Less:||||||General||Undistribu||Minority||Total owners’|
||||Share|instruments||||Capital||||comprehen|Special||Surplus|||||interests||equity|
||||capital|Preferenc||||reserve||Treasury||sive|reserve||reserve|risk||ted|||||
|||||e|Perpetual|Others||||stock||||||provisions||profits|||||
||||||bonds|||||||income|||||||||||
|||||share|||||||||||||||||||
|Ⅰ. Closing balance for theprevious year||2,720,835,940.00|||||6 1 4,930,304.56||||1 8 ,753,515.32|||1 ,9 52,899,233.79|||9 ,1 86,744,529.78||5,536,698,221.13||20,030,861,744.58||
|Add: changes in accountingpolicies|||||||||||||||||||||||
|Correction of previous errors|||||||||||||||||||||||
|The consolidation ofenterprises under common control|||||||2,000,514.75||||4 9 ,305,875.44||||||- 1 7 2,307,423.16||23,966,739.86||-97,034,293.11||
|Others|||||||||||||||||||||||
|Ⅱ.Opening balance for thecurrent year||2,720,835,940.00|||||6 1 6,930,819.31||||6 8 ,059,390.76|||1 ,9 52,899,233.79|||9 ,0 14,437,106.62||5,560,664,960.99||19,933,827,451.47||
|Ⅲ.Increase/decrease and changeof amount for the current period(decrease is represented by ―-‖)||325,099,194.00|||||5 ,3 61,856,620.14||47,160,730.00||509,554,048.87|||7 1 ,206,298.83|||4 ,0 14,750,208.09||1,753,863,068.81||11,989,168,708.74||
|(I) Total comprehensive income|||||||||||412,138,693.29||||||5,337,541,039.32||1,810,968,459.32||7,560,648,191.93||
|(II) Capital injection andreduction by owners||325,099,194.00|||||5 ,4 59,271,975.72||47,160,730.00||||||||||1 0 2 ,058,106.02||5,839,268,545.74||
|1. Ordinary shares invested byshareholders||325,099,194.00|||||6 ,1 40,866,417.15||47,160,730.00||||||||||1 , 2 40,812,022.25||7,659,616,903.40||
|2. Capital injected by holders ofother equity instruments|||||||||||||||||||||||
|3. Amount of shares paymentcredited to owner’s equity|||||||8 5 ,420,000.00||||||||||||||85,420,000.00||
|4．Others|||||||- 7 6 7,014,441.43||||||||||||-1,138,753,916.23||-1,905,768,357.66||
|(III) Profit distribution||||||||||||||7 1 ,206,298.83|||- 1 , 322,790,831.23||-159,163,496.53||-1,410,748,028.93||
|1. Appropriation to surplusreserves||||||||||||||71,206,298.83|||-71,206,298.83||||||
|2．Provisions for general risks|||||||||||||||||||||||
|3．Distribution to owners (orshareholders)|||||||||||||||||-1,251,584,532.40||-159,163,496.53||-1,410,748,028.93||

Qingdao Haier Co., Ltd. 2015 Annual Report
||||||||||
|-|-|-|-|-|-|-|-|-|
|4．Others|||||||||
|(IV) Internal transfer of owner’sequity|||||||||
|1. Transfer of capital reserves intocapital (or share capital)|||||||||
|2. Transfer of surplus reservesinto capital (or share capital)|||||||||
|3. Surplus reserves used forremedying loss|||||||||
|4．Others|||||||||
|(V) Special reserve|||||||||
|1. Appropriated for the currentperiod|||||||||
|2. Utilized for the current period|||||||||
|(VI) Others||- 9 7 ,415,355.58||9 7 ,415,355.58|||||
|Ⅳ. Closing balance for thecurrent period|3,045,935,134.00|5 ,9 78,787,439.45|47,160,730.00|577,613,439.63|2 ,0 24,105,532.62|1 3 ,029,187,314.71|7,314,528,029.80|31,922,996,160.21|

 Legal representative: Liang Haishan Chief accountant: Gong Wei Person in charge of accounting department: Yi Wenjun(尹文峻) Statement of Changes in Equity of the Parent Company
January-December 2015
Unit and Currency: RMB
||||||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||||Current period||||||||||||||||
|||||Other equity instruments|||||||||||||||
|||||||||||Less:||Other||||Undistribute||Total|
||Items|||||||Capital|||||Special|Surplusreserve|||||
||||Share capital||Perpetual|||||Treasury||comprehensi||||d||owners’|
|||||Preference||||reserve|||||reserve||||||
||||||bon|Others||||stock||ve income||||profits||equity|
|||||share|||||||||||||||
||||||ds||||||||||||||
|Ⅰ. Closing balance for the previousyear||3,045,935,134.00|||||5 ,0 45,611,870.14||47,160,730.00||7,231,809.03|||1 ,1 31,458,371.35|2,722,113,534.38||11,905,189,988.90||
|Add: changes in accounting policies|||||||5,071.02|||||||6 ,6 70,173.97|60,031,565.76||66,706,810.75||
|Correction of previous errors|||||||||||||||||||
|Others|||||||||||||||||||
|Ⅱ. Opening balance for the currentyear||3,045,935,134.00|||||5 ,0 45,616,941.16||47,160,730.00||7,231,809.03|||1 ,1 38,128,545.32|2,782,145,100.14||11,971,896,799.65||
|Ⅲ. Increase/decrease and change ofamount for the current period(decrease is represented by ―-‖)||3,077,219,134.00|||||- 2 ,816,105,291.97||30,443,814.70||11,610,213.22|||1 9 4,518,642.12|253,862,907.11||690,661,789.78||
|(I) Total|||||||||||1 1 ,610,213.2||||1 , 9 45,186,42||1,956,796,63||

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||||||
|-|-|-|-|-|-|-|-|
|Comprehensive income|-|||2||1.16|4.38|
|(II) Capital injection and reductionby owners|31,094,000.00|2 3 0,019,842.03|30,443,814.70||||2 3 0,670,027.33|
|1. Ordinary shares invested byshareholders|31,094,000.00|2 2 0,212,680.00|-16,952,892.00||||2 6 8,259,572.00|
|2. Capital injected by holders ofother equity instruments||||||||
|3. Amount of shares paymentcredited to owner’s equity||2 ,4 90,000.00|||||2 ,4 90,000.00|
|4．Others||7 ,3 17,162.03|47,396,706.70||||- 4 0,079,544.67|
|(III) Profit distribution|||||1 9 4,518,642.12|-1,691,323,514.05|-1,496,804,871.93|
|1. Appropriation to surplus reserves|||||1 9 4,518,642.12|-194,518,642.12|-|
|2 ． Distribution to owners (orshareholders)||||||-1 , 496,804,871.93|-1,496,804,871.93|
|3．Others||||||||
|(IV) Internal transfer of owner’sequity|3,046,125,134.00|- 3 ,046,125,134.00||||||
|1. Transfer of capital reserves intocapital (or share capital)|3,046,125,134.00|- 3 ,046,125,134.00||||||
|2. Transfer of surplus reserves intocapital (or share capital)||||||||
|3. Surplus reserves used forremedying loss||||||||
|4．Others||||||||
|(V) Special reserve||||||||
|1. Appropriated for the currentperiod||||||||
|2. Utilized for the current period||||||||
|(VI) Others||||||||
|Ⅳ. Closing balance for the currentperiod|6,123,154,268.00|2 ,2 29,511,649.19|77,604,544.70|18,842,022.25|1 ,3 32,647,187.44|3,036,008,007.25|12,662,558,589.43|

||||||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||||Previous period||||||||||||||||
|||||Other equity instruments|||||Less:||Other|||||Undistribute||Total|
||Items|||||||Capital||||Special||Surplus|||||
||||Share capital||||||Treasury||comprehensi|||||d||owners’|
|||||Preference|Perpetual|||reserve||||reserve||reserve|||||
|||||||Others|||stock||ve income|||||profits||equity|
|||||share|bonds||||||||||||||
|Ⅰ . Closing balance for theprevious year||2,720,835,940.00|||||2 ,5 73,058,953.46|||2 ,0 19,633.82|||1 ,0 54,853,524.14||3,284,254,441.82||9,635,022,493.24||
|Add: changes in accounting policies|||||||5 31,483.14||||||8 ,5 77,931.14||90,459,184.58||99,568,598.86||
|Correction of previous errors|||||||||||||||||||

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||||||
|-|-|-|-|-|-|-|-|
|Others||||||||
|Ⅱ.Opening balance for the currentyear|2,720,835,940.00|2 ,5 73,590,436.60||2 ,0 19,633.82|1 ,0 63,431,455.28|3,374,713,626.40|9,734,591,092.10|
|Ⅲ.Increase/decrease and change ofamount for the current period(decrease is represented by ―-‖)|325,099,194.00|2 ,4 72,026,504.56|47,160,730.00|5,212,175.21|7 4 ,697,090.04|-592,568,526.26|2,237,305,707.55|
|(I) Total comprehensive income|-|||5 ,2 12,175.21||7 33 ,713,096.18|738,925,271.39|
|(II) Capital injection and reductionby owners|325,099,194.00|2 ,4 72,026,504.56|47,160,730.00||||2 ,7 49,964,968.56|
|1. Ordinary shares invested byshareholders|325,099,194.00|3 ,1 01,389,359.89|47,160,730.00||||3 ,3 79,327,823.89|
|2. Capital injected by holders ofother equity instruments||||||||
|3. Amount of shares paymentcredited to owner’s equity||8 5 ,420,000.00|||||8 5 ,420,000.00|
|4．Others||-7 1 4,782,855.33|||||-7 1 4,782,855.33|
|(III) Profit distribution|||||7 4 ,697,090.04|-1,326,281,622.44|-1,251,584,532.40|
|1. Appropriation to surplus reserves|||||7 4 ,697,090.04|-74,697,090.04|-|
|2．Distribution to owners (orshareholders)||||||-1 , 251,584,532.40|-1,251,584,532.40|
|3．Others||||||||
|(IV) Internal transfer of owner’sequity||||||||
|1. Transfer of capital reserves intocapital (or share capital)||||||||
|2. Transfer of surplus reserves intocapital (or share capital)||||||||
|3. Surplus reserves used forremedying loss||||||||
|4．Others||||||||
|(V) Special reserve||||||||
|1. Appropriated for the currentperiod||||||||
|2. Utilized for the current period||||||||
|(VI) Others||||||||
|Ⅳ. Closing balance for the currentperiod|3,045,935,134.00|5 ,0 45,616,941.16|47,160,730.00|7,231,809.03|1 ,1 38,128,545.32|2,782,145,100.14|11,971,896,799.65|

 Legal representative: Liang Haishan Chief accountant: Gong Wei Person in charge of accounting department: Yin Wenjun(尹文峻)
Qingdao Haier Co., Ltd. 2015 Annual Report
III. General Information of the Company
1. Overview of the Company
The predecessor of Qingdao Haier Co., Ltd. (herein after referred to as the―Company‖) was Qingdao Refrigerator Factory, which was established in 1984. As permitted to offering by People's Bank of China, Qingdao Branch on 16 December 1989, approved by Qing Ti Gai[1989] No.3 on 24 March 1989, based on the reconstruction of the original Qingdao Refrigerator Factory, a limited company was set up by directional fund raised of RMB150 million. In March and September 1993, as approved by the document of Qing Gu Ling Zi[1993] No. 2 and No. 9 issued by the pilot leading team of Qingdao joint stock company, the Company was converted from a directional offering company to a public subscription company, and issued additional 50.00 million shares to the public and listed and traded on SSE in November 1993.
TheCompany’s registered office is located at the Haier Industrial Park of Laoshan District, Qingdao, Shandong Province, and the head office is located at the Haier Industrial Park of Laoshan District, Qingdao, Shandong Province.
The Company is mainly engaged in manufacturing and trading as well asR&D of refrigerator, air-conditioner, freezer, washing machine, water heater, dishwashers, gas stove and relevant products and commercial circulation business.
TheCompany’s ultimate holding company is Haier Group Corporation.
These financial statements have been approved for publication by the Board of the Company on 28 April 2016.
2. Scope of consolidated financial statements
For details of principal subsidiaries included in the consolidation scope during the year, please refer to note VII.
IV. Basis of Preparation of the Financial Statements
1. Basis of Preparation
The financial statements of the Company were prepared on the going concern basis according to the transactions and matters actually occurred, in accordance with the Accounting Standards for Enterprises– Basic Standards published by the Ministry of Finance, specific accounting standards, and guidance on application of accounting standards for enterprises, interpretations to accounting standards
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for enterprises and other relevant requirements (hereinafter collectively referred to as the―Accounting Standards forEnterprises‖) which issued subsequently, and in combination with the disclosure provisions of the Rules for the Information Disclosure and Compilation of Companies Publicly Issuing Securities No.15: General Provisions for Financial Report (Revised in 2014) of CSRC as well as the following significant accounting policies and accounting estimation.
2. Going concern
The Company has ability to continue as a going concern for at least 12 months since the end of the reporting period and there is no significant events affecting its ability to continue as a going concern. V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
According to the characteristics of its production and operation, the Company formulated a series of specific accounting policies and accounting estimates, including the provisions for impairment for accounts receivable (Note III.11); the measurement of inventories (Note III.12); the depreciation and amortization of the investment properties (Note III.14); the depreciation of fixed assets (Note III.15), the amortization of intangible assets (Note III.18), the criterion for determining of long-term assets impairment (Note III.19); and the date of revenue recognition (Note III.24), etc..
1. Statement of compliance with enterprise accounting standards
The financial statements prepared by the Company meet the requirements of the enterprise accounting standards; exactly and completely reflected relevant information of the financial condition as of 31 December 2015, operation result and cash flow of the Company in 2015.
2. Accounting period
The accounting year of the Company is from 1 January each year to 31 December of the same year in western calendar.
3. Operating cycle
The Company takes 12 months as an operation cycle, which is also the classification basis for the liquidity of its assets and liabilities.
4. Functional currency
Renminbi is the functional currency of the Company.
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5. Accounting treatments of enterprise combinations involving entities under common control and entities not under common control
An enterprise combination is a transaction or event that brings together two or more separate entities into one reporting entity. Enterprise combinations are classified into enterprise combinations under common control and enterprise combinations not under common control.
(1) Enterprise combinations under common control
An enterprise combination under common control is an enterprise combination in which all of the combining entities are ultimately controlled by the same party or parties both before and after the combination, and that control is not transitory. For enterprise combination under common control, the party that obtains the control of the other parties on the combination date is the acquiring party, and other parties involving in the enterprise combination are the parties being acquired. The combination date is the date on which the acquiring party effectively obtains the control of the party being acquired. In case the consideration for long-term equity investments formed in enterprise combination under common control is paid by ways of cash, transfer of non-cash assets or assumption of debts, the Company will regard the share of carrying amounts of the net assets in the finalcontroller’s consolidated financial statements obtained as the initial investment cost of long-term equity investments as at the date of combination. For carrying value of net assets of the acquiree is negative as at the date of combination, investment cost of long-term equity investment is calculated as zero. In case the acquiree is controlled by the ultimate controller by the enterprise combination under non-common control before combination, the initial investment cost of the long-term equity investment of the acquirer includes relevant goodwill. The Company should adjust the capital reserve (capital premium or share premium) in accordance with the differences between initial investment cost of the long-term equity investment and the cash paid, the non-cash assets transferred and the carrying value of liability assumed; in case the balance of the capital reserve (capital premium or share premium) is insufficient for the elimination, then any excess shall be adjusted against retained earnings. In case the consideration for the combination is paid by issuance of equity instruments, the aggregate nominal value of shares issued will be deemed as the share capital. The difference between the initial investment cost of long-term equity investments and aggregate nominal value of shares issued shall be adjusted to capital reserve (capital premium or share premium), in case
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the capital reserve (capital premium or share premium) is insufficient for the elimination, then any excess shall be adjusted against retained earnings.
Intermediary fees (such as audit, legal services and valuation consultancy) and other relevant management fees incurred in the enterprises combination by the acquirer are credited in profit or loss in the period when they occurred. Trading expenses in direct relation to the issuance of equity instrument as the consideration for the combination is written down to the capital reserve (capital premium or share premium), where the capital reserve (capital premium or share premium) is insufficient, retained earnings should be adjusted. Trading expenses in direct relation to the issuance of debt instrument as the consideration for the combination is included in the initial recognition amount of the debt instrument. For enterprise combination under common control finally realized through several transactions, in case of a package transaction, all the transactions are accounted as one transaction that has acquired the control; in case of no package transaction, the capital reserve (assets premium or share premium) is adjusted by the difference between the initial investment cost and the carrying value of the original long-term equity investment and the book value of the new payment consideration for further acquisition of shares with the share of acquirer's owner's equity on the date of combination in case calculated on the proportion of shareholding on the date of combination as its initial investment cost; where the capital reserve (assets premium or share premium) is insufficient, the retained earnings are adjusted.
In the consolidated financial statements, the equity investment held by the combining party before the date of acquiring control of the combined parties, and the profit and loss, the other comprehensive income and changes in the otherowners’ equity recognized during the period between the later of the date of acquisition and the date when the combining and the combined parties are under the common control of the same party and the date of combination, are written down to the retained earnings or current profit or loss at the end of the comparative reporting period, respectively.
(2) Enterprise combinations involving entities not under common control
An enterprise combination not under common control is an enterprise combination in which all of the combining entities are not ultimately controlled by the same party or parties both before and after the combination. For enterprise combination not under common control, the party that obtains the control of the other parties at the combination date is the acquirer; other parties involving in the enterprise
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combination are the acquirees. The combination date is the date on which the acquirer effectively obtains control of the acquirees.
In enterprise combination involving entities not under common control, the cost of combination shall be the sum of the assets paid, obligations incurred or assumed and the fair value of the equity securities issued by the acquirer for obtaining control of the acquiree at the date of acquisition. Intermediary fees (such as audit, legal services and valuation consultancy) and other relevant management fees incurred by the acquirer for the purpose of enterprise combination are credited in profit or loss in the period when they occurred. Transaction fees for the equity instruments or debt instruments issued by the acquirer as combination consideration is included in the initial recognition amount of such equity instruments or debt instruments. Contingent consideration involved shall be recorded as the combination cost based on its fair value on the acquisition date. Should any new or further evidence arises within 12 months after the acquisition date and makes it necessary to adjust the contingent consideration on the acquisition date, the goodwill arising from the enterprise combination shall be amended accordingly.
The cost of combination and identifiable net assets obtained by the acquirer in an enterprise combination are measured at fair value on the acquisition date. Where the cost of the combination exceeds theacquirer’s interest in the fair value of theacquiree’s identifiable net assets, the difference is recognized as goodwill; where the cost of combination is lower than theacquirer’s interest in the fair value of theacquiree’s identifiable net assets, the difference is initially recognized in profit or loss for the current year after a review of computation for the identifiable assets, liabilities or fair value of the liabilities and combination cost, and where the combination cost is still lower than the fair value of the identifiable net assets of the acquiree obtained during the course of combination, then the difference is recorded in the current profit and loss.
In enterprise combination involving entities not under common control that is realized in phases through multiple exchange transactions, in the parent's financial statements, the sum of the book value of the equity investment of the acquiree held before the date of acquisition and the cost of new investment on the date of acquisition are recognized as the initial investment cost of such investment.
In consolidated financial statement, the equity of the acquiree held before the date of acquisition is re-measured at the fair value on the date of acquisition, and the difference between the fair value and book value is included in current investment income; where the equity of the acquiree held before the
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date of acquisition involves the other comprehensive income, such equity and relevant other comprehensive income are transferred to current investment income on the date of acquisition, other than the other comprehensive income that cannot be reclassified into the current profit or loss.
The fair value on the acquisition date of equity interest in the acquiree prior to the acquisition date and the fair value of the considerations paid for the acquisition of the new equity on the acquisition date are regarded as the combination costs of the Company, comparing with aquirer's share of the fair value on the acquisition date of the acquiree's net identifiable assets on the proportion of the shareholding on the acquisition date to confirm the goodwill that required to be recognized on the acquisition date or the amount that shall be included in the current consolidated profit or loss.
6. Preparation method of consolidated financial statements
(1) Scope of consolidated financial statements
The Company incorporated all of its subsidiaries (including the separate entities controlled by the Company) into the scope of consolidation financial statements, including the enterprises under theCompany’s control, divisible part in the investees and structured entities.
(2) To unify the accounting policies, date of balance sheets and accounting periods of the parent company and subsidiaries
When preparing consolidated financial statements, adjustments are made ifsubsidiaries’ accounting policies or accounting periods are different from that of the Company, in accordance with theCompany’s accounting policies and accounting periods.
(3) Offset matters in the consolidated financial statements
The consolidated financial statements shall be prepared on the basis of the balance sheets of the parent company and subsidiaries, which offset the internal transactions incurred between the parent company and subsidiaries and among subsidiaries. Theowner’s equity of the subsidiaries not attributable to the parent company shall be presented as―minorityequity‖ under theowners’ equity item in the consolidated balance sheet.
(4)Accounting treatment of subsidiaries acquired from combination
For subsidiaries acquired from enterprise combination under common control, the assets, liabilities, operating results and cash flows of the subsidiaries are included in the consolidated financial statements from the beginning of the period in which the combination took place, as if the combination has taken since the ultimate controller began its control. When preparing the consolidated financial statements, for the subsidiaries acquired from enterprise combination under non-common control, separate financial
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statement will be adjusted on the basis of their fair values of the identifiable net assets on the date of acquisition.
7. Classification of joint arrangement and joint operations
A joint arrangement refers to an arrangement jointly controlled by two or more parties. In accordance with theCompany’s rights and obligations under a joint arrangement, the Company classifies joint arrangements into: joint operations and joint ventures.
Joint operations refer to a joint arrangement during which the Company is entitled to relevant assets and obligations of this arrangement. The Company recognizes the following items in relation to its interest in a joint operation, and accounts the same in accordance with relevant accounting standards for business enterprises:
① recognize the assets held solely by the Company, and recognize assets held jointly by the Company in appropriation to the share of the Company;② recognize the obligations assumed solely by the Company, and recognize obligations assumed jointly by the Company in appropriation to the share of the Company;③ recognize revenue from disposal of joint operations of the Company;④ recognize revenue from disposal of joint operations in appropriation to the share of theCompany;⑤ recognize fees solely occurred by the Company and recognize fees from joint operations in appropriation to the share of the Company.
When the Company, as a joint venture, invests or sells assets to or purchase assets (the assets do not constitute a business, the same below) from joint operations, the Company shall only recognize the part of profit or lost from this transaction attributable to other parties of joint operations before these assets are sold to a third party. In case of an impairment loss incurred on these assets which meets the requirements as set out in―Accounting Standards for Business Enterprises No. 8– AssetImpairment‖, the Company shall full recognize the amount of this loss in relation to its investment in or sale of assets to joint operations, or recognize the loss according to theCompany’s share of commitment in relation to the its purchase of assets from joint operations.
Joint ventures refer to a joint arrangement during which the Company only is entitled to net assets of this arrangement. Investment in joint venture is accounted for using the equity method according to the accounting policies referred to under―13 Long-term equityinvestment‖ of this Note III.
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8. Recognition standard for cash and cash equivalents
Cash recognized in the cash flow statements represents the cash on hand and deposits available for payment of the Company at any time.
Cash equivalents recognized in the cash flow statements refer to short-term, highly liquid investments held by the Company that are readily convertible to known amounts of cash and which are subject to an insignificant risk on change in value.
9. Foreign currency businesses and translation of foreign currency statements
(1) Foreign currency transactions
If foreign currency transactions occur, they are translated into the amount of functional currency by applying the spot exchange rate at the transaction date.
Monetary items denominated in foreign currencies are translated into functional currencies at the rates of exchange ruling at the balance sheet date. All foreign exchange difference are credited into the current profit or loss, except① those arising from the funds denominated in foreign currency specially borrowed for the establishment of the qualifying assets are treated based on the principal of capitalization of borrowing costs;② those arising from the other changes in the balance other than amortized cost of available-for-sale monetary items denominated in foreign currency are recognized in the other comprehensive income.
Non-monetary items in foreign currency measured at historical cost are translated using the spot exchange rate prevailing on the date when transaction occurred and its functional currency shall remain unchanged. Non-monetary items denominated in foreign currencies that are measured at fair value are translated using the foreign exchange rate at the date the fair value is determined; the exchange differences between the translated and original amounts of functional currencies are recognized in the statement of profit or loss or other comprehensive income as changes in fair value (including changes in exchange rate).
(2) Translation of foreign currency information
If the functional currencies used as the bookkeeping base currency by the subsidiaries, joint ventures and associates under the control of the Company are different from that of the Company, their financial statements denominated in foreign currencies shall be translated to perform accounting and prepare the
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consolidated financial statements.
The assets and liabilities of the balance sheet are translated using the spot exchange rate at the balance sheet date; all items except for―undistributedprofits‖ of theowner’s equity are translated at the spot exchange rate on the transaction date. The revenue and expenses in the income statement are translated using the approximate rate of the spot exchange rate on the transaction date. Differences arising from the translation of foreign currency financial statements are presented as the―other comprehensiveincome‖ in theowner’s equity of the balance sheet.
Foreign currency cash flows are translated using the approximate rate of the spot exchange rate on the transaction date. The impact of exchange rate changes on cash amount is reflected separately in the cash flow.
When disposing overseas operations, the translation difference related to the overseas operation shall be transferred together or as the percentage of disposing the overseas operation to profit or loss for the current period of disposal.
10. Financial instruments
(1) Classification, recognition and measurement of financial instruments
A financial asset or a financial liability is recognized when the Company becomes a contractual party of a financial instrument. Financial assets and financial liabilities are measured at fair value upon initial recognition. Related transaction costs are recorded directly in current profit or loss for financial assets and financial liabilities at fair value through profit or loss, or included in the amount recognized initially for other financial assets and financial liabilities.
Determination of the fair value of financial assets and financial liabilities: Fair value refers to the price receivable from the exchange of an asset or payable for the settlement of a liability in a fair transaction between knowledgeable and willing counterparties. The fair value of financial instruments where there is an active market is determined based on the quoted price in such market, which refers to the price regularly available from exchanges, brokers, trade associations and pricing service agencies that represents the price adopted in anarm’s length transaction actually occurred in the market. For financial instruments where there is no active market, the fair value is determined using valuation techniques. Such techniques include reference to prices used in recent market transactions between knowledgeable and willing counterparties, reference to the current fair value of another instrument which is
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substantially the same, discounted cash flow analysis and option pricing models or other valuation models.
The effective interest method is a method of calculating the amortized cost of a financial asset and of allocating interest income or expense over each period based on the effective interest of a financial asset or a financial liability (including a group of financial assets or financial liabilities). The effective interest rate is the rate that discounts future cash flows from the financial asset or financial liability over its expected life or (where appropriate) a shorter period to the carrying amount of the financial asset or financial liability. In calculating the effective interest rate, the Company will estimate the future cash flows (excluding future credit losses) by taking into account all contract terms relating to the financial assets or financial liabilities whilst considering various fees, transaction costs and discounts or premiums which are part of the effective interest rate paid or received between the parties to the financial assets or financial liabilities contracts.
Financial assets are classified into financial assets at fair value through profit or loss, held-to-maturity investments, loans and receivables, and available-for-sale financial assets upon initial recognition. Classification of financial asset other than loans and receivables is based on the purpose and capability of financial asset held by the Company and its subsidiaries. The financial liabilities are, on initial recognition, classified into financial liabilities at fair value through profit or loss and other financial liabilities.
Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated as at fair value through profit or loss. All financial assets at fair value through profit or loss of the Company are financial assets held for trading. Financial assets may be classified as financial assets held for trading if one of the following conditions is met: (1) The financial asset is acquired principally for the purpose of sale or repurchase in the near term; (2) The financial asset is part of a portfolio of identified financial instruments that are managed together and for which there is objective evidence of a recent pattern of short-term profit-taking; (3) The financial asset is a derivative, excluding the derivatives designated as effective hedging instruments, the derivatives classified as financial guarantee contract, and the derivatives linked to an equity instrument investment, which has no quoted price in an active market nor a reliably measured fair value, and required to be settled through delivery of that equity instrument. A financial asset may be designated as at fair value through profit or loss upon initial recognition only when one of the following conditions is satisfied: (1) Such designation
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eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise result from measuring assets or recognizing the gains or losses on them on different bases; (2) The financial asset forms part of a group of financial assets or a group of financial assets and financial liabilities, which is managed and its performance is evaluated on a fair value basis, in accordance with theCompany’s documented risk management or investment strategy, and information about the grouping is reported to key management personnel on that basis; (3) Pursuant to Accounting Standards for Enterprises No. 22– Recognition and Measurement of Financial Instruments, the financial asset is designated as combination instrument of financial assets measured at fair value through current profit or loss and related to embedded derivatives. A financial asset at fair value through profit or loss, except for those falling under cash flow hedging, is subsequently measured at fair value. Any gains or losses arising from changes in the fair value are recognized in profit or loss of changes in the fair value. Interests or cash dividends received during the period in which such assets are held, are recognized as investment income; on disposal, the differences between the consideration received and initial recognized amount are recognized as investment income and the gain or loss from changes in fair value shall be adjusted accordingly.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in active market. Financial assets, including bills receivable, accounts receivable, other receivables and long-term receivables are classified as loans and receivables by the Company. Loans and receivables are subsequently measured at amortized cost using the effective interest method. Gain or loss on derecognition, impairment or amortization is recognized through profit or loss for the current period. Available-for-sale financial assets include non-derivative financial assets designated as available-for-sale at initial recognition, and the financial assets other than financial assets at fair value through profit or loss, loans and receivables, and held-to-maturity investments. Available-for-sale financial assets are subsequently measured at fair value, the gains or losses arising from changes in fair value, except for impairment losses and exchange difference related to monetary financial assets and amortized cost which are recognized in profit or loss, are recognized in other comprehensive income and reclassified to profit or loss when the financial assets are derecognized. Interests calculated in the effective interest method during the holdings of available-for-sale financial assets and cash dividends declared by investees are recognized in investment incomes. On disposal, the differences between the consideration received and the carrying amount of assets after deducting the accumulated fair value
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adjustments previously recorded in capital reserves are recorded as investment income. However, an equity instrument investment which has no quoted price in an active market nor a reliably measured fair value, and a derivative financial asset (or derivative financial liability) linked to such equity instrument and required to be settled through delivery of that equity instrument are measured at cost.
Derivative financial instruments include forward foreign exchange contracts and interest rate swap contracts, etc. Derivative financial instruments are initially recognized at fair value at the execution date of relevant contracts, and subsequently measured at fair value. Expect for the derivative financial instruments designated as hedging instruments with a highly effective hedging, of which the profit or loss arising from the changes in fair value will be included in the corresponding profit or loss depending on the nature of hedging relations and the accounting requirements of hedging tools, the changes in the fair value of all other derivative financial instruments will be included in the current profit or loss. Equity instruments refer to the contracts proving the ownership of the remaining equities in the assets of the Company upon the deduction of all the liabilities. The consideration received from the issue of the equity instruments increases theshareholders’ equity upon the deduction of the transaction costs. The allocations made by the Company to the holders of equity instruments (excluding stock dividends) decreaseshareholders’ equity. The Company does not recognize the change in the fair value of equity instruments.
(2) Recognition and measurement of transfers of financial asset
Financial asset that satisfied any of the following criteria shall be derecognized: (1) the contract right to recover the cash flows of the financial asset has terminated; (2) the financial asset, along with substantially all the risk and return arising from the ownership of the financial asset, has been transferred to the transferee; and (3) the financial asset has been transferred to the transferee, and the Company has given up the control on such financial asset, though it does not assign or maintain substantially all the risk and return arising from the ownership of the financial asset.
When the Company does not either assign or maintain substantially all the risk and rewards of ownership of the financial asset and does not give up the control on such financial asset, to the extent of its continuous involvement in the financial asset, the Company recognizes it as a related financial asset and recognizes the relevant liability accordingly. The extent of the continuous involvement is the extent
to which the Company exposes to changes in the value of such financial assets.
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On derecognition of a financial asset, the difference between the following amounts is recognized in profit or loss for the current period: the carrying amount and the sum of the consideration received and any accumulated gain or loss that had been recognized directly in equity. If a part of the financial assets qualifies for derecognition, the carrying amount of the financial asset is allocated between the part that continues to be recognized and the part that qualifies for derecognition, based on the fair values of the respective parts. The difference between the following amounts is recognized in profit or loss for the period: the carrying amount of the part that qualifies for derecognition and the sum of the consideration received and any accumulated gain or loss that had been recognized directly in equity.
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is currently an enforceable legal right to offset the recognized financial assets and financial liabilities and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously. Otherwise, financial assets and financial liabilities are presented separately in the balance sheet without being offset.
(3) Classification, recognition and measurement of financial liabilities
The Company classifies financial liabilities and equity instruments according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. Financial liabilities are classified as financial liabilities at fair value through profit or loss and other financial liabilities at initial recognition.
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated as at fair value through profit or loss.
Financial liabilities may be classified as financial liabilities held for trading if one of the following conditions is met: (1) The financial liability is acquired principally for the purpose of sale or repurchase in the near term; (2) The financial liability is part of a portfolio of identified financial instruments that are managed together and for which there is objective evidence of a recent pattern of short-term profit-taking; or (3) The financial liability is a derivative, excluding the derivatives designated as effective hedging instruments, the derivatives classified as financial guarantee contract, and the derivatives linked to an equity instrument investment, which has no quoted price in an active market nor a reliably measured fair value, and required to be settled through delivery of that equity instrument. A financial liability may be designated as at fair value through profit or loss upon initial recognition only when one of the following conditions is satisfied: (1) Such designation eliminates or significantly
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reduces a measurement or recognition inconsistency that would otherwise result from measuring liabilities or recognizing the gains or losses on them on different bases; (2) The financial liability forms part of a group of financial liabilities or a group of financial liabilities and financial liabilities, which is managed and its performance is evaluated on a fair value basis, in accordance with theCompany’s documented risk management or investment strategy, and information about the grouping is reported to key management personnel on that basis; or (3) Pursuant to Accounting Standards for Enterprises No. 22– Recognition and Measurement of Financial Instruments, the financial liability is designated as combination instrument of financial liabilities measured at fair value through current profit or loss and related to embedded derivatives.
Financial liabilities at fair value through profit or loss are subsequently measured at fair value. The gain or loss arising from changes in fair value and dividend and interest incomes arising from such financial liabilities are recognized in profit or loss for the current period.
Derecognition of financial liabilities: A financial liability shall be derecognized or partly derecognized when the current obligation is discharged or partly discharged. When the Company (debtor) and the creditor have signed a contract which uses a new financial liability to replace the existing financial liability, and the contract terms of the new financial liability are substantially different with the existing financial liability, the existing financial liability shall be derecognized, and the new financial liability shall be recognized at the same time. If a financial liability is fully or partially derecognized, the difference between the book value of derecognized portion and the consideration paid (including non-cash assets transferred out or new financial liability assumed) is recognized in profit or loss.
(4) Impairment of financial assets
The carrying values of all financial assets except financial assets at fair value through profit or loss should be tested for impairment. If impairment is demonstrated by objective evidences, the provision of impairment should be prepared according to the impairment test.
Objective evidences for recognition of impairment of financial asset include the following observable matters:
① The issuer or debtor is experiencing significant financial difficulties;
② The debtor breaches the contractual terms, including default or delinquency in interest or principal payments;
③ The Company, based on economic or legal or other factors, waive the debts;
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④ It is highly probable that the debtor will enter bankruptcy or other financial reorganization;
⑤ The issuer is experiencing significant financial difficulties that the corresponding financial instruments could not be traded in an active market;
⑥ When it is unable to determine whether cash flows of a specific instrument in a group of financial assets decrease, but the cash flows since initial recognition of that group of financial assets would be measurable and decrease, or the ability to repay by the debtors in that group of financial asset deteriorate, or the unemployment rate of the country or region in which the debtors situate increases, or the price of the underlying collateral decreases significantly in its region, or the industry of the debtors is diminishing;
⑦ There are significant adverse changes in the technology, market, economy or legal environments in issuance place of the equity instrument so that the investor could not recover its investment costs;⑧ There is significant or other than temporary decrease in fair value of equity instrument;
⑨ Other objective evidences show that the financial asset is impaired.
The Company shall carry out independent impairment test for financial assets of significant single amounts. With regard to the financial assets with insignificant single amounts, an independent impairment test shall be included in a combination of financial assets with similar credit risk characteristics so as to carry out an impairment test. In the event, upon independent test, the financial asset (including those financial assets with significant single amounts and those with insignificant amounts) has not been impaired, it shall be included in a combination of financial assets with similar characteristics so as to conduct another impairment test. Financial assets that have conducted independent test as impairment loss shall not be included in a combination of financial assets with similar risk characteristics so as to conduct another impairment test.
When held-to-maturity investments, loans and accounts receivables have been impaired, the book value of the financial assets shall be written down to the current value of estimated future cash flow discounted at the original effective interest rate, and the write-down amount is recorded as impairment loss and written into profit or loss of the current period. When a financial asset based on amortized cost is impaired, if there are objective evidences showing the value of this financial asset is recovered and it is objectively related to the matters happened after the impairment loss recognition, the impairment loss recognized shall be reversed. However, the reversal shall not result in a carrying amount of the financial asset that exceeds the amortized cost that would have been if the impairment had not been recognized at
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the date when the impairment is reversed.
If an available-for-sale financial asset is impaired, the cumulative loss arising from decline in fair value that had been recognized directly in other comprehensive income is reclassified to profit or loss. The cumulative loss reclassified is the difference between its acquisition cost (net of any principal repayment and amortization) and its current fair value, less any impairment loss previously recognized in profit or loss. If there are objective evidences that the value of that financial asset is recovered and it can be objectively related to an event occurred after the impairment loss recognition, the impairment loss recognized shall be reversed, impairment losses recognized for equity instruments classified as available-for-sale are reversed through other comprehensive income, while impairment losses recognized for debt instruments classified as available-for-sale are reversed through current profit or loss.
Ifthere’s objective evidence that an investment in equity instrument which has no quoted price in an active market nor a reliably measured fair value or a derivative financial asset which is linked to that equity instrument and required to be settled through delivery of that equity instrument is impaired, the carrying amount shall be written down to the present value discounted at the market rate of return on future cash flows of the similar financial assets, and the write-down amount shall be recognized as impairment loss in profit or loss. Such impairment loss once recognized shall no longer be reversed. For investments in equity instruments, the specific quantitative criteria for the Company to determine―serious‖ or―nottemporary‖ decrease in their fair value are set out below:
Specific quantitative criterion on―serious‖ decrease Decrease in closing fair value relative to the in their fair value cost has reached or exceeded50%.
Specific quantitative criterion on―nottemporary‖
Fall for 12 consecutive months.
decrease in their fair value
11. Receivables
Receivables of the Company include trade receivables and other receivables. Recognition and provision of bad debts of receivables:
(1) Individually significant receivables for which separate bad-debt provision is made
Individually significant receivables represent the receivables accounting for above5% of the closing balance. The Company conducted a separate impairment test for receivables that are individually
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significant on the balance sheet date and made provision for its bad debts based on the difference between the present value of its estimated future cash flows and its carrying amount.
(2) Individually insignificant receivables for which separate bad-debt provision is made
Individual impairment test is made where there is concrete evidence indicates that there is obvious difference in recoverability, and bad debts provision is made based on the difference between the present value of its estimated future cash flows and its carrying amount.
(3) Trade receivables for which collective bad debt provision is made
Receivables that are individually tested not impairment, is classified by similar credit risks into several portfolio and then recognize the impairment loss and make bad debts provision on the5% of the balance of the receivables on the balance sheet date.
12. Inventories
(1) Classification of inventories:
Inventories refer to the finished goods or commodities held for sale in daily activities, goods in progress in the production process, consumed materials and supplies in the production process or providing services of the Company, which mainly include raw materials, revolving materials, entrusted processed materials, wrappage, low-cost consumables, goods in progress, self-made semi-finished goods, finished goods (merchandise inventory) and engineering construction etc.
(2) Cost of inventories transferred out
Inventories from the Company are calculated by weighted average method.
(3)Provision for inventory impairment
At balance sheet date, inventories are stated at the lower of cost or net realizable value.
The net realizable value of inventories (including finished products, merchandize and materials for sale) that can be sold directly is determined using the estimated saleable price of such inventory deducted by the cost of sales and relevant taxation. The net realizable value of materials in inventory that are held for production is determined using the estimated saleable price of the finished product deducted by the cost to completion, estimated cost of sales and relevant taxation. The net realizable value of inventory held for performance of sales contract or labor service contract is determined based on the contractual price; in case the amount of inventory held by the enterprise exceeds the contractual amount, the net realizable value of the
Qingdao Haier Co., Ltd. 2015 Annual Report
excess portion of inventory is calculated using the normal saleable price.
Provision for impairment of inventories is made for individual inventory. For items of inventories that is produced and marketed in the same geographical area and with the same or similar end uses or purposes, which cannot be practicable evaluated separately from other items, cost and net realizable value of inventories may be determined on an aggregate basis. For large quantity and low value items of inventories, cost and net realizable value of inventories may be determined on types of inventories.
Provision for impairment of inventories is made and recognized as current profit or loss when the cost is higher than the net realizable value on the balance sheet date. If the factors that give rise to the provision in prior years are not in effect in current year, provision would be reversed within the impaired cost, and recognized in the current profit or loss.
(4) Inventory system
The Company adopts perpetual inventory system.
(5) Amortization of low-value consumables and packaging
Low-value consumables and packages of the Company are amortized by one-time write-off.
13. Long-term equity investments
Long-term equity investments in this section refer to equity investments held by the Company that give it control, joint control or significant influence over the investee. Long-term equity investments where the Company does not exercise control, joint control or significant influence over the investee are accounted for as available-for-sale financial assets.
(1) Recognition of initial cost of investment
①For long-term equity investment obtained from business consolidation under common control, the initial cost is measured at the combiningparty’s share of the carrying amount of the equity of the combined party; for a long-term equity investment obtained from business consolidation under non-common control, the initial cost is the consolidation cost at the date of acquisition;
② For the long-term equity investment acquired in a manner other than enterprise combination: the initial investment cost of the long-term equity investment acquired by payment in cash shall be the total purchase price; the initial investment cost of the long-term equity investment acquired by issuing equity securities shall be the fair value of the equity securitiesissued；For long-term equity investment acquired
Qingdao Haier Co., Ltd. 2015 Annual Report
by debt restructuring, the initial investment cost shall be recognized in accordance with the requirements under Accounting Standards for Enterprises No. 12 - Debt Restructuring. For long-term equity investment acquired by the exchange of non-monetary assets, the initial investment cost shall be recognized in accordance with relevant requirements under the Rules.
(2) Subsequent measurement and profit or loss recognition
①Cost method
Where the investor has a control over the investee, long-term equity investments are measured using cost method. For long-term equity investments using cost method, unless increasing or reducing the investment, the carrying value is unchanged. TheCompany’s share of the profit distributions or cash dividends declared by the investee are recognized as investment income.
②Equity method
Investor's long-term equity investments in associates and joint ventures are measured using equity method. Where part of the equity investments of an investor in its associates are held indirectly through venture investment institutions, common fund, trust companies or other similar entities including investment linked insurance funds, such part of equity investments indirectly held by the investor shall be measured at fair value through profit or loss according to relevant requirements of Accounting Standards for Business EnterprisesNo.22—Recognition and measurement of Financial Instruments regardless whether the above entities have significant influence on such part of equity investments, while the remaining part shall be measured using equity method.
Under the equity method, where the initial investment cost of a long-term equity investment exceeds theCompany’s share of the fair value of theinvestee’s identifiable net assets at the time of acquisition, no adjustment is made to the initial investment cost. Where the initial investment cost is less than theCompany’s share of the fair value of theinvestee’s identifiable net assets at the time of acquisition, the difference is recognized in profit or loss for the period, and the cost of the long-term equity investment is adjusted accordingly.
For long-term equity investments accounted for using the equity method, the Company recognizes the investment income and other comprehensive incomes according to its share of net profit or loss of the investee, and the carrying amount of the long-term equity investments shall be adjusted accordingly; the carrying amount of the investment is reduced by theCompany’s share of the profit distribution or cash dividends declared by an investee; for changes inowner’s equity of the investee other than those arising from
Qingdao Haier Co., Ltd. 2015 Annual Report
its net profit or loss, other comprehensive income and profit distribution, the carrying amount of the long-term equity investment shall be adjusted and recognized to capital reserve. When recognizing attributable share of the net profits and losses of the investee, the net profits of the investee shall be recognized after adjustment on the ground of the fair value of all identifiable assets of the investee when it obtains the investment. If the accounting policies and accounting periods adopted by the investee are different from those adopted by the Company, an adjustment shall be made to the financial statements of the investee in accordance with the accounting policies and accounting periods of the Company and recognize the investment incomes and other comprehensive incomes.
TheCompany’s share of net losses of the investee shall be recognized to the extent that the carrying amount of the long-term equity investment together with any long-term interests that in substance form part of theinvestor’s net investment in the investee are reduced to zero. If the Company has to assume additional obligations, the estimated obligation assumed shall be provided for and charged to the profit or loss as investment loss for the period. Where the investee is making profits in subsequent periods, the Company shall resume recognizing its share of profits after setting off against the share of unrecognized losses.
(3) Change of the accounting methods for long-term equity investments
①Change of measurement at fair value to accounting under equity method: where the equity investment held have no control, joint control or significant impact on the investee and that are accounted according to the financial instrument recognition and measurement criteria can carry out common control or place significant impact due to addition of investment which resulted in the increase of shareholding, the investee shall plus the fair value of the equity investment originally held determined in accordance with the Standards for Recognition and Measurement of Financial Instruments and the fair value of the consideration payable for new investment as the initial investment cost accounted under equity method when change the equity method.②Change of measurement at fair value or accounting under equity method to cost method: the equity investment of the investee held by the investor with no control, joint control or significant impact and accounted according to the financial instrument recognition and measurement criteria, or the long-term equity investment in associates or joint venture originally held that can control the investee due to addition of investment, shall be accounted in accordance with the long-term equity investment formed by combination of enterprises.
③Change of accounting under equity method to measurement at fair value: the long-term equity investment originally held with common control or significant impact on the investee that cannot conduct
common control or significant impact on the investee due to the decrease of shareholding as a result of factors
Qingdao Haier Co., Ltd. 2015 Annual Report
such as partial disposal, shall be accounted in accordance with Standards for Recognition and Measurement of Financial Instruments, and the difference between the fair value on the date when the common control or significant impact is lost and the book value is included in current profit or loss.
④Change of cost method to equity method: where control on the investee change to significant impact or common control with other investors due to factors such as disposal of investment, the long-term equity investment cost that ceased to be recognized shall first be carried forward on the proportion of the investment disposed. Then comparing the cost of the remaining long-term equity investment with the attributable fair value of the identifiable net assets of the investee at the original investment calculated on proportion of the remaining shareholding, where the former larger than the later, it belongs to the goodwill as showed in deciding the investment price and will not adjust the carrying amount of the long-term equity investment; where the former less than the later, the retained earnings will be adjusted along with the adjustment of the long-term equity investment.
(4) Basis of conclusion for common control and significant influence over the investee
①Joint control over an investee refers to activities which have a significant influence on return of an arrangement could be decided only by mutual consent of the investing parties sharing the control, which includes the sales and purchase of goods or services, management of financial assets, acquisition and disposal of assets, research and development activities and financing activities, etc.
② Significant influence on the investee refers to significant influence over the investee exists when holding more than20% but less than50% of the shares with voting rights or even if the holding is below20%, there is still significant influence if any of the following conditions satisfied:
① there is representative in the board of directors or similar governing body of the investee;
② participating ininvestee’s policy setting process;
③ assign management to investee;
④ the investee relies on the technology or technical information of the investee;
⑤ major transactions with the investee.
(5) Impairment test and provision of impairment
At the balance sheet date, the Company reviews whether there is impairment indicator for the long-term equity investments. When there is impairment indicator, the recoverable amount is determined through impairment test and impairment is provided based on the difference between the recoverable amount and the carrying value. Impairment loss is not reversed once provided.
The recoverable amount is the higher of net fair value of long-term equity investments on disposal and the present value of estimated future cash flows.
(6) Disposal of long-term equity investments
For disposal of long-term equity investment, the difference between the considerations received and the
Qingdao Haier Co., Ltd. 2015 Annual Report
carrying amount of the disposed investment is recognized in profit or loss. For long-term equity investment accounted for using the equity method, the part recognized in other comprehensive income is accounted on pro rata basis upon disposal in the same way as the relevant assets or liabilities are disposed of directly by the investee.
14. Investment properties
(1). If measured by cost:
Investment properties of the Company include leased land use rights and leased buildings.
An investment property is initially measured at cost, and cost method is adopted for subsequent measurement. Investment properties are depreciated or amortized in accordance with the accounting policies for the fixed assets or intangible assets of the Company. When the investment properties are for self-use, relevant investment properties will be converted into fixed assets or intangible assets on the date of conversion.
15. Fixed assets
(1). Recognition criteria
Fixed assets are tangible assets that are held for production of goods, provision of services, leasing or administrative purposes, and have useful life more than one fiscal year, which are recognized when the following conditions are met:
①economic benefits in relation to the fixed assets are very likely to flow into the enterprise;②the cost of the fixed assets can be measured reliably.
(2). Depreciation method
The fixed assets of the Company can be divided into: buildings and constructions, production equipment, transportation equipment and office equipment, etc. The straight-line method is used to measure depreciation. The useful lives and the expected net residual value of fixed assets are determined according to the nature and usage of various fixed assets. At the end of each year, the useful lives and depreciation method of fixed assets are reviewed, and adjusted if there is variance with original policies; The Company have made provisions for all of the fixed assets except for the fixed assets with full provision and used continuously.
|||||
|-|-|-|-|
|Category|Depreciation lives(years)|Estimated rate ofresidual value (%)|Annual depreciationrate (%)|
|Houses and buildings|20-40 years|5%|2.38-4.75%|
|Machinery equipment|10-20 years|5%|4.75-9.50%|
|Vehicles|5-10 years|5%|9.50%-19.00%|
|Office equipment andothers|3-8 years|5%|11.88%-31.67%|

Qingdao Haier Co., Ltd. 2015 Annual Report
(3). Test method and provision for impairment of fixed assets
At the balance sheet date, the Company reviews whether there is impairment indicator for the fixed assets. When there is an impairment indicator, the recoverable amount is estimated and impairment is provided based on the difference between the carrying value and the recoverable amount once the impairment of an asset is recognized, it will not be reversed in the subsequent accounting period.
16. Construction in progress
(1) Construction in progress is measured at actual cost. Actual cost comprises construction costs, installation costs, borrowing cost that are eligible for capitalization and other necessary cost incurred to bring the fixed assets ready for their intended use.
(2) Standard and date of transfer from construction in progress to fixed assets
The construction in progress of the Company is transferred to fixed assets when the project is completed and ready for its intended use, which shall satisfy one of the following conditions:
① The construction of the fixed assets (including installation) has been completed or substantially completed;
② The fixed asset has been used for trial operation and it is evidenced that the asset can operate ordinarily or produce steadily qualified products; or the result of trial operation proves that it can operate normally;
③ Further expenditure incurred for construction is very minimal or remote;
④ The constructed fixed asset reaches or almost reaches the design or the requirements of contract, or complies with the design or the requirements of contract.
(3) Impairment test and provision of impairment of construction in progress
At the balance sheet date, the Company reviews the construction in progress to check whether there is any sign of impairment and an impairment test is needed to recognize the recoverable amount when there are signs that construction in progress may impair. The impairment loss should be the lower of the carrying value and recoverable amount and impairment loss cannot be reversed in the following accounting period if it has been accounted.
The recoverable amount should base on the higher value between fair value less disposal expense and present value of estimated cash flow in the future.
Qingdao Haier Co., Ltd. 2015 Annual Report
17. Borrowing costs
(1) Recognition principles for borrowing cost capitalization:
Borrowing costs include interests incurred by the Company in connection with the borrowings, amortization of discount or premium plus auxiliary expenses, and foreign exchange translation differences from foreign currency borrowings. Borrowing cost incurred by the Company arising from special borrowings or general borrowing for fixed assets, properties for development and investment or inventories that require more than one year (including one year) to purchase or construct, shall be capitalized and credited into relevant assets cost; other borrowing costs are expensed and charged to current profit or loss when incurred.
(2) Computation of capitalized amount of borrowing costs
Capitalization period refers to the period from the commencement to the cessation of capitalization of borrowing costs, excluding the periods in which capitalization of borrowing costs is suspended.
Capitalization interruption period: Capitalization of borrowing costs is suspended during periods in which the acquisition or construction of a qualifying asset is interrupted abnormally and the interruption lasts for more than 3 months.
Computation of capitalized amount of borrowing costs:① Specific borrowings will be recorded based on the actual interest expense incurred in the period of special borrowings less the interest income from unutilized borrowings placed at banks or investment gain from temporary investment;② For normal borrowings used, the interest amount that should be capitalized on normal borrowings is calculated based on the weighted average of expenses of the aggregate asset exceeding the expenses of the portion of special borrowings multiplied by the capitalization ratio of the normal borrowings utilized. Capitalization ratio is calculated based on weighted average interest rate of normal borrowings;③ For borrowings with discount or premium, the discount or premium was amortized over the term of the borrowings to adjust the interest in every period using the effective interest rates.
18. Intangible assets
Intangible assets are the identifiable non-monetary assets which have no physical shape and are possessed or controlled by the Company.
Qingdao Haier Co., Ltd. 2015 Annual Report
(1). Measurement method, useful life and impairment test
(1) Measurement of intangible assets
Intangible assets are initially recognized at costs. The actual costs of purchased intangible assets include the consideration and relevant expenses paid. For intangible asset contributed by investors, the price contained in the investment agreement or mutually agreed is the actual cost of the intangible asset. If the price contained in the investment agreement or mutually agreed is not a fair value, the fair value of the intangible asset is regarded as the actual cost. The cost of a self-developed intangible asset is the total expenditure incurred in brings the asset to its intended use.
Subsequent measurement of intangible assets of the Company:① Intangible assets with finite useful lives are amortized on a straight-line basis over the useful lives of the intangible assets; at the end of each year, the useful lives and amortization policy are reviewed, and adjusted if there is any variance with original policies;② Intangible assets with indefinite useful lives are not amortized and the useful lives are reviewed at each year end date. If there is objective evidence that the useful life of an intangible asset is finite, the intangible asset is amortized using the straight line method according to the estimated useful life.
(2) Criterion of determining infinite useful life
The useful life of an intangible asset is indefinite if the period of the future economic benefits generated by the intangible asset could not be reasonably determined, or the useful life could not be reasonably ascertained.
Criterion of determining intangible assets with infinite useful lives:① For intangible assets derived from contractual rights or other legal rights and there are no explicit years of use stipulated in the contract or laws and regulations;② Useful life still could not be estimated after considering the industrial practice or relevant expert opinion.
At the end of each year, the useful lives of the intangible assets with indefinite useful lives are reviewed. The assessment is performed by the departments that use the intangible assets, using the down-to-top approach, to determine if there are changes to the indefinite useful lives.
(3) Methods for impairment test and provision for impairment of intangible assets
At the balance sheet date, the Company reviews the intangible assets to check whether there is a sign of impairment and an impairment test is needed to recognize the recoverable amount when there are signs that intangible assets may impair. The impairment loss should be the lower of the carrying value and recoverable
Qingdao Haier Co., Ltd. 2015 Annual Report
amount and provision for impairment loss cannot be reversed in the following accounting periods if it has been accounted for.
The recoverable amount should be based on the higher value between fair value less disposal expense and present value of estimated cash flow in the future.
(2). Basis for research and development phases for internal research and development project and basis for capitalization of expenditure incurred in development stage
As for an internal research and development project, expenditure incurred in the research phase is recognized in profit or loss in the period as incurred. Expenses incurred in the development stage are recognized as intangible assets if all of the following conditions are met:① the technical feasibility of completing the intangible asset so that it will be available for use or for sale;② the intention to complete the intangible asset for use or for sale;③ how the intangible asset will generate economic benefits including there is evidence that the products produced using the intangible asset has a market or the intangible asset itself has a market; if the intangible asset is for internal use, there is evidence that there exists usage for the intangible asset;④ the availability of adequate technical, financial and other resources to complete the development and the ability to use or sell the intangible asset;⑤ the expenditures attributable to the development of the intangible asset could be reliably measured.
Basis for distinguishing research phase and development phase of an internal research and development project: research stage is the activities carried out for the planned investigation and search of new technology and knowledge, which has the characteristics of planning and exploration; before commercial production or other uses, the application of new technologies and new knowledge obtained from the research phase in a plan or design to produce new or improved materials, equipment and products is regarded as development phase, which has the characteristics of very probable pinpointing and forming results.
19. Impairment of long-term assets
Long-term equity investment, investment properties measured based on cost model, fixed assets, construction in progress, intangible assets and other long-term assets are tested for impairment if there is any indication that an asset may be impaired at the balance date. If the result of the impairment test indicates that the recoverable amount of the asset is less than its carrying amount, a provision for impairment and an impairment loss are recognized for the amount by which theasset’s carrying amount
Qingdao Haier Co., Ltd. 2015 Annual Report
exceeds its recoverable amount. The recoverable amount is the higher of anasset’s fair value less costs to sell and the present value of the future cash flows expected to be derived from the asset. Provision for asset impairment is determined and recognized on the individual asset basis. If it is not possible to estimate the recoverable amount of an individual asset, the recoverable amount of a group of assets to which the asset belongs is determined. A group of assets is the smallest group of assets that is able to generate independent cash inflows.
Goodwill is tested for impairment at least at each year end.
In terms of impairment test of the goodwill, the carrying amount of the goodwill, arising from enterprise combination, shall be allocated to the related asset groups in accordance with a reasonable basis on acquisition date, or to the related asset group portfolios if it is difficult to be allocated to the related asset groups. When the carrying amount of the goodwill is allocated to the related assets or asset groups, it shall be allocated in the proportion of the fair value of each asset group or asset group portfolio against the total fair value of related assets or asset groups. If it is difficult to measure the fair value reliably, it shall be allocated in the proportion of the carrying amount of each asset group or asset group portfolio against the total carrying amount of related assets or asset groups.
When there is an indication that the asset and asset group are prone to impair, the Company shall firstly test for impairment for asset and asset group excluding goodwill and calculate the recoverable amount and recognize the impairment loss accordingly by comparing with its carrying amount. The Company shall then test for impairment for asset or the asset group including goodwill and compare the asset or assetgroup’s recoverable amount with its carrying amount (including the carrying amount of allocated goodwill). Provision for impairment of assets shall be recognized when the recoverable amount of the asset or the asset group is lower than its carrying amount.
Once the impairment loss of such assets is recognized, it is not be reversed in any subsequent accounting period.
20. Long-term prepayments
Long-term prepayments are expenditures which have incurred but shall be amortized over the current period and subsequent periods of more than one year (excluding one year). They are amortized evenly over the benefit period. If the long-term prepayments are no longer beneficial to the subsequent accounting periods, the unamortized balance is then fully transferred to profit or loss for the period.
Qingdao Haier Co., Ltd. 2015 Annual Report
21. Estimated liabilities
(1) Criterion for determining of estimated liability
If an obligation in relation to contingencies such as external guarantees, discounting of commercial acceptance bills, pending litigation or arbitration and product quality assurance is the present obligation of the Company and the performance of such obligation is likely to lead to the outflow of economic benefits and its amount can be reliably measured, such obligation shall be recognized as estimated liability.
(2) Measurement of estimated liability
The best estimate of the expenditure from current obligation is initially recorded as accrued liability. When the necessary expenditures falls within a range and the probability of each result in the range are identical, the best estimate is the median of the range; if there are severable items involved, every possible result and relevant probability are taken into account for the best estimation.
At the balance sheet date, the carrying value of provision is reviewed. If there is objective evidence that the carrying value could not reflect the current best estimate, the carrying value is adjusted to the best estimated value.
22. Share-based payments
For equity-settled share-based payment transaction in return for services from employees, it shall be measured at the fair value of equity instruments granted to the employees. For the payment of such fair value that may only be exercised if services are fulfilled in the current period or the specified performance is achieved, the fair value shall, based on the best estimate of the number of exercisable instruments, be recognized in relevant costs or expenses in straight-line method with the increase in the capital reserve accordingly.
The cash-settled share-based payment shall be measured at the fair value of liability assumed by the Company, which is calculated and determined based on the shares or other equity instruments. For the cash-settled share-based payment that may be exercised immediately after the grant, the fair value of the liability assumed by the Company shall, on the date of the grant, be recognized in relevant costs or expenses and the liabilities shall be increased accordingly. For cash-settled share-based payment during vesting period, on each balance sheet date within the vesting period, the services acquired in the current period shall, based on the best estimate of the number of exercisable instruments, be recognized in relevant costs or expenses and the
Qingdao Haier Co., Ltd. 2015 Annual Report
corresponding liabilities at the fair value of the liability assumed by the Company, and the liabilities shall be adjusted correspondingly.
At each reporting date and the settlement date prior to the settlement of liabilities, the fair value of the liability is re-measured through profit or loss.
When there is changes in the Company's share-based payment plans, if the modification increases the fair value of the equity instruments granted, corresponding recognition of service increase in accordance with the increase in the fair value of the equity instruments; if the modification increases the number of equity instruments granted, the increase in fair value of the equity instruments is recognized as a corresponding increase in service achieved. Increase in the fair value of equity instruments refer to the difference between the fair values of the modified date. If the Company modifies the exercisable conditions in such manner conductive to the employees, including the shortening of the vesting period, change or cancellation of the performance conditions (rather than market conditions), the Company shall consider the modified exercisable conditions upon the disposal of exercisable conditions. If the modification reduces the total fair value of shares paid or the Company uses other methods not conductive to employees share-based payment plans to modify the terms and conditions of service, it will continue to be accounted for in the accounting treatment, as if the change had not occurred, unless the Company cancelled some or all of the equity instruments granted.
During the vesting period, if the cancelled equity instruments granted by the Company to cancel the equity instruments granted amount treated as accelerated vesting of the remaining period should be recognized immediately in profit or loss, while recognizing the capital reserve. Employees or other parties can choose to meet non-vesting conditions but are not met in the vesting period, the Company will treat it as canceled equity instruments granted.
23. Remuneration of employees
Remuneration of employees are all forms of compensation and other relevant expenditure given by the Company in exchange for services rendered by employees, including short-term remuneration, post-employment benefits, termination benefits and other long-term benefits.
Qingdao Haier Co., Ltd. 2015 Annual Report
(1).accounting methods of Short-term compensation
Short-term remuneration include short-term salaries, bonus, allowance, subsidies,staff’s welfare, housing provident fund, union funds and employee education funds, medical insurance fees, injury insurance fees, maternity insurance fees, short-term paid absence, short-term profit sharing plans, etc.. During the accounting period when employees render services, short-term benefits payable that actually incurred shall be recognized as liabilities and credited into the current profit and loss or relevant assets cost on an accrual basis for the benefit objects.
(2) Accounting methods of welfare after leaving office
Post-employment benefits mainly includes the basic pension insurance, supplementary pension, etc., In accordance with the risks and obligations undertaken by the Company, the post-employment benefits
is classified as defined contribution plans and defined benefit pension plans. Defined contribution plans: the Company shall recognize the sinking fund paid to individual entity on balance sheet date as a liability in exchange of services from the employee in accounting period, and credited into current profits or losses or related assets costs in accordance with the benefit objects. Defined benefit plans: the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out by independent actuary at the interim and the annual balance sheet date. Staffs' benefit costs incurred by the defined benefit plan of the Group are categorized as follows: (1) service cost, include current period service cost, past-service cost and settlement gain or loss. Current period service cost means the increase of the present value of defined benefit obligation resulted from the current period service offered by employee. Past-service cost means the increase or decrease of the present value of defined benefit obligation resulted from the revision of the defined benefit plans related to the prior period service offered by employee; (2) interest costs of defined benefit plans; (3) changes related to the remeasurement of defined benefit plans liabilities. Unless other accounting standards require or permit to
charge the employee benefits into assets cost, the Company charges (1) and (2) above into current profit or loss, and recognized (3) above as other comprehensive income without transferring to profit or loss in subsequent accounting periods.
(3) Accounting treatment of welfare post cancellation of labor relationship
Termination benefits: the indemnity proposal provided by the Company for employees for the purpose of terminating labor relation with the employees before the expiry of the labor contract or
Qingdao Haier Co., Ltd. 2015 Annual Report
encouraging employees to accept downsizing voluntarily, when the following conditions are met, recognize and at the same time credited into the current profit or loss the accrued liabilities arising from the indemnity as a result of terminating labor relation with the employees: the Company has made a formal plan for termination of employment relationship or has made an offer for voluntary redundancy which will be implemented immediately; and the Company could not unilaterally withdraw from the termination plan or the redundancy offer. Early retirement benefits will adopt same principles as the termination benefit. The Company will credit the salaries and social benefits intend to pay for these early retirees during the periods from the date of early retirement to the normal retirement date to profit or loss of the current period when recognition conditions for accrued liabilities are met.
24. Revenue
(1) Sale of goods
Revenue from the sale of goods shall be recognized at the amount received or receivable from buyers based on contractual or agreed prices, only when all of the following conditions are satisfied:① the significant risks and rewards of ownership of the goods have been passed to the buyer;② the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;③ the amount of revenue can be measured reliably;④ it is probable that the associated economic benefits will flow to the enterprise;⑤ the associated costs incurred or to be incurred can be measured reliably.
Recognition process of theCompany’s sales revenue: Business personnel submit sales application in the business system according to theconsumers’ orders; financial personnel review the remaining credit of the consumers or whether the payment for goods is made in advance according to the sales application, and notify the warehouse to handle the delivery formalities if the delivery conditions are met. The Financial Department confirms that the major risks of property in the goods and rewards have been transferred to the buyers upon the receipt of waybill with theconsumers’ signature, and then issue sales invoices to confirm the sales revenue.
(2) Provision of labor services
At the balance sheet date, when the outcome of a transaction involving the rendering of services can be estimated reliably, revenue from provision of services shall be recognized using the percentage of completion method. The Company confirms the completion progress in accordance with the ratio of actual cost accounting for the total estimated cost. At the balance sheet date, when the outcome of the
Qingdao Haier Co., Ltd. 2015 Annual Report
transaction involving the rendering of services cannot be estimated reliably, it shall be dealt with in the following ways:① if the cost of services incurred is expected to be compensated, the revenue from the rendering of services is recognized to the extent of actual cost incurred to date, and the relevant cost is transferred to cost of service in profit or loss;② if the cost of services incurred is not expected to be compensated, the cost incurred should be included in current profit or loss, and no revenue from the rendering of services may be recognized.
(3) Assignment of asset use rights
Revenue from usage fee arising from assignment of intangible assets (such as trademark rights, patent rights, franchise rights, software and copyright, etc.) and the use right of other assets will be recognized in accordance with the time and method for charge as required under relevant contract or agreement and at the same time satisfy the conditions that the economic benefit in connection with transaction could flow into the Company and the amount of revenue could be reliably measured.
(4) Construction contracts
Where the outcome of a construction contract can be estimated reliably at the balance sheet date, revenues and expenses associated are recognized using the percentage of completion method. The term―percentage of completionmethod‖ means a method by which the contractor recognizes its revenues and costs in the light of the schedule of the contracted project. The Company ascertained the completion schedule of a contract project according to the proportion of the completed total contract cost against the expected total contract cost.
25.Government grants
(1)Types of government grants
Government grants refer to the monetary assets or non-monetary assets obtained by the Company from the government for free, not including the investment made by the government as an owner. The government grants are mainly divided into asset-related government grants and revenue-related government grants.
Qingdao Haier Co., Ltd. 2015 Annual Report
a) Basis of determining and accounting of asset-related government grant
Asset-related government grants shall be recognized as deferred income in profit or loss for the current period on an even basis over the useful life of theasset；Government grants measured at nominal amount shall be recorded directly in profit and loss for the current period.
b) Basis of determining and accounting of income-related government grant
Revenue-related government grants shall be treated as follows:① those used to compensate relevant expenses or losses to be incurred by the enterprise in subsequent periods are recognized as deferred income and recorded in profit or loss for the current period when such expenses are recognized;② those used to compensate relevant expenses or losses that have been incurred by the enterprise are recorded directly in profit or loss for the current period.
(2). Basis for determination of asset-related government grant and revenue-related government grant
If the government grant received by the Company is used for construction or other project that forms a long term asset, it is regarded as asset-related government grant.
If the government grant received by the Company is not asset-related, it is regarded as revenue-related government grant.
Government grant received without clear objective shall be classified as asset-related government grant or revenue-related government grant by:
① Government grant subject to a certain project shall be separated according to the proportion of expenditure budget and capitalization budget, and the proportion shall be reviewed and modified if necessary on the balance sheet date;
② Government grant shall be categorized as related to income if its usage is just subject to general statement but specific project in relevant document.
(3) Amortization method and determination of amortization period of deferred revenue related to government grants
Asset-related government grant received by the Company is recognized as deferred revenue and is evenly amortized to profit or loss over the estimated useful life of the relevant asset starting from the date the asset is available for use.
Qingdao Haier Co., Ltd. 2015 Annual Report
(4)Recognition of government grants
Government grant receivable is recognized at the end of period when there is clear evidence that the conditions set out in the financial subsidy policies and regulation are fulfilled and the receipt of such financial subsidy is assured.
Other government grants not fulfilling the above requirements are recognized upon actual receipt of such subsidies.
26. Deferred income tax assets / deferred income tax liabilities
Deferred income tax assets and deferred income tax liabilities of the Company are recognized: (1) Based on the difference between the carrying amount and the tax base amount of an asset or a liability (items not recognized as assets and liabilities but their tax base is ascertained by the current tax laws and regulation, the tax base is the difference), deferred income tax asset or deferred income tax liability is calculated using the applicable tax rate prevailing at the expected time of recovering the relevant asset or discharging the relevant liability.
(2) Deferred income tax asset is recognized to the extent that there is enough future profit for the utilization of the deductible temporary difference. At the balance sheet date, if there is sufficient evidence that there would be enough future benefit for the utilization of the deductible temporary difference, the deferred income tax asset not previously recognized is recognized in current period. If there is no sufficient evidence that there would be enough future taxable income for the deduction of the deferred income tax asset, the carrying value of the deferred income tax asset is reduced.
(3) Deferred income tax liability is recognized for taxable temporary difference arising from investments in subsidiaries and associated companies, unless the Company could control the reversal of the temporary differences and the temporary differences would not be reversed in the foreseeable future. For deductible temporary differences arising from investments in subsidiaries and associated companies, deferred income tax asset is recognized if the temporary difference will be reversed in foreseeable future and there will be sufficient future taxable profit to utilize the deductible temporary difference.
(4) No deferred income tax liability is recognized for a temporary difference arising from the initial recognition of goodwill. No deferred income tax asset or deferred income tax liability is recognized for the temporary differences resulting from the initial recognition of assets or liabilities due to a transaction other than a business combination, which affects neither accounting profit nor taxable profit (or deductible loss).
Qingdao Haier Co., Ltd. 2015 Annual Report
27. Lease
(1)Accounting treatment of Operating lease
① Rental payments for asset rented are amortized on a straight-line basis over the lease term (including rent-free periods), and credited into the current expenses. Initial direct costs that are attributable to leasing transactions paid by the Company are credited to current expense.
When the lesser bears the lease related expenses which should be undertaken by the Company, the Company shall deduct this part of expense from the rent and amortize the net amount over the lease term and credited to current expense.
② Rental income received from assets rented out is amortized on a straight-line basis over the lease term (including rent-free periods), and recognized as lease income. Initial direct costs involving leasing transactions paid by the Company are credited into current expenses, in case the amount is significant, it will be capitalized, and are credited into current revenue on the same basis as rental income recognized over the lease term.
When the Company bears the lease related expenses which should be undertaken by the lessee, the Company shall deduct this part of expense from the total rent income, and amortize the rental payment over the lease term.
(2)Accounting treatment of Finance lease
①When the Company is a lessee, the leased asset is recorded at the amounts equal to the lower of the fair value of the leased asset and the present value of the minimum lease payments on the lease beginning date and the long-term payables is recorded at the amounts of the minimum lease payments. The difference between the recorded amount of the leased asset and the minimum lease payments is accounted for as unrecognized finance charge.
The unrecognized finance charge is amortized using the effective interest method over the period of the lease and accounted in finance charge. Initial direct costs incurred by the Company are credited in value of leased assets.
②When the Company is a lessor, the difference between sum of the lease receivables and unguaranteed residual value its and present value is accounted for as unrealized finance income and is recognized as rental income over the period of the lease. Initial direct costs attributable to lease transaction incurred by the Company shall be accounted in the initial measurement of finance lease receivables and reduced the amount of recognized revenue during period of the lease.
28. Other significant accounting policies and accounting estimations
(1) Share repurchases
When the Company purchases its own shares to decrease its registered capital or reward its staff, it shall be included in treasury stock against the amount actually paid.
When Company awards the purchased shares to its staff under the equity-settled share-based payment agreement, it shall be included in capital reserve (equity premium) against the difference
Qingdao Haier Co., Ltd. 2015 Annual Report
between the book balance of awarded treasury stock and the staff-paid cash and capital reserve recognized upon the granting of equity instruments.
When cancelling the treasury stock, the share capital shall be cancelled against the total face value of the cancelled treasury stock; the treasury stock shall be eliminated against the book balance of the cancelled treasury stock; the capital reserve (equity premium) shall be eliminated against the difference; if the equity premium is insufficient for elimination, the retained earnings shall be adjusted accordingly. (2) Explanations on significant accounting estimates
Judgments, estimates and assumptions shall be made to financial statements items, which could not be measured accurately, due to the inherent uncertainties of operating activities, while applying accounting policy. Management bases its judgments, estimates and assumptions on historical experience and other various factors, these judgments will influence the amount of revenues, expenses, assets and liabilities presented in financial reports and the disclosure of contingent liabilities on the balance sheet date. However, these uncertainties may have a difference from the current estimates of the management, and thus cause a material adjustment to the carrying amounts of assets and liabilities. The judgments, estimates and assumptions mentioned above shall be reviewed on a going concern basis. If the revisions to accounting estimates only influence the current period, relevant adjustment due to the effect shall be recognized in the current period; otherwise, in the current and future period.
On the balance sheet date, the significant fields involving judgments, estimates and assumptions about financial report items are listed as follows:
① Estimated liability
Provision for product quality guarantee, estimated onerous contracts, and delay delivery penalties shall be recognized in terms of contract, current knowledge and historical experience. If the contingent event has formed a practical obligation which probably results in outflow of economic benefits from the Company, an estimated liability shall be recognized on the basis of the best estimate of the expenditures to settle relevant practical obligation. Recognition and measurement of the estimated liability significantly rely on themanagement’s judgments in consideration of the assessment of relevant risks, uncertainties, time value of money and other factors related to the contingent events. Among them, the Company will undertake estimated liabilities with respect to the after-sales services provided for the return, maintenance and installation of goods. When estimating liabilities, the Company has considered the maintenance information in recent years, but the previous maintenance experiences may fail to reflect the future circumstances. Any increase or decrease in this provision is likely to affect the profits and losses of the next year.
② Provision for bad debts
The allowance method is adopted for bad debts according to accounting policies of trade receivables. Impairment losses for receivables are assessed on the basis of recoverability, as a result of judgments and estimates of the management. The difference between actual outcome and the previously estimated outcome will influence the carrying value of receivables and accrual or reversal of provision for bad debts during the period accounting estimates are changed.
Qingdao Haier Co., Ltd. 2015 Annual Report
③ Provision of write-down of inventories
Inventories are measured by lower of historical cost or net realizable value method according to the accounting policies of inventories; for obsolete and unsalable inventories or whose historical costs are higher than the net realizable, provision for write-down of inventories shall be incurred. The carrying value of inventory shall be written down to the net realizable value on the basis of the salability of inventories and the net realizable value. Inventory write-down shall be incurred in consideration of solid evidence and the purpose of holding inventories and the effect of subsequent events and etc. The difference between the actual outcome and the previously estimated outcome will influence the carrying value of inventories and accrual or reversal of provision for write-down of inventories during the period accounting estimates are changed.
④ Fair value of financial instruments
For financial instruments where there is no active market, the Company will determine the fair value through a variety of valuation methods. Such valuation methods include discounted cash flow analysis. In the valuation, the Company shall estimate the future cash flow, credit risk, market volatility and correlation, and select the appropriate discount rate. Such related assumptions are uncertain, and their changes may affect the fair value of financial instruments.
⑤ Impairment of available-for-sale financial assets
The determination of whether impairment loss shall be recognized in income statement for available-for-sale financial asset is significantly depends on the judgments and assumptions of the management. While making judgments and assumptions, it shall be take into consideration that how much the fair value of the investment is lower than the cost, the financial position and short-term business projection, including industry conditions, technological innovation, the credit ratings, probability of violation andcounterparts’ risks.
⑥ Provision for long-term assets impairment
On the balance sheet date, the Company shall judge whether there is any possible indication of impairment against non-current assets other than financial assets. The intangible assets with indefinite useful life must be tested for impairment on an annual basis as well as when there is any indication of impairment. Other non-current assets other than financial assets shall be tested for impairment when there is an indication showing that the carrying value is not recoverable. Impairment occurs while the carrying value of an asset or asset group is higher than the recoverable value, which is the higher of its fair value deducted disposal expenses and the present value of expected future cash flow. The fair value deducted by disposal expenditure is determined in consideration that sale agreement regarding analogous asset, and approachable market price and relevant dispose expenditures. Significant judgments regarding the production amount, sales price, relevant operating costs of the assets (or assets group) and the discount rate used to calculate the present value shall be made, while determining the present value of future cash flows. Recoverable amount shall be estimated by using all accessible relevant information, including production amount, sales price, and relevant operating costs predictions made based on reasonable and supportive assumptions. The Company shall test for goodwill impairment at least every
Qingdao Haier Co., Ltd. 2015 Annual Report
year. This requires the Company to estimate the present value of future cash flows for such assets or asset groups allocated with goodwill. When estimating the present value of future cash flows, the Company shall not only estimate the future cash flows generated by such assets or asset groups, and select the appropriate discount rate to determine the present value of such future cash flows.
⑦ Depreciation and amortization
Investment properties, fixed assets and intangible assets are depreciated and amortized by a straight-line approach over their estimated useful life by taking the residual value into consideration. Useful life shall be periodically reviewed to determine the depreciation and amortization expenses for each reporting period and be determined on the basis of historical experience regarding analogous assets and the expected technological innovation. Significant changes to previous accounting estimates will result in adjustments against depreciation and amortization expenses in the future periods.
⑧ Deferred tax assets
Deferred tax asset is recognized for all the uncompensated tax losses to the extent of the amount of deductible taxable income. In order to determine the amount of deferred tax assets, the management needs to predict the timing and the amount of taxable profits in the future by taking into account the influence of tax planning.
⑨ Income tax
There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. Whether some items are non-deductible shall be approved by relevant tax authorities. Where the final tax outcome of these matters is different from the carrying amount, such differences will impact the current and deferred tax.
⑩ Returned profits from sales
The Company and its subsidiaries adopt the policy of returned profits from sales for all consumers. According to the relevant conventions in the sales agreement, the review of specific transactions, the market situation, the pipeline inventory levels and the historical experiences, the Company and its subsidiaries estimate and make returned profits from sales on a regular basis pursuant to the completion of agreed assessment indexes. Provisions of returned profits from sales involve the judgment and
estimates of the management. In case of any significant changes in the previous estimates, the balance above will have an impact on the returned profits from sales during the period when significant changes occur.
29. Changes in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
□Applicable√Not Applicable
(2) Changes in accounting estimates
□Applicable√Not Applicable
Qingdao Haier Co., Ltd. 2015 Annual Report
VI. Taxation
1. Main tax types and tax rates
||||
|-|-|-|
|Tax type|Basis of taxation|Tax rate|
|Value-added tax|Taxable revenue of goods salesand taxable labor services revenue|6%, 11%, 17%|
|Business tax|Business tax amount payable|3%, 5%|
|Urban maintenance andconstruction tax|Turnover tax amount payable|7%|
|EIT|Income tax amount payable|Statuary tax rate are as follows|
|(Local) educationsurcharges|Turnover tax amount payable|1%, 2%, 3%|

Rate of income tax of the Company and subsidiaries are as follows:
□Applicable√Not Applicable
2. Preferential tax
Companies enjoying preferential tax and preferential tax rate:
||||
|-|-|-|
|Name of company|Tax rate|Preferential tax|
|Qingdao Haier Co., Ltd.|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|Qingdao Haier Refrigerator Co., Ltd.|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|Qingdao Haier Intelligent Electronics Co., Ltd.|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|Qingdao Haier Special Refrigerator Co., Ltd.|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|Qingdao Haier Air Conditioner Gen Corp., Ltd.|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|Qingdao Haier Dishwasher Co., Ltd.|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|Qingdao Haier Special Freezer Co., Ltd.|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|Qingdao Haier Intelligent Home Appliance TechnologyCo., Ltd|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|Wuhan Haier Electronics Co., Ltd.|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|Wuhan Haier Freezer Co., Ltd.|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|Hefei Haier Refrigerator Co., Ltd.|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|Hefei Haier Air-conditioning Co., Ltd.|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|ZhengZhou Haier Air-conditioning Co., Ltd.|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|Chongqing Haier Air-conditioning Co., Ltd.|15%|entitled to the preferential taxationpolicies under the WesternDevelopment initiative of the PRC|
|Chongqing Haier Refrigeration Appliance Co., Ltd.|15%|entitled to the preferential taxationpolicies under the WesternDevelopment initiative of the PRC|
|Guizhou Haier Electronics Co., Ltd.|15%|entitled to the preferential taxationpolicies under the WesternDevelopment initiative of the PRC|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||
|-|-|-|
|Qingdao Haier Air-Conditioner Electronics Co., Ltd.|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|Qingdao Haier Moulds Co., Ltd.|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|Qingdao Haier Special Steel Plate Research andDevelopment Co., Ltd|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|Qingdao Meier Plastic Powder Co., Ltd.|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|Chongqing Haier Precision Plastic Co., Ltd.|15%|entitled to the preferential taxationpolicies under the WesternDevelopment initiative of the PRC|
|Chongqing Haier Intelligent Electronics Co., Ltd.|15%|entitled to the preferential taxationpolicies under the WesternDevelopment initiative of the PRC|
|Qingdao Haigao Design & Manufacture Co., Ltd.|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|Qingdao Haier Technology Co., Ltd.|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|Qingdao Hairi High Technology Molding Co., Ltd.|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|Qingdao Haier (Jiaozhou) Air-Conditioner Co., Ltd.|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|Beijing Haier Guangke Digital Technology Co., Ltd.|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|He Fei Haier Washing Machine Co., Ltd.|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|Qingdao Haier Washing Machine Co., Ltd.|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|Qingdao Jiaonan Haier Washing Machine Co., Ltd.|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|Qingdao Haier Drum Washing Machine Co., Ltd.|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|Foshan Shunde Haier Electric Appliance|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|Qingdao Economy and Technology Development ZoneHaier Water Heater Co., Ltd.|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|Ltd.Wu Han Haier Water Heater Co., Ltd.|15%|entitled to the preferential taxation policiesas a hi-tech enterprise|
|Chongqing Goodaymart Electronics Sales Co., Ltd.|15%|entitled to the preferential taxationpolicies under the WesternDevelopment initiative of the PRC|
|Chongqing Haier Home Appliance Sale Co., Ltd. andsome branches in western region|15%|entitled to the preferential taxationpolicies under the WesternDevelopment initiative of the PRC|
|Chongqing Goodaymart Electronics Sales Co., Ltd. andsome of branch companies|15%|entitled to the preferential taxationpolicies under the WesternDevelopment initiative of the PRC|
|Chongqing Haier washing machine Co., Ltd.|15%|entitled to the preferential taxationpolicies under the WesternDevelopment initiative of the PRC|
|Chongqing Haier Water Heater Co., Ltd.|15%|entitled to the preferential taxationpolicies under the WesternDevelopment initiative of the PRC|
|Chongqing Haier Drum Washing Machine Co.,Ltd|15%|entitled to the preferential taxationpolicies under the WesternDevelopment initiative of the PRC|

Qingdao Haier Co., Ltd. 2015 Annual Report
3. Others
VII. Explanatory Notes for Items in Consolidated Financial Statements
Unless otherwise specified, the following closing balance means the amount as at 31 December 2015; opening balance means the amount as at 31 December 2014; current period means the amount incurred from 1 January to 31 December 2015, while the previous period means the amount incurred from 1 January to 31 December 2014.
1. Monetary funds
Unit and Currency: RMB
||||
|-|-|-|
|Items|Closing balance|Opening balance|
|Treasury cash|448,890.79|667,833.83|
|Bank deposit|24,622,416,375.45|31,118,679,107.93|
|Othermonetaryfunds|91,949,685.73|106,068,874.12|
|Total|24,714,814,951.97|31,225,415,815.88|
|Among which: total of overseasamounts|1,000,735,432.46|2,418,099,379.53|

Other explanatory
An amount of RMB11,141,062,633.53 of the monetary fund was deposited in Haier Group Finance Co., Ltd. on 31 December 2015, the balance of which including a fixed term deposit of RMB4,520,300,000.00. The investment fund in the closing balance of other monetary fund was RMB53,487,981.75, the payment of the third party platform was RMB6,473,256.10 and the amount securing bill payable was RMB31,988,447.88.
2. Financial asset designated to be measured by fair value and change of which is recorded in current profit and loss
√Applicable□Not Applicable
||||
|-|-|-|
|Items|Closing balance|Opening balance|
|Forward foreign exchange sale andpurchase agreement|22,069,897.04|103,668,887.71|
|Total|22,069,897.04|103,668,887.71|

 3. Bills receivable
(1) Categories of bills receivable
√Applicable□Not Applicable
Unit and Currency: RMB
||||
|-|-|-|
|Items|Closing balance|Opening balance|
|Bank acceptance notes|2,030,726,556.43|3,935,944,898.33|
|Commercial acceptance bill|10,642,925,056.43|12,538,175,841.84|
|Total|12,673,651,612.86|16,474,120,740.17|

(2)The pledged bills receivable of the Company at the end of the period was RMB 7,943,296,324.49.
Qingdao Haier Co., Ltd. 2015 Annual Report
4. Trade receivables
(1)Trade receivables disclosed by categories:
||||||
|-|-|-|-|-|
|Items|Closing balance||Opening balance||
||Book balance|Provision for baddebts|Book balance|Provision forbaddebts|
|Trade receivables that areindividually significant andare subjected to provision forbad debts on individual basis|||||
|Trade receivables that aresubjected to provision for baddebts on portfolio basis|6,464,622,032.50|323,231,101.63|7,090,924,171.34|354,546,208.57|
|Trade receivables that areindividually insignificant butare subjected to provision forbad debts on individual basis|124,613,269.46|124,613,269.46|65,754,801.54|65,754,801.54|
|Total|6,589,235,301.96|447,844,371.09|7,156,678,972.88|420,301,010.11|

 (2)Trade receivables of which provision for bad debts is made according to aging analysis within the group:
√Applicable□Not Applicable
||||||
|-|-|-|-|-|
|Aging|Closing balance||Opening balance||
||Book balance|Provision forbad debts|Book balance|Provision forbad debts|
|Within 1year|6,240,233,823.59|312,011,691.20|6,906,704,119.89|345,335,205.98|
|1-2years|177,154,723.15|8,857,736.15|133,485,982.27|6,674,299.12|
|2-3years|10,733,254.50|536,662.72|36,401,544.69|1,820,077.24|
|Over 3years|36,500,231.26|1,825,011.56|14,332,524.49|716,626.23|
|Total|6,464,622,032.50|323,231,101.63|7,090,924,171.34|354,546,208.57|

 (3)The total amount of the top 5 in the trade receivables at the end of the period was RMB1,472,299,078.60, accounting for22.34% of the book balance of the trade receivables, and the amount of provision for bad debts was RMB73,614,953.93.
(4) Provisions for bad debts made, collected or reversed in the current period:
Provisions for bad debts in the amount of RMB 55,170,989.48 were made in the current period. (5) Accounts receivable written off in the current period
The bad debts written off in the current period amounted to RMB6,075,120.17, and there was no significant accounts receivable written off in the current period.
5. Prepayments
(1) Aging of prepayments:
Unit and Currency: RMB
||||
|-|-|-|
|Aging|Closing balance|Opening balance|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||
|-|-|-|
|Amount|Proportion (%)|Amount|
|304,860,675.09|54.74|689,547,822.13|
|84,576,029.21|15.19|92,381,704.21|
|111,635,498.60|20.05|27,182,650.43|
|55,799,800.49|10.02|26,971,816.19|
|556,872,003.39|100|836,083,992.96|

 (2)The total amount of the top 5 in the prepayments at the end of the period was RMB126,201,327.86, accounting for22.66% of the book balance of the prepayments.
6. Interest receivables
√Applicable□Not Applicable
||||||
|-|-|-|-|-|
|Aging|Closing balance||Opening balance||
||Book balance|Proportion|Book balance|Proportion|
|Within 1 year|183,731,216.46|100.00%|178,522,845.11|100.00%|
|Total|183,731,216.46|100.00%|178,522,845.11|100.00%|

 7. Other receivables
(1) Other receivables disclosed by categories:
||||||
|-|-|-|-|-|
|Items|Closing balance||Opening balance||
||Book balance|Provision forbad debts|Book balance|Provision forbad debts|
|Individual significant otherreceivables of whichprovision for bad debts ismade on an individual basis|||||
|Other receivables of whichprovision for bad debts ismade on a group basis|503,762,220.81|25,188,111.04|636,411,007.62|31,820,550.38|
|Individual insignificant otherreceivables of whichprovision for bad debts ismade on an individual basis|16,989,358.60|16,989,358.60|8,320,297.85|8,320,297.85|
|Total|520,751,579.41|42,177,469.64|644,731,305.47|40,140,848.23|

 (2) Other receivables of which provision for bad debts is made on portfolio basis:
||||||
|-|-|-|-|-|
|Aging|Closing balance||Opening balance||
||CarryingBalance|Provision forbad debts|CarryingBalance|Provision forbad debts|
|Within oneyear|271,943,281.93|13,597,164.11|595,714,702.41|29,785,735.12|
|1-2 years|200,229,224.55|10,011,461.22|29,734,745.57|1,486,737.28|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||||
|-|-|-|-|-|
|2-3 years|16,878,863.68|843,943.18|4,655,121.58|232,756.08|
|Over 3 years|14,710,850.65|735,542.53|6,306,438.06|315,321.90|
|Total|503,762,220.81|25,188,111.04|636,411,007.62|31,820,550.38|

 (3)At the end of the period, total amount of top five other receivables was RMB104,217,012.04, representing20.01% of the book balance of other receivables, and the amount of provision for bad debts was RMB5,210,850.60.
(4) Bad-debt provisions made, collected or reversed in the current period:
Provisions for bad debts in the amount of RMB6,928,631.57 were made in the current period. (5) There was no other receivable written off in the current period.
(6) Other receivables mainly include the deposit, the quality retention money, staff borrowing, tax refunds, and advance money for another, etc.
8. Inventories
(1) Details of inventories:
||||||
|-|-|-|-|-|
|Items|Closing balance||Opening balance||
||Book balance|ImpairmentProvision|Book balance|ImpairmentProvision|
|Raw materials|1,319,167,777.77|27,740,567.60|1,949,737,346.72|45,422,279.17|
|Work inprogress|100,862,950.68||78,710,967.65||
|Engineeringconstruction|183,826,364.76||170,319,071.95||
|Finishedgoods|7,265,453,539.26|282,326,025.78|7,001,755,604.31|133,459,770.55|
|Total|8,869,310,632.47|310,066,593.38|9,200,522,990.63|178,882,049.72|

 (2) Impairment provision of inventories:
||||||||
|-|-|-|-|-|-|-|
|Items|Openingbalance|Increase forthe currentperiod|Decrease for the period|||Closingbalance|
||||Reversal|Write-off|Total||
|Rawmaterials|45,422,279.17|3,827,521.08|9,445,223.60|12,064,009.05|21,509,232.65|27,740,567.60|
|Finishedgoods|133,459,770.55|256,499,729.47||107,633,474.24|107,633,474.24|282,326,025.78|
|Total|178,882,049.72|260,327,250.55|9,445,223.60|119,697,483.29|129,142,706.89|310,066,593.38|

（3）Engineering construction
||||||||
|-|-|-|-|-|-|-|
|Items|Total of actual contract costs||Accumulatively recognized grossprofit||The settled price||
||Closingbalance|Openingbalance|Closingbalance|Openingbalance|Closingbalance|Openingbalance|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||||||
|-|-|-|-|-|-|-|
|Engineeringconstruction|730,332,518.99|593,043,713.33|154,760,775.13|114,811,872.59|701,266,929.36|537,536,513.97|

9. Other current assets
Unit and Currency: RMB
||||
|-|-|-|
|Items|Closing balance|Opening balance|
|Bank Treasury deposit|250,000,000.00|242,400,000.00|
|Deductible VAT|962,096,326.52|409,584,923.23|
|Others|238,968,870.78|139,033,818.42|
|Total|1,451,065,197.30|791,018,741.65|

 10. Available-for-sale financial assets
√Applicable□Not Applicable
(1) Explanation of available-for-sale financial assets:
||||||||
|-|-|-|-|-|-|-|
|Items|Closing balance|||Opening balance|||
||CarryingBalance|Provisionforimpairment|Book value|CarryingBalance|Provisionforimpairment|Book value|
|Available-for-saleequityinstrument:|2,840,543,201.20|3,225,000.00|2,837,318,201.20|1,437,781,907.98|7,160,559.63|1,430,621,348.35|
|At fair value|1,453,993,243.39||1 ,453,993,243.39|1,394,842,730.44||1 ,394,842,730.44|
|At cost|1,386,549,957.81|3,225,000.00|1,383,324,957.81|42,939,177.54|7,160,559.63|35,778,617.91|
|Total|2,840,543,201.20|3,225,000.00|2,837,318,201.20|1,437,781,907.98|7,160,559.63|1,430,621,348.35|

 (2) Available-for-sale financial assets at fair value at the end of the period:
|||
|-|-|
|Categories of available-for-sale financial assets|Available-for-sale equity instrument|
|Cost of equity instrument|912,022,174.60|
|Fair value|1,453,993,243.39|
|Accumulated fair value changes credited into othercomprehensive income|459,664,677.19|
|Allowance for impairment amounts||

(3)Available-for-sale financial assets at cost at the end of the period:
||||||
|-|-|-|-|-|
|Book value|Opening Balance|Increase for theperiod|Decrease forthe period|Closing Balance|
|(1) Book value|||||
|Haier Home Integration Limited|2,500,000.00||2,500,000.00||
|Qingdao Hai Yong Cheng CertificationServices Co., Ltd.|100,000.00|||100,000.00|
|Haier Innovative Technology Service co.,Ltd.|25,000.00|||25,000.00|
|Beijing Jia Wei Yi Jia Technology Co.,Ltd.|300,000.00|||300,000.00|
|Qingdao Haier Gold Plastic Products Co.,Ltd.|900,000.00||900,000.00||
|Pioneer Energy (Jiangsu) Co., Ltd.|20,000,000.00|||20,000,000.00|
|Shanghai Haier Integrated Circuit Co.,|15,511,100.74||15,511,100.74||

Qingdao Haier Co., Ltd. 2015 Annual Report
||||||
|-|-|-|-|-|
|Ltd.|||||
|GK Shanghai Design Inc.|297,961.20|||297,961.20|
|Wuhan Huaxin Hi-tech Co., Ltd.|200,000.00|||200,000.00|
|Wuhan Household Appliances Group Co.,Ltd.|1,000,000.00|||1,000,000.00|
|Qingdao Haier Facility Management Co.,Ltd.|2,000,000.00|||2,000,000.00|
|Shenzhen Holdings Donghai Investment Co.,Ltd.||1,500,000.00||1,500,000.00|
|Shenzhen Holdings Donghai Phase I Fund(limited partnership)||7,500,000.00||7,500,000.00|
|Beijing Xiaobei Technology Co., Ltd.||1,828,125.00||1,828,125.00|
|China Petrochemical Marketing Co., Ltd.||1,290,489,366.41||1,290,489,366.41|
|Shanghai Grand Logistics Co., Ltd.||61,200,000.00||61,200,000.00|
|Others|105,115.60|4,750.00|360.40|109,505.20|
|Total|42,939,177.54|1,362,522,241.41|18,911,461.14|1,386,549,957.81|
|(2) Provision for impairment|||||
|Haier Home Integration Limited|||||
|Qingdao Hai Yong Cheng CertificationServices Co., Ltd.|||||
|Haier Innovative Technology Service co.,Ltd.||25,000.00||25,000.00|
|Beijing Jia Wei Yi Jia Technology Co.,Ltd.|||||
|Qingdao Haier Gold Plastic Products Co.,Ltd.|||||
|Pioneer Energy (Jiangsu) Co., Ltd.|||||
|Shanghai Haier Integrated Circuit Co.,Ltd|3,960,559.63||3,960,559.63||
|GK Shanghai Design Inc.|||||
|Wuhan Huaxin Hi-tech Co., Ltd.|200,000.00|||200,000.00|
|Wuhan Household Appliances Group Co.,Ltd.|1,000,000.00|||1,000,000.00|
|Qingdao Haier Facility Management Co.,Ltd.|2,000,000.00|||2,000,000.00|
|Shenzhen Holdings Donghai Investment Co.,Ltd.|||||
|Shenzhen Holdings Donghai Phase I Fund(limited partnership)|||||
|Beijing Xiaobei Technology Co., Ltd.|||||
|China Petrochemical Marketing Co., Ltd.|||||
|Shanghai Grand Logistics Co., Ltd.|||||
|Others|||||
|Total|7,160,559.63|25,000.00|3,960,559.63|3,225,000.00|
|(3) Book value|||||
|Haier Home Integration Limited|2,500,000.00||||
|Qingdao Hai Yong Cheng CertificationServices Co., Ltd.|100,000.00|||100,000.00|
|Haier Innovative Technology Service co.,Ltd.|25,000.00||||
|Beijing Jia Wei Yi Jia Technology Co.,Ltd.|300,000.00|||300,000.00|
|Qingdao Haier Gold Plastic Products Co.,Ltd.|900,000.00||||
|Pioneer Energy (Jiangsu) Co., Ltd.|20,000,000.00|||20,000,000.00|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||
|-|-|-|
|Shanghai Haier Integrated Circuit Co.,Ltd.|11,550,541.11||
|GK Shanghai Design Inc.|297,961.20|297,961.20|
|Wuhan Huaxin Hi-tech Co., Ltd.（|||
|Wuhan Household Appliances Group Co.,Ltd.|||
|Qingdao Haier Facility Management Co.,Ltd.|||
|Shenzhen Holdings Donghai Investment Co.,Ltd.||1,500,000.00|
|Shenzhen Holdings Donghai Phase I Fund(limited partnership)||7,500,000.00|
|Beijing Xiaobei Technology Co., Ltd.||1,828,125.00|
|China Petrochemical Marketing Co., Ltd.||1,290,489,366.41|
|Shanghai Grand Logistics Co., Ltd.||61,200,000.00|
|Others|105,115.60|109,505.20|
|Total|35,778,617.91|1,383,324,957.81|

 (4) Movement in impairment of available-for-sale financial assets during the reporting period:
|||
|-|-|
|Items|Provisionforimpairment of available-for-sale equityinstrument|
|Provision balance at the beginning of the period|7,160,559.63|
|Provision made in the year|25,000.00|
|Decreased in the year|3,960,559.63|
|Allowance for impairment amounts at the end of theperiod|3,225,000.00|

11. Long-term equity investments
√Applicable□Not Applicable
||||||||
|-|-|-|-|-|-|-|
|Investees|Openingbalance|Increase/decrease during the period|||||
|||Investmentsincreased|Investmentincomerecognizedunder equitymethod|Adjustment inothercomprehensiveincome|Otherchangesin equity|Declaration of cashdividendsor profits|
|Associates:|||||||
|Haier Group Finance Co., Ltd.|2,933,846,942.59||639,782,002.34|31,143,808.65|||
|Haier Medical and LaboratoryProducts Co., Ltd.|270,141,291.60||13,366,494.73||||
|Wolong Electric ZhangqiuHaier Motor Co., Ltd.|110,995,187.75||8,972,996.78||||
|Qingdao Haier SoftwareInvestment Co., Ltd.|16,323,729.58||710,142.88||||
|Qingdao Haier SAIF SmartHome Industry InvestmentCenter (limited partnership)|202,000,000.00||-1,733,167.23||||
|Qingdao Haier Special SteelPlate Research andDevelopment Co., Ltd.||95,964,009.69|-756,895.83||||
|Hefei Haier Special Steel PlateResearch and Development||114,176,814.54|-176,814.54||||

Qingdao Haier Co., Ltd. 2015 Annual Report
||||||||
|-|-|-|-|-|-|-|
|Co., Ltd.|||||||
|Beijing Mr. Hi NetworkTechnology Company Limited||3,750,000.00|-1,143,116.72||||
|Haier Tongchuang InvestmentPartnership (limitedpartnership)||160,000,000.00|12,400.00||||
|Qingdao HSW WaterAppliance Co., Ltd.||72,728.10|3,633,891.90||35,731,064.81||
|Qingdao Roca WaterAppliance Co., Ltd.||7,350,000.00|5,950,791.62||||
|China Shengfeng Microfinancelimited in Jin’an District ofFuzhou City||71,754,558.28|6,843,637.31||||
|Fujian ATL-ShengfengLogistics Co., Ltd.||12,573,271.17|397,264.64|||-340,000.00|
|Shenzhen Storm LeaderTechnology Co., Ltd.||21,173,548.79|-5,005,041.75||||
|Konan Electronic Co., Ltd.|23,986,803.71||6,989,998.02|927,434.50|||
|HPZ Limited||63,525,998.33|8,996,878.31|819,877.49|||
|HNR Company (Private)Limited||83,881,638.11|5,563,919.72|6,704,244.06|||
|Hefei Huadong Packaging Co.,Ltd.|25,302,522.69||3,319,345.04|||-9,298,600.00|
|Total|3,582,596,477.92|634,222,567.01|695,724,727.22|39,595,364.70|35,731,064.81|-9,638,600.00|

 continued table
||||||
|-|-|-|-|-|
|Investees|Increase/decrease duringthe period||Closing balance|Closingbalanceofprovisionforimpairment|
||Others|The disposalof theinvestment|||
|Associates:|||||
|Haier Group Finance Co., Ltd.|||3,604,772,753.58||
|Haier Medical and Laboratory Products Co., Ltd.|||283,507,786.33||
|Wolong Electric Zhangqiu Haier Motor Co., Ltd.|||119,968,184.53||
|Qingdao Haier Software Investment Co., Ltd.|||17,033,872.46||
|Qingdao Haier SAIF Smart Home IndustryInvestment Center (limited partnership)|||200,266,832.77||
|Qingdao Haier Special Steel Plate Research andDevelopment Co., Ltd.|||95,207,113.86||
|Hefei Haier Special Steel Plate Research andDevelopment Co., Ltd.|||114,000,000.00||
|Beijing Mr. Hi Network Technology CompanyLimited|||2,606,883.28||
|Haier Tongchuang Investment Partnership (limitedpartnership)|||160,012,400.00||
|Qingdao HSW Water Appliance Co., Ltd.|||39,437,684.81||
|Qingdao Roca Water Appliance Co., Ltd.|||13,300,791.62||
|China Shengfeng Microfinance limited in Jin’anDistrict of Fuzhou City|||78,598,195.59||
|Fujian ATL-Shengfeng Logistics Co., Ltd.|||12,630,535.81||
|Shenzhen Storm Leader Technology Co., Ltd.|||16,168,507.04||
|Konan Electronic Co., Ltd.|||31,904,236.23||
|HPZ Limited|||73,342,754.13||
|HNR Company (Private) Limited|||96,149,801.89||
|Hefei Huadong Packaging Co., Ltd.||-19,323,267.73|||
|Total||-19,323,267.73|4,958,908,333.93||

Qingdao Haier Co., Ltd. 2015 Annual Report
12. Investment properties
√Applicable□Not Applicable
(1) Increase and decrease of investment property under cost model for the year are set out as follows:
||||||
|-|-|-|-|-|
|Items|Openingbalance|Increase forthe period|Decreasefor theperiod|Closingbalance|
|(1) Total original costs for theinvestment property|38,358,419.50||26,642,367.85|11,716,051.65|
|House, buildings and land|38,358,419.50||26,642,367.85|11,716,051.65|
|(2) Total accumulated amortizationfor the investment property|7,775,566.78|491,152.92||8,266,719.70|
|House, buildings and land|7,775,566.78|491,152.92||8,266,719.70|
|(3) Total accumulated provision forImpairment for the investmentproperty|||||
|House, buildings and land|||||
|(4) Total book value for theinvestment property|30,582,852.72|||3,449,331.95|
|House, buildings and land|30,582,852.72|||3,449,331.95|

 (2) Depreciated and amortized amount for the period was RMB491,152.92 .
(3) No provision for impairment was made as the recoverable amount of investment property was not less than the book value of the Company at the end of the period.
13. Fixed assets
|||||||
|-|-|-|-|-|-|
|Category offixed assets|Opening balance|Increase for theperiod|Decrease for theperiod|Translationreserve|Closing balance|
|(1) Book value||||||
|Buildings andstructures|5,120,446,831.45|1,033,121,701.52|201,037,110.32|4,259,788.41|5,956,791,211.06|
|Productionequipment|7,536,506,221.09|937,547,313.95|1,061,706,872.49|-5,259,349.45|7,407,087,313.10|
|Transportationequipment|191,092,533.02|157,709,139.21|56,052,984.57|-8,043,936.48|284,704,751.18|
|Officeequipment|206,280,613.02|56,220,171.29|21,297,514.41|666,142.13|241,869,412.03|
|Others|488,398,727.08|212,351,348.37|58,407,097.69|852,245.64|643,195,223.40|
|Total|13,542,724,925.66|2,396,949,674.34|1,398,501,579.48|-7,525,109.75|14,533,647,910.77|
|(2)Accumulateddepreciation||||||
|Buildings andstructures|1,664,767,447.23|258,652,344.89|152,314,939.34|784,983.34|1,771,889,836.12|
|Productionequipment|4,006,404,253.05|553,586,576.00|744,269,842.02|-4,677,328.97|3,811,043,658.06|
|Transportationequipment|100,030,493.42|68,072,847.74|45,924,981.85|-14,433,352.76|107,745,006.55|
|Officeequipment|141,880,028.11|16,072,084.68|19,746,417.65|62,405.36|138,268,100.50|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||||
|-|-|-|-|-|-|
|Others|230,529,801.79|57,597,328.36|43,098,851.34|-461,616.34|244,566,662.47|
|Total|6,143,612,023.60|953,981,181.67|1,005,355,032.20|-18,724,909.37|6,073,513,263.70|
|(3) Net bookvalue||||||
|Buildings andstructures|3,455,679,384.22||||4,184,901,374.94|
|Productionequipment|3,530,101,968.04||||3,596,043,655.04|
|Transportationequipment|91,062,039.60||||176,959,744.63|
|Officeequipment|64,400,584.91||||103,601,311.53|
|Others|257,868,925.29||||398,628,560.93|
|Total|7,399,112,902.06||||8,460,134,647.07|
|(4) Provisionfor impairment||||||
|Buildings andstructures|5,380,416.50|22,075,540.32||696,032.18|28,151,989.00|
|Productionequipment|18,752,377.76||9,645,477.94|58,978.05|9,165,877.87|
|Transportationequipment|87,260.54|||-89.02|87,171.52|
|Officeequipment|2,078,906.22||135,361.12|82,109.95|2,025,655.05|
|Others|155,485.11||||155,485.11|
|Total|26,454,446.13|22,075,540.32|9,780,839.06|837,031.16|39,586,178.55|
|(5) Book value||||||
|Buildings andstructures|3,450,298,967.72||||4,156,749,385.94|
|Productionequipment|3,511,349,590.28||||3,586,877,777.17|
|Transportationequipment|90,974,779.06||||176,872,573.11|
|Officeequipment|62,321,678.69||||101,575,656.48|
|Others|257,713,440.18||||398,473,075.82|
|Total|7,372,658,455.93||||8,420,548,468.52|

 (1) Total fixed asset transferred from construction-in-progress balance during the period amounted to RMB2,164,973,212.42.
(2) Haier Group Corporation, the parent company of the Company, issued an undertaking letter to the Company, committing that it will ensure the Company and its subsidiaries use the self-establish buildings and theGroup’s lands in a continuous, steady, free and undisturbed condition. If Haier Group Corporation suspended or terminated to fulfill its commitment and obligation as leading to any loss of the Company and its subsidiaries, Haier Group Corporation shall take responsibility for the loss. As for
the legal defects of theCompany’s and its substantialsubsidiaries’ land and property, the Company
committed since the application date of non-public issue, the Company will use all reasonable
Qingdao Haier Co., Ltd. 2015 Annual Report
commercial endeavors to solve the real estate defects of the Company and its substantial subsidiaries within five years to realize the legal compliance of theCompany’s and its substantialsubsidiaries’ land and property.
(3) The pledged fixed assets were RMB 55,137,400.00 at the end of the period.
(4) The rental financial fixed assets:
||||
|-|-|-|
|Items|Category of fixed assets|Closing balance|
|(1) Book Amount|Transportationequipment|32,621,686.22|
|(2) Accumulateddepreciation|Transportationequipment|4,405,293.46|
|(3) Net book value|Transportationequipment|28,216,392.76|
|(4) Provision forimpairment|Transportationequipment||
|(5) Book value|Transportationequipment|28,216,392.76|

14. Construction in progress
√Applicable□Not Applicable
(1). Construction in progress
|||||||
|-|-|-|-|-|-|
|Closing balance|||Opening balance|||
|Bookbalance|Provision forimpairment|Book value|Bookbalance|Provision forimpairment|Book value|

(1) Balance of Construction in progress
||||||||||
|-|-|-|-|-|-|-|-|-|
|Projects|Openingbalance|Increase forthe period|Transfer tofixedassets|Otherdecrease|Translationreserve|Closingbalance|Percentageofcompletion|Sourceoffund|
|ChongqingHousehold AirConditioner|15,555,553.98|33,920,933.09|27,690,378.49|||21,786,108.58|95%|Self-financing|
|HefeiRefrigerator|64,184,363.31|66,805,609.94|76,430,053.13|||54,559,920.12|94%|Self-financing|
|QingdaoSpecialFreezer|34,903,404.89|56,184,778.71|38,169,281.31|||52,918,902.29|90%|Self-financing|
|JiaozhouAir-Conditioner|152,589,571.22|103,182,962.38|180,973,555.32|||74,798,978.28|80%|Self-financing|
|ZhengzhouAir-Conditioner|68,227,489.21|492,396,704.14|535,928,440.60|||24,695,752.75|95%|Self-financing|
|ShenyangRefrigerator|114,751,804.95|42,685,334.00|58,255,995.45|||99,181,143.50|94%|Self-financing|
|QingdaoSpecialRefrigerator|62,390,940.34|26,197,066.99|73,081,068.11|||15,506,939.22|91%|Self-financing|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||||||||
|-|-|-|-|-|-|-|-|-|
|DalianRefrigerator|27,618,437.59|16,169,526.14|31,694,571.78|||12,093,391.95|95%|Self-financing|
|ElectricalAir-Conditioner|48,782,790.59|67,805,041.65|54,880,738.52|||61,707,093.72|82%|Self-financing|
|FoshanFront-loadingWashingMachine|39,231,081.66|35,056,193.62|74,106,463.31|||180,811.97|93%|Self-financing|
|QingdaoElectric WaterHeater|39,885,031.98|51,723,678.18|62,371,291.56|||29,237,418.60|64%|Self-financing|
|Qingdao HaierNew EnergyElectricAppliance|114,738,021.36|30,474,441.93|122,197,153.17|||23,015,310.12|70%|Self-financing|
|QingdaoFront-loadingWashingMachine|21,669,160.15|59,179,659.69|35,773,752.95|||45,075,066.89|80%|Self-financing|
|Guiyanglogistics|18,123,581.41|46,875,140.76||||64,998,722.17|end|Self-financing|
|Ningbologistics||80,074,630.30||||80,074,630.30|end|Self-financing|
|Nanchanglogistics|130,500.00|62,976,142.78||||63,106,642.78|end|Self-financing|
|Changchunlogistics|373,310.00|52,349,013.09||||52,722,323.09|end|Self-financing|
|ChongqingWater Heater|5,222,370.22|60,871,917.11|13,394,295.05|||52,699,992.28|91%|Self-financing|
|Japan projects|225,829,287.26|44,649,512.86|261,086,937.77||1,679,669.76|11,071,532.11|30%|Self-financing|
|RussianProject||60,550,817.60||||60,550,817.60|95%|Self-financing|
|AmericanProject||56,484,200.24||||56,484,200.24|50%|Self-financing|
|others|302,481,045.35|658,070,794.16|518,939,235.90|6,094,224.64|-512,254.46|435,006,124.51||Self-financing|
|Total|1,356,687,745.47|2,204,684,099.36|2,164,973,212.42|6,094,224.64|1,167,415.30|1,391,471,823.07|||

(2) Provision for impairment of construction in progress
|||||||
|-|-|-|-|-|-|
|Name ofProjects|Openingbalance|Increase forthe period|Transfer tofixedassets|Otherdecrease|Closingbalance|
|Japanprojects|15,471,276.69||15,471,276.69|||
|Total|15,471,276.69||15,471,276.69|||

There was no impairment of construction in progress, so no provision for impairment loss of
construction in progress
15. Disposals of fixed assets
|||||
|-|-|-|-|
|Items|Closing balance|Opening balance|Reasons|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||
|-|-|-|-|
|International Refrigerator Project|55,808,808.81|31,400,425.86|Demolition|
|Qingdao Air Conditioning Project|17,825,030.67||Demolition|
|Others|462,515.56|223,779.72|Disposed|
|Total|74,096,355.04|31,624,205.58||

16. Intangible assets
|||||||
|-|-|-|-|-|-|
|Categories|Opening balance|Increase for theperiod|Decrease for theperiod|Translationreserve|Closing balance|
|(1) Book value atcost||||||
|Technicalexpertise|3,200,000.00||||3,200,000.00|
|Land use rights|980,974,049.78|369,177,636.68|1,195,402.36|97,173.93|1,349,053,458.03|
|Managementsoftware|89,429,222.98|18,105,220.85|1,093,505.85|-610,561.05|105,830,376.93|
|Others|136,434,282.55|112,612,845.13||-199,162.04|248,847,965.64|
|Total|1,210,037,555.31|499,895,702.66|2,288,908.21|-712,549.16|1,706,931,800.60|
|(2) Accumulatedamortization||||||
|Technicalexpertise|2,640,000.00|320,000.00|||2,960,000.00|
|Land use rights|91,543,610.51|25,192,726.40|921,798.06|-1,949.49|115,812,589.36|
|Managementsoftware|50,150,532.01|13,420,850.49|992,760.69|-561,098.54|62,017,523.27|
|Others|57,412,678.44|15,457,415.08||-199,120.64|72,670,972.88|
|Total|201,746,820.96|54,390,991.97|1,914,558.75|-762,168.67|253,461,085.51|
|(3) Net bookvalue||||||
|Technicalexpertise|560,000.00||||240,000.00|
|Land use rights|889,430,439.27||||1,233,240,868.67|
|Managementsoftware|39,278,690.97||||43,812,853.66|
|Others|79,021,604.11||||176,176,992.76|
|Total|1,008,290,734.35||||1,453,470,715.09|
|(4) Provision forimpairment||||||
|Technicalexpertise||||||
|Land use rights||||||
|Managementsoftware||||||
|Others||||||
|Total||||||
|(5) Book value||||||
|Technicalexpertise|560,000.00||||240,000.00|
|Land use rights|889,430,439.27||||1,233,240,868.67|
|Managementsoftware|39,278,690.97||||43,812,853.66|
|Others|79,021,604.11||||176,176,992.76|
|Total|1,008,290,734.35||||1,453,470,715.09|

Qingdao Haier Co., Ltd. 2015 Annual Report
At the end of the period, the intangible assets arise from internal research and development accounting for6.29% of the original value at the end of the period.
17. Development expenses
|||||||
|-|-|-|-|-|-|
|Items|Openingbalance|Increase forthe period|Decrease for the period||Closingbalance|
||||Charged toprofit orloss in theperiod|Recognized asanintangible asset||
|U+ platform construction|68,341,844.86|128,055,741.00|11,051,521.00|107,281,869.04|78,064,195.82|
|Total|68,341,844.86|128,055,741.00|11,051,521.00|107,281,869.04|78,064,195.82|

 18. Goodwill
||||||
|-|-|-|-|-|
|Items|Openingbalance|Increase forthe period|Decreasefor theperiod|Closingbalance|
|Furniture after-sales servicebusiness|6,123,000.00|||6,123,000.00|
|Shanghai Boyol New BrothersSupply Chain ManagementCompany Limited|68,407,241.86|||68,407,241.86|
|Shengfeng Logistics Group Co.,Ltd||317,954,690.69||317,954,690.69|
|Total|74,530,241.86|317,954,690.69||392,484,932.55|

 (1) The Company additionally acquired RMB0.318 billion of goodwill of Shengfeng Logistics Group Co., Ltd. The subsidiaries of the Company paid cash and contingent considerations of RMB0.675 billion to acquire partial equity of Shengfeng Logistics Group Co., Ltd. In January 2015, the fair value of the equity interest was RMB0.357 billion, the difference between the cost of business combination and the share of fair value of identifiable assets acquired is recognized as goodwill. (2) The Company, by estimating the present value of future cash flows, calculates the recoverable amount of the asset groups. According to the cash flows in the next five years based on the financial budget approved by the management, the perpetual growth rate of cash flow in the next years is estimated to be3% to4%, not more than the long-term average growth rate of the asset group business. The discount rate is within the range of13.25% to15.00%. The management prepares the financial budget above based on the past performance and market development forecasts. Pursuant to the result of impairment test, no goodwill has been impaired by the end of the
current period.
Qingdao Haier Co., Ltd. 2015 Annual Report
19. Long-term deferred expenditures
||||||||
|-|-|-|-|-|-|-|
|Items|Openingbalance|Increaseamount forthecurrentperiod|Amortizationamount forthecurrentperiod|Otherdeductions|Translationdifference forforeigncurrencystatement|Closingbalance|
|RenovationfeeExpenditureforreconstruction of leasedplantOthers|28,935,702.2956,532,084.6520,862,517.41|28,984,375.3610,233,431.1614,840,376.38|23,231,430.6013,914,427.627,549,267.00|744,409.542,143,620.17|247,813.55|34,688,647.0552,106,678.6526,257,820.17|
|Total|106,330,304.35|54,058,182.90|44,695,125.22|2,888,029.71|247,813.55|113,053,145.87|

 20. Deferred income tax assets/liabilities
(1) The deferred income tax assets without consideration of the offsetting of balances
||||||
|-|-|-|-|-|
|Items|Closing balance||Opening balance||
||Temporarydifferences|Deferred incometax assets|Temporarydifferences|Deferred incometax assets|
|Effect on deferredincome tax of temporarydifferences formed byprovision for assetsimpairment|842,899,612.66|125,466,005.57|688,410,190.51|98,641,656.52|
|Effect on deferredincome tax of temporarydifferences formed byliabilities|3,317,632,626.10|703,437,008.26|3,261,152,605.38|702,069,768.52|
|Effect on deferredincome tax of temporarydifferences formed bygovernment subsidies|46,004,962.52|10,002,815.63|48,613,677.84|10,464,094.46|
|Effect on deferredincome tax of temporarydifferences formed byinternal unrealized profitdue to consolidation|973,458,143.14|176,044,215.94|773,866,294.86|138,832,956.08|
|Total|5,179,995,344.42|1,014,950,045.40|4,772,042,768.59|950,008,475.58|

 (2) Deferred income tax liabilities without consideration of the offsetting of balances
||||
|-|-|-|
|Items|Closing balance|Opening balance|
|Changes of the fair vale|90,133,922.90|114,159,827.40|
|Purchase and dispose subsidiaries|33,059,596.88|28,687,449.46|
|The reserved foreign enterpriseincome tax|9,127,063.15|8,718,607.00|
|Depreciation of fixed assets and thedifference of the tax laws|5,077,072.26|4,335,544.95|
|Others|19,399,402.52|4,489,227.43|
|Total|156,797,057.71|160,390,656.24|

Qingdao Haier Co., Ltd. 2015 Annual Report
(3) The deferred income tax assets and the deferred income tax liabilities offset at the end of the period amounted to RMB43,466,955.60.
21. Other non-current assets
Unit and Currency: RMB
||||
|-|-|-|
|Items|Closing balance|Opening balance|
|Prepayments for equipment andland|316,752,155.61|312,617,960.08|
|Others|82,331,935.92|43,612,717.79|
|Total|399,084,091.53|356,230,677.87|

 22. Short-term borrowings
√Applicable□Not Applicable
(1). The classification of short-term borrowings
Unit and Currency: RMB
||||
|-|-|-|
|Items|Closing balance|Opening balance|
|Pledged borrowings|20,000,000.00||
|Mortgage loan|61,509,124.60||
|Guaranteed borrowings|1,000,728,210.00|983,758,300.00|
|Unsecured borrowings|790,870,906.90|1,308,182,725.91|
|Total|1,873,108,241.50|2,291,941,025.91|

 23. Financial Liabilities designated to be measured by fair value and change of which is recorded in current profit or loss
√Applicable□Not Applicable
Unit and Currency: RMB
||||
|-|-|-|
|Items|Closing balance|Opening balance|
|Forward foreign exchange sale andpurchase agreement|7,707,414.12|42,686.85|
|Total|7,707,414.12|42,686.85|

 24. Bills payable
√Applicable□Not Applicable
Unit and Currency: RMB
||||
|-|-|-|
|Categories|Closing balance|Opening balance|
|Commercially acceptancebill|1,425,847,863.41|1,917,974,279.06|
|Bank acceptance bill|10,171,037,482.65|12,325,063,393.71|
|Total|11,596,885,346.06|14,243,037,672.77|

 25. Trade payables
||||
|-|-|-|
|Items|Closing balance|Opening balance|
|Trade payables|14,713,516,620.92|15,312,971,646.36|
|Total|14,713,516,620.92|15,312,971,646.36|

Qingdao Haier Co., Ltd. 2015 Annual Report
The book balance at the end of the period was mainly the unpaid expenditures on material, equipment and labor.
26. Payments received in advance
||||
|-|-|-|
|Items|Closing balance|Opening balance|
|Payments received in advance|3,170,457,870.50|4,336,427,690.63|
|Total|3,170,457,870.50|4,336,427,690.63|

 The book balance at the end of the period was mainly the payments received in advance.
27. Staff remuneration payables
(1) Presentation of staff remuneration payables
||||||
|-|-|-|-|-|
|Items|Opening balance|Increase for theperiod|Decrease for theperiod|Closing balance|
|Short-term emolument|1,078,052,302.02|7,415,479,096.67|7,300,763,156.37|1,192,768,242.32|
|Post-employmentbenefits-defined contribution plan|19,416,498.85|537,194,458.59|536,242,421.05|20,368,536.39|
|Termination benefits|30,693,772.24|5,250,435.03|15,536,720.41|20,407,486.86|
|Other welfare due within oneyear|||||
|Total|1,128,162,573.11|7,957,923,990.29|7,852,542,297.83|1,233,544,265.57|

(2) Presentation of short-term remuneration
||||||
|-|-|-|-|-|
|Items|Opening balance|Increase for theperiod|Decrease for theperiod|Closing balance|
|(1) Salaries, bonus, allowance andbenefit|633,486,885.71|5,193,464,495.66|5,119,296,553.46|707,654,827.91|
|(2) Employee welfare|320,717,645.94|148,548,501.60|163,699,041.48|305,567,106.06|
|(3) Social benefit|9,247,445.07|277,885,586.94|280,632,314.10|6,500,717.91|
|(4) Housing fund|2,938,717.80|216,594,418.76|212,830,051.90|6,703,084.66|
|(5) Labor union fee and educationfee|7,983,654.28|52,089,713.39|57,346,138.87|2,727,228.80|
|(6) Short-term compensated leave|||||
|(7) Others|103,677,953.22|1,526,896,380.32|1,466,959,056.56|163,615,276.98|
|Total|1,078,052,302.02|7,415,479,096.67|7,300,763,156.37|1,192,768,242.32|

(3) Presentation of defined contribution plan
||||||
|-|-|-|-|-|
|Items|Openingbalance|Increase forthe period|Decrease forthe period|Closingbalance|
|Basic pension insurance|15,402,423.98|485,722,976.64|485,551,224.19|15,574,176.43|
|Unemploymentinsurance|433,600.38|27,934,821.24|27,867,442.95|500,978.67|
|Enterprise annuitypayment|3,580,474.49|23,536,660.71|22,823,753.91|4,293,381.29|
|Total|19,416,498.85|537,194,458.59|536,242,421.05|20,368,536.39|

Qingdao Haier Co., Ltd. 2015 Annual Report
(4) Presentation of termination benefits
||||
|-|-|-|
|Items|Closing balance|Opening balance|
|Termination compensation|20,407,486.86|30,693,772.24|
|Total|20,407,486.86|30,693,772.24|

 28. Taxes payable
Unit and Currency: RMB
||||
|-|-|-|
|Items|Closing balance|Opening balance|
|VAT|59,700,542.53|488,027,357.82|
|Business tax|5,888,947.72|6,516,054.50|
|Enterprise income tax|708,348,404.94|847,386,344.65|
|Individual income tax|16,635,460.95|14,557,491.42|
|Municipal maintenance tax|8,866,023.89|29,520,918.23|
|Education surcharge|3,363,149.08|12,787,612.68|
|The electrical and electronicproducts waste treatment fund|55,378,377.00|63,455,219.50|
|Additional local taxes|51,756,909.98|69,133,979.78|
|Total|909,937,816.09|1,531,384,978.58|

 29. Interests payable
||||
|-|-|-|
|Items|Closing balance|Opening balance|
|Interest of long-term borrowings|1,131,479.67||
|Interest of short-term borrowings|6,199,909.01|7,921,318.87|
|Interest of corporate bond|7,750,027.66||
|Total|15,081,416.34|7,921,318.87|

 30. Dividends payable
||||
|-|-|-|
|Name of Entity|Closing balance|Opening balance|
|BRAVE LION (HK) LIMITED|115,230,923.73|132,644,847.17|
|Other minority shareholders|18,151,086.00|14,667,528.94|
|Total|133,382,009.73|147,312,376.11|

 31. Other payables
||||
|-|-|-|
|Items|Closing balance|Opening balance|
|Other payables|6,056,795,354.04|7,083,921,880.47|
|Total|6,056,795,354.04|7,083,921,880.47|

 The book balance at the end of the period mainly included the incurred but unpaid costs.
32. Non-current liabilities due within 1 year
√Applicable□Not Applicable
Unit and Currency: RMB
||||
|-|-|-|
|Items|Closing balance|Opening balance|
|Long-term borrowings duewithin one year|10,877,261.36||

Qingdao Haier Co., Ltd. 2015 Annual Report
|||
|-|-|
|Predicative liabilities duewithin one year|62,020,766.97|
|Total|72,898,028.33|

33. Long-term borrowings
√Applicable□Not Applicable
||||
|-|-|-|
|Category of borrowings|Closing balance|Opening balance|
|Credit borrowings|297,241,293.20||
|Total|297,241,293.20||

The interest rate of the long-term bank borrowings is1.37% plus Yen London inter-bank offered rate of 3 month.
34. Bonds payable
√Applicable□Not Applicable
On 24 August 2011, Haier Electronics Group Co., Ltd., theCompany’s holding subsidiary, issued 100,000,000 convertible corporate bonds and 40,000,000 warrants, face value of which amounted toHK$1,067,000,000 (equivalent to RMB874,375,557). Annual coupon rate of which is3%, payable semi-annually in arrears on 30 June and 31 December of each year. As of 31 December 2015, all the bond holders have transferred their shares.
On 20 March 2014, Haier Electronics Group Co., Ltd., theCompany’s holding subsidiary, issuedHK$1,316,036,039 convertible corporate bonds (equivalent to RMB1,055,023,280), with an annual coupon rate of1.5%. The convertible corporate bonds will be expired on 20 March 2017. The bond holders may transfer shares after one year from the issue date to 7 days before the expiration at their option.
On initial recognition, the convertible corporate bonds, issued by theCompany’s holding subsidiary Haier Electronics Group Co., Ltd., was divided into liabilities and equities:
||||
|-|-|-|
|Items|Convertible bondsissued in2011|Convertible bonds issued in2014|
|Initial recognition:|874,375,557.00|1,055,023,279.62|
|Face values of the convertible bonds andissued warrants|||
|Including:|||
|Share option|59,699,810.00||
|Equity of convertible bonds|149,249,526.00|54,838,289.02|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||
|-|-|-|
|Liabilities of convertible bonds|665,426,221.00|1,000,184,990.60|

 Change in liabilities of convertible bonds for the period:
|||||||||
|-|-|-|-|-|-|-|-|
|Items|Openingbalance|Increasefor theperiod|Accruedbondinterest|Less: paidbondinterestfor theperiod|Thetranslationof theperiod|Effect ofexchangerate|Closingbalance|
|Convertiblebondsissued in2011|776,318,964.06||20,850,450.69|7,750,027.94|789,445,397.59|26,010.78||
|Convertiblebondsissued in2014|1,024,381,665.99||34,201,853.01|||49,150,997.43|1,107,734,516.43|
|Total|1,800,700,630.05||55,052,303.70|7,750,027.94|789,445,397.59|49,177,008.21|1,107,734,516.43|

 35. Long-term payables
√Applicable□Not Applicable
||||
|-|-|-|
|Items|Closing balance|Opening balance|
|CDB development fund investmentfund|43,000,000.00||
|Vehicle financing lease|16,916,852.02||
|Total|59,916,852.02||

Under the Investment Contract of China Development Fund executed by the Company and its subsidiaries including Qingdao Haier Refrigerator Co., Ltd., Qingdao Haier Air Conditioner Gen Corp., Ltd., Qingdao Haier (Jiaozhou) Air-conditioning Co., Limited together with China Development Fund Co. Ltd. in 2015, China Development Fund Co. Ltd. invested RMB 20 million in Qingdao Haier Refrigerator Co., Ltd., and RMB 23 million in Qingdao Haier (Jiaozhou) Air-conditioning Co., Limited. China Development Fund Co. Ltd. obtains1.2% of the earnings every year in dividend or through call premium. From 2020 to 2027, the Company and its subsidiaries will repurchase the investments made by China Development Fund Co. Ltd. in two batches respectively.
36. Long-term staff remuneration payables
√Applicable□Not Applicable
(1) Presentation of long-term staff remuneration payables
||||
|-|-|-|
|Items|Closing balance|Opening balance|
|I. Post-employment benefits: net liabilityof defined benefit plan|||
|II. Termination benefits|33,209,406.02|24,531,136.34|
|III. Other long-term benefits|||
|Total|33,209,406.02|24,531,136.34|

 (2) Defined benefit plan
Some subsidiaries of the Company have set defined benefit plan for the qualified staff. In the plan,
the employees are entitled to enjoy the retirement benefits agreed in such defined benefit plan. In the
Qingdao Haier Co., Ltd. 2015 Annual Report
plan, payments are required to be made to an independent trustee, and the trustee is responsible to determine the investment strategies of the plan.
The plan is exposed to interest rate risks, changes in life expectancy of the beneficiary and other risks.
The recent actuarial evaluation of the assets and the present value of defined benefit obligations under such plans are determined by using the expected cumulative welfare unit method.
Actuarial assumption used in the defined benefit plan
|||
|-|-|
|Items|percentage|
|I. Discount rate|1.10%|
|II. Expected rate of return|2.00%|

Present value of defined benefit obligations
|||
|-|-|
|Items|Amount|
|I. Opening balance|275,770,839.30|
|II. Defined benefit cost in current profit or loss|12,463,283.18|
|1. Current period service cost|9,423,103.14|
|2. Past service cost|-|
|3. Settlement profit (loss indicated in ―－‖)||
|4. Interest expenses|3,040,180.04|
|III. Defined benefit cost in other comprehensive incomes|6,017,915.39|
|1. Actuarial loss (gain indicated in ―－‖)|6,017,915.39|
|IV. Other changes|-8,032,856.91|
|1. Consideration paid upon settlement||
|2. Prepaid benefits|-21,964,992.54|
|3. Exchange difference|13,932,135.63|
|V. Closing balance|286,219,180.96|

 Fair value of plan assets
|||
|-|-|
|Items|Amount|
|I. Opening balance|283,230,286.40|
|II. Defined benefit cost in current profit or loss|5,641,214.64|
|1. Interest income|5,641,214.64|
|III. Defined benefit cost in other comprehensive incomes|-247,301.83|
|1. Return on plan assets (except those included in netinterests)|-247,301.83|
|2. Changes in impact of asset cap (except those included innet interests)||
|IV. Other changes|3,569,441.61|
|1. Payments made by the employer|11,955,068.05|
|2. Prepaid benefits|-21,964,992.54|
|3. Balance of exchange|13,579,366.10|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||
|-|-|
|V. Closing balance|292,193,640.82|

 Neither the Company's common stocks or bonds, nor the properties occupied by the Company are included in the plan assets.
Net liability (net asset) of defined benefit plan
|||
|-|-|
|Items|Amount|
|I. Opening balance|-7,459,447.10|
|II. Defined benefit cost in current profit or loss|6,822,068.54|
|III. Defined benefit cost in other comprehensive incomes|6,265,217.22|
|IV. Other changes|-11,602,298.52|
|V. Closing balance|-5,974,459.86|

 It is estimated that the payment of RMB40,964,000.00 will be made to the defined benefit obligation in the next 12 months.
The average term for the defined benefit obligation is 14.70 years at the balance sheet date.
37. Estimated liabilities
||||
|-|-|-|
|Items|Closing balance|Opening balance|
|Estimated charges of ―threeguarantees‖ and installations|1,841,853,237.19|1,913,448,778.76|
|Acquirement of equity interests ofminority interests|43,500,000.00|319,372,857.14|
|Pending action|14,190,400.00|18,725,375.08|
|Total|1,899,543,637.19|2,251,547,010.98|

 Significant assumptions and estimates related to the estimated charges of―threeguarantees‖ and installations: The Company rationally estimates the rate of―threeguarantees‖ and installations according to the previous actual expenditures and sales data on―threeguarantees‖ and installations, and estimates the potential charges of―threeguarantees‖ and installations based on the policy of―threeguarantees‖ and installations and the realized sales data.
38. Deferred income
√Applicable□Not Applicable
Unit and Currency: RMB
|||||||
|-|-|-|-|-|-|
|Items|Openingbalance|Increase for theperiod|Decrease for theperiod|Closing balance|Reason|
|Governmentalsubsidy|135,707,501.91|139,115,711.94|25,653,688.07|249,169,525.78|Governmentsubsidies relatedassets|
|Leaseback||1 5,038,883.21|87,854.66|14,951,028.55|The differenceson sales price andthe book value ofassets|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||||
|-|-|-|-|-|-|
|Total|135,707,501.91|154,154,595.15|25,741,542.73|264,120,554.33|/|

39. Share capital
||||||
|-|-|-|-|-|
|Class of shares|Opening balance|Increase forthe period|Decrease forthe period|Closing balance|
|I. Restricted shares|309,093,994|309,473,994|4,880,800|613,687,188|
|1. State-owned shares|||||
|2. Shares held bydomestic non-state-ownedlegal entities|||||
|3. Shares held bydomestic natural persons|6,101,000|6,481,000|4,880,800|7,701,200|
|4. Shares held by foreignnon-state-owned legalentities|302,992,994|302,992,994||605,985,988|
|Ⅱ. Non-restricted shares|2,736,841,140|2,772,625,940||5,509,467,080|
|1. Ordinary shares inRMB|2,736,841,140|2,772,625,940||5,509,467,080|
|2. Domestic listed foreignshares|||||
|3. Overseas listed foreignshares|||||
|4. Others|||||
|Ⅲ. Total shares|3,045,935,134|3,082,099,934|4,880,800|6,123,154,268|

 (1) On 18 March 2015, the Company granted restricted shares to 3 beneficiaries and acquired 190,000 RMB ordinary shares at the grant price of RMB10.06 per share by the beneficiaries, and the registered capital was increased by RMB190,000.00. The capital was increased by way of cash, and the increase has been verified by the Hexin Yan Zi (2015) No. 000012 Capital Verification Report issued by Shandong Hexin Accountants LLP (Special Ordinary Partnership).
(2) TheCompany’s 2014 profit distribution plan was passed at the 2014 Annual General Meeting of Qingdao Haier Co., Ltd. held on 10 June 2015: a cash dividend of RMB4.92 (inclusive of tax) for every 10 shares was distributed to all shareholders, and a bonus issue was made by way of capitalizing its capital reserve on the basis of 10 shares for every 10 shares on the basis of 3,046,125,134 shares. On 15 July 2015, the Company has transferred capital reserves of RMB3,046,125,134.00 to share capital, and the increase has been verified by the Hexin Yan Zi (2015) No. 000048 Capital Verification Report issued by Shandong Hexin Accountants LLP (Special Ordinary Partnership).
(3) The Proposal on Relevant Arrangements of the First Exercise/Unlocking of Rights Firstly
Granted in Phase IV Share Option Incentive Scheme was passed at the 24th Meeting of the 8th Session
Qingdao Haier Co., Ltd. 2015 Annual Report
of the Board of Directors held on 17 July 2015. According to the Proposal, the Company granted restricted shares to 422 beneficiaries and acquired 30,904,000.00 RMB ordinary shares at the grant price of RMB8.07 per share by the beneficiaries. The capital increase has been verified by the Hexin Yan Zi (2015) No. 000050 Capital Verification Report issued by Shandong Hexin Accountants LLP (Special Ordinary Partnership).
40. Capital reserve
||||||
|-|-|-|-|-|
|Items|Openingbalance|Increase for theperiod|Decrease for theperiod|Closingbalance|
|Capital premium|5,861,864,244.94|424,771,671.27|6,286,635,916.21||
|Other capitalreserve|116,923,194.51|2,490,000.00|36,030,000.00|83,383,194.51|
|Total|5,978,787,439.45|427,261,671.27|6,322,665,916.21|83,383,194.51|

 (1) Movements in capital premium mainly due to:① an increase of RMB168,528,991.27 in capital premium due to the changes in shareholding proportion held by the parent company as a result of the additional capital contributed by minority shareholders of subsidiaries during the period;② an increase of RMB256,242,680.00 in capital premium as a result of the first exercise of Phase IV Share Option Incentive Scheme;③ a decrease of RMB3,221,270,582.00 in capital premium as a result of common control combination during the period;④ a decrease of RMB3,046,125,134.00 in capital premium as a result of transfer of capital reserves into share capital during the period;⑤ a decrease of RMB19,240,200.21 in capital premium as a result of acquisition of minority interest of subsidiaries during the period.
(2) Movements in other capital reserve mainly due to:① an increase of RMB2,490,000.00 in other capital reserve as a result of share-based payment credited intoshareholders’ equity during the period;② a decrease of RMB36,030,000.00 in other capital reserve as a result of the first exercise of Phase IV Share Option Incentive Scheme.
41. Treasury stock
√Applicable□Not Applicable
Unit and Currency: RMB
||||||
|-|-|-|-|-|
|Items|Opening balance|Increase for theperiod|Decrease for theperiod|Closing balance|
|Restricted sharecertificates|47,160,730.00|1,911,400.00|18,864,292.00|30,207,838.00|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||||
|-|-|-|-|-|
|Share repurchase||47,396,706.70||47,396,706.70|
|Total|47,160,730.00|49,308,106.70|18,864,292.00|77,604,544.70|

 Other explanations, including the explanations on increases or decreases during the period and the reasons thereof:
(1) Movements in restricted shares mainly due to:①an increase of RMB1,911,400.00 in restricted shares as a result of some restricted shares reserved in the first exercise of Phase IV Share Option Incentive Scheme during the period;② a decrease of RMB18,864,292.00 in restricted shares as a result of the restricted shares involved in the first exercise of Phase IV Share Option Incentive Scheme unlocked during the period;
(2) Movements in share repurchases mainly due to: an increase of RMB47,396,706.70 as a result of share repurchases during the period.
42. Other comprehensive income
|||||||||
|-|-|-|-|-|-|-|-|
|Items|Openingbalance|Amounts incurred in the current period|||||Closingbalance|
|||The pre-taxamount inthecurrentperiod|Less:incometax expense|Attributable to theparentcompany,netof tax|Attributabletominorityshareholders,net of tax|Others||
|a|10,696,254.05|39,595,364.70||39,584,241.91|11,122.79||50,280,495.96|
|b|421,754,809.35|40,320,174.29|6,106,343.18|33,989,723.80|224,107.31|-145,650.27|455,598,882.88|
|c|122,191,333.61|5,753,115.52||-11,593,077.82|17,346,193.34||110,598,255.79|
|d|22,971,042.62|-6,265,217.22||-6,265,217.22|||16,705,825.40|
|Total|577,613,439.63|79,403,437.29|6,106,343.18|55,715,670.67|17,581,423.44|-145,650.27|633,183,460.03|

 Notes: (1) Item a, b and c are other comprehensive income that will be reclassified to profit or loss, including:
a Share of other comprehensive income of investments accounted for using the equity method, which will be reclassified subsequently to profit or loss.
b Change in fair value of financial assets available-for-sale.
c Exchange differences from retranslation of foreign currency financial statements. (2) Item d represents changes arising from remeasurement of net liabilities/assets of defined benefit plans, which may not be subsequently reclassified to profit or loss.
43. Surplus reserve
Unit and Currency: RMB
||||||
|-|-|-|-|-|
|Items|Opening balance|Increase for theperiod|Decrease for theperiod|Closing balance|
|Statutory surplusreserve|1,976,448,731.03|194,518,642.12|192,538,873.51|1,978,428,499.64|
|Discretionarysurplus reserve|26,042,290.48|||26,042,290.48|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||||
|-|-|-|-|-|
|Reserve fund|11,322,880.64|||11,322,880.64|
|Enterpriseexpansion fund|10,291,630.47|||10,291,630.47|
|Others|||||
|Total|2,024,105,532.62|194,518,642.12|192,538,873.51|2,026,085,301.23|

 Explanations on surplus reserves, including the explanations on increases or decreases during the period and the reasons thereof:
Pursuant to Company Law of thePeople’s Republic of China and articles of association, the Company is required to appropriate the statutory surplus reserve at10% of its net profit. Decrease for the period is resulted from the write-down of retained earnings through enterprise combinations under common control.
44. Undistributed profits
|||
|-|-|
|Items|Amount|
|Undistributed profits at the end of last year|12,855,511,059.42|
|Add: correction of accounting errors||
|Implementation of ASBE reclassification||
|Adjustment on business combination under common control|173,676,255.29|
|Undistributed profits at the beginning of the year|13,029,187,314.71|
|Add: net profit attributable to owners of the parent company|4,300,760,542.82|
|Profit available for appropriation for the year|17,329,947,857.53|
|Less: appropriation of statutory surplus reserve|194,518,642.12|
|Appropriation of staff incentive and welfare fund||
|Dividend payable for ordinary shares|1,496,804,871.93|
|Retained earnings after deduction of combined offsetting undercommon control|1,732,849,861.60|
|Undistributed profits at the end of the period|13,905,774,481.88|

 45. Operating income and Operating cost
(1) Operating income
||||
|-|-|-|
|Categories|Current amount|Prior amount|
|Principal Business|89,168,902,490.15|96,201,548,720.34|
|Other Business|579,417,920.76|728,215,174.02|
|Total|89,748,320,410.91|96,929,763,894.36|

 (2) Income and cost of principle operations presented by product categories:
||||||
|-|-|-|-|-|
|Categories|Current amount||Prior amount||
||Income of principalbusiness|Cost of principalbusiness|Income ofprincipalbusiness|Cost of principalbusiness|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||||
|-|-|-|-|-|
|Air conditioner|16,250,889,159.97|11,662,362,800.22|20,471,645,554.31|13,961,625,203.37|
|Refrigerator|27,588,532,137.07|18,610,588,978.98|28,266,621,414.28|19,104,177,471.13|
|Kitchenware andsanitary ware|6,620,603,698.64|3,730,801,944.40|6,499,294,676.18|3,685,681,952.34|
|Washing machine|17,469,847,901.81|11,472,567,714.01|17,259,524,173.06|11,400,672,884.91|
|Equipment product|1,818,035,269.39|1,576,671,700.64|4,347,020,056.55|4,045,004,617.33|
|Integrated channelservices and others|19,420,994,323.27|17,480,791,069.94|19,357,442,845.96|17,688,045,087.81|
|Total|89,168,902,490.15|64,533,784,208.19|96,201,548,720.34|69,885,207,216.89|

 46. Business taxes and surcharge
|||||
|-|-|-|-|
|Items|Current amount|Prior amount|Tax base|
|Business tax|21,692,903.23|17,686,137.75|Payable at 5% , 3% of thetaxable turnover|
|City constructiontax|249,968,408.97|261,859,781.12|Payable at 7% of the circulationtax|
|Educationsurcharge|115,023,959.01|118,905,938.21|Payable at 3%, 2% and 1% ofthe circulation tax|
|Others|10,565,768.64|6,095,205.59||
|Total|397,251,039.85|404,547,062.67||

47. Expenses of sales
Unit and Currency: RMB
||||
|-|-|-|
|Items|Current amount|Prior amount|
|Expenses of sales|13,101,282,436.95|12,579,781,619.54|
|Total|13,101,282,436.95|12,579,781,619.54|

 Other explanation:
Selling expenses of the Company mainly include compensation, transportation and warehousing costs, advertising, sales promotion and after-sale expenses and so on.
48. Management expenses
Unit and Currency: RMB
||||
|-|-|-|
|Items|Current amount|Prior amount|
|Management expenses|6,549,193,839.44|6,813,114,797.83|
|Total|6,549,193,839.44|6,813,114,797.83|

 Other explanation:
Administrative expenses of the Company mainly include compensation, research and development costs, administrative expenses, taxes and rental payments.
49. Financial expenses
||||
|-|-|-|
|Categories|Current amount|Prior amount|
|Interest expenses|119,256,405.78|153,759,585.82|
|Less: interest income|524,652,061.70|550,990,928.09|
|Exchange gain or loss|-146,355,539.67|61,428,911.71|
|Others|53,630,789.76|79,153,850.10|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||
|-|-|-|
|Total|-498,120,405.83|-256,648,580.46|

 50. Loss in assets impairment
||||
|-|-|-|
|Categories|Current amount|Prior amount|
|Bad debt loss|62,099,621.05|45,338,057.93|
|Loss from price drop in inventory|250,882,026.95|153,904,717.94|
|Impairment loss on fixed assets|5,004,997.05|6,453,775.26|
|Impairment loss on construction inprogress||17,487,960.62|
|Impairment loss on assets available forsale|25,000.00||
|Total|318,011,645.05|223,184,511.75|

 51. Profit or loss of changes in fair value
||||
|-|-|-|
|Items|Current amount|Prior amount|
|Financial instruments measured in fairvalue through current profit or loss -derivative financial instruments|-90,223,059.50|112,363,366.12|
|Total|-90,223,059.50|112,363,366.12|

 52. Investment Income
√Applicable□Not Applicable
||||
|-|-|-|
|Items|Current amount|Prior amount|
|Long-term equity investments income calculated by theequity method|695,724,727.22|646,307,155.00|
|Investment income from disposal of long-term equityinvestments|338,777,175.29|420,123,350.96|
|Investment income from financial assets available forsale during the holding period|121,454,252.17|19,679,408.23|
|Gain on remeasurement of remaining equity by fair valueupon loss of control|49,201,148.46|151,233,596.81|
|Investment income from disposal of financial assetsavailable for sale|54,535,164.73||
|Investment income from disposal of financial assets atfair value through profit and its changes recognized in thecurrent profit and loss|49,703,912.97|-52,278,306.13|
|Wealth management products return|10,905,835.77|7,514,804.00|
|Total|1,320,302,216.61|1,192,580,008.87|

 53. Non-operating income
||||
|-|-|-|
|Items|Current amount|Prior amount|
|Gain on disposal of non-current assets|50,992,727.10|79,784,116.53|
|Government grants|307,550,180.85|119,525,560.32|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||
|-|-|-|
|Others|259,914,355.87|179,025,689.24|
|Total|618,457,263.82|378,335,366.09|

 Government grants included in current profit or loss
√Applicable□Not Applicable
Unit and Currency: RMB
||||
|-|-|-|
|Grant Items|Current amount|Prior amount|
|Amortization of government grantsrelated to assets|24,873,688.07|15,686,241.90|
|Subsidies for profits|282,676,492.78|103,839,318.42|
|Total|307,550,180.85|119,525,560.32|

 54.Non-operating expenses
||||
|-|-|-|
|Items|Current amount|Prior amount|
|Loss on disposal of non-current asset|40,689,452.41|30,258,846.12|
|Charitable donation expenses|14,785,616.95|9,415,000.00|
|Others|40,441,092.69|62,600,130.44|
|Total|95,916,162.05|102,273,976.56|

 55. Income tax expense
(1)Table of income tax expense
Unit and Currency: RMB
||||
|-|-|-|
|Items|Current amount|Prior amount|
|Current income expense|1,123,894,772.94|1,459,762,777.16|
|Deferred tax income|-71,125,354.97|67,723,968.46|
|Total|1,052,769,417.97|1,527,486,745.62|

 (2) Adjustment process of accounting profit and income tax expenses
Unit and Currency: RMB
|||
|-|-|
|Items|Current amount|
|Total profit|6,974,858,906.80|
|Income tax expenses calculated atstatutory/applicable tax rate|1,743,714,727.07|
|Impact from different tax rates applicable tosubsidiaries|-591,361,323.79|
|Impact from adjustment to income tax in priorperiods|-123,932,932.55|
|Effect from non-taxable income|-127,889,968.81|
|Impact from non-deductible costs, fees and losses|55,762,067.59|
|Impact from utilization of deductible losses ofunrecognized deferred income tax assets in priorperiods||
|Impact from deductible temporary differences orlosses of unrecognized deferred income tax assetsin the current period|102,383,851.62|
|Effect of write-off of deferred income taxes|-15,455,331.34|
|Others|9,548,328.18|
|Income tax expenses|1,052,769,417.97|

Qingdao Haier Co., Ltd. 2015 Annual Report
56. Other comprehensive income
For details, please refer to item 42 of note VII.
57. Cash received from other operating related activities
Unit and Currency: RMB
|||
|-|-|
|Items|Current amount|
|Deposits and securities|51,048,407.70|
|Government grants|282,676,492.78|
|Non-operating income excluding government grants|125,231,972.76|
|Interest income|519,444,538.53|
|Others|6,606,689.62|
|Total|985,008,101.39|

 58. Cash paid to other operation related activities
Unit and Currency: RMB
|||
|-|-|
|Items|Current amount|
|Cash paid on operating expenses|6,843,398,032.30|
|Cash paid on management expenses|3,482,472,539.26|
|Cash paid on financial expenses|49,228,152.40|
|Non-operating expenses|51,429,955.11|
|Others|161,261,260.81|
|Total|10,587,789,939.88|

 59. Cash received from other investment related activities
Unit and Currency: RMB
|||
|-|-|
|Items|Current amount|
|Government grants related to assets|10,972,523.38|
|Total|10,972,523.38|

 60. Cash paid on other investment related activities
Unit and Currency: RMB
|||
|-|-|
|Items|Current amount|
|Cash paid on disposal of subsidiaries|81,334,939.43|
|Others|266,802.77|
|Total|81,601,742.20|

 61. Cash received from other financing related activities
Unit and Currency: RMB
|||
|-|-|
|Items|Current amount|
|Cash received from leaseback business|17,063,242.50|
|Total|17,063,242.50|

 62. Cash paid to other financing related activities
Unit and Currency: RMB
|||
|-|-|
|Items|Current amount|
|Cash paid on repurchasing shares|47,396,706.70|
|Cash paid on repurchasing stock option|75,990,821.27|
|Cash paid on financial lease|30,673,525.83|
|Others|381,748.18|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||
|-|-|
|Total|154,442,801.98|

 63. Explanation on net profit adjusted to cash flows of operating activities
Unit and Currency: RMB
||||
|-|-|-|
|Supplementary Information|Current amount|Prior amount|
|1．Net profit adjusted to cash flowsof operating activities|||
|Net profit|5,922,089,488.83|7,048,901,343.00|
|Plus: provisions for assets impairment|318,011,645.05|223,184,511.75|
|Depreciation of fixed assets,depreciation of oil and gas assets,depreciation of productive bio-assets|954,472,334.59|779,154,506.13|
|Amortization of intangible assets|54,390,991.97|50,961,678.41|
|Amortization of long term expensespayable|44,695,125.22|29,638,858.21|
|Loss on disposal of fixed assets,intangible assets and other long termassets (―－‖represents ―gains―)|-10,303,274.69|-48,412,936.61|
|Loss on write-off of fixed assets(―－‖represents ―gains ―)|||
|Loss on change of fair value(―－‖represents ―gains ―)|90,223,059.50|-112,363,366.12|
|Financial expenses (―－‖represents―increase ―)|119,256,405.78|153,759,585.82|
|Loss on investments (―－‖represents―gains ―)|-1,320,302,216.61|-1,192,580,008.87|
|Decrease of deferred income taxassets (―－‖represents ―gains ―)|-58,736,355.41|3,728,000.79|
|Increase of deferred income taxliabilities (―－‖represents ―decrease ―)|-12,388,999.56|63,995,967.67|
|Decrease of inventories(―－‖represents ―gains ―)|372,583,766.58|-943,420,407.08|
|Decrease of operational accountreceivables (―－‖represents ―gains ―)|4,490,806,802.27|-1,561,278,073.97|
|Increase of operational accountpayables (―－‖represents ―decrease ―)|-5,183,054,157.18|2,010,844,166.64|
|Others|-202,144,003.41|263,247,472.58|
|Net cash flows generated fromoperational activities|5,579,600,612.93|6,769,361,298.35|
|2. Significant investment andfinancing activities not involvingcash inflows and outflows|||
|Capital transferred from debts|789,445,397.59||
|Convertible corporate bonds duewithin 1 year||776,318,964.06|
|Financial leased fixed assets|24,232,599.76||
|3. Changes of cash and cashequivalents:|||
|Cash balance at the end of the period|24,682,826,504.09|31,120,319,710.77|
|Less: cash balance at the beginning ofthe period|31,120,319,710.77|20,974,450,271.64|
|Add: cash equivalents balance at theend of the period|||

Qingdao Haier Co., Ltd. 2015 Annual Report
||||
|-|-|-|
|Less: cash equivalents balance at thebeginning of the period|||
|Net increase of cash and cashequivalents|-6,437,493,206.68|10,145,869,439.13|

64. Cash and cash equivalents
||||
|-|-|-|
|Items|Closing balance|Opening balance|
|I. Cash|24,682,826,504.09|31,120,319,710.77|
|Including:: cash on hand|448,890.79|667,833.83|
|Bank deposit available for payment atany time|24,622,416,375.45|31,118,679,107.93|
|Other cash fund available for paymentat any time|59,961,237.85|972,769.01|
|II. Cash equivalents|||
|Including: bond investment due withinthree months|||
|Ⅲ. Closing balance of cash and cashequivalents|24,682,826,504.09|31,120,319,710.77|
|Including: restricted cash andequivalents used by the parent companyor subsidiaries of the Group|||

65. Foreign Currency Items
||||||||
|-|-|-|-|-|-|-|
|Items|Closing balance|||Opening balance|||
||Foreigncurrencybalance|Exchangerate|RMB balance|Foreign currencybalance|Exchangerate|RMB balance|
|Monetary capital|||||||
|Dollar|382,814,217.61|6.4936|2,485,842,403.49|584,183,095.23|6.1190|3,574,616,359.73|
|Euro|23,695,633.42|7.0952|168,125,258.25|41,752,731.40|7.4556|311,291,664.27|
|Yen|1,519,376,567.61|0.053875|81,856,412.58|3,577,239,388.37|0.051371|183,766,364.62|
|Others|||593,664,319.50|||480,513,197.43|
|Sub-total|||3,329,488,393.82|||4,550,187,586.05|
|Receivables|||||||
|Dollar|60,073,515.58|6.4936|390,093,380.78|32,173,707.03|6.1190|196,870,913.30|
|Euro|78,420,140.64|7.0952|556,406,581.87|71,043,423.47|7.4556|529,671,348.02|
|Yen|5,056,219,138.00|0.053875|272,403,806.06|8,044,496,625.72|0.051371|413,253,836.16|
|Others|||1,459,452,977.77|||1,577,781,202.59|
|Sub-total|||2,678,356,746.48|||2,717,577,300.07|
|Short-term borrowings|||||||
|Dollar|29,279,006.04|6.4936|190,126,153.60|34,923,222.99|6.1190|213,695,201.45|
|Euro|14,673,870.97|7.0952|104,114,049.31|17,781,421.68|7.4556|132,571,167.48|
|Yen|6,396,593,092.71|0.053875|344,616,452.87|17,029,608,144.67|0.051371|874,828,000.00|
|HKDollars|1,194,471,484.84|0.8378|1,000,728,210.00|1,247,000,000.00|0.7889|983,758,300.00|
|Others|||119,091,405.25|||61,322,381.41|
|Sub-total|||1,758,676,271.03|||2,266,175,050.34|
|Payables|||||||
|Dollar|113,082,834.29|6.4936|734,314,692.73|142,790,224.82|6.1190|873,733,385.67|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||||||
|-|-|-|-|-|-|-|
|Euro|50,236,492.28|7.0952|356,437,960.06|105,791,736.53|7.4556|788,740,870.87|
|Yen|4,698,797,257.13|0.053875|253,147,702.23|5,333,730,559.14|0.051371|273,999,072.55|
|Others|||1,008,890,397.28|||1,057,481,668.02|
|Sub-total|||2,352,790,752.30|||2,993,954,997.11|
|Long-term borrowings|||||||
|Dollar|||||||
|Euro|||||||
|Yen|5,517,239,780.97|0.053875|297,241,293.20||||
|Others|||||||
|Sub-total|||297,241,293.20||||

VIII. Changes of consolidation scope
1.The consolidation of enterprises under non-common control
√Applicable□Not Applicable
(1). The consolidation of enterprises under non-common control occurred in the period
√Applicable□Not Applicable
Unit and Currency: RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
|Name ofacquiree|Dateofequityacquisition|Cost ofequityacquisition|Proportion ofequityacquired(%)|Methodofequityacquisition|Date ofpurchase|Recognitionbasis as atthe date ofpurchase|Income ofacquiree fromthedate ofacquisitionto the end oftheperiod|Net profit ofacquiree fromthedate ofacquisitionto the end of theperiod|
|ShengfengLogisticsGroup Co.,Ltd|2015.1|675,144,595|58.08|Outsourced|2015-01-01|The relevantrights andObligationsof targetinterest havetransferredinto theCompany|1,418,342,315.09|16,178,900.16|

(2). Combination costs and goodwill
√Applicable□Not Applicable
Unit and Currency: RMB
|||
|-|-|
|Combination costs|Shengfeng Logistics Group Co., Ltd|
|-- Cash|605,144,595.00|
|-- Fair value of the non-cash asset||
|-- The fair value of issued or assumed debt||
|-- The fair value of issued equity securities||
|-- Fair value of contingent considerations|70,000,000.00|
|-- The fair value of the shares held prior to the dateof purchase||
|--Others||
|Total combination costs|675,144,595.00|
|Less: share of fair value of identifiable assets|357,189,904.31|
|Amount of goodwill /combination costs which isless than its share of the fair value of identifiablenet assets acquired|317,954,690.69|

Qingdao Haier Co., Ltd. 2015 Annual Report
(3) Identifiable assets and liabilities of the acquiree as at the acquisition date
||||
|-|-|-|
|Items|Shengfeng Logistics Group Co., Ltd||
||Fair value as at the date ofacquisition|Book value as at the date ofacquisition|
|Monetary Capital|27,357,283.97|27,357,283.97|
|Trading financial assets|71,687.17|71,687.17|
|Bills receivables|6,084,722.00|6,084,722.00|
|Trade receivables|227,842,735.94|227,842,735.94|
|Other receivables|321,688,172.93|321,688,172.93|
|Prepayment|73,446,979.71|73,446,979.71|
|Inventories|1,206,280.62|1,206,280.62|
|Fixed assets|199,354,775.70|199,354,775.70|
|Construction in progress|11,518,221.48|10,391,738.48|
|Intangible assets|53,838,749.06|44,209,000.67|
|Long-term equity investment|84,327,829.45|84,327,829.45|
|Other long-term assets|33,080,318.61|33,080,318.61|
|Less: borrowings|-160,400,000.00|-160,400,000.00|
|Trade payables|-119,156,731.39|-119,156,731.39|
|Taxes payables|-13,635,046.88|-13,635,046.88|
|Interests payables|-258,527.64|-258,527.64|
|Other payables|-53,753,792.48|-53,753,792.48|
|Payroll payables|-17,062,425.22|-17,062,425.22|
|Payment received in advance|-1,944,121.19|-1,944,121.19|
|Other long-term debts|-43,843,123.31|-41,154,065.46|
|Net assets|629,763,988.53|621,696,814.99|
|Less: minority interest|272,574,084.22||
|Net assets acquired|357,189,904.31||

2. The consolidation of enterprises under common control
√Applicable□Not Applicable
(1) Enterprise combination under common control occurred in the period
||||||
|-|-|-|-|-|
|Name of the combinedparty|The proportionof equityinterestacquiredin businesscombination|Base of transactionconstitutingbusinesscombination undercommon control|Date ofcombination|Base of combination date|
|Qingdao Haier Technology Co.,Ltd|100%|Under commoncontrol of HaierGroup Corporationbefore and after thetransaction|31 December2015|The relevant rights andobligations of targetinterest have transferredinto the Company|
|Haier Singapore InvestmentHolding Pte. Ltd|100%|Under commoncontrol of HaierGroup Corporationbefore and after thetransaction|31 December2015|The relevant rights andobligations of targetinterest have transferredinto the Company|

Continued
Qingdao Haier Co., Ltd. 2015 Annual Report
||||||
|-|-|-|-|-|
|Name of combined party|Revenue ofcombinedparty from thebeginning of thecombined period tothe date ofcombination|Net profit ofcombined party fromthe beginning of thecombined period tothe date ofcombination|Revenue ofcombined partyin thecomparisonperiod|Net profit ofcombinedparty in thecomparisonperiod|
|Qingdao Haier Technology Co.,Ltd|29,678,337.93|9,420,101.15|34,470,710.63|-703,428.95|
|Haier Singapore InvestmentHolding Pte Ltd|12,664,648,640.95|223,861,382.94|11,343,182,086.06|347,675,454.56|

(2) Combination costs
||||
|-|-|-|
|Combinationcosts|Qingdao Haier Technology Co., Ltd|Haier Singapore InvestmentHolding Pte Ltd|
|------ Cash|9,500,000.00|4,873,700,000.00|

 (3) Assets and liabilities of the combined party
√Applicable□Not Applicable
Unit and Currency: RMB
||||||
|-|-|-|-|-|
||Qingdao Haier Technology Co., Ltd||Haier Singapore Investment Holding Pte Ltd||
||As at thecombination date|At the end oflast period|As at thecombination date|At the end oflast period|
|Assets:|24,027,026.52|11,363,453.80|7,618,655,750.87|7,285,203,936.83|
|Monetarycapital|22,079,264.89|4,024,301.80|1,763,623,141.19|2,584,817,169.51|
|Accountsreceivable|1,686,242.06|7,004,525.82|2,478,337,466.97|2,104,312,146.26|
|Inventories|||1,666,319,312.42|1,490,182,775.29|
|Fixed assets|152,163.23|168,638.07|754,928,659.99|402,015,800.74|
|Intangibleassets|91,148.61|161,092.82|42,643,589.34|35,742,000.55|
|Tradingfinancial assets|||22,015,240.31|103,668,887.71|
|Other currentassets|||387,378,681.29|186,453,623.96|
|Available-for-sale financialassets|||1,469,316.23|1,339,735.12|
|Long-termequityinvestment|||201,396,792.25|23,986,803.71|
|Construction inprogress|||164,985,677.33|255,358,596.06|
|Otherlong-termassets|18,207.73|4,895.29|135,557,873.55|97,326,397.92|
|Liabilities:|7,209,864.49|3,966,392.92|4,833,770,663.30|4,470,256,479.12|
|Borrowings|||1,057,138,548.02|1,283,267,211.48|
|Amountpayables|1,535,176.80||3,510,743,568.12|2,872,288,681.59|
|Tradingfinancial assets||2,082,640.05|7,707,414.12|42,686.85|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||||
|-|-|-|-|-|
|Staffremunerationpayable|1,915,123.66|2,148,253.86|67,178,224.44|63,954,326.38|
|Taxes payable|3,759,564.03|-264,500.99|20,787,463.33|77,143,159.56|
|Otherlong-termliabilities|||170,215,445.27|173,560,413.26|
|Net assets|16,817,162.03|7,397,060.88|2,784,885,087.57|2,814,947,457.71|
|Less: minorityinterest|||41,869,546.18|34,585,696.89|
|Net assetsacquired|16,817,162.03|7,397,060.88|2,743,015,541.39|2,780,361,760.82|

3. Disposal of subsidiaries
Single disposal of investments in subsidiaries representing loss of control:
|||||
|-|-|-|-|
|Name of subsidiaries|Qingdao Haier SpecialSteel Plate Researchand Development Co.,Ltd.|Hefei Haier Special SteelPlate Researchand Development Co.,Ltd.|Shenzhen LeaderChuang Zhi JiaTechnology CompanyLimited|
|Consideration for disposal of equityinterest|224,000,000.00|266,000,000.00|260,500,000.00|
|Proportion of equity disposal|70.00%|70.00%|62.89%|
|Method of equity disposal|Transfer|Transfer|Transfer|
|Date of loss-of-control|2015/11/30|2015/11/30|2015/10/31|
|Basis of determination of date ofloss-of-control|The relevant rights andobligations of targetinterest have beentransferred|The relevant rights andobligations of targetinterest have beentransferred|The relevant rights andobligations of targetinterest have beentransferred|
|Difference between disposalconsideration and its share of net assetsof the subsidiary in the consolidatedfinancial statements as respect to thedisposal of investment|83,977.36|80,459,085.31|246,387,461.25|
|Proportion of remaining equity on thedate of loss of control|30%|30%|22.11%|
|Carrying amount of remaining equityon the date of loss of control|95,964,009.69|79,517,534.87|6,631,680.00|
|Fair value of remaining equity on thedate of loss of control|95,964,009.69|114,176,814.54|21,173,548.79|
|Gain or loss from remeasurement ofremaining equity at fair value(deduction of income tax effect)||29,460,387.72|10,906,401.59|
|Method and key assumptions of fairvalue of remaining equity on the dateof loss of control|Third partyvaluation report|Third partyvaluation report|Third partyvaluation report|
|Amount transferred from othercomprehensive income relating toequity investment of originalsubsidiary to profit and loss ofinvestment||||

continued
||||||
|-|-|-|-|-|
|Name of subsidiaries|Suzhou HaipengE-commerce Co.,Ltd.|SHCInternational(HK) Ltd.|Ocean VastEnterprises Ltd.|9 Goodaymartjoint ventures|
|Consideration for disposal of equityinterest|3,780,000.00|-|HK$ 350,100|7,590,000.00|
|Proportion of equity disposal|70%|63%|51%|51%|
|Method of equity disposal|Transfer|Transfer|Transfer|Transfer|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||||
|-|-|-|-|-|
|Date of loss-of-control|2015/5/31|2015/1/1|2015/1/1|2015/1/1|
|Basis of determination of date ofloss-of-control|The relevantrights andobligations oftarget interesthave beentransferred|The relevantrights andobligations oftarget interesthave beentransferred|The relevantrights andobligations oftarget interesthave beentransferred|The relevantrights andobligations oftarget interesthave beentransferred|
|Difference between disposalconsideration and its share of net assetsof the subsidiary in the consolidatedfinancial statements as respect to thedisposal of investment|8,972,905.85|-284,160.60||-15,523,245.37|

IX. Interests in other entities
1. Interests in subsidiaries
√Applicable□Not Applicable
(I) Composition of the Group
|||||||||
|-|-|-|-|-|-|-|-|
|Name ofsubsidiaries|Principalplaceof business|Registration place|Businessnature|Shareholdingpercentage||Percentageofvoting rights|Acquisitionmethod|
|||||Direct|Indirect|||
|Haier ElectronicsGroup Co., Ltd.|Mainland ofChina|Bermuda|Manufactureand sale ofwashingmachinesand waterheaters, andintegratedchannelservicesbusiness|14.06%|29.78%|55.89%|commoncontrolcombination|
|Haier SingaporeInvestmentHolding Pte Ltd|Singapore|Singapore|Householdappliancesproductiondistributionbusiness||100.00%|100.00%|commoncontrolcombination|
|Qingdao HaierAir ConditionerGen Corp., Ltd|QingdaoHigh-techZone|QingdaoHigh-techZone|Manufactureand operationof householdair-conditioners|99.95%||99.95%|commoncontrolcombination|
|Guizhou HaierElectronics Co.,Ltd.|HuichuanDistrict,ZunyiCity, GuizhouProvince|HuichuanDistrict,ZunyiCity,GuizhouProvince|Manufactureand sale ofrefrigerator|59.00%||59.00%|commoncontrolcombination|
|Hefei HaierAir-conditioningCo., Limited|Hefei HaierIndustrialPark|HefeiHaierIndustrialPark|Manufactureand sale ofair-conditioners|100.00%||100.00%|commoncontrolcombination|
|Wuhan HaierElectronics Co.,Ltd.|Wuhan HaierIndustrialPark|WuhanHaierIndustrialPark|Manufactureand sale ofair-conditioners|60.00%||60.00%|commoncontrolcombination|
|Qingdao HaierAir-ConditionerElectronics Co.,Ltd.|QingdaoDevelopmentZone|QingdaoDevelopmentZone|Manufactureand sale ofair-conditioners|100.00%||100.00%|commoncontrolcombination|
|Qingdao HaierInformationPlastic|QingdaoHigh-techZone|QingdaoHigh-techZone|Manufactureof plasticproducts|100.00%||100.00%|commoncontrolcombinat|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||||||
|-|-|-|-|-|-|-|-|
|Development Co.,Ltd.|||||||ion|
|Dalian HaierPrecisionProducts Co., Ltd.|Dalian ExportExpressingZone|DalianExportExpressingZone|Manufactureand sale ofpreciseplastics|90.00%||90.00%|commoncontrolcombination|
|Hefei HaierPlastic Co., Ltd.|HefeiEconomic&TechnologicalDevelopmentArea|HefeiEconomic&TechnologicalDevelopmentArea|Manufactureand sale ofplastic parts|94.12%|5.88%|100.00%|commoncontrolcombination|
|Qingdao HaierMoulds Co., Ltd.|QingdaoHigh-techZone|QingdaoHigh-techZone|Research andmanufactureof precisemould andproduct|75.00%|25.00%|100.00%|commoncontrolcombination|
|Qingdao MeierPlastic PowderCo., Ltd.|QingdaoDevelopmentZone|QingdaoDevelopmentZone|Manufactureof plasticpowder,plastic sheetand highperformancecoatings|40.00%|60.00%|100.00%|commoncontrolcombination|
|Chongqing HaierPrecision PlasticCo., Ltd.|JiangbeiDistrict,ChongqingCity|JiangbeiDistrict,ChongqingCity|Plasticproducts,sheet metalwork,electronicsand hardware|90.00%|10.00%|100.00%|commoncontrolcombination|
|Chongqing HaierIntelligentElectronics Co.,Ltd.|JiangbeiDistrict,ChongqingCity|JiangbeiDistrict,ChongqingCity|Manufactureand sale ofelectronicsandautomaticcontrolsystemequipment|90.00%|10.00%|100.00%|commoncontrolcombination|
|Qingdao HaierRobot Co., Ltd.|QingdaoHigh-techZone|QingdaoHigh-techZone|Research,development,manufactureand sale ofrobot and itsapplication,dedicateddevice andautomaticproductionline|50.00%||50.00%|commoncontrolcombination|
|Qingdao HaierRefrigerator Co.,Ltd.|QingdaoHigh-techZone|QingdaoHigh-techZone|Manufactureandproduction offluorine-freerefrigerators|100.00%||100.00%|Establish|
|Qingdao HaierRefrigerator(International)Co., Ltd.|PingduDevelopmentZone,Qingdao|PingduDevelopmentZone,Qingdao|Manufactureandproduction ofrefrigerators|75.00%||75.00%|Establish|
|QingdaoHouseholdApplianceTechnology andEquipment|QingdaoHigh-techZone|QingdaoHigh-techZone|Research anddevelopmentof homeappliancesmould and|100.00%||100.00%|Establish|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||||||
|-|-|-|-|-|-|-|-|
|Research Institute|||technologicalequipment|||||
|Qingdao HaierWhole Set HomeApplianceService Co., Ltd.|QingdaoHigh-techZone|QingdaoHigh-techZone|Research,developmentand sales ofhealth seriesof smallhomeappliance|98.33%||98.33%|Establish|
|Qingdao HaierIntelligentElectronics Co.,Ltd.|QingdaoHigh-techZone|QingdaoHigh-techZone|Design anddevelopmentof electronicsandautomaticcontrolsystem|97.36%||97.36%|Establish|
|Qingdao HaierSpecialRefrigerator Co.,Ltd.|QingdaoDevelopmentZone|QingdaoDevelopmentZone|Manufactureand sales offluorine-freerefrigerators|100.00%||100.00%|Establish|
|Qingdao HaierDishwasher Co.,Ltd.)|QingdaoDevelopmentZone|QingdaoDevelopmentZone|Manufactureandproduction ofdish washingmachine andgas stove|100.00%||100.00%|Establish|
|Qingdao HaierSpecial FreezerCo., Ltd.|QingdaoDevelopmentZone|QingdaoDevelopmentZone|Research,manufactureand sales offreezer andotherrefrigerationproducts|96.06%||96.06%|Establish|
|Dalian HaierAir-conditioningCo., Ltd.|Dalian ExportExpressingZone|DalianExportExpressingZone|Manufactureandproduction ofair-conditioners|90.00%||90.00%|Establish|
|Dalian HaierRefrigerator Co.,Ltd.|Dalian ExportExpressingZone|DalianExportExpressingZone|Manufactureandproduction ofrefrigerators|90.00%||90.00%|Establish|
|Qingdao HaierElectronic PlasticCo., Ltd.|QingdaoDevelopmentZone|QingdaoDevelopmentZone|Development, assemblingand sales ofplastics,electronicsand product|80.00%||80.00%|Establish|
|Wuhan HaierFreezer Co., Ltd.|WuhanEconomic &TechnologicalDevelopmentZoneHigh-techIndustrialPark|WuhanEconomic&TechnologicalDevelopmentZoneHigh-techIndustrialPark|Research,manufactureand sales offreezer andotherrefrigerationproducts|95.00%|5.00%|100.00%|Establish|
|Qingdao HaidaruiProcurementService Co., Ltd.|QingdaoHigh-techZone|QingdaoHigh-techZone|Development, purchaseand sales ofelectricalproduct andcomponents|98.00%|2.00%|100.00%|Establish|
|Qingdao Haier|Qingdao|Qingdao|Development|98.91%|1.09%|100.00%|Establish|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||||||
|-|-|-|-|-|-|-|-|
|Intelligent HomeApplianceTechnology Co.,Ltd.|High-techZone|High-techZone|andapplicationof householdappliances,communication,electronicsand networkengineeringtechnology|||||
|Chongqing HaierAir-conditioningCo., Ltd.|JiangbeiDistrict,ChongqingCity|JiangbeiDistrict,ChongqingCity|Manufactureand sales ofairconditioners|76.92%|23.08%|100.00%|Establish|
|Qingdao HaierPrecisionProducts Co., Ltd.|QianwangangRoad, JiaonanCity|QianwangangRoad,JiaonanCity|Developmentandmanufactureof preciseplastic, metalplate, mouldandelectronicproducts forhouseholdappliances||70.00%|70.00%|Establish|
|Qingdao HaierAir ConditioningEquipment Co.,Ltd.|Jiaonan City,Qingdao|JiaonanCity,Qingdao|Manufactureof householdappliancesandelectronics||70.00%|70.00%|Establish|
|Dalian Free TradeZone HaierAir-conditioningTrading Co., Ltd|Dalian ExportExpressingZone|DalianExportExpressingZone|Domestictrade||100.00%|100.00%|Establish|
|Dalian Free TradeZone HaierRefrigeratorTrading Co., Ltd|Dalian ExportExpressingZone|DalianExportExpressingZone|Domestictrade||100.00%|100.00%|Establish|
|Qingdao DingXin ElectronicsTechnology Co.,Ltd.|QingdaoDevelopmentZone|QingdaoDevelopment Zone|Manufactureand sale ofelectronicParts.||100.00%|100.00%|Establish|
|Chongqing HaierElectronics SalesCo., Ltd.|JiangbeiDistrict,ChongqingCity|JiangbeiDistrict,ChongqingCity|Householdappliancesales|95.00%|5.00%|100.00%|Establish|
|Chongqing HaierRefrigerationAppliance Co.,Ltd.|JiangbeiDistrict,ChongqingCity|JiangbeiDistrict,ChongqingCity|Manufactureandproduction ofrefrigerator|84.95%|15.05%|100.00%|Establish|
|Hefei HaierRefrigerator Co.,Ltd.|Hefei HaierIndustrialPark|HefeiHaierIndustrialPark|Manufactureandproduction ofrefrigerator|100.00%||100.00%|Establish|
|Wuhan HaierEnergy andPower Co., Ltd|Wuhan HaierIndustrialPark|WuhanHaierIndustrialPark|Energyservice||75.00%|75.00%|Establish|
|Qingdao HaierHVACEngineering Co.,Ltd|QingdaoDevelopmentZone|QingdaoDevelopmentZone|Air-conditioning||100.00%|100.00%|Establish|
|ChongqingGooddaymartElectricAppliance Sale|JiangbeiDistrict,ChongqingCity|JiangbeiDistrict,ChongqingCity|Sales ofhouseholdappliancesand||51.00%|51.00%|Establish|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||||||
|-|-|-|-|-|-|-|-|
|Co., Ltd|||electronics|||||
|Qingdao Haier(Jiaozhou)Air-conditioningCo., Limited|JiaozhouCity,Qingdao|JiaozhouCity,Qingdao|Manufactureand sale ofair-conditioners||100.00%|100.00%|Establish|
|Qingdao HaierComponent Co.,Ltd|JiaozhouCity,Qingdao|JiaozhouCity,Qingdao|Manufactureand sales ofplastic andprecise sheetmetalproducts||100.00%|100.00%|Establish|
|HaierShareholdings(Hong Kong)Limited|Hong Kong|HongKong|Investment|100.00%||100.00%|Establish|
|Shenyang HaierRefrigerator Co.,Ltd.|Shenbei NewArea,ShenyangCity|ShenbeiNewArea,ShenyangCity|Manufactureand sales ofrefrigerator|100.00%||100.00%|Establish|
|Foshan HaierFreezer Co., Ltd.|ShanshuiDistrict,FoshanCity|ShanshuiDistrict,FoshanCity|Manufactureand sales offreezer|100.00%||100.00%|Establish|
|Zhengzhou HaierAir-conditioningCo., Ltd.|ZhengzhouEconomicandTechnologicalDevelopmentZone|ZhengzhouEconomicandTechnologicalDevelopmentZone|Manufactureand sales ofairconditioner|100.00%||100.00%|Establish|
|QingdaoHaidayuanProcurementService Co., Ltd.|QingdaoDevelopmentZone|QingdaoDevelopmentZone|Development, purchaseand sales ofelectricalproduct andcomponents|100.00%||100.00%|Establish|
|Qingdao HaierIntelligentTechnologyDevelopment Co.,Ltd.|QingdaoHigh-techZone|QingdaoHigh-techZone|Developmentand researchof householdappliances|100.00%||100.00%|Establish|
|Qingdao Hai RiHigh-Tech ModelCo., Ltd.|QingdaoHigh-techZone|QingdaoHigh-techZone|Design,manufactureand sales ofproductmodel andmould||75.00%|75.00%|commoncontrolcombination|
|Qingdao Hai GaoDesign andManufacture Co.,Ltd.|QingdaoHigh-techZone|QingdaoHigh-techZone|Industrialdesign andprototypeproduction||75.00%|75.00%|commoncontrolcombination|
|Beijing HaierGuangke DigitalTechnology Co.,Ltd.|Beijing|Beijing|Development, promotionand transferoftechnology||55.00%|55.00%|commoncontrolcombination|
|Shanghai HaierMedicalTechnology Co.,Ltd.|Shanghai|Shanghai|Wholesaleand retail ofmedicalfacility||100.00%|100.00%|Establish|
|Qingdao HaierTechnology Co.,Ltd.|Qingdao|Qingdao|Developmentand sales ofsoftware andinformation|100.00%||100.00%|commoncontrolcombination|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||||||
|-|-|-|-|-|-|-|-|
||||product|||||
|Qingdao HaierTechnologyInvestment Co.,Ltd.|Qingdao|Qingdao|Entrepreneurshipinvestmentandconsulting|100.00%||100.00%|Establish|
|Qingdao CasarteSmart LivingAppliances Co.,Ltd.|Qingdao|Qingdao|Development, productionand sales ofappliances||100.00%|100.00%|Establish|
|QingdaoHaichuangyuanAppliances SalesCo., Ltd.|Qingdao|Qingdao|Sales ofhouseholdappliancesand digitalproducts||100.00%|100.00%|Establish|

|||||||||
|-|-|-|-|-|-|-|-|
|Beijing ASUTech Co., Ltd.|Beijing|Beijing|Technicalservices,import andexportbusiness||100.00%|100.00%|Establish|
|Haiyike(Beijing) TechCo., Ltd.|Beijing|Beijing|Technicalservices,softwaredevelopment||100.00%|100.00%|Establish|
|Haier OverseasElectricAppliance Co.,Ltd.|Qingdao|Qingdao|Sales ofhouseholdappliances,internationalfreightforwarding|100.00%||100.00%|Establish|
|Qingdao HaierCentralAir-conditionerCo., Ltd.|Qingdao|Qingdao|Productionand sales ofairconditionersandrefrigerationequipment||100.00%|100.00%|Establish|
|BeijingTongyuanTechnologyCo., Ltd.|Beijing|Beijing|Technologydevelopment,promotionand transfer||100.00%|100.00%|Establish|
|Smallcompanies suchas Qingdao HaiHeng FengElectricalAppliances Sale& Service Co.,Ltd|All over thecountry|All overthecountry|Sales ofhouseholdappliances||||Establish|

Reasons for including subsidiaries which the Company has50% or less of the equity into the scope of consolidated financial statements:
At the end of the reporting period, the Company had substantial control over the finance and operating decision of small companies, such as Haier Electronics Group Co., Ltd., Qingdao Hai Heng
Feng Electrical Appliances Sale& Service Co., Ltd, thus, they were included into the scope of
consolidated financial statements.
Qingdao Haier Co., Ltd. 2015 Annual Report
Reason for the ratio of voting rights higher than the ratio of shareholding of Haier Electronics Group Co., Ltd.: in 2014, Qingdao Haier Investment and Development Co., Ltd. (hereinafter referred to as―Investment andDevelopment‖) signed a Shareholder Voting Right Entrustment Agreement with the Company. Investment and Development entrusted the Company to exercise the underlying shareholder voting rights of 336,600,000 shares of Haier Electronics Group Co., Ltd. Both parties agreed that Investment and Development will not revoke the entrustment and authorization to the Company unless the Company issues a written notice of revoking trustee to Investment and Development.
(2) Significant non-wholly owned subsidiaries
Unit and Currency: RMB
||||||
|-|-|-|-|-|
|Name ofsubsidiaries|Percentage ofshareholdingof minorityshareholders (%)|Profit or lossattributed tominorityshareholders for theperiod|Dividend declaredto minorityshareholders for theperiod|Balance ofminority interestat the end of theperiod|
|HaierElectronicsGroup Co., Ltd.|56.16|1,589,954,949.08|200,573,175.94|9,173,408,636.09|
|Guizhou HaierElectronics Co.,Ltd.|41.00|10,827,554.19|12,300,000.00|101,700,855.57|
|Wuhan HaierElectronics Co.,Ltd.|40.00|30,554,666.63|8,000,000.00|192,742,430.20|
|Qingdao HaierRefrigerator(International)Co., Ltd.|25.00|-3,779,586.67||78,950,314.05|

(3) Main financial information of significant non-wholly owned subsidiaries
||||||||
|-|-|-|-|-|-|-|
|Name ofsubsidiaries|Closing balance||||||
||Current assets|Non-currentassets|Total assets|Currentliabilities|Non-currentliabilities|Total liabilities|
|HaierElectronicsGroup Co.,Ltd.|23,044,810,093.72|7,019,431,512.78|30,064,241,606.50|12,309,170,141.12|2,107,776,134.64|14,416,946,275.76|
|GuizhouHaierElectronics Co., Ltd.|314,706,629.02|43,195,339.38|357,901,968.40|109,851,101.19||109,851,101.19|
|WuhanHaierElectronics Co., Ltd.|549,813,441.00|138,467,728.19|688,281,169.19|206,425,093.69||206,425,093.69|
|QingdaoHaierRefrigerator|278,517,080.54|55,808,808.81|334,325,889.35|18,524,633.17||18,524,633.17|

Qingdao Haier Co., Ltd. 2015 Annual Report
||
|-|
|(International) Co.,Ltd.|

Continued
||||||||
|-|-|-|-|-|-|-|
|Name ofsubsidiaries|Opening balance||||||
||Current assets|Non-currentassets|Total assets|Currentliabilities|Non-currentliabilities|Total liabilities|
|HaierElectronicsGroup Co.,Ltd.|23,409,589,144.57|3,705,899,222.63|27,115,488,367.20|12,146,570,349.37|3,028,630,902.15|15,175,201,251.52|
|GuizhouHaierElectronics Co., Ltd.|338,553,939.22|54,889,192.16|393,443,131.38|141,800,932.93||141,800,932.93|
|WuhanHaierElectronics Co., Ltd.|689,222,958.63|143,426,976.88|832,649,935.51|407,180,526.59||407,180,526.59|
|QingdaoHaierRefrigerator(International) Co.,Ltd.|279,107,969.13|58,042,793.71|337,150,762.84|6,231,159.98||6,231,159.98|

||||||
|-|-|-|-|-|
|Name of subsidiaries|Current amount||||
||Operating income|Net profit|Comprehensive income|Cash flows fromoperatingactivities|
|Haier Electronics Group Co.,Ltd.|62,831,627,407.20|2,821,288,343.71|29,669,272.02|2,602,853,409.58|
|Guizhou Haier ElectronicsCo., Ltd.|1,071,734,860.12|26,408,668.76||26,016,651.42|
|Wuhan Haier Electronics Co.,Ltd.|1,709,531,738.51|76,386,666.58||33,442,718.25|
|Qingdao Haier Refrigerator(International) Co., Ltd.||-15,118,346.68||23,547,247.02|

Continued
||||||
|-|-|-|-|-|
|Name of subsidiaries|Prior amount||||
||Operating income|Net profit|Comprehensive income|Cash flows fromoperatingactivities|
|Haier Electronics Group Co.,Ltd.|67,146,203,802.89|2,512,707,253.07|-4,410,494.34|3,018,221,639.68|
|Guizhou Haier Electronics Co.,Ltd.|1,306,368,920.51|29,756,452.63||15,968,522.51|
|Wuhan Haier Electronics Co.,Ltd.|2,588,103,169.17|76,132,973.02||23,109,264.39|
|Qingdao Haier Refrigerator(International) Co., Ltd.|194,357,325.75|-62,199,081.59||143,390,719.69|

2. Transactions leading to the change ofowners’ equity in subsidiaries but not losing the control
√Applicable□Not applicable
Qingdao Haier Co., Ltd. 2015 Annual Report
(1). Explanation to the change ofowners’ equity in subsidiaries:
During the period, shareholding proportion held by the Company changed as a result of the exercise of share options and additional capital contributed by minority shareholders of Haier Electronics Group Co., Ltd., Qingdao Haier Special Freezer Co., Ltd., and Haiyike (Beijing) Tech Co., Ltd., all of which are subsidiaries of the Company; shareholding proportion held by the Company also changed as a result of unilateral increase capital contribution to Qingdao Haier Intelligent Appliances Technology Co., Ltd., and Haier Appliances (India) Co., Ltd. by the Company.
(2). Impact of the transactions on the minority interest and the equity attributable to owners of the parent company:
||||
|-|-|-|
|Items|Haier Electronics GroupCo., Ltd.|Others|
|Total of cost ofacquisition/disposal consideration||249,239,125.42|
|Less: share of net assets ofsubsidiaries calculated withreference to the proportion of theshare acquired/disposed|161,323,089.29|256,445,027.40|
|The difference|-161,323,089.29|-7,205,901.98|
|Including: adjustment andincrease to capital reserve|161,323,089.29|7,205,901.98|

3. Interests in joint ventures and associates
√Applicable□Not applicable
(1). Interests in joint ventures and associates
Unit and Currency: RMB
||||||||
|-|-|-|-|-|-|-|
|Name of joint ventures orassociates|Principalplace ofbusiness|Registration place|Businessnature|Shareholdingpercentage(%)||Accountingmethod fortheinvestmentof jointventure andassociates|
|||||Direct|Indirect||
|Haier Medical and LaboratoryProducts Co., Ltd.|Qingdao|Qingdao|Medicalfreezer|27.37||Equitymethod|
|Wolong Electric ZhangqiuHaier Motor Co., Ltd.|Zhangqiu|Zhangqiu|Electricmotormanufacture|30||Equitymethod|
|Haier Group Finance Co., Ltd.|Qingdao|Qingdao|Financing||42|Equitymethod|
|Qingdao Haier SoftwareInvestment Co., Ltd.|Qingdao|Qingdao|Softwaredevelopment||25|Equitymethod|
|Qingdao Haier Special Steel PlateResearch and Development Co.,Ltd.|Qingdao|Qingdao|Manufacture of steelplate|30||Equitymethod|
|Hefei Haier Special Steel PlateResearch and Development Co.,Ltd.|Hefei|Hefei|Manufacture of steelplate|30||Equitymethod|
|Qingdao Haier SAIF Smart HomeIndustry Investment Center(limited partnership)|Qingdao|Qingdao|Venturecapitalinvestment|63||Equitymethod|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||||
|-|-|-|-|-|-|
|Haier Tongchuang InvestmentPartnership (limited partnership)|Guangzhou|Guangzhou|Investment|50|Equitymethod|
|Qingdao HSW Water ApplianceCo., Ltd.|Qingdao|Qingdao|Sales|25|Equitymethod|
|Qingdao Roca Water ApplianceCo., Ltd.|Qingdao|Qingdao|Sales|49|Equitymethod|
|China Shengfeng Microfinancelimited in Jin’an District of FuzhouCity|Fuzhou|Fuzhou|Microfinance|20|Equitymethod|
|Fujian ATL-Shengfeng LogisticsCo., Ltd.|Fuzhou|Fuzhou|Logistics|40|Equitymethod|
|Shenzhen Storm LeaderTechnology Co., Ltd.|Shenzhen|Shenzhen|Sales|22|Equitymethod|
|Konan Electronic Co., Ltd.|Hunan|Hunan|MotorManufacturing|50|Equitymethod|
|HPZ Limited|Nigeria|Nigeria|Manufacture ofhouseholdappliances|25.01|Equitymethod|
|HNR Company (Private) Limited|Pakistan|Pakistan|Manufacture ofhouseholdappliances|31.72|Equitymethod|
|Beijing Mr. Hi NetworkTechnology Company Limited|Beijing|Beijing|Technologydevelopment|25|Equitymethod|

(2). Basic information and financial information of important associates
① Basic information of important associates: Haier Group Finance Co., Ltd. is established by Haier Group Corporation and its three affiliates. Registration place and principal place of business: Qingdao High-tech Zone Haier Park. TheCompany’s subsidiaries hold an aggregate of42.00% equity interest in Haier Group Finance Co., Ltd.
②Financial information of major associates
||||
|-|-|-|
|Items|Closing balance / Currentamount|Opening balance/Prioramount|
||Haier Group FinanceCo., Ltd.|Haier Group FinanceCo., Ltd.|
|Current assets|56,908,243,695.90|62,826,102,544.12|
|Non-current assets|4,185,942,298.04|6,053,424,346.06|
|Total assets|61,094,185,993.94|68,879,526,890.18|
|Current liabilities|48,277,090,860.06|57,417,592,987.45|
|Non-current liabilities|4,234,302,863.48|4,476,584,039.45|
|Total liabilities|52,511,393,723.54|61,894,177,026.90|
|Minority interests|||
|Equity interest attributable to|8,582,792,270.40|6,985,349,863.28|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||
|-|-|-|
|shareholders of the parent company|||
|Share of net assets calculated based onshareholding percentage|3,604,772,753.58|2,933,846,942.59|
|Operating income|2,720,546,605.87|2,395,047,078.12|
|Net profit|1,523,290,481.78|1,462,326,161.93|
|Other comprehensive income|74,151,925.35|110,295,772.41|
|Total comprehensive income|1,597,442,407.13|1,572,621,934.34|
|Dividend received from associatesfor the year|||

(3). Summarized financial information of insignificant associates
||||
|-|-|-|
|Investment to associates|Closing balance /Currentamount|Openingbalance/Prioramount|
|Haier Medical and Laboratory Products Co., Ltd.|283,507,786.33|270,141,291.60|
|Wolong Electric Zhangqiu Haier Motor Co., Ltd.|119,968,184.53|110,995,187.75|
|Qingdao Haier Software Investment Co., Ltd.|17,033,872.46|16,323,729.58|
|Qingdao Haier SAIF Smart Home IndustryInvestment Center (limited partnership)|200,266,832.77|202,000,000.00|
|Qingdao Haier Special Steel Plate Research andDevelopment Co., Ltd.|95,207,113.86||
|Hefei Haier Special Steel Plate Research andDevelopment Co., Ltd.|114,000,000.00||
|Beijing Mr. Hi Network Technology CompanyLimited|2,606,883.28||
|Haier Tongchuang Investment Partnership(limited partnership)|160,012,400.00||
|Qingdao HSW Water Appliance Co., Ltd.|39,437,684.81||
|Qingdao Roca Water Appliance Co., Ltd.|13,300,791.62||
|China Shengfeng Microfinance limited in Jin’anDistrict of Fuzhou City|78,598,195.59||
|Fujian ATL-Shengfeng Logistics Co., Ltd.|12,630,535.81||
|Shenzhen Storm Leader Technology Co., Ltd.|16,168,507.04||
|Konan Electronic Co., Ltd.|31,904,236.23|23,986,803.71|
|HPZ Limited|73,342,754.13||
|HNR Company (Private) Limited|96,149,801.89||
|Hefei Huadong Packaging Co., Ltd.||25,302,522.69|
|Total book value of investment|1,354,135,580.35|648,749,535.33|
|Total amount of the following items calculatedbased on shareholding percentage|||
|--Net profit|55,942,724.88|32,130,166.99|
|--Other comprehensive income|8,451,556.05|-2,930,435.77|
|--Total comprehensive income|64,394,280.93|29,199,731.22|

 X. Segment Report
√Applicable□Not applicable
The Company principally engaged in manufacture and sales of household appliances and relevant
services business, manufacture of upstream household appliances parts business and distribution of
products of third-party, logistics and after-sale business. The Company has 6 business segments,
Qingdao Haier Co., Ltd. 2015 Annual Report
including refrigerator segment, air-conditioner segment, washing machine segment, kitchenware and sanitary ware segment, equipment components segment, integrated channel services segment and other segment. The management of the Company assesses operating performance of each segment and allocates resources according to the division. Sales between segments were mainly based on market price.
Refrigerator segment mainly engaged in manufacture and sales of refrigerator and freezers products.
Air-conditioner segment mainly engaged in manufacture and sales of household air conditioners and commercial air conditioners.
Washing machine segment mainly engaged in manufacture and sales of washing machine products. Kitchenware and sanitary ware segment mainly engaged in manufacture and sales of water heater and kitchen appliances products.
Equipment components segment mainly engaged in procurement, manufacture and sales of upstream matching accessories for household appliances, manufacture and sales of mould.
Segment of integrated channel services and others mainly engaged in distribution business, logistics business, after-sale business, small home appliance business and others.
TheCompany’s 3rd and 4th tier markets channel business is treated as integrated channel services and assessed separately with other segments. Accordingly, operating profit from 3rd and 4th tier markets of refrigerator, air-conditioner, kitchenware and sanitary ware, washing machine business segment was not reflected in operating profit of each segment.
As the centralized management under the headquarters or not being included in the assessment scope of segment management, the total assets of segment exclude monetary capital, financial assets held for trading, dividends receivable, other current assets, available-for-sale financial assets, long-term equity investment, goodwill, deferred income tax assets; the total liabilities of segment exclude long-term and short-term borrowings, financial liabilities held for trading, dividends payables, tax payable, bonds payable, deferred income tax liabilities; operating profit of segment exclude profit/loss in fair value and income from investment.
(1) Information of segment information
Segment information for the year of 2015 and as of 31 December 2015
||||||
|-|-|-|-|-|
|Segmentinformation|Air-conditionersegment|Refrigeratorsegment|Kitchenware andsanitary waresegment|Washingmachinesegment|
|Segment revenue|16,623,263,912.64|25,353,653,900.06|5,788,906,482.77|15,740,751,019.45|
|Including:revenue fromexternalconsumers|6,341,544,098.49|10,081,565,549.44|1,071,717,018.93|4,897,345,078.20|
|Inter-segmentrevenue|10,281,719,814.15|15,272,088,350.62|4,717,189,463.84|10,843,405,941.25|
|Total segmentoperating cost|16,258,478,653.85|23,262,032,956.30|5,133,865,136.46|14,284,872,060.44|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||
|-|-|-|
|364,785,258.79|2,091,620,943.76|655,041,346.31|
|6,107,428,454.78|6,110,718,160.02|2,130,388,494.57|
|3,997,986,679.58|6,217,133,445.17|1,541,249,731.32|

Continued
||||||
|-|-|-|-|-|
|Segmentinformation|Equipmentcomponents segment|Segment ofintegratedchannelservices andothers|Inter-segmentelimination|Total|
|Segment revenue|30,510,178,653.76|73,680,295,098.27|-77,749,534,982.29|89,947,514,084.66|
|Including:revenuefrom externalconsumers|2,100,221,913.89|65,455,120,425.71||89,947,514,084.66|
|Inter-segmentrevenue|28,409,956,739.87|8,225,174,672.56|-77,749,534,982.29||
|Total segmentcost|29,968,099,587.42|73,014,812,425.67|-77,396,079,057.15|84,526,081,762.99|
|Segment profit|542,079,066.34|665,482,672.60|-353,455,925.14|5,421,432,321.67|
|Total segmentassets|14,782,886,743.90|22,179,686,713.16|-15,068,970,516.46|40,526,702,039.33|
|Total segmentliabilities|19,020,827,626.04|20,223,679,095.98|-14,140,358,350.64|39,115,969,351.32|

Segment information for the year of 2014 and as of 31 December 2014
||||||
|-|-|-|-|-|
|Segmentinformation|Air-conditionersegment|Refrigeratorsegment|Kitchenware andsanitary waresegment|Washingmachinesegment|
|Segment revenue|19,765,699,327.37|26,382,928,039.46|5,635,160,017.75|15,694,184,750.60|
|Including: revenuefrom externalconsumers|6,468,804,139.96|10,903,551,930.59|991,210,568.51|5,345,676,232.92|
|Inter-segmentrevenue|13,296,895,187.41|15,479,376,108.87|4,643,949,449.24|10,348,508,517.68|
|Total segment cost|18,975,141,221.03|24,323,833,747.22|5,026,020,068.83|14,257,949,190.46|
|Segment profit|790,558,106.34|2,059,094,292.24|609,139,948.92|1,436,235,560.14|
|Total segmentassets|5,579,677,929.54|7,570,105,286.06|1,525,338,071.19|4,207,163,131.38|
|Total segmentliabilities|3,898,364,094.73|6,760,589,840.82|1,472,655,683.43|2,360,136,721.84|

Continued
||||||
|-|-|-|-|-|
|Segment|Equipment|Segment of|Inter-segment|Total|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||||
|-|-|-|-|-|
|information|componentssegment|integratedchannelservices andothers|elimination||
|Segmentrevenue|33,588,605,445.91|72,855,666,416.37|-76,992,480,103.10|96,929,763,894.36|
|Including:revenue fromexternalconsumers|4,722,654,407.97|68,497,866,614.41||96,929,763,894.36|
|Inter-segmentrevenue|28,865,951,037.94|4,357,799,801.96|-76,992,480,103.10||
|Total segmentcost|32,847,795,174.41|71,297,684,265.42|-76,794,043,097.11|89,934,380,570.26|
|Segment profit|740,810,271.50|1,557,982,150.95|-198,437,005.99|6,995,383,324.10|
|Total segmentassets|18,073,539,645.32|14,322,347,023.41|-7,111,558,603.30|44,166,612,483.60|
|Total segmentliabilities|23,098,480,393.55|12,953,797,746.35|-6,019,796,049.28|44,524,228,431.44|

(2) Geographical information
―Othercountries/regions‖ in this report refers to all other countries/regions (including Hong Kong and Macau Special Administration Region and Taiwan) other than the mainland China for the purpose of information disclosure.
||||
|-|-|-|
|External transactionincome|For the year 2015|For the year 2014|
|Mainland China|71,297,057,103.80|78,233,675,569.40|
|Other countries/regions|18,650,456,980.86|18,696,088,324.96|
|Total|89,947,514,084.66|96,929,763,894.36|

 Continued
||||
|-|-|-|
|Total non-currentassets|31 December 2015|31 December 2014|
|Mainland China|10,899,308,703.78|9,582,602,315.11|
|Other countries/regions|1,033,929,423.11|732,673,229.33|
|Total|11,933,238,126.89|10,315,275,544.44|

 The total non-current assets exclude: available-for-sale financial assets, long-term equity investment, goodwill, deferred income tax assets.
XI. Disclosure of fair value
√Applicable□Not applicable
1. Fair value of assets and liabilities at fair value at the end of the period
|||||
|-|-|-|-|
|Items|Fair value at the end of the period|||
||Level 1|Level 2|Total|
|Recurring fair value measurement||||

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||
|-|-|-|-|
|I. Financial asset designated to be measuredby fair value and change of which is recordedin current profit and loss|22,069,897.04||22,069,897.04|
|II. Financial liability designated to bemeasured by fair value and change of which isrecorded in current profit and loss|7,707,414.12||7,707,414.12|
|III. Available-for-sale financial assets|30,558,837.86|1,423,434,405.53|1,453,993,243.39|

 1. Basis for determination of level 1 fair value at recurring and non-recurring fair measurement Unadjusted quoted prices of similar assets or liabilities in active markets as at the measurement date.
2. Qualitative and quantitative information about valuation technique and key parameters of level 2 fair value at recurring and non-recurring fair measurement
Inputs other than quoted prices included within level 1 that are observable for the assets or liabilities, either directly or indirectly.
XII. Related parties and connected transactions
According to Accounting Standards for Business Enterprises No. 36— Related Party Disclosures, parties are considered to be related if one party has the ability to control or jointly control the other party or exercise significant influence over the other party. Parties (two or more than two) are also considered to be related if they are subject to common control, joint control or significant influence.
According to Management Practices for Information Disclosure of Listed Companies (China Securities Regulatory Commission Order No. 40), in certain occasions, related legal person and natural person will be identified as related parties.
1. Information about the parent company of the Company and persons acting in concert with the parent company
|||||||||
|-|-|-|-|-|-|-|-|
|Name ofenterprise|Typesofentity|Registeredaddress|Registeredcapital|Legalrepresentative|Relationship with theCompany|Equityinterestin theCompany|Votingshare intheCompany|
|Haier GroupCorporation|Collectively-ownedenterprise|QingdaoHigh-techZone HaierPark|311,180,000|ZhangRuimin|Parentcompany|17.52%|17.52%|
|Haier ElectricAppliancesInternationalCo., Ltd.|Jointstockcompany|QingdaoHigh-techZone HaierPark|631,930,635|ZhangRuimin|Personsacting inconcert withthe parentcompany|20.56%|20.56%|
|Qingdao Haier|Limited|Qingdao Free|30,000,000|Zhang|Persons|2.62%|2.62%|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||||||
|-|-|-|-|-|-|-|-|
|Venture &InvestmentInformation Co.,Ltd.|liabilitycompany|Trade Zone||Ruimin|acting inconcert withthe parentcompany|||
|Qingdao HaierKitchenFacilities Co.,Ltd|Limitedliabilitycompany|QingdaoEconomicsandTechnologyDevelopingZone|105,000,000|LuXiaobin|Personsacting inconcert withthe parentcompany|0.19%|0.19%|

2. Information about subsidiaries of the Company
Detailed information of subsidiaries is disclosed in item 1 of note IX. Interests in subsidiaries 3. Information about associates and joint ventures
Information about the associates and joint ventures of the Company are set out in item 11 of note VII and item 3 of note IX.
4. Related companies without controlling relationship
|||
|-|-|
|Name of enterprises|Relationship with theCompany|
|FISHER＆PAYKEL APPLIANCES LIMITED|Subsidiary of Haier Group|
|FISHER&PAYKEL AUSTRALIA PTY|Subsidiary of Haier Group|
|HAH(HK) Company Limited|Subsidiary of Haier Group|
|HAIER INFORMATION APPLIANCES S.R.L.|Subsidiary of Haier Group|
|HAIER INTERNATIONAL CO., LTD|Subsidiary of Haier Group|
|HAIER INTERNATIONAL(HK)LTD.|Subsidiary of Haier Group|
|Feima Electronic (Qingdao) Co., Ltd.|Subsidiary of Haier Group|
|Haier Group (Dalian) Electrical Appliances Industry Co., Ltd.|Subsidiary of Haier Group|
|Haier Group Finance Co., Ltd.|Subsidiary of Haier Group|
|Haier Group Electric Appliance Industry Co., Ltd|Subsidiary of Haier Group|
|Haier Group Technology Research and Development Center|Subsidiary of Haier Group|
|Haier Energy Power Co., Ltd.|Subsidiary of Haier Group|
|Haier Brothers Animation Industry Co., Ltd.|Subsidiary of Haier Group|
|Hefei Haier Logistics Co., Limited|Subsidiary of Haier Group|
|Laiyang Haier Electrical Co. Ltd.|Subsidiary of Haier Group|
|Lizhu Haier Built Facilities (Qingdao) Co., Ltd.|Subsidiary of Haier Group|
|Qingdao Haier Fungchoi Exquisite Indian Express Co., Ltd.|Subsidiary of Haier Group|
|Qingdao Haier Tooling Development and Manufacturing Co., Ltd.|Subsidiary of Haier Group|
|Qingdao Haier International Travel Agency Co., Ltd.|Subsidiary of Haier Group|
|Qingdao Haier International Trading Co., Ltd|Subsidiary of Haier Group|
|Qingdao Haier Household Integration Co., Ltd|Subsidiary of Haier Group|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||
|-|-|
|Qingdao Haier Parts Procurement Co., Ltd.|Subsidiary of Haier Group|
|Qingdao Haier Software Investment Co., Ltd.|Subsidiary of Haier Group|
|Haier Medical and Laboratory Products Co., Ltd.|Subsidiary of Haier Group|
|Qingdao Haier Special Plastic Development Co., Ltd.|Subsidiary of Haier Group|
|Qingdao Haier Logistics Consulting Co., Ltd.|Subsidiary of Haier Group|
|Qingdao Haier New Material Research and Development Co., Ltd.|Subsidiary of Haier Group|
|Qingdao Haiyongda Property Management Co., Ltd.|Subsidiary of Haier Group|
|Goodaymart Electronics Co., Ltd.|Subsidiary of Haier Group|
|Mitsubishi Heavy Industries Haier (Qingdao) Air-conditioners Co., Ltd.|Subsidiary of Haier Group|
|Xingyang International Co., Ltd.|Subsidiary of Haier Group|
|BRAVE LION (HK) LIMITED|Subsidiary of Haier Group|
|Chongqing Haier Electrical Appliances Sales Co., Ltd.|Subsidiary of Haier Group|
|Chongqing Haier Logistics Co., Ltd.|Subsidiary of Haier Group|
|Konan Electronic Co., Ltd.|Joint venture|
|HNR Company (Private) Limited|Joint venture|
|Qingdao Haier Special Steel Plate Research and Development Co.,Ltd.|Joint venture|
|Hefei Haier Special Steel Plate Research and Development Co., Ltd.|Joint venture|
|Wolong Electric Zhangqiu Haier Motor Co., Ltd.|Joint venture|

1. Information on related transaction
(1). Connected transactions regarding purchase and sale of goods and rendering and receipt of services
√Applicable□Not applicable
1. Details about procurement of goods and services made by the Company from related parties are set out as follows:
||||
|-|-|-|
|Related parties|Current amount|Prior amount|
|Qingdao Haier Parts Procurement Co.,Ltd.|6,675,153,029.96|12,881,805,063.32|
|Chongqing Haier Electrical AppliancesSales Co., Ltd.|5,503,218,700.70|4,965,913,649.03|
|Chongqing Haier Logistics Co., Ltd.|1,628,537,521.70|2,414,391,500.84|
|Qingdao Haier International Trading Co.,Ltd|960,755,418.06|1,292,105,147.38|
|Haier Group (Dalian) ElectricalAppliances Industry Co., Ltd.|1,271,334,765.31|1,091,225,602.49|
|Haier Group Electrical AppliancesIndustry Co., Ltd.|4,199,545,118.50|3,083,247,568.19|
|Haier Energy Power Co., Ltd.|452,034,595.44|453,685,752.74|
|Qingdao Haier Household IntegrationCo., Ltd|156,111,132.01|6,663,186.20|
|Haier Group Technology Research and|36,542,616.47|223,799,546.72|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||
|-|-|-|
|Development Center|||
|Qingdao Haier Special PlasticDevelopment Co., Ltd.|607,921,553.32|523,127,531.98|
|Qingdao Haiyongda PropertyManagement Co., Ltd.|169,008,958.41|193,198,934.77|
|Wolong Electric Zhangqiu Haier MotorCo., Ltd.|573,416,379.71|286,450,137.02|
|Hefei Haier Logistics Co., Limited|1,166,640,621.44|147,804,207.71|
|HAIER INTERNATIONAL CO., LTD|389,354,690.48|1,584,193,730.40|
|HAIER INFORMATION APPLIANCESS.R.L.|227,035,537.04|334,319,232.06|
|HAIER INTERNATIONAL(HK)LTD.|216,381,269.39|184,811,362.19|
|HNR Company (Private) Limited|1,004,079,518.17|903,062,781.53|
|Konan Electronic Co., Ltd.|216,902,186.20|92,733,415.93|
|Other related parties|2,162,156,392.11|2,043,988,872.48|
|Total|27,616,130,004.42|32,706,527,222.98|

 2. Details about selling goods to related parties by the Company are set out as follows:
||||
|-|-|-|
|Name of related parties|Current amount|Prior amount|
|Haier Group Electric Appliance IndustryCo., Ltd|2,958,400,103.88|5,616,759,920.69|
|Qingdao Haier Parts Procurement Co.,Ltd.|76,087,939.66|2,131,489,369.07|
|Haier Group (Dalian) ElectricalAppliances Industry Co., Ltd.|1,128,406,336.11|1,301,911,526.72|
|Chongqing Haier Logistics Co., Ltd.|23,235,938.29|438,682,830.04|
|Qingdao Haier New Material Researchand Development Co., Ltd.|476,339,702.18|406,578,922.37|
|Wolong Electric Zhangqiu Haier MotorCo., Ltd.|583,990,560.40|359,445,959.19|
|Qingdao Haier Special PlasticDevelopment Co., Ltd.|175,369,533.76|117,572,897.25|
|Qingdao Haier International TravelAgency Co., Ltd.|110,651,599.25|107,499,395.32|
|Qingdao Haier Tooling Developmentand Manufacturing Co., Ltd.|109,459,024.01|118,624,452.63|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||
|-|-|-|
|QINGDAO HAIER INTERNATIONALTRADING CO., LTD.|487,308,824.30|127,698,599.08|
|HAIER INTERNATIONAL CO., LTD|37,525,630.99|129,914,421.73|
|HAH(HK) Company Limited||55,764,041.30|
|FISHER&PAYKEL AUSTRALIA PTY|316,305,245.47||
|Other related parties|1,081,121,611.73|725,950,476.01|
|Total|7,564,202,050.03|11,637,892,811.40|

 (2). Other connected transactions
(1) One of theCompany’s subsidiaries entered into a loan contract with Haier Group Finance Co., Ltd. The borrowed amount as of 31 December 2015 was RMB1,048 million and the accrued interest and fees payable to Haier Group Finance Co., Ltd. in 2015was RMB34.22 million.
(2) Information about the guarantor of theCompany’s ending guaranteed borrowing who is a related party:
||||
|-|-|-|
|Borrower|Borrowedamount|Guarantor|
|Haier Shareholdings (HongKong) Limited|1,000,728,210.00|Haier Group Corporation|
|Total|1,000,728,210.00||

(3) The accrued interest income from bank deposits with Haier Group Finance Co., Ltd. deposited by the Company and its subsidiaries in the full year of 2015 was RMB258.38 million.
(4) Qingdao Haier Goodaymart Logistic Co., Ltd., a subsidiary of the Company and other companies provided logistics services to other related companies under Haier Group, the logistics income for the year of 2015 was RMB128.71 million, and that for the year of 2014 was RMB103.62 million.
(5) Leasing
|||||
|-|-|-|-|
|Lessees|Lessors|Application of leasedassets|Lease expenserecognized for theperiod|
|Subsidiary of theCompany|Qingdao HaierInvestment andDevelopment Co., Ltd.and its subsidiaries|Production andoperation|23,869,740.00|
|Subsidiary of theCompany|Other companies ofHaier Group|Production andoperation|71,904,383.56|
|Total|/|/|95,774,123.56|

2. Amounts due from/to related parties
√Applicable□Not applicable
Qingdao Haier Co., Ltd. 2015 Annual Report
||||||
|-|-|-|-|-|
|Items and name of consumers|Ending balance||Beginning balance||
|Bills receivables:|||||
|Haier Group Electric ApplianceIndustry Co., Ltd|580,500,000.00||380,000,000.00||
|Wolong Electric Zhangqiu HaierMotor Co., Ltd.|||79,410,269.85||
|Other related parties|1,792,043.36||||
|Dividends receivables:|||||
|Wolong Electric Zhangqiu HaierMotor Co., Ltd.|50,000,000.00||50,000,000.00||
|Qingdao Haier SoftwareInvestment Co., Ltd.|4,524,472.84||4,524,472.84||
|Qingdao Haier Special SteelPlate Research andDevelopment Co., Ltd.|6,301,362.54||||
|Trade receivables:|||||
|Items and name of consumers|Carryingbalance|Provision forbad debts|Carryingbalance|Provision forbad debts|
|Haier Group Electric ApplianceIndustry Co., Ltd|174,630,258.08|8,731,512.90|1,474,306,101.96|73,715,305.10|
|Haier Group (Dalian) ElectricalAppliances Industry Co., Ltd.|207,921,660.16|10,396,083.01|221,964,815.34|11,098,240.77|
|Qingdao Haier PartsProcurement Co., Ltd.|763,720.68|38,186.03|12,075,463.81|603,773.19|
|Chongqing Haier Logistics Co.,Ltd.|9,597.75|479.89|2,484,717.32|124,235.87|
|Wolong Electric Zhangqiu HaierMotor Co., Ltd.|110,510,547.68|5,525,527.38|137,780,626.24|6,889,031.31|
|Haier Medical and LaboratoryProducts Co., Ltd.|8,419,069.02|420,953.45|37,704,028.23|1,885,201.41|
|Qingdao Haier InternationalTravel Agency Co., Ltd.|123,890,004.37|6,194,500.22|89,417,323.67|4,470,866.18|
|Qingdao Haier New MaterialResearch and Development Co.,Ltd.|47,541,824.58|2,377,091.23|84,802,398.87|4,240,119.94|
|HAIER INTERNATIONALCO., LTD|115,557,090.93|5,777,854.55|31,935,683.07|1,596,784.15|
|Hefei Haier Special Steel PlateResearch and DevelopmentCo., Ltd.|76,285,963.56|3,814,298.18|||
|Qingdao Haier Special SteelPlate Researchand Development Co., Ltd.|22,351,319.72|1,117,565.99|||
|HNR Private LimitedCompany|32,073,631.86|1,603,681.59|||
|Mitsubishi Heavy IndustriesHaier (Qingdao)Air-conditioners Co., Ltd.|29,966,338.37|1,498,316.92|431,130.97|21,556.55|
|FISHER＆PAYKELAPPLIANCES LIMITED|158,810,441.99|7,940,522.10|||
|Qingdao Haier InternationalTrading Co., Ltd|85,283,740.22|4,264,187.01|29,134.60|1,456.73|
|Other related parties|165,146,632.71|8,257,331.64|156,025,187.61|7,801,259.38|
|Prepayments:|||||
|Qingdao Haier InternationalTrading Co., Ltd|26,873,715.41||110,687,664.04||
|Goodaymart Electronics Co.,Ltd.|12,538,028.12||25,682,607.70||

Qingdao Haier Co., Ltd. 2015 Annual Report
||||||
|-|-|-|-|-|
|Qingdao Haier PartsProcurement Co., Ltd.|16,879,474.20||7,028,547.95||
|Mitsubishi Heavy IndustriesHaier (Qingdao)Air-conditioners Co., Ltd.|||12,238,106.36||
|Other related parties|9,556,559.99||31,990,235.22||
|Interests receivables:|||||
|Haier Group Finance Co., Ltd.|91,036,865.15||96,503,804.13||
|Other receivables:|||||
|Items and name of consumers|Book balance|Provision forbad debts|Book balance|Provision forbad debts|
|HAIER INTERNATIONALCO., LTD|||191,683,291.58|9,584,164.58|
|Goodaymart Electronics Co.,Ltd.|6,025,082.15|301,254.11|||
|Qingdao Haier LogisticsConsulting Co., Ltd.|13,593,017.74|679,650.89|13,593,017.74|679,650.89|
|Other related parties|35,868,639.60|1,793,431.98|39,340,346.66|1,967,017.33|
|Bills payable:|||||
|Laiyang Haier Electrical Co. Ltd.|29,649,819.07||||
|Qingdao Haier FungchoiExquisite Indian Express Co.,Ltd.|5,910,415.02||20,929,728.42||
|Other related parties|12,574,392.12||22,269,163.16||
|Trade payables:|||||
|Qingdao Haier PartsProcurement Co., Ltd.|663,349,767.52||1,050,103,108.32||
|Hefei Haier Logistics Co.,Limited|201,205,529.62||41,948,091.58||
|Haier Group (Dalian) ElectricalAppliances Industry Co., Ltd.|533,547,117.67||538,844,269.75||
|Chongqing Haier Logistics Co.,Ltd.|139,178,244.68||162,611,663.58||
|Chongqing Haier ElectricalAppliances Sales Co., Ltd.|759,596,919.13||69,805,044.81||
|Goodaymart Electronics Co.,Ltd.|10,614,831.51||1,559,351.13||
|Qingdao Haier InternationalTrading Co., Ltd|149,918,593.84||229,414,178.34||
|Qingdao Haier New MaterialResearch and Development Co.,Ltd.|817,525.38||1,328,676.53||
|Qingdao Haier Special PlasticDevelopment Co., Ltd.)|74,845,920.73||52,202,976.39||
|Haier Group Electric ApplianceIndustry Co., Ltd|187,995,713.20||593,288,327.64||
|HAIERINTERNATIONAL(HK)LTD.|20,541,494.39||97,844,763.62||
|HAIER INTERNATIONALCO., LTD|22,060,139.07||288,756,788.20||
|HAIER INFORMATIONAPPLIANCESS.R.L.|102,725,606.14||108,982,353.26||
|Feima Electronic(Qingdao)Co., Ltd.|203,253,438.63||||
|Lizhu Haier BuiltFacilities(Qingdao) Co.,Ltd.|39,063,792.08||||

Qingdao Haier Co., Ltd. 2015 Annual Report
||||
|-|-|-|
|HNR Private LimitedCompany|83,188,898.42|69,132,247.62|
|Other related parties|387,875,450.85|252,662,924.21|
|Receipts in advance:|||
|Haier Group Electric ApplianceIndustry Co., Ltd|18,701,475.03|25,336,903.89|
|Qingdao Haier PartsProcurement Co., Ltd.||2,819,955.86|
|HAIER INTERNATIONALCO., LTD|18,158.64|34,970,939.50|
|Other related parties|18,596,856.89|25,156,256.95|
|Other payable:|||
|Haier Brothers AnimationIndustry Co., Ltd.|393,253,947.83|397,445,354.81|
|Goodaymart Electronics Co.,Ltd.|18,990,955.78|14,990,955.78|
|Chongqing Haier Logistics Co.,Ltd.|51,830,739.06|51,830,739.06|
|Haier Group Electric ApplianceIndustry Co., Ltd|27,962,633.21|148,340,987.33|
|Xingyang International Co.,Ltd.|13,885,076.40|269,935,646.21|
|BRAVE LION (HK) LIMITED||825,681,434.10|
|Haier Group Corporation||137,294,659.26|
|Other related parties|138,432,347.41|292,029,050.33|
|Interests payables:|||
|Haier Group Finance Co., Ltd.|5,697,476.64|7,152,237.84|
|Dividends payables:|||
|BRAVE LION (HK) LIMITED|115,230,923.73|132,644,847.17|
|Other related parties|17,051,346.99|6,413,171.90|

||||
|-|-|-|
|||Ending balance|
||Feima Electronic(Qingdao) Co., Ltd.||
||Lizhu Haier Built Facilities(Qingdao) Co., Ltd.||
||HNR Private Limited Company||
||Haier Brothers AnimationIndustry Co., Ltd.||
|Dividendspayable|||
|Dividendspayable|||

3. Others
1. Connected sales
In 2015, following the acquisition of the overseas white household appliances assets, the
Company’s original overseas sales model, being exports through theGroup’s exporting platform, was
changed. The trading company under the company holding overseas white household appliances assets
was fully responsible for sales of export-oriented products. Meanwhile, the trading company was also
Qingdao Haier Co., Ltd. 2015 Annual Report
responsible for the overseas sales of some of theGroup’s products (such as brown goods). As such, the Company entered into a Sales Framework Agreement with Haier Group Corporation. Under which, it was agreed that the Company and Haier Group Corporation will sell products and provide sales-related services (including but not limited to agency sales services, after-sales services and technical support ) on a reciprocal basis for a term of three years.
2. Connected Procurements
In addition to independent procurement platform, the Company entrusted Haier Group Corporation and its subsidiaries for procurements of part of raw materials and distribution of goods and materials. The Company, Haier Group Corporation and its subsidiaries purchase materials from agents. They purchase and distribute goods for production and non-production use according to the specific material procurement target proposed by the Company. The price of materials purchased and delivered consist of the actual purchase price and the agency fee, of which the agency fee was calculated by1.25% of the actual purchase price, while in principle the price of materials should not be higher than the price that the Company independently purchases from the market.
Connected procurements among Haier Electronics Group Co., Ltd.(―HaierElectronics‖), a holding subsidiary of the Company, Qingdao Haier Investment and Development Co., Ltd, Haier Group Corporation are carried out according to relevant provisions of Materials Procurement Agreement and Production and Experimental Equipment Procurement Agreement entered into among parties.
3. Connected Transactions of Financial and Logistics Services
The price of financial services provided by Haier Group Corporation and its subsidiaries such as deposits/loans are determined by the principle that is not less favorable of market value fair. The Company is entitled to decide whether to keep cooperation relationship with Finance Company with the knowledge of the price prevailing on the market and in combination with their own interests. While performing the agreement, the Company could also require other financial service institutions to provide related financial services basing on actual situation.
Connected transactions of financial services among Haier Electronics, Haier Group Finance Co., Ltd., Qingdao Haier Investment and Development Co., Ltd and Haier Group Corporation are carried out according to relevant provisions of Financial Service Agreement entered into among parties.
In order to further standardize the logistics services provided by the related companies of Haier Group Corporation, the Company renewed the Logistics and Service Agreement with Qingdao Haier Investment and Development Co., Ltd and Haier Group Corporation, the Company entrusted the subsidiaries of Haier Group to provide energy and power, basic research and detection, equipment leasing, house rental and maintenance, landscaping and sanitation, gift purchasing, design, consultation, all kinds of booking and other services.
Qingdao Haier Co., Ltd. 2015 Annual Report
In accordance with the Comprehensive Service Agreement, Promotion Agreement, Product Research and Development Agreement entered into among Haier Electronics, Qingdao Haier Investment and Development Co., Ltd and Haier Group Corporation, Haier Electronics entrusted subsidiaries of Haier Group to provide Haier Electronics with hydropower energy and related support; meeting, accommodation, ticket agent; integrated services such as product certification, software, food and beverage agent, property decoration, house lease, finance and marketing, product research and development services.
4. Others
In order to expend the sales businesses in the third and fourth-tier markets, Haier Electronics renewed the Products Procurement Agreement and Internal Sales Agreement with Qingdao Haier Investment and Development Co., Ltd and Haier Group Corporation, according to which, while Haier Electronics purchases products from contract parties, the purchasing price shall be determined basing on the prices of which Haier Electronics purchases the same type of product in similar transactions from independent third parties in the market, and are not less favorable than the terms and conditions provided by the independent third parties to Haier Electronics; while Haier Electronics sales products to contract parties for their own use or distributes products through sales network, the selling price shall be determined basing on the prices of which Haier Electronics sells the same type of product in similar transactions to independent third parties in the market, and are not less favorable than the terms and conditions provided by Haier Electronics to independent third parties.
The Company and its subsidiaries entered into a series of contracts, including the Framework Agreement Regarding the Procurement of Modular Products with Wolong Electric Zhangqiu Haier Motor Co., Ltd. and other companies (the―vendors‖). Pursuant to which, the vendors agreed to supply modular products to the Company at the most favorable price which is no higher than the price it offered to other clients.
The Company and its subsidiaries entered into a series of contracts, including the Contract Arrangement Regarding the Procurement of Special Steel Plate Products with Qingdao Haier Special Steel Plate Research and Development Co., Ltd. and Hefei Haier Special Steel Plate Research and Development Co., Ltd. (the―vendors‖). Under which, it is agreed that the vendors shall supply goods to the Company on terms which are not less favorable than terms offered by other suppliers.
XIII. Share-based Payments
|||
|-|-|
|Items|Current period|
|1.Total equity instruments granted during the period|0.84 million shares|
|2.Total equity instruments exercised during the period|35.7848 million shares|
|3.Total equity instruments lapsed during the period|59.5632 million shares|
|4.Range of exercise price|RMB8.07 per share, RMB10.06 per share|
|5.The remaining term of contract|Nil|

Qingdao Haier Co., Ltd. 2015 Annual Report
|||
|-|-|
|6.Share option outstanding at the end of the period|0.1360 million shares|
|7.Total expense recognized for share-based payments|RMB2.49 million|
|8.Total amount of employee services as a result of theshare-based payments|RMB2.49 million|
|9.Total amount of other services as a result of theshare-based payments|Nil|

The Company adopted B-S model to determine the fair value of the equity instruments, parameters for the valuation method include: (1) exercise price of option; (2) duration of option; (3) the price of the underlying shares at the grant date; (4) risk-free interest rate; (5) dividend yield of the underlying shares; (6) expected volatility of share price.
XIV. Commitment and contingencies
1. Critical commitment
□Applicable√Not applicable
2. Contingencies
√Applicable□Not applicable
As of 31 December 2015, the Company has no material contingencies that need to be disclosed. 3. Events Subsequent to the Balance Sheet Date
1. According to the resolution of the 31th meeting of the 8th session of the Board of Directors of the Company held on 28 April 2016, the profit for the year is proposed to be distributed on the basis of the total number of shares on the registration date when the plan is implemented in the future, the Company will declare cash dividend of RMB2.12 (including taxes) for every 10 shares to all shareholders.
2. On 14 January 2016, the Company entered into an Equities and Assets Purchase Agreement with General Electric Company (hereinafter referred to as―GeneralElectric‖). Pursuant to which, the Company intended to acquire the household appliances business of General Electric and relevant assets for a consideration ofUS$5.4 billion by way of cash. The total consideration for this transaction shall be paid in cash with self-raised funds and funds obtained through a variety of financing methods including application forM&A loans. The amount ofM&A loans used in this transaction did not exceed60% of the transaction consideration. Please refer to the Report on the Acquisition of Major Assets by Qingdao Haier Co., Ltd. for further details.
3. The Company has no material events subsequent to the balance sheet date need to be disclosed. XV Financial Instruments Related Risks
TheCompany’s financial assets include notes receivables, receivables and etc., and theCompany’s financial liabilities include bills payable, payables, long- and short- term borrowings and etc. Please
refer to relevant items in Note V for detailed descriptions of various financial instruments. Risks relating
to these financial instruments and the risk management policies the Company adopts to mitigate these
Qingdao Haier Co., Ltd. 2015 Annual Report
risks are summarized below. TheCompany’s management manages and monitors these risk exposures in order to ensure these risks are well within their respective risk limits.
1. Credit risk
The credit risk the Company exposed to mainly comes from bank deposits, notes receivables, accounts receivables, interest receivables, other receivables and wealth management products in other current assets.
(1) TheCompany’s bank deposits and wealth management products are mainly deposited with Haier Group Finance Co., Ltd., national banks and other large and medium size listed banks. The interest receivables mainly refer to the accrued interest from time deposits placed with the aforesaid banks. The Groupdoesn’t believe there is any significant credit risk due to defaults of its counterparties which would cause any significant loss.
(2) Accounts receivables and notes receivables: The Company only trades with recognized and creditworthy third parties. It is theCompany’s policy that all consumers who wish to trade on credit terms are subject to credit verification procedures. The payment terms shall be determined on a reasonable basis. The Company monitors the balances of accounts receivables on an ongoing basis and maintains credit insurances for significant accounts receivables due from its credit clients, so as to ensure the Company will not expose to significant risk of bad debts.
(3) TheCompany’s other receivables mainly include export tax rebate receivable, recurrent loans and advances to its employees. The Company strengthened the management of these receivables and corresponding business activities based on their historical reasons of occurrence, and continue to monitor such receivables, so as to ensure theCompany’s significant risk of bad debts are controllable and to further reduce such risk.
2. Liquidity risk
Liquidity risk is the risk that an enterprise may encounter deficiency of funds in meeting obligations associated with financial liabilities. In order to control liquidity risk, the Company integrates the utilization of various financing methods such as settlement with bills and bank loans, to strive for a sustainable and flexible financing. The Company has secured line of credit with a great number of commercial banks to satisfy its needs for working capital and capital expenditures.
3. Exchange rate risk
TheCompany’s principle operations are based in mainland China and are settled in RMB. However, theCompany’s overseas assets and liabilities denominated in foreign currencies as well as transactions settled in foreign currencies in the future still expose the Company to fluctuations in exchange rates. TheCompany’s finance department is responsible for monitoring the size of transactions in foreign
Qingdao Haier Co., Ltd. 2015 Annual Report
currencies and assets and liabilities denominated in foreign currencies, so as to reduce its exposure to fluctuations in exchange rates to the largest extent. The Company avoid its exposure to fluctuations in exchange rates by entering into forward foreign exchange contracts.
4. Interest rate risk
The Company mainly faces interest rate risk from its long- and short- term bank loans and bonds payables which are interest-bearing. Financial liabilities with floating interest rates expose the Company to cash flow interest rate risk, while financial liabilities with fixed interest rates expose the Company to fair value interest rate risk. The Company determines the percentage of fixed-interest rate and floating interest rate contracts in light of the prevailing market conditions.
XVI. Other Important Events
The Company has no other important events need to be disclosed.
XVII. Notes to Main Items of Financial Statements of the Parent Company
1. Trade receivables
(1) Disclosure of trade receivables by consumer categories is set out as follows:
||||||
|-|-|-|-|-|
|Items|Closing balance||Opening balance||
||CarryingBalance|Provision forbaddebts|CarryingBalance|Provision forbaddebts|
|Individual significant tradereceivables of whichprovision for bad debts ismade on an individual basis|||||
|Trade receivables of whichprovision for bad debts ismade on a group basis|219,582,372.06|10,979,118.60|440,870,327.34|22,043,516.37|
|Individual insignificanttrade receivables of whichprovision for bad debts ismade on an individual basis|||||
|Total|219,582,372.06|10,979,118.60|440,870,327.34|22,043,516.37|

 (2) Trade receivables of which provision for bad debts is made on a group basis:
||||||
|-|-|-|-|-|
|Aging|Closing balance||Opening balance||
||Book balance|Provision for baddebts|Book balance|Provision forbad debts|
|Withinoneyear|208,577,829.57|10,428,891.47|424,530,078.86|21,226,503.95|
|One totwo|914,539.56|45,726.98|16,340,248.48|817,012.42|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||||
|-|-|-|-|-|
|years|||||
|More thantwo years|10,090,002.93|504,500.15|||
|Total|219,582,372.06|10,979,118.60|440,870,327.34|22,043,516.37|

 (3) The total debt amount of the top 5 debtors in the ending trade receivables amounted to
RMB218,490,054.10, representing99.50% of the book balance of the trade receivables.
2. Other receivables
(1) Disclosure of other receivables by consumer categories is set out as follows:
||||||
|-|-|-|-|-|
|Items|Closing balance||Opening balance||
||Book balance|Provision forbad debts|Book balance|Provision forbad debts|
|Individual significant otherreceivables of whichprovision for bad debts ismade on an individual basis|||||
|Other receivables of whichprovision for bad debts ismade on a group basis|64,573,075.32|3,228,653.77|997,921.00|49,896.05|
|Individual insignificant otherreceivables of whichprovision for bad debts ismade on an individual basis|||||
|Total|64,573,075.32|3,228,653.77|997,921.00|49,896.05|

 (2) Other receivables of which provision for bad debts is made on a group basis:
||||||
|-|-|-|-|-|
|Aging|Closing balance||Opening balance||
||Book balance|Provision forbad debts|Book balance|Provision forbad debts|
|Withinone year|64,573,075.32|3,228,653.77|997,921.00|49,896.05|
|Total|64,573,075.32|3,228,653.77|997,921.00|49,896.05|

 (3) The total debt amount of the top 5 debtors in the ending trade receivables amounted to RMB61,990,047.14, representing96.00% of the book balance of the trade receivables.
3. Long-term equity investments
√Applicable□Not applicable
(1) Details of long-term equity investments:
||||||
|-|-|-|-|-|
|Item|Closing balance||Opening balance||
||Book balance|Impairmentprovision|Book balance|Impairmentprovision|
|Long-term equity investments|||||
|Including: long-term equityinvestments to subsidiaries|13,506,982,541.50|7,100,000.00|8,012,639,498.46|7,100,000.00|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||||
|-|-|-|-|-|
|Long-term equity investments toassociates|641,850,570.99||592,290,666.30||
|Total|14,148,833,112.49|7,100,000.00|8,604,930,164.76|7,100,000.00|

 (2) Long-term equity investments to subsidiaries
||||||
|-|-|-|-|-|
|Name of Investee Companies|Opening balance|Changes for thePeriod|Closing balance|ImpairmentprovisionClosingbalance|
|I. Subsidiaries:|||||
|Chongqing Haier Electronics Sales Co.,Ltd.|9,500,000.00||9,500,000.00||
|Qingdao Haier RefrigeratorCo., Ltd.|382,667,504.64|20,000,000.00|402,667,504.64||
|Qingdao Haier Special Refrigerator Co.,Ltd.|329,832,047.28||329,832,047.28||
|Qingdao Haier Information PlasticDevelopment Co., Ltd.|102,888,407.30||102,888,407.30||
|Dalian Haier Precision ProductsCo., Ltd.|41,836,159.33||41,836,159.33||
|Hefei Haier Plastic Co., Ltd.|42,660,583.21||42,660,583.21||
|Qingdao Haier Moulds Co., Ltd.|273,980,796.30||273,980,796.30||
|Qingdao Haier Intelligent Electronics Co.,Ltd.|271,380,000.00||271,380,000.00||
|Qingdao Household ApplianceTechnology and Equipment ResearchInstitute|66,778,810.80||66,778,810.80||
|Qingdao Meier Plastic Powder Co., Ltd.|24,327,257.77||24,327,257.77||
|Chongqing Haier Precision Plastic Co.,Ltd.|47,811,283.24||47,811,283.24||
|Chongqing Haier Intelligent ElectronicsCo., Ltd.|11,870,511.98||11,870,511.98||
|Qingdao Haier Electronic Plastic Co., Ltd.|48,000,000.00||48,000,000.00||
|Dalian Haier Refrigerator Co., Ltd.|99,000,000.00||99,000,000.00||
|Dalian Haier Air-conditioning Co., Ltd.|99,000,000.00||99,000,000.00||
|Guizhou Haier Electronics Co., Ltd.|96,904,371.71||96,904,371.71||
|Hefei Haier Air-conditioning Co., Limited|67,110,323.85||67,110,323.85||
|Qingdao Haier Refrigerator (International)Co., Ltd.|158,387,576.48||158,387,576.48||
|Qingdao Haier Robot Co., Ltd.|3,149,188.69||3,149,188.69||
|Qingdao Haier Air-ConditionerElectronics Co., Ltd.|885,787,953.99|227,645,090.52|1,113,433,044.51||
|Qingdao Haier Air Conditioner Gen Corp.,Ltd|218,245,822.50||218,245,822.50||
|Qingdao Haier Special FreezerCo., Ltd.|442,684,262.76||442,684,262.76||
|Qingdao Haier Dishwasher Co.,Ltd.|156,192,042.82|50,402,250.00|206,594,292.82||
|Wuhan Haier Freezer Co.,Ltd.|47,310,000.00||47,310,000.00||
|Wuhan Haier Electronics Co.,Ltd.|100,715,445.04||100,715,445.04||
|Chongqing HaierAir-conditioning Co., Ltd.|100,000,000.00||100,000,000.00||

Qingdao Haier Co., Ltd. 2015 Annual Report
||||||
|-|-|-|-|-|
|Hefei Haier Refrigerator Co.,Ltd.|49,000,000.00||49,000,000.00||
|Qingdao Haier Whole SetHome Appliance Service Co.,Ltd.|118,000,000.00||118,000,000.00||
|Chongqing Haier RefrigerationAppliance Co., Ltd.|91,750,000.00||91,750,000.00||
|Haier Shareholdings (Hong Kong) Limited|2,081,316,920.00|5,000,000,000.00|7,081,316,920.00||
|Shenyang Haier RefrigeratorCo., Ltd.|100,000,000.00||100,000,000.00||
|Foshan Haier Freezer Co.,Ltd.|100,000,000.00||100,000,000.00||
|Zhengzhou HaierAir-conditioning Co., Ltd.|100,000,000.00||100,000,000.00||
|Qingdao Haidayuan Procurement ServiceCo., Ltd.|20,000,000.00||20,000,000.00||
|Qingdao Haier Intelligent TechnologyDevelopment Co., Ltd.|130,000,000.00||130,000,000.00||
|Haier Electronics Group Co., Ltd.|669,830,769.26||669,830,769.26|7,100,000.00|
|Qingdao Haidarui ProcurementService Co., Ltd.|107,800,000.00||107,800,000.00||
|Qingdao Haier IntelligentHousehold Appliances Co.,Ltd.|176,400,000.00|150,000,000.00|326,400,000.00||
|Qingdao Haier Special Steel PlateResearch and Development Co., Ltd.|70,549,422.43|-70,549,422.43|||
|Hefei Haier Special Steel Plate ResearchAnd Development Co., Ltd.|69,972,037.08|-69,972,037.08|||
|Qingdao Haier Technology InvestmentCo., Ltd.||120,000,000.00|120,000,000.00||
|Qingdao Casarte Smart Living AppliancesCo., Ltd.||10,000,000.00|10,000,000.00||
|Qingdao Casarte Smart Living AppliancesCo., Ltd.||40,000,000.00|40,000,000.00||
|Qingdao Haier Technology Co., Ltd.||16,817,162.03|16,817,162.03||
|Total|8,012,639,498.46|5,494,343,043.04|13,506,982,541.50|7,100,000.00|

 (4) Long-term equity investments to associates
||||||||
|-|-|-|-|-|-|-|
|Name of investeecompanies|Openingbalance|Changes for the Period|||Closing balance|Impairmentprovisionatthe end ofthe period|
|||Investmentincomerecognizedunder theequitymethod|Declarethedistributionof cashdividends|Others|||
|Haier Medical andLaboratory Products Co.,Ltd.|142,192,892.50|21,910,767.42|||164,103,659.92||
|Wolong Electric ZhangqiuHaier Motor Co., Ltd.|87,709,990.04|12,754,879.07|||100,464,869.11||
|Qingdao Haier SpecialSteel Plate Researchand Development Co.,Ltd.|93,262,112.05|1,945,001.81|||95,207,113.86||
|Hefei Haier Special SteelPlate Research andDevelopment Co., Ltd.|67,125,671.71|14,682,423.62|||81,808,095.33||
|Qingdao Haier SAIF|202,000,000.00|-1,733,167.23|||200,266,832.77||

Qingdao Haier Co., Ltd. 2015 Annual Report
|||||
|-|-|-|-|
|Smart Home IndustryInvestment Center(limited partnership)||||
|Total|592,290,666.30|49,559,904.69|641,850,570.99|

4. Operation Income and Operation Expense
Unit and Currency: RMB
||||||
|-|-|-|-|-|
|Item|Current amount||Prior amount||
||Income|Expense|Income|Expense|
|Principal Business|2,563,999,764.21|1,923,914,958.87|2,165,891,389.21|1,611,051,693.59|
|Other Business|9,182,671.10|2,856,661.71|27,075,005.45|13,123,156.82|
|Total|2,573,182,435.31|1,926,771,620.58|2,192,966,394.66|1,624,174,850.41|

 5. Investment Income
||||
|-|-|-|
|Item|Current amount|Prior amount|
|Long-term equity investments incomecalculated by the equity method|49,559,904.69|47,822,106.37|
|Investment income from disposal of long-termequity investments|174,478,540.49|508,370,366.00|
|Long-term equity investments incomecalculated by cost method|1,436,445,351.14|91,739,754.15|
|Investment income from financial assetsavailable for sale during the holding period|35,145,802.66|343,343.12|
|Total|1,695,629,598.98|648,275,569.64|

 XVIII. Supplementary Information
1. Breakdown of non-recurring profit or loss in the current period
Unit and Currency: RMB
|||
|-|-|
|Item|Amount|
|Gains or losses from disposal of non-current assets|13,327,370.03|
|Government grants credited to profit or loss in the period(exclusive of government grants which are closely related tothe operations of the Company and received in fixed amountor quantity in accordance with the national unifiedstandards)|95,078,644.93|
|Net gain or loss of subsidiaries from the beginning of theperiod to the consolidation date arising from theconsolidation ofenterprises under common control|223,063,608.99|
|Other non-operating income and expenses|205,936,250.61|
|Effect of income tax|-95,984,291.44|
|Effect of minority interests|-257,738,419.70|
|Total|625,808,032.67|

 1. Basic and diluted earnings per share
||||||
|-|-|-|-|-|
|Item|Current amount||Prior amount||
||Weightedaverage|Earnings per share(RMB)|Weightedaverage|Earnings per share(RMB)|

Qingdao Haier Co., Ltd. 2015 Annual Report
||||||||
|-|-|-|-|-|-|-|
||return onnetassets|Basicearningspershare|Dilutedearningspershare|return onnetassets|Basicearningsper share|Dilutedearningspershare|
|Net profit attributable toordinary shareholders ofparent company|16.22%|0.705|0.705|29.34%|0.933|0.932|
|Net profit attributable toordinary shareholders ofthe parent company afterdeduction of non-recurringgain or loss|13.86%|0.603|0.603|23.89%|0.754|0.753|

2. Difference on figures by domestic and foreign Accounting Standards
□Applicable√Not applicable
Qingdao Haier Co., Ltd. 2015 Annual Report
SECTIONⅩII DOCUMENTS AVAILABLE FOR INSPECTION
|||
|-|-|
|DocumentsAvailable forInspection|(I) Financial statements with signatures and seals of the legal representative, chiefaccountant and person in charge of accounting department.|
||(II) Original audit report with seals of accounting firm, signatures and seals ofregistered accountants.|
||(III) Original of all documents and announcements of the Company which havebeen publicly disclosed on the newspaper designated by China SecuritiesRegulatory Commission during the reporting period.|

Chairman: Liang Haishan Publish approved by the Board on 28 April 2016