Haier 18703[1] E00 Cover 1st Proof

Company Code：600690.SH, 690D.DE

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Short Name：Haier Smart Home

Haier Smart Home Co., Ltd.
2022 Annual Report

Haier Smart Home Co., Ltd. Annual Report 2022

Haier 18703[1] E01 Notice

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Important NoticeI.

The Board of Directors, the Board of Supervisors, directors, supervisors and senior
management of Haier Smart Home Co., Ltd. (‘the Company’) hereby assure that the content
set out in the annual report is true, accurate and complete, and free from any false record,
misleading representation or material omission, and are individually and collectively
responsible for the content set out therein.

II.

All Directors of the Company have attended the board meetings.

III.

Hexin Certified Public Accountants Limited LLP has issued a standard and unqualified audit
report for the Company.

IV.

Li Huagang (legal representative of the Company), Gong Wei (chief financial officer of theCompany) and Ying Ke (the person in charge of accounting department) hereby certify thatthe financial report set out in the annual report is true, accurate and complete.

V.

Proposal of profit distribution or proposal of capitalizing capital reserves for the reporting
period resoluted and adopted by the Board
Proposal of profit distribution for the reporting period are examined and reviewed by the Board: todeclare a cash dividend of RMB5.66 per 10 shares (tax inclusive) to all shareholders based on the total
number of shares held on record date and after deducting the repurchased shares from therepurchase account upon the execution of distribution proposal, with proposed distribution amounting
to RMB5,297,529,553.10 (tax inclusive). The proportion of cash distribution is 36.01% of the net profit
attributable to shareholder of parent company of the Company for the year. If there is any change inthe total share capital of the Company during the period from the date of this report to the record
date of the equity distribution, the total distribution amount will be remained unchanged withcorresponding adjustment to the proportion of distribution per share.

VI.

Disclaimer in respect of forward-looking statements√ Applicable□Not Applicable

Forward-looking statements such as future plans, development strategies as set out in this report do
not constitute the Company’s substantial commitment to investors. Investors are advised to pay
attention to investment risks.
VII.

Is there any fund occupation by controlling shareholders and other related parties for nonoperational purposes?
No

VIII. Is there any provision of external guarantee in violation of the prescribed decision-making
procedures?
No

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Important Notice

IX.

Are there more than half of the Directors who are unable to guarantee the truthfulness,accuracy and completeness of the annual report disclosed by the Company?
No

X.

Important Risk Warnings
For the possible risks which the Company may encounter, please refer to the relevant information set
out in the section of ‘MANAGEMENT DISCUSSION AND ANALYSIS’ in this report.

XI.

Others□ Applicable√ Not Applicable

Chairman: Li Huagang
Haier Smart Home Co., Ltd
30 March 2023

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Haier 18703[1] E02 Contents

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Contents

LETTER TO SHAREHOLDERS

4

SECTION I

DEFINITIONS

7SECTION II

GENERAL INFORMATION OF THE COMPANY AND KEY FINANCIAL INDICATORS9SECTION III

MANAGEMENT DISCUSSION AND ANALYSIS

16

SECTION IV

CORPORATE GOVERNANCE

53

SECTION V

ENVIRONMENTAL AND SOCIAL RESPONSIBILITIES93

SECTION VI

SIGNIFICANT EVENTS108

SECTION VII

CHANGES IN SHARES AND INFORMATION ABOUT SHAREHOLDERS127

SECTION VIIIRELEVANT INFORMATION OF PREFERRED SHARES140

SECTION IX

RELEVANT INFORMATION OF BONDS

141

SECTION X

FINANCIAL REPORT144

SECTION XIRESPONSIBILITY STATEMENT

326

DOCUMENTS
AVAILABLE FORINSPECTION(I)

Financial statements with signatures and seals of the legal representative,
chief accountant and person in charge of accounting department.

(II)

Original audit report with seals of accounting firm, signatures and seals ofregistered accountants.

(III)

Originals of all documents and announcements of the Company which havebeen publicly disclosed on the newspaper designated by China Securities
Regulatory Commission during the reporting period.

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Haier 18703[1] E02b Letter

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Letter to shareholders

Haier Smart Home delivered another year of record performance in 2022. Our global sales revenue grew
7.2% to RMB243.514 billion, net profit increased by 12.5% to RMB14.711 billion and recurring net profit
rose by 18% to RMB13.963 billion under China GAAP. Our products are gaining grounds in almost all
markets around the world.
As one of the Fortune 500 companies, Haier Smart Home is committed to meeting the expectations of our
stakeholders on ESG practices by lowering carbon emissions through the lifetime of our products,
advocating diversity and inclusion, implementing responsible sourcing, creating value in the interest of thesociety, and promoting sustainable corporate governance. Haier Smart Home continued to be named “Most
Admired Company” by Fortune in 2022, and our subsidiary GE Appliances was once again certified as Great
Place to Work in the US.
In 2022, unprecedented inflationary pressure in the US and looming energy crisis in Europe caused
retraction in demand for home appliances; while our supply chain, distribution network, logistic operation andfulfilment system in the Company’s biggest market were disrupted by public health emergency in the fourth
quarter. What we have achieved in an extraordinary year like 2022 was truly remarkable, and it could only bemade possible with winning spirit, shared goal and decisive actions from the entire organization in fulfilling
our commitment to always prioritize consumer experience.
In taking on the role of Chairman of Haier Smart Home in June 2022, I have spent a great deal of time withour customers, employees, partners as well as Haier Group, amongst other shareholders. What has been
reinforced is our stakeholders’ shared expectation for Haier Smart Home to become a long-standing leader
with sustainability that transcends the ups and downs in the economy. This requires Haier Smart Home tocontinue outperforming the industry in the next three years, in order to attract and retain talents, while
creating greater value for shareholders and employees. During this time, we must be more efficient andtransparent not only in the way we interact with our users, in the product we make and in the service weprovide, but also in the business operations and supply chain system; we ought to become the elephantthat can dance by being agile and embrace the latest technological development. In the next three years,
Haier Smart Home will strengthen the foundation of our sustainable development. As a responsible corporate
citizen of global influence, we remain committed to reducing carbon emissions in product design,
manufacturing and recycling; building a sustainable and ethical supply chain; creating a workplace for ourpeople to fulfil their dreams and realize individual value; eliminating bureaucracy and avoiding disorientationin processes. Across the globe, we will enhance our commitment to local communities, and strengthen ourties with the places where we operate.
Looking ahead, the abrupt reversal in globalisation and increasing financial volatility remain source of
uncertainty during Haier Smart Home’s global brand portfolio building. The way to success lies with placing
users experience at the heart of our business while transforming ourselves by accelerating digitalisation andinnovation.

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Letter to shareholders

The pandemic appears to be over, however lingering aftereffects such as lower labour participation rate andsupply chain fragmentation will inevitably impact demand in home appliance and HVAC sectors, against thisbackdrop, quality growth is only made possible in countries with substantial domestic market, manufacturing
scales and ample supply of engineering talents; and businesses that can achieve rapid profit growth arethose with engaged workforce, production efficiency and consumer goodwill. Capitalising on our advantages
in the world’s largest home appliance market, efficient supply chain and engineering expertise in China, Haier
Smart Home is in the best position to strengthen our global competitiveness as long as we drive innovation
with technology, redefine experience with digitalization and manage the business with start-up sensibility.
The Internet of Things (IoT) and advancements in energy efficiency are two driving forces that will transformthe industry. Harnessing these technologies is the focus of Haier Smart Home’s future R&D. IoT technology
gives home appliance businesses better consumer insights via interactive experience. After the initialconfiguration, home appliance businesses can accelerate product upgrades and improve algorithm toenhance user recognition based on feedback on product quality, functionality and scenario applications
utilising sensors, user behaviour analysis and big data applications. In addition to the breakthrough in
consumer robotics and smart lighting we made in 2022, future IoT development will focus on appliances for
elderly, cleaning robots and whole house smart management systems.
In January 2023, the Company established a rotary compressor joint venture with Shanghai Highly, a leading
manufacturer of residential compressors, to facilitate integrated R&D of our home air conditioning products.
In addition, we consolidated leadership with air-sourced heat pump & solar water heater solutions designed
to provide efficient alternative heating solutions for hotels, campuses and hospitals. Since 2006, we havebeen developing magnetic centrifugal chiller in Chinese market since 2006. Compared to MRV systems, thistechnology could increase COP/IPLV by 100% and we have been number one globally in magnetic chillers
for four consecutive years. The Company has also developed air levitation centrifugal chiller and integrated
energy management solutions, which will become solid foundation facilitating innovations in our global
commercial HVAC business.
Aspired to be the global leader like refrigerator and washing machine businesses, our home and central air
conditioner businesses ought to become the new pillar of future growth, while investments must continue insmall appliance and kitchen appliance to grow R&D and supply chain competitiveness. We have establishedleadership in the more significant markets of China and the US, but our position and profitability demandfurther progress in other regions. The way forward is through relentless product innovation and brandbuilding, during which process Haier Smart Home must remain committed to designing high quality andcreative appliances that deliver user-centric experience. We must stay attuned to local markets and build asolid reputation with reliable and attentive services. This strategy also requires us to allocate our supply
chain and distribution resource to cater for the characteristics of each product category, for instance, we do
not necessarily have to make all of the small appliances in our own factories and digital applications online
could be playing a more important role in marketing our small appliance.

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Letter to shareholders

The new generation of consumers is demanding personalised and customised scenarios that integrate
appliances with home furnishings, thus unlocking significant business opportunities that inspired us to create
scenario-based project of Three-Winged Bird, specializing in redefining in-store experience by creating
immersive display of smart lighting, smart kitchen, smart air & temperature solution as well as water
management, all of which could be mixed & matched to suit personal taste. More importantly, we would likethis entire process to be efficient and transparent, and we are committed to being their trustworthy partnerin creating the smart home experience right from the beginning.
It is rather lamentable that as companies grow bigger, they often lose touch with the latest trends andtechnological breakthroughs when the organization becomes too entwined with bureaucracy. In order toachieve long-standing prosperity, our next step is to make Haier a place that inspires young generation Z
with dreams, to take pride in creating amazing value for our users, instead of burying their passion withfrivolous details. Adopting a ‘start-up’ mindset is fundamental to the vitality of our organisation. We haveinitiated an internal debate trying to encourage practices that lead to operational excellence and eliminate
those who don’t. I would like our marketing department to look beyond sales figures, and spend more timewith our customers and focus on their future prospects in Haier’s ecosystem. I have tasked our product andscenario designers to better understand what end-users think of our products, and draw inspirations throughuser engagement. Decisions should be made based on critical consumer insights generated from sharing ofmarket demand in a boundaryless organization. The next three years will see a determined drive tore-engineer the organisation, not only to improve operational efficiency, but to free up financial resourcesthat will fuel investments in talents and technologies for the future.
I feel a great sense of responsibility during this turbulent time, a bold transformation is what will position
Haier Smart Home better in value creation. Motivated by our winning spirit and guided by our goals, we lookforward to embarking upon this exciting journey to a brighter future.
Once again, I would like to thank all our shareholders for your trust and support as we embrace asustainable future together!

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Haier Smart Home Co., Ltd. Annual Report 2022

Haier 18703[1] E03 Section 1 1st Proof

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Section I Definitions

I.

DEFINITIONS
Unless otherwise stated in the context, the following terms should have the following meanings in thisreport:Definition of frequently used terms
CSRC

China Securities Regulatory Commission

SSE

Shanghai Stock Exchange

The Company,
Haier Smart Home

Haier Smart Home Co., Ltd., its original name is ‘Qingdao Haier Co.,
Ltd.’, and the original short name is ‘Qingdao Haier’.

Four Major Securities
Newspapers

China Securities Journal, Shanghai Securities News, Securities Times,
Securities Daily

Haier Electrics, 1169

Haier Electronics Group Co., Ltd. (a company originally listed in Hong
Kong, stock code: 01169.HK), a subsidiary as accounted for in the
consolidated statement of the Company. Haier Electrics has been
privatized by way of H shares issuance on 23 December 2020 andbecame a wholly owned subsidiary of the Company since then.

GEA

GE Appliances, household appliances assets and business of General
Electric Group, have currently been owned by the Company.

FPA

Fisher & Paykel Appliances Holdings Limited (Chinese name: 斐雪派克),was established in 1934 and is known as the national appliance brandof New Zealand, the global top-level kitchen appliance brand and thefamous luxury brand of the world. It has products including ventilator,
gas stove, oven, dishwasher, microwave oven, built-in freezer, washingmachine, clothes dryer and etc. Its business covers over 50 countries/
regions across the world. FPA is a wholly-owned subsidiary of theCompany.

Candy

Candy Group (Candy S.p.A), is an international professional appliances
manufacturer from Italy. Since its establishment in 1945, it has beencommitted to enabling the global users to enjoy a higher quality of life
through innovative technologies and quality services. Candy Group has
been prestigious in the global market with users all over the world via its
ten self-owned professional household appliance brands. In January
2019, Candy became a wholly-owned subsidiary of the Company.

CMM

China Market Monitor Co., Ltd., as an authoritative market research
institute in Chinese household appliances area, was established in 1994
and has been focusing on research of retail sales in China consumption
market ever since.

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Section I Definitions

8

Euromonitor

Euromonitor, established in 1972, is the leading strategic market
information supplier and has over 40-years of experience in respect ofpublishing market report, commercial reference data and on-line
database. They create data and analysis on thousands of products andservices around the world.

All View Cloud

All View Cloud (AVC) is a big data integrated solution provider to thesmart home field, providing enterprises with big data information
services, regular data information services and special data services.

GFK

GFK Group, the world's leading market research company. After a long
period of development and accumulation, GFK Group's global market
research business covers consumer durables research, consumer
research, media research, healthcare market research and special
studies.

IEC

The International Electrotechnical Commission, founded in 1906, is theworld’s first organization for the preparation and publication ofinternational electrotechnical standardization and is responsible forinternational standardization for electrical engineering and electronicengineering. The goals of the commission include: to effectively meetthe needs of the global market; to ensure that the standards andconformity assessment programs are applied globally in a prioritizedmanner and to the greatest extent; to assess and improve the quality of
products and services involved in its standards; to create conditions forthe common use of complicated systems; to improve the effectivenessof the industrialization process; to improve human health and safety,
and to protect the environment.

IEEE

The Institute of Electrical and Electronics Engineers, an international
association of electronic technology and information science engineers,
is currently the largest non-profit professional technology society in theworld. It is committed to the development and research of electrical,
electronic, computer engineering and science-related fields, and has
now developed into an international academic organization with great
influence in terms of the fields of space, computer, telecommunications,biomedicine, power and consumer electronics.

Model of RenDanHeYi

The concept of ‘Achieving win-win via RenDanHeYi’is the guarantee ofHaier’s sustainable operation and the driving force of the Company
featuring a self-motivated and empowering corporate culture. “Ren” is an
employee who has the spirit of entrepreneurship and innovation; “Dan”
is to create value for users. The “RenDanHeYi “management model
encourages employees to create value for users with an entrepreneurial
mindset, and to achieve self-value in line with the those of theCompany and its shareholders.

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Haier 18703[1] E04 Section 2 1st Proof

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Section II General Information of theCompany and Key Financial IndicatorsI.

INFORMATION OF THE COMPANY
Chinese name
Chinese short nameEnglish nameEnglish short name
Legal representativeII.

海尔智家股份有限公司
海尔智家
Haier Smart Home Co., Ltd.
Haier Smart Home
Li Huagang

CONTACT PERSON AND CONTACT INFORMATION
Secretary to the
Board

Representative ofsecurities affairs

Company Secretary(D/H shares)
OthersName

Liu Xiaomei

Liu Tao

Ng Chi Yin, Trevor

Address

Room 3513, 35th
Department of
Department of
Floor, The Center,
Securities of Haier
Securities of Haier
99 Queen’s Road
Smart Home Co.,
Smart Home Co.,
Central, Central,Ltd., Haier Science
Ltd., Haier Science
Hong Kong
and Technology
and Technology
Innovation
Innovation
Ecological Park,
Ecological Park,
No.1 Haier Road,
No.1 Haier Road,
Qingdao City
Qingdao City/

Tel

0532–88931670

0532–88931670+852 2169 0000

4006 999 999

Fax

0532–88931689

0532–88931689+852 2169 0880

/

Email

finance@haier.com

finance@haier.com

ir@haier.hk/

Global Customer
Service Hotline

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Section II General Information of the Company and Key Financial Indicators

III. SUMMARY OF THE GENERAL INFORMATION
Registered Address

Haier Industrial Park, Laoshan District, Qingdao City (now known as
Haier Science and Technology Innovation Ecological Park, Laoshan
District, Qingdao City)
Historical Changes to thePrior to the Company’s listing in 1993, the registered address of theRegistered AddressCompany was No.165 Xiaobaigan Road, Sifang District, Qingdao City,
Shandong Province, and has changed to the current address since
1994, during which the address name was adjusted in line with thechange of name of the industrial park but the actual site remains
unchanged.
Business address
Haier Science and Technology Innovation Ecological Park,
Laoshan District, Qingdao City
Postal code of the business 266101
address
Websitehttps://smart-home.haier.com/cn/
Email9999@haier.com

IV. PLACE FOR INFORMATION DISCLOSURE AND DEPOSIT
Newspapers and websites
for annual reportdisclosure
Stock Exchange Website forannual report disclosure
as designated by the
CSRC
Other websites for annual
report disclosure
Deposit place of annual
reportV.

Shanghai Securities News, Securities Times, China Securities Journal,
Securities Dailywww.sse.com.cn

https://smart-home.haier.com/cn/, www.xetra.com, www.dgap.de,https://www.hkexnews.hk
Department of Securities of Haier Smart Home Co., Ltd.,
Haier Science and Technology Innovation Ecological Park,
No.1 Haier Road, Qingdao CitySUMMARIZED INFORMATION OF SHARES OF THE COMPANY
Summarized information of shares of the Company
Stock Exchange ofShares Listed

Stock Short
Name

Stock Code

Stock Short
Name Before
Variation

A-sharesShanghai Stock
Exchange

Haier Smart Home

600690

Qingdao Haier

D-sharesFrankfurt Stock
Exchange

Haier Smart Home

690D

Qingdao Haier

H-sharesHong Kong Stock
Exchange

Haier Smart Home

6690

/

Type of Shares

10

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Section II General Information of the Company and Key Financial Indicators

VI. OTHER RELATED INFORMATION
Accounting firm engaged
by the Company(domestic)

Name
Hexin Certified Public Accountants LLPBusiness Address 24th Floor, Century Building,
No.39 Donghai Road West, Qingdao City
Name of signing
Zhao Bo, Li Xiang Zhi
accountant

Accounting firm engaged
by the Company(overseas)

Name
Business address

Name of signingaccountant

HLB Hodgson Impey Cheng Limited
31st Floor, Gloucester Tower, The Landmark,11 Pedder Street, Central, Hong Kong Special
Administrative Region
Jack, Tian Sun Kit

Note:
Accounting firm engaged by the Company (domestic and overseas): Pursuant to the motion for the appointment of an auditor
approved at the Company’s 2021 Annual Shareholders‘Meeting, the Company engaged Hexin Certified Public Accountants LLP and
HLB Hodgson Impey Cheng Limited to issue the China Accounting Standards and International Accounting Standards auditing
report respectively for the Company’s 2022 annual report.

VII. KEY ACCOUNTING DATA AND FINANCIAL INDICATORS IN THE
RECENT THREE YEARS(I)

Key accounting data
Unit and Currency: RMB

Key accounting data

Operating revenue
Net profit attributable toshareholders of thelisted company
Net profit after
deduction ofnon- recurring profit
or loss attributable toshareholders of thelisted company
Net cash flows fromoperating activities

2022

Yoy
change(%)

2020

After adjustment

2021
Before adjustment

243,513,563,670.73

227,105,817,641.69

227,556,143,618.17

7.22

209,723,430,081.03

14,710,923,491.99

13,078,840,517.10

13,067,038,271.85

12.48

8,883,129,055.16

13,962,931,853.78

11,831,272,558.29

11,831,272,558.29

18.02

6,457,813,335.37

20,153,505,783.35

23,235,380,690.95

23,129,640,417.72–13.26

17,609,513,831.64

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Section II General Information of the Company and Key Financial Indicators

Net assets attributable
to shareholders of
the listed company
Total assets(II)

At the end of 2022

At the end of 2021
After adjustment Before adjustment

93,422,647,664.43
235,842,254,826.77

79,985,092,528.06
217,741,133,577.31

79,810,927,325.55
217,459,494,212.74

Yoychange(%)

At the end of 2020

16.80
8.31

66,837,525,701.87
203,498,169,276.71

Yoychange(%)

2020

Key financial indicators
Key financial
indicators

2022
After adjustment

2021
Before adjustment

1.58

1.41

1.41

12.06

1.34

1.57

1.40

1.40

12.14

1.31

1.50

1.27

1.27

0.97

16.81

17.26

18.11
Decreasedby 0.45
percentage
17.29
point

17.68

15.65

Increasedby 0.30
percentage
15.65
point

12.85

Basic earnings per
share(RMB/share)
Diluted earnings per
share (RMB/share)
Basic earnings per
share after deducting
non-recurring profit
or loss (RMB/share)
Weighted average
return on net assets(%)
Weighted average
return on net assets
after deducting
non- recurring profit
or loss (%)

15.95

Explanation of the key accounting data and financial indicators of the Company as at the end of
the reporting period for the previous three years□ Applicable

12√ Not applicable

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Section II General Information of the Company and Key Financial Indicators

VIII. DIFFERENCES IN ACCOUNTING DATA UNDER DOMESTIC ANDOVERSEAS ACCOUNTING STANDARDS(I)

Differences in net profit and net asset attributable to shareholders of listedcompany in financial report disclosed in accordance with International
Accounting Standards and China Accounting Standards□ Applicable√ Not applicable

There is no difference between the net profit and net assets attributable to shareholders of thelisted company presented in the consolidated financial statements disclosed in accordance with
International Accounting Standards and China Accounting Standards.

(II)

Differences in net profit and net asset attributable to shareholders of the listedcompany in financial statements disclosed in accordance with overseas
accounting standards and China Accounting Standards□ Applicable√ Not applicable

Apart from the financial statements prepared in accordance with International AccountingStandards, the Company did not prepared any financial statements in accordance with otheroverseas accounting standards.

(III) Explanation on the difference between the domestic and overseas accounting
standards:□ Applicable√ Not applicable

IX. KEY FINANCIAL DATA OF 2022 BY QUARTER
Unit and Currency: RMB

Operating revenue
Net profit attributable to shareholders of
the listed Company
Net profit after deduction of nonrecurring profit or loss attributable toshareholders of the listed Company
Net cash flows from operating activities

Q2 (April-June)

Q3(July-September)

Q4(OctoberDecember)

60,250,997,851.46

61,606,524,610.76

62,891,243,547.88

58,764,797,660.63

3,517,044,899.45

4,432,039,573.25

3,716,522,018.59

3,045,317,000.70

3,190,978,313.06
1,154,796,354.40

4,299,715,392.32
4,809,451,302.82

3,730,558,477.25
5,240,826,180.55

2,741,679,671.15
8,948,431,945.58

Q1(January-March)

Explanation on the difference between quarterly data and disclosed regular reporting data
□ Applicable√ Not applicable

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Section II General Information of the Company and Key Financial IndicatorsX.

NON-RECURRING PROFIT AND LOSS ITEMS AND AMOUNT
Non-recurring profit and loss items

Amount in 2022 Amount in 2021

Profit and loss from disposal of non-current assets
Government subsidies included in current profit or loss,
except for government subsidies that are closely related to
the Company’s normal business operations and gained
constantly at a fixed amount or quantity according tocertain standard based on state policies
Net profit and loss of subsidiaries arising from businesscombinations under common control of the current period
from the beginning of the period to the date of
consolidation
Profit and loss from fair value changes of financial assets
held for trading, derivative financial assets, financial
liabilities held for trading and derivative financial liabilities,
as well as investment gains arising from disposal of
financial assets held for trading, derivative financial assets,financial liabilities held for trading and derivative financial
liabilities and other debt investments, except the effective
hedging related to the normal operations of the Company
Other non-operating income and expenses except the
aforementioned items
reduction: Effect of income tax
Effect of minority equity interest (After Tax)

209,436,774.95

95,443,538.78

766,426,467.17

717,084,575.78

12,934,615.51

10,786,626.61–23,321,060.42

512,402,328.52–29,750,173.25

60,282,401.05
135,105,480.15
13,326,031.78

Total

747,991,638.21 1,247,567,958.81

167,413,005.22
20,321,980.53

For the Company’s designation of extraordinary gain or loss items as defined in the”Explanatory
Announcement on Information Disclosure for Companies Offering Their Securities to the Public No.1 —Extraordinary Gains or Losses”, and for extraordinary gain or loss items as illustrated inthe”Explanatory Announcement on Information Disclosure for Companies Offering Their Securities to the
Public No.1 — Extraordinary Gains or Losses“designated as recurring gain or loss items, reasons shallbe specified.
□ Applicable14√ Not applicable

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P.15 (P1)

(C>E)

868

Section II General Information of the Company and Key Financial Indicators

XI. ITEMS MEASURED BY FAIR VALUE√ Applicable□ Not applicable
Unit and Currency: RMB
Affected amount
Changes in the to profit of current
current period
periodItems

Opening balance

Closing balance

Wealth management products
Investment in other equity instruments
Investment in trading equity instruments
Investment funds
Derivative financial instruments

2,168,622,090.00
4,851,884,944.63
330,557,610.82
150,516,274.37
176,525,574.88

14,638,968.26
5,851,882,930.20
336,743,065.02
168,430,847.63
61,674,330.75–2,153,983,121.74
999,997,985.57
6,185,454.20
17,914,573.26–114,851,244.13

92,094,300.47
31,607,357.22
106,216,247.55–37,211,579.82
142,693,890.40

Total

7,678,106,494.70

6,433,370,141.86–1,244,736,352.84

335,400,215.82

XII. OTHERS□ Applicable√ Not Applicable

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(C>E)

879

Section III Management Discussion andAnalysisI.

DISCUSSION AND ANALYSIS ON OPERATIONSIn 2022, the Company realized sales revenue of RMB243.514 billion, representing an increase of 7.2%
from 2021. Revenue growth was driven by: (1) the strengths of high-end brands which enhanced user
value, along with the promotion of Three-Winged Bird brand that boosted sales of scenario-based
product sets and increased transaction value; (2) overseas market expansions leveraging globalised
supply chain and R&D platforms as well as in-depth market network to launch leading products andimprove price index; (3) the development of new product categories including tumble dryers,
dishwashers, heat pumps and home cleaning robots.
In 2022, net profit attributable to the owners of the Company amounted to RMB14.711 billion,
representing a growth of 12.5% from 2021; net profit attributable to owners of the Company after
non-recurring items reached RMB13.963 billion, up 18.0% from 2021. (1) Gross profit margin remained
flat to 2021 at 31.3%, domestic gross margin expansion was driven by product mix upgrade,development of globalised platforms, digitalization in procurement and R&D, as well as lower
commodities prices in the second half of the year; the overseas market recorded minor gross margin
contraction as the benefits of better product mix and price increases were offset by cost pressure
related to rising commodities prices. (2) Selling expense ratio reduced by 0.3 percentage points to
15.9%, attributable to efficiency enhancement from digitalizing marketing, logistics and warehouses. (3)Administrative expense ratio reduced by 0.2 percentage points to 4.5%, achieved by digitally enhanced
operational processes and organizational efficiency. (4) Financial expense ratio went down by 0.4
percentage points to –0.1%, the reduction was attributable to increase in interest income, improved
exchange risk management, however this was partially offset by higher interest expense caused byinterest rate increase overseas.
Net cash flow from operating activities in 2022 was RMB20.154 billion, operations remained solid withnet cash flow to net profit ratio reached 1.37, attributable to improved working capital management in
China.

(I)

Smart Home Business in China
In 2022, revenue of smart home business in China grew by 4.6% from 2021 reaching
RMB126.379 billion, the growth was attributable to ① market share gains from outperforming theindustry in refrigerators, washing machines, air conditioners, and water heaters; ② distribution
network expansion to capture strong momentum from e-commerce and franchised stores; ③increased sales of product sets with higher average ticket price from Three-Winged Bird
scenario-based solutions; ④ enhanced user engagement and conversions through providing
services and design solutions in first and second tier markets, and offering door-to-door services
to rural households.
1.

16

Household Food Storage and Cooking Solutions(1) Refrigerator and Freezer BusinessIn 2022, refrigerator business achieved sales revenue of RMB43.199 billion,
representing an increase of 3.5% year-on-year. According to CMM, the Company’s
retail share of refrigerators went up 2.5 percentage points to 43.9% offline; andincreased 0.5 percentage points to 39.2% online.

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Section III Management Discussion and Analysis

The Company spearheaded industry development in food preservation, large-volume
products and connectivity. The Company served a variety of user needs throughbrand portfolio of Casarte, Haier and Leader. (1) Leveraging breakthroughs in built-in
design, structural configuration and heat dissipation technology, Casarte was able tointroduce seamless built-in range and achieved 180% revenue growth from its built-in
refrigerators during the reporting period. (2) Featuring cutting-edge freshness
preservation and refrigeration technologies, more than one million units of Haier
full-space freshness preservation refrigerator were sold, including Boguan (博 觀)
series, could maintain humidity level at 90% in the refrigerator zone with zerotemperature fluctuations in the freezer, allowing ingredients to stay fresh for 7 and 15
additional days in the chilled and frozen sections compared to ordinary refrigerators,
over 50,000 units were sold in its first year on the market at an average price of over
RMB15,000.
During the reporting period, freezer business achieved a revenue growth of 11%
partly driven by the introduction of large-size upright freezers designed for home use.
In May 2022, Haier’s upright freezer was awarded the highest honour of recognition
by Stiftung Warentest, Germany’s leading consumer testing institution. Meanwhile,revenue of commercial freezers also grew by 19%.

Export business
The Company focused on brand premiumisation and product innovation featuring
large multi-door refrigerators and freshness preservation technology to expand market
share overseas. In Europe, Haier ranked first in large multi-door refrigerators withmarket share of over 40%. In Japan, the Company launched ultra-thin large-volume
TZ freezer series, boosting market share of large refrigerators by 4.6 percentage
points to 43%. In Vietnam, market share of high-end large refrigerators reached 40%.
(2)

Kitchen appliance businessIn 2022, kitchen appliance segment recorded sales revenue of RMB3.763 billion, a
year-on-year increase of 7.7% and Casarte’s revenue contribution continued toincrease. According to CMM, the Company’s offline retail share of kitchen appliancesrose 1.4 percentage points year-on-year to 8.4%, ranking top three in the industry forthe first time.
The Company launched a series of innovative products that were well-received by themarket. Casarte’s constant air volume range hood was equipped with wind pressure
sensor and automatic fan adjustment, to provide strong ventilation and efficient
extraction, while reducing noise level by 5dB to 43dB. Casarte’s ovens createdself-cooking technology at 300ºC, a pizza could be cooked within three minutes, andbaking is automatically stopped once the food is ready. This product ranked first in
market share among ovens priced above RMB11,000. Casarte’s dishwashers
featuring drawer-style compartments equipped with large-diameter spray arm thatrinsed dishes at 360º to achieve thorough cleaning. During the reporting period,
revenue of Casarte’s dishwashers recorded double-digit revenue growth.

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879

Section III Management Discussion and Analysis

Export businessExport revenue grew 25% in 2022. In addition, the Company continued making effort
to increase in-house production and improve operational efficiency.
2.

Household Laundry Management Solutions
During the reporting period, the Company’s washing machine business achieved sales
revenue of RMB31.614 billion, a year-on-year increase of 3.1%. According to CMM, theCompany’s offline retail share of washing machines rose 1.8 percentage points to 46%,and retail share stayed flat at 40.4% online. Retail share of tumble dryers increased 6.4
percentage points to 39.3% offline and 6 percentage points to 31% online.
The Company has strengthened high-end washing machine market leadership throughproduct innovation. (1) Casarte’s Zhongzihemei (中 子 和 美) washer & dryer combo
integrated washing, drying and clothes caring with real-time data sharing during eachprocess. It was designed to reduce creases, wear & tear, and consume less energy. (2)Haier brand is committed to developing innovative technologies that enhance energy andwater efficiency. Its Essence Wash washing machine was equipped with a premix
compartment and high-pressure spraying technology to achieve powerful stain removal andreduce wear & tear by pre-mixing detergent. More than 200,000 units have been soldwithin three months since its launch. The Company also captured new opportunities intumble dryers with revenue growth of over 80% in 2022. Casarte Xiannuo (纖 諾) dryer
helped grow the Company’s market share in units above RMB10,000 to 46.6%.

Export Business
The Company focused on product upgrade and user interaction to enhance experience.
Despite industry-wide weakness, IoL data indicates that the Company still managed to
grow export revenue by 4%, by capturing energy efficiency market opportunities with swift
upgrade of entire washing machine range to energy efficiency Class A in Europe; in Japan,
heat pump and front-load washer combo contributed to the 50% revenue growth.
3.

Air and Energy Solutions
During the reporting period, the Company’s air and energy solution business realized sales
revenue of RMB33.947 billion, up 5.4% year-on-year.

(1)

18

Home air conditioner business
During the reporting period, home air conditioner business achieved significant market
share increase by consolidating distribution network, boosting distributor and user
reputation, increasing in-house components production, and accelerating supply chain
integration. According to CMM, offline retail share rose 2.8 percentage points
year-on-year to 19.5% in 2022, and retail share increased 0.8 percentage points
year-on-year to 14.4% online. In addition, retail share in the high-end market(wall-mounted units priced above RMB4,000 and standing units priced above
RMB10,000) grew 3.9 percentage points, reaching 24.2%.

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879

Section III Management Discussion and Analysis

The Company capitalised on the development of home central air-conditioners by
improving design, installation and service standards, while enhancing distributors’
service capabilities through trainings to garner consumer goodwill. According to China
IoL, the Company’s market share of home central air-conditioners increased 0.25
percentage points year-on-year to 14.7% in 2022.
The Company strived to provide users with healthier, more comfortable,energy-efficient and environmentally friendly air solutions by utilizing IoT technologies.
For example, Casarte’s Yunding (雲 鼎) deluxe air conditioners could wash and purify
air through a 19-layer water curtain, effectively removing seven types of pollutants
including formaldehyde and PM2.5. It is also equipped with Smart Home system that
could identify users and surrounding environment in order to provide customized andpersonal temperature settings.
The Company created immersive experience to improve store traffic conversion bydemonstrating technological strengths in cooling and heating efficiency, ultra-low
noise, and health benefits. The Company also increased average contribution ofindividual models by streamlining SKUs and increasing the volume of each order.
The Company strengthened supply chain and optimized design & procurement costs
by increasing in-house manufacturing of core components and enhancing
management of tier two & three suppliers. In January 2023, the Company formed acompressor joint venture with Shanghai Highly, aiming to secure an integrated supply
of compressors, enhance production stability, reduce costs, in order to improveoverall profitability and enhance competitiveness through coordinated development ofcompressors and air-conditioning units.
Export businessExport revenue rose by over 25% in 2022, ranking number one in the industry
according to China IoL. The growth was driven by breakthroughs in new products
such as dehumidifiers and strong performance in the US and Europe markets
leveraging localized distribution network and product innovation.

(2)

Commercial air-conditioner business
During the reporting period, revenue from commercial air conditioners grew over 20%.
According to China IoL, the Company’s share increased 0.9 percentage points
year-on-year to 11.1% in the domestic market and 0.7 percentage points to 14.2% in
the export market as compared to 2021.
During the reporting period, the Company started expanding from commercial HVAC
equipment to energy management and smart integrated solutions for buildings. By
creating MetaBuilding control system that integrates air conditioners, elevators,
lighting, water, electricity and security, the Company aims at offering green and smart
building solutions that combine technology, experience and space.

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879

Section III Management Discussion and Analysis

Drawing on strengths in magnetic centrifugal chillers, the Company won contract of
37 underground lines in 17 cities in 2022, reinforcing number one position indomestic market. In addition, the Company developed air-suspending central
air-conditioners and pioneered magnetic & air-centrifugal chillers solutions leveraging
air-suspending centrifugal compressor technology to enhance energy efficiency andeliminate frictions in the switch on/off process.
During the reporting period, heat pump revenue grew by 26%. The Company
launched –37ºC Low Ambient heat pumps with performance above and beyond thescope of China Energy Label grade 1 products by adopting leading R32 refrigerantsystem. The Company also launched Air to Water heat pump that could provide
constant 90ºC water under wide temperature, making it an efficient alternative tofossil-fuel boilers in many industrial settings. In 2022, the Company won Tangshan’s
Guye District (古 冶 區) Heating Renovation Project, the largest project of its kind in
China.
Export business
The Company also developed oil-free magnetic centrifugal chillers overseas, with
export revenue up by over 40% in 2022. During the reporting period, the Company
also won several contracts including Suvarnabhumi Airport in Thailand and theMinistry of Health in Malaysia.
4.

Household Water Solutions
During the period, water heaters and purifiers revenue grew by 9.1% to RMB13.855 billion.
According to CMM, the Company strengthened its leadership in 2022, with market share
increase of 1.3 percentage points to 29.8% offline, and online retail share rose 2.4
percentage points to 34.0%.
Following the launch of Casarte’s Crystal Tank Galaxy series, the Company expanded
dual-tank line-up to capture demand for water heaters with small-size, tasteful appearance
and large-capacity. Leveraging gas-electric hybrid technology, the Company was able toconsolidate premium leadership in gas water heaters with revenue growth of 16% in 2022;
and the Company remained number one in units priced above RMB8,000. During theperiod, the offline retail share of gas water heaters increased by 1.9 percentage points
year-on-year to 22.2%. Air-sourced heat pump water heater accelerated R&D in high watertemperature, disinfection, frequency conversion and energy saving. In 2022, its domestic
revenue grew by 19% and overseas revenue rose by over 290%. Casarte’s Tianhe (天 合)NC7 air-sourced water heater could rapidly heat up at –15ºC and reduce electricity usage
by over 76%.

20

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(C>E)

879

Section III Management Discussion and Analysis

The water purifier business strengthened competitiveness through product innovation andsupply chain optimization. During the period, the Company expanded high-end market
share with cutting edge technologies including zinc-strontium mineral spring. Since April
2021, Haier smart water purifier factory has not only been able to produce the entire
under-sink range in house, but also its own filter, water circuit board and moulding
modules, all of which contributed to increase cost competitiveness.
5.

Sales Platform in China
Despite macro uncertainties during the reporting period, the Company remained committed
to enhancing user experience, increasing user recognition and growing average user value
via several initiatives to enhance efficiency of franchised network with digital transformationand service innovation; accelerate development in new retail channels and improve userinteraction online; increase presence in home improvement channels, establish design,
installation & service one-stop stores, as well as establishing partnerships with designers.
According to CMM, the Company’s overall retail market share went up 2 percentage points
year-on-year to 27.2% in China in 2022.
Challenged by declining traffic and store closures in KA channels, the Company accelerated
omni channel network expansion, and strengthened its franchised stores with digital tools toimprove traffic acquisition and conversion. The Company stimulated replacement demand in
the rural market by offering door-to-door appliance cleaning services, while driving the salesof product sets in the urban areas by building showrooms featuring tailored design
solutions. Furthermore, the Company actively developed shopping mall channels throughscenario-based solutions and integrated offline/online interactions, showcasing quality
lifestyle and boosting replacement demand.
Increasing number of consumers started to buy appliances online. During the reporting
period, the Company expanded product portfolio online, while strengthening the premium
Casarte brand by introducing over 70 new units. The Company also made efforts toimprove membership management by streamlining online and offline user database utilizing
digital tools. In 2022, the Company topped the industry with 20% growth of its aggregatedGMV online; user engagement efficiency increased 23%; total number of Haier brandmembership surged 41% to over 45 million.
The Company made dedicated effort to capture the growth opportunities of live streaming
platforms and short video marketing by creating quality content integrating brand stories toincrease consumer recognition. In 2022, over 40,000 short videos were released, and daily
average live streaming coverage exceeded 16 hours in flagship store online. Streaming
related transaction value exceeded RMB10 billion in 2022, ranking first amongst major
home appliance businesses online.

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879

Section III Management Discussion and Analysis

Growing number of consumers started to buy major appliances at the beginning of theirrenovation project, thus the Company enhanced traffic conversion and average ticket priceby showcasing scenario-based solutions in Three-Winged Bird stores, providing professional
design toolkit to distributors and promoting existing home renovation and kitchenrenovation solutions. In 2022, over 900 new Three-Winged Bird stores were added, andretail sales of Three-Winged Bird stores went up by 257% year-on-year.
Amid the growing traffic towards home improvement channels, the Company establishedwide partnership with home furnishing industry and expanded distribution network inbuilding material markets with retail sales increase of 51% and 401 new sales outlets
added in 2022.
In 2022, business operations remained under constant pressure offline, the weakness in KA
channels also had an impact on sales of mid and high-end products. During the reporting
period, Casarte brand managed to grow against the headwind through product renovation,
development of set product portfolio and distribution network enhancement. In 2022,
revenue contribution from product sets went up by 2.4 percentage points, according to
CMM, Casarte’s core appliance market share went up by 1.4 percentage points from 2021
to 12.3%.
6.

Accelerating digitalization to facilitate end-to-end innovation, enhance operational
efficiency and user experience.
During the reporting period, the Company implemented digital transformation in
procurement, lean manufacturing, marketing, and R&D, achieved cost reduction andefficiency improvement through data integration, operational digitalization andtransformation.

Improve procurement efficiency
The Company established selective vendor database to reduce supplier complexity,
increase commonly used parts and improve material quality. In 2022, the number ofcomponents was reduced by 17.5% and proportion of common parts increased by 12%,
the Company also cut new supplier process time by 10% and shortened supplierinspection time by 10% to accelerate new product pipeline.
Improved efficiency of lean manufacturing
The Company has successfully increased scheduling accuracy to 85%, increased factory
UPH by 9.3%. and reduced inventory of semi-finished goods by 20% thanks to promoting
manufacturing digitalization, integrated scheduling in assembly, pre-process, and sequential
production. Loading efficiency of finished goods logistics also enhanced 30% by integrating
logistics data.
In 2022, the Company reduced OTD lead time by reduced by 7% in China throughadvancing SKU classification system, as well as simplifying process during examination,scheduling, and shipment to reduce order fulfilment delays. Meanwhile, the Company also
optimized inventory replenishment model in e-commerce channels and implemented VMI
model, to reduce inventory turnover days in regional branches by 10%.

22

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879

Section III Management Discussion and Analysis(II)

Overseas home appliances and smart home business
Revenue amounted to RMB125.424 billion in 2022, up 10.3% from 2021, driven by productinnovation leveraging globalised platforms, several new products have been successfully launchedglobally including the large front-load washer; flexible and efficiency from globalised supply chain;worldwide deployment of production capacity to cater for local demand; continued growth inprice index thanks to global premium brand building.
1.

North America
The North American Home Appliance market encountered a significant challenge in 2022.
Fears of recession exacerbated the weakness of consumer spending, and the coreappliance industry declined by around 6%, while costs faced severe inflationary pressures.
However, the Company acted decisively in implementing its strategy during the reporting
period and again delivered a solid performance, with sales revenue increasing by 9.0% (up4.6% in local currency). The Company’s resilience and sustainability are built on long-term
investments in technology, product innovation, distribution network expansion, brandbuilding, and supply chain management, ultimately continuing to meet its commitment to its
users.
During the reporting period, the Company adhered to its high-end strategy and launched
new differentiated premium products such as the first Profile Front Load and Top Loadwashing machine with built-in Alexa voice assistant, Café counter-depth multi-door
refrigerator, industry-leading Striker smart cooktop with precise temperature control andultra-fresh dishwasher with stainless steel tub to improve product mix and support
double-digit growth of premium brands.
The Company continues to expand the growing space for new categories. During thereporting period, the product line-up of HVAC continued to improve, and the launch ofducted AC marked the Company’s entry into the mainstream HVAC market in the UnitedStates; the water heater factory in South Carolina went into operation, becoming the core
manufacturing base for premium water heater products; the small domestic appliancecategory expanded, and Opal ice maker ranked in the top in the premium countertop ice
maker category at Amazon, etc.
The Company has always been committed to continuously improving user experience,building the end-to-end digital platform to improve the Company’s efficiency internally andinteract with users externally. The Company has remotely upgraded the Steakhouse Modeand Turkey Mode for tens of thousands of users successively; during the same time theCompany opened a micro-factory in the Co-Creation Centre in Stamford, Connecticut. The
Company once again won the annual “Smart Appliance Company of the Year” and“Cybersecurity Breakthrough Award” in the United States.
Facing the challenging of a downward market environment and raw material inflation etc.,
the Company continues to deepen RenDanHeYi to motivate employees. Employees set up
five teams spontaneously to build a synergistic system of sales and operation in the areasof material cost takeout, operation efficiency, structure improvement, revenue, and cash
flow respectively to achieve sustainable growth. With high recognition of the employees, theCompany was again certified as the “Great Place to Work” in the US in 2022.

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879

Section III Management Discussion and Analysis

The Company continues to be a local corporate citizen. During the reporting period, theCompany launched the Every Voice program, which aims to provide jobs for refugeegroups who have left their homes; the first batch of Einride electric trucks have been put
into service, effectively reducing carbon emissions during the Company’s operation while
improving supply chain efficiency; and Blue Wave public service program has expandedfrom the U.S. to a global scale and will contribute to public welfare around the world.

24

2.

EuropeIn 2022, the Company recorded revenue of RMB23.032 billion in Europe, an increase of
16.7% year-on-year. GFK statistics suggests the Company was the fastest growing
appliances business with retail volume market share up by 1 percentage point to 7.4%,
and retail revenue market share increase of 1.4 percentage points to 6.8%. The Company
achieved growth against the headwind by strengthening high-end brand strategy, seizing
market opportunities for energy-saving and built-in products, as well as accelerating supply
chain localization. During the period, Haier brand’s price index rose to 131; the Company
capture market opportunity for energy-efficient products by launching Haier905CD
refrigerator, ultra-thin Ipro7plus washing machine, 939 washing machine and 979Plus12kg
washing machine with an energy-efficiency rating of A-20%. Heat pump revenue grew by
200% and the Company launched air-source heat pump water heater which provides
heating under –30ºC to meet growing demand. In the meantime, the Company accelerated
go-to market strategy by utilizing local facilities from dishwasher & kitchen appliancefactories Turkey and refrigerator factory in Romania.

3.

Australia and New ZealandDuring the reporting period, the Company recorded revenue of RMB6.962 billion, down by
0.7% year-on-year (up by 5.9% in local currency) in Australia and New Zealand, market
share exceeded 18% in main-stream channels (including TGG & NARTA) in Australia withstrengthening leadership in New Zealand. The growth was attributable to continued productinnovation driven by long term technological advancement. In 2022, the Company launched
60cm Contemporary and New Minimal series equipped with full steam to provide users witha healthier gourmet experience, and FPA’s premium 7, 8 and 9 series contributed toalmost 50% of total kitchen appliance revenue. FPA brand Rf605T refrigerator with precise
temperature control and variable temperate zone was created to deliver superior
preservation performance, it was an instant best-seller and soon became number one inmarket share of units’ capacity between 600–650L. On the other hand, the Company also
made greater efforts in customizing smart and comprehensive solutions in the offline
channels, while establishing partners with designs leveraging FPA’s premium productportfolio.

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Section III Management Discussion and Analysis

4.

South Asia
During the period, revenue from South Asia market grew 16.1% year-on-year to RMB8.284
billion. Retail market share in India grew by 2 percentage points to 11% leveraging brandportfolio of Casarte, Haier and Candy to meet mid to high-end demand for large-capacity
and health-oriented products, while catering to the third and fourth-tier market withenergy-saving and entry level products. High-end market share grew by 3.5 percentage
points to 14% leveraging continued product launches including Haier high-end T-door
refrigerators and front-load washers with heating function. In Pakistan, the Company
outperform the industry in all categories and remained number one with overall market
share, an increase of 2 percentage points year-on-year to 36%. High end market sharerose by 5 percentage points, driven by introducing Casarte products that cater for premium
market demand of smart and stylish appliances; the Company also developed deep
freezing and rapid cooling freezer to meet demand for large freezing capacity in third andfourth tier markets.

5.

Southeast Asia
During the period, the Company realized revenue of RMB5.18 billion in Southeast Asia, up
9.3% year-on-year. The Company accelerated brand premiumization in response to growing
demand for large capacity, health oriented and energy efficient products. In Thailand, highend refrigerators revenue grew 165%, air-conditioners ranked first in market share, andT-door refrigerators rose to number one online. In Vietnam, the Company became number
one in washing machines supported by successful launch of 601 large front-load washer. In
Malaysia, retail volume market share rose 1.3 percentage points year-on-year to 6.1%, andrevenue contribution of mid and high-end products reached 38%. In Indonesia, mid andhigh-end market share continued to grow and dual brand strategies of Candy and AQUA
have been established.

6.

Japan
During the period, revenue from amounted to RMB3.569 billion in Japan, up 2.2% (up16.5% in local currency) year-on-year. The Company’s combined market share for freezers,
refrigerators and washing machines reached 17.3%, amongst 15.3% in refrigerators and43.3% in freezers, ranked the Company number one in the industry. Through differentiatingproduct portfolio, high-end revenue contribution went up by 2 percentage points to 51%.
The Company became the fastest growing refrigerators business with several launches
including AQUA ultra-thin T-style and Delie series, as well as 468/406 T-door andultra-narrow 3-door series under Haier brand. The Company also grasped the
pandemic-driven market opportunity of health-conscious laundry with AQUA
variable-frequency washing machine, high-end heat pump front-load washers, and Haier
medium and large size variable-frequency washing machines. More than 50,000 units ofheat pump front-load washer-dryer combo have been sold in the first year since its launch.

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Section III Management Discussion and Analysis

II.

INTRODUCTION OF THE INDUSTRY WHERE THE COMPANY OPERATESDURING THE REPORTING PERIOD(I)

Industry Overview for 2022
1.

The Chinese market
In 2022, home appliance industry was sluggish amid real estate downturn, weak consumer
sentiment and rising commodity prices. Data from CMM showed that the retail sales of the
China’s home appliance (excluding 3C & digital products) retail revenue across all channels
in China was RMB799.9 billion in 2022, down 6.4% year-on-year when compared to 2021,
amongst which refrigerator retail sales was RMB96.4 billion, down 1.7% year-on-year;
washing machine retail sales was RMB68.1 billion, down 7.3%; thanks to hot temperaturein July and August, home air-conditioner retail sales grew by 1.6% year-on-year to
RMB160.1 billion; retail sales of range hoods and stoves amounted to RMB54.0 billion,
down 13.9% year-on-year. Impacted property weakness and saturating penetration, water
heater retail sales went down by 14.5% to RMB52.0 billion. The rise of the middle classand the growing consumer sophistication drive the popularity of new categories such as
tumble dryers, whose retail sales reached RMB9.3 billion in 2022, up 22.5% year-on-year.
On the other hand, consumption momentum was weakened by lower income expectation,and people started to make fewer impulsive purchases; consumer preference is becoming
polarized with high end focusing on quality and wellbeing while entry level users appreciatevalue-for-money offerings. Nonetheless, high end market continued to expand, for example,
consumers started to appreciate compartmentalized storage and healthy preservation
technologies, while built-in refrigerators that blend in well with ambience at home has
become one of the main directions of appliance upgrade. According to AVC, share ofrefrigerators priced above RMB10,000 went up 5.4 percentage points to 37.1% in theoffline market in 2022.
In a well penetrated market, appliances business ought to make dedicated effort indeveloping consumer insights and unlocking new opportunities with constant productinnovation, while increasing value of existing users with a variety of product sets that alsoecho the trend of appliances and home furnishing integration. Wall-mounted washingmachine, micro washers and separated laundry washers have become popular withgrowing number of families choose to have more than one child. New-air ventilation system
and kitchen-specialised air conditions are the latest revenue drivers. According to AVC,
New-air ventilation AC revenue contribution went up by 2.2 percentage points to 8.4% in
2022, and washer-dryer combo contributed 40.4% of the revenue in the offline market in
the first nine months of 2022, up 5.5 percentage points year-on-year.

Export markets
In 2022, China’s home appliance industry was under significant pressure caused byinflation, over-consumption from previous years and high level of inventories. According to
China Household Electrical Appliances Association, total annual export was USD97.25 billion
in 2022, down 6.9%; with quarterly growth of 1.8%, –1.3%, –7% and –20.2% from Q1 to
Q4. Refrigerators, air conditioners, freezers and washing machines export revenue grew by–23.1%, 4.2%, –9.6% and –6.3%, respectively, in 2022.

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2.

Overseas markets
The global economy recovered gradually in 2022. IMF estimated global GDP growth to be
3.4%. According to Euromonitor, global home appliances retail revenue (including major
appliances and small appliances) was USD518.3 billion in 2022, increased by 0.5% for theyear, of which, retail sales of core appliances dropped 0.3%, while small appliances grew
1.5% year-on-year.

By market:(1)
The U.S.: Costs remained under inflationary pressure from raw materials, commodities,
logistics and labour. Competition in the home appliance industry was intense, andinterest rate increases have slowed down new home constructions and home sales.
Consumer confidence and spending remained subdued. Core appliances shipment
went down by 6.4% in 2022.
(2)

Europe: According to GFK, overall sales volume amounted to approximately 96.27
million units in Europe, down 8.9% year-on-year due to various factors including
inflation. At the same time, the energy crisis spurred rapid growth of alternative
energy product such as heat pumps. Consumers continue to favour large-volume,
health-conscious and energy efficient products.

(3)South Asia: ① In India, demand for large-volume, health-conscious and variable-frequency
products grew steadily in the mid-range to high-end market, whereas demand forenergy-saving entry level products in third- and fourth-tier markets were on the rise.
Chain retailors expanded rapidly across the country, and e-commerce channel
continued to increase in revenue contribution. ② Due to flood damages and inflationin Pakistan, people’s purchasing power plummeted causing appliance market volume
to decline by 10%. Import policy change led to structural shortages of raw materials.
However, mid and high-end products continued to grow.

(4)Southeast Asia: As markets fully reopened economic recovery continued, howeverindustry performances varied in the region. According to GFK, appliance industry
suffered a decline in Thailand while, Vietnamese market experienced a mild growth.
Demand for mid to high end products with large-volume, health-conscious, protection
and sterilization features continued to dominate.

(5)

Australia & New Zealand: ① In 2022, sales volume in Australia recorded a mild increaseof 3%, with falling demand in the fourth quarter due to interest rate hikes andinflation. Average unit prices rose year-on-year driven by inflation and growth in highend products. ②According to customs’ data, white goods market experienced adouble-digit year-on-year volume decline in New Zealand in 2022.

(6)

Japan: White goods market was sluggish in Japan due to currency depreciation andpandemic resurgence, annual sales volume of refrigerators, freezers and washingmachines dropped by 1.5% year-on-year. Demand grew for large-volume, small-sized,
health-conscious, energy-saving, and smart products.

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Section III Management Discussion and Analysis(II)

Industry Outlook for 2023
1.

The Chinese market
Domestic GDP is expected to accelerate in 2023 after re-opening, positive for income
prospects and confidence. Market momentum could benefit from concrete housing demand
unleased by policy support in the property sector, appliances replacement & upgrade, andgreen & smart appliance initiatives.
CMM estimates appliance retail sales to grow 5% in 2023, with new opportunities from thehome improvement channel unlocked by appliances and interior integration; and growing
traffic from social media platforms such as TikTok and Xiaohongshu.

Export markets
Home appliance exports is expected to stay flat in 2023 as fundamental improvements
remain less likely for global economy, particularly in Europe and the US. Sequential
recovery could be expected in the second half as inflationary pressure, inventory build-up
and high comps should start to ease. The pandemic and Russia-Ukraine conflict willcontinue to reshape global supply chains, with accelerated manufacturing localization that
could affect China’s export in the long run.
2.

The Global Market
According to IMF’s World Economic Outlook, global economic recovery is slow amidtightening monetary policy and financial conditions worldwide. The global GDP is forecasted
to grow at 2.9% in 2023.
Euromonitor forecasts global core appliance industry will exceed USD290 billion in 2023,
up 2.5% year-on-year. Recovery of high-end market offline could accelerate innovation andpromote appliance connectivity; demand remain strong for efficient products amid energy
shortage; on the other hand, regional instabilities could put global appliance supply chain
under pressure.

III. INTRODUCTION OF THE COMPANY’S BUSINESS DURING THE
REPORTING PERIODFounded in 1984, the Company is committed to being an enterprise of the times. Through relentless
innovation and iterations, we seize opportunities in the industry by continuously launching new
products that steer market development. After more than 30 years, the Company has become a global
leader in the major home appliance industry, as well as a pioneer in global smart home solutions.
•28

Global leader of the major home appliance industry: According to data from Euromonitor — anauthoritative market researcher, the Company ranked first in terms of sales volume in global
major appliance market for 13 consecutive years. The Company has a global portfolio of brands,
including Haier, Casarte, Leader, GE Appliances, Candy, Fisher&Paykel and AQUA. From 2008 to
2022, Haier brand refrigerators and washing machines ranked first among global major home
appliance brands in sales volume for 15 and 14 consecutive years respectively.

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Pioneer of global smart home solutions: Capitalizing on our full-range home appliances products,
the Company is recognized by Euromonitor as one of the first in the industry to introduce smart
home solutions. Three-Winged Bird focuses on customising smart home experience, by building
up five core competencies including the Smart Home Brain, scenario-based solutions, experiential
stores, the Three-Winged Bird interior design tool and the digital platform, we provide end-to-end
and full life cycle services that “design a home, build a home and serve a home” for users.

Over the years, the Company has established three business segments, namely the Chinese Smart
Home Business, the Overseas Home Appliance and Smart Home Business, and Other Business

Smart Home Business in China
The Company provides a full range of home appliance products and value-added services in China
market through Haier Smart Home APP and Three-Winged Bird APP, supplemented by our offline
experience centres, in order to cater for users’ needs for different lifestyle scenarios. Smart Home
Business in China comprises Household Food Storage and Cooking Solutions (Internet of Food),
Household Laundry Solutions (Internet of Clothing), Air Solutions (Internet of Air), and Household Water
Solutions (Internet of Water).
•Household Food Storage and Cooking Solutions (Internet of Food): Through selling in domestic
market and exporting products such as refrigerators, freezers, kitchen appliances, as well as
providing one-stop smart kitchen scenario solutions and ecosystem solutions including smart
cooking and nutrition planning, the Company fully addresses users’ need for convenient, healthy
and tasteful gourmet experiences.

•

Household Laundry Solutions (Internet of Clothing): Haier’s washing machine focuses on applying
original technologies to directly solve users’ pain points in home living scenarios, and create newexperiences and value for users. With a product lineup of washing machines, tumble dryers,
all-in-one laundry machines, garment care machines, and heated drying racks, the Company has
evolved from selling individual products to providing scenario-based solutions, and offering
end-to-end laundry care services. For example, the Zhongzihemei (中子和美) three-in-one washer
combines washing, drying, and fabric care functions into a single unit, and the Essence Wash
washing machine reduces washing time and improves cleaning effectiveness by producing ahighly concentrated detergent solution that can quickly soak into clothes through detergent
pre-mixing and high pressure spraying.

•

Air Solutions (Internet of Air):
Home air conditioners: Through domestic sales in China and exports, the Company provides
products such as home air-conditioners and fresh air systems, as well as a comprehensive rangeof full-cycle solutions including coordination of multiple air-conditioners and purifiers, adaptive air
flow, air quality monitoring and air disinfection, thereby delivering a healthy and comfortable
experience at home and during commute that caters to the user needs in terms of air
temperature, humidity and quality.

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Commercial air conditioners: The Company is committed to becoming a leader in efficient,sustainable and smart building solutions based on the state’s “carbon peaking and carbon
neutrality” strategy. Focusing on the business areas of smart control, environment, energy andsystem integration of buildings, the Company provides green and smart building solutions
integrating “technology + experience + space” for government and commercial buildings,
railways, schools, and hospitals.
•

Household Water Solutions (Internet of Water): Through selling in domestic market and exporting,
the Company provides users with electric water heaters, gas water heaters, solar water heaters,
air energy heat pump water heaters, POE water purifiers, POU water purifiers, water softening
equipment, at the same time, we offer smart water solutions including interactions between water
heaters and purifiers, and between heating appliances and water heaters, so as tocomprehensively cater to users’ needs for water purification, softening and heating.

Overseas Home Appliance and Smart Home BusinessIn addition, the Company manufactures and sells a comprehensive portfolio of home applianceproducts and provides value-added services in more than 200 countries and regions, including North
America, Europe, South Asia and Southeast Asia, Australia and New Zealand, Japan, Middle East andAfrica.
In the overseas market, the Company has been manufacturing and selling proprietary applianceproducts catering for local users’ demands for more than 20 years. During the time, a number ofacquisitions contributed to our growth including acquisition of Haier Group Corporation’s overseas
white goods business (Sanyo Electric Co., Ltd.’s white goods business in Japan and Southeast Asia)
in 2015, home appliances of GE in the US in 2016, Fisher&Paykel in 2018, and Candy in 2019. The
development of the Company’s overseas businesses has been fuelled by synergies among ourself-developed business and our acquired businesses.
At present, the overseas business of the Company has entered a stage of promising growth, having
achieved a multi-brand, cross-product and cross-regional presence on a global basis. According toEuromonitor, the Company’s share of the global market (retail volume) for major home appliances in
key regions in 2021 is as follows: ranked first in Asia in terms of retail volume, with a 21.4% market
share; ranked second in America, with a market share of 15.6%; ranked second in Australia and New
Zealand, with a market share of 12.8%. The Company ranked third in Middle East and Africa with amarket share of 7.5%, and ranked fourth in Europe with a market share of 8.3%.

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Other Businesses
Building on our established smart home businesses, the Company has also developed small home
appliances, channel distribution and other businesses. In particular, the small home appliance businessprimarily involves small home appliances designed by the Company, produced by outsourced
third-party manufacturers and sold under the Company’s brands, which serve to enrich our smart
home solutions product mix. The channel distribution business primarily offers distribution services for
products such as televisions and user electronics for the Haier Group or third-party brands, whichleverages the Company’s sales network.
During the reporting period, the Company was once again listed among the Top 500 World’s
Companies and named again as the 2022 World’s Most Admired Companies by the Fortune Magazine.
We are the only company being selected in Europe and Asia in the home appliances industry, and are
the only selected company incorporated outside the US. Meanwhile, the Company is also the world’s
only Internet-of-Things (IoT) ecosystem brand being named again as BrandZtm Top 100 Most Valuable
Global Brands in 2022.
At the same time, the Company was named among Fortune’s first China ESG Impact list and Forbes’
The World’s Best Employers 2022 list. The Company’s ESG effort has also been recognized byexternal rating agencies, receiving an MSCI ESG rating of BBB and a Wind ESG rating of AAA, both ofwhich are at leading levels in China. Thanks to the above performance, Haier Smart Home wasselected into the three major ESG indices of the Hang Seng Index, including the HSI ESG Enhanced
Index, the HSI ESG Enhanced Select Index and the HSCEI ESG Enhanced Index.

IV. ANALYSIS ON CORE COMPETITIVENESS DURING THE REPORTING
PERIOD.
√ Applicable□ Not applicable

The Company has established a solid strategic presence and competitive advantage in China andoverseas markets. In China’s major home appliance market, the Company has long maintained aleading position across all product categories. According to CMM’s report, the Company has
established a continued leading market position in key major home appliance categories in 2022. In
overseas markets, the Company has adhered to its high-end brand creation strategy, building capacity
to create leading sustainable growth, which has continuously improved its market share. Building on
this foundation, the Company will further consolidate its leadership position in the industry byleveraging integrated synergies of its global unified platforms, through efficiency transformation driven
by digitalization, and by leveraging its technological strength and innovative capabilities. As cornerstone
for sustainable development, our ‘Rendanheyi (人 單 合 一)’ Model also provided management guidance
to the Company, and enabled us to replicate successful experiences. It is believed that the following
advantages will help the Company to continue to strengthen its leading position:(i)

Dominance in China’s high-end market; rapid growth of overseas high-end
brandsRiding the trend of consumption upgrade in China, the Company has started to develop thehigh-end brand Casarte in the Chinese market more than 10 years ago. The creation of high-end
brands required not only focus, experience and patience, but also continuous innovation oftechnological standards and differentiated service capabilities to fulfil user demand for high-quality

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experiences. The Casarte brand combined the Company’s global technological strengths, productdevelopment capabilities and manufacturing craftsmanship, as well as privilege marketing anddifferentiation services, which has won the trust of users in China’s high-end market. According
to data from CMM, the Casarte brand has assumed a definitive leading position in China’s
high-end major home appliance market in 2022, ranking first in the retail sales of refrigerator,
washing machine and air conditioner categories in the high-end segment. Specifically, in terms ofoffline retail sales, shares of the Casarte brand of washing machines and refrigerators reached77.2% and 38.5% respectively in the market with product price above RMB10,000 in China, while
its share of air conditioners priced above RMB15,000 in the China’s market reached 30.6%. Our
overall average price for Carsate refrigerators, air conditioners and washing machines is two to
three times the average price of the industry.
In the North American market, the Company owns high-end brands such as Monogram, Café,and GE Profile. We enhanced our high-end brand profile through launching leading products
including high-end steam ovens, drawer-style microwave ovens and lift-up cooker hoods.
Through the creation of luxurious, customizable and smart technology-enabled user experience,
our high-end brands Monogram, Café and GE Profile have grown rapidly.

(ii)

Smart household solutions that continue to expand and upgrade
As users continued to demand for higher living quality, coupled with the development oftechnologies such as Internet of Things, big data, cloud computing and artificial intelligence, theindustry has shown a smart and high-end development trend that prioritized product suites,
based upon scenarios, and home appliances integrated with home furnishings. With leading user
insights, extensive product coverage and technological accumulation from intelligent AI
algorithms, home big data and IoT equipment technology, the Company provided scenario
solutions on whole-house water usage, air, and smart control for five major spaces at homeincluding the living room, kitchen, bathroom, bedroom and balcony.
First of all, the Smart Home Brain created the best intelligent experience for users by upgrading
the brain technology system. Through iteration of the whole-house sensing system, we unified
data collection from multiple devices and constructed a whole-house sensing service model. At
the same time, through software and hardware integration and end-to-end cloud integration, we
enabled diversified and multi-modal voice and image interactions which opened up a new form ofmulti-dimensional connectivity.
Secondly, in terms of our capabilities in scenario solutions, Three-Winged Bird continued to build
insightful smart scenarios that boosted health, comfort, safety and energy efficiency based on its
strategic focus on tailored smart home experience. We addressed user needs on intelligencethrough the design and implementation of nine thematic scenarios of kitchen, sleep, ambience,
low carbon, air, water, cleaning, security, and perception.
In addition, Three-Winged Bird’s interior design tool focused on “building a home”, providing
users with smart home appliances + smart home solutions. The VR function allowed users tovirtually visualise the look, size and style of their smart appliances from different viewing angles.
The Three-Winged Bird interior design tool has now facilitated more than 30,000 localised design
solutions.

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Finally, Three-Winged Bird’s digital platform is integrated with the Three-Winged Bird APP and the
Smart Home APP to offer full life cycle service for users, thereby enhancing the value added toactive users and increasing conversion of scenario-based transactions.

(iii) Extensive and solid global presence with localized operational capability
In addition to success in the Chinese market, the Company also prospered in overseas markets.
The Company seeks overseas expansion of its own brands as well as synergies with acquired
brands to develop overseas markets. Such business strategy has guided the Company toestablish R&D, manufacturing and marketing three-in-one structure across multiple brands,
products and regions, as well as the model of self-development, interconnection and synergized
operation.
The Company’s extensive global presence depends on its localized business teams as well as its
flexible and autonomous management mechanisms established in various overseas markets,
which have enabled the Company to gain rapid insights and respond swiftly to local user
demands. The Company also proactively integrates into local markets and cultures, and has
established a corporate image that is recognized by local communities in the overseas regions
where the Company operates.
In 2022, the Company established 10+N innovative ecosystems, 122 manufacturing centres, and
108 marketing centres around the world, and achieved a coverage of nearly 230,000 point ofsales in overseas markets.

(iv) A comprehensive portfolio of proprietary brands recognised by users of all tiers
Through organic growth and acquisitions, the Company has formed seven brand clusters,
including Haier, Casarte, Leader, GE Appliances, Candy, Fisher&Paykel and AQUA. To address
the needs of users from different tiers in various markets around the world, the Company has
adopted a differentiated multi-brand strategy in different regions that centred around users, so as
to achieve an extensive and in-depth user coverage. For example, in the Chinese market: thethree brands of Casarte, Haier and Leader achieved the coverage of high-end, mainstream andniche market groups respectively; in the U.S. market, the six major brands such as Monogram,Café, GE Profile, GE, Haier, Hotpoint comprehensively covered all segments of high-end,
mid-range and low-end markets, thereby meeting the preferences and needs of different types ofusers.

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Section III Management Discussion and Analysis(v)

Cross-border acquisition and synergy realisation capabilities
The Company has an excellent track record of acquisition and integration. The Company has
acquired Haier Group Corporation’s overseas white goods business, including Sanyo Electric Co.,
Ltd.’s white goods businesses in Japan and Southeast Asia in 2015, the home appliancebusiness of General Electric in the US in 2016, the New Zealand company Fisher&Paykel (which
has been entrusted by the Haier Group since 2015) in 2018, and the Italian company Candy in
2019. The Company’s capability to perform acquisition and integration is reflected in thefollowing: First of all, the Company implements the ‘Rendanheyi (人 單 合 一)’ Model in theacquired companies, which is a value-added sharing mechanism for the whole-process teamunder a common goal. Such model can motivate the acquired companies and their employees,
and enable them to generate more value. Secondly, the Company made use of its global
platform to empower the acquired companies in terms of strategic planning, R&D andprocurement in order to enhance their competitiveness. Thirdly, the Company’s open andinclusive corporate culture can support the acquired companies in establishing a flexible andautonomous management mechanism, which can easily earn recognition from the acquiredcompanies and is conducive to the promotion of integration.

(vi) Comprehensive and in-depth global collaborations and empowerment
The Company has made full use of its global collaborative platform, as well as its integratedfunctions of R&D, product development, procurement, supply chain, sales and brand marketing.
It was able to share and expand its successful market development experience to various
markets around the world. By strengthening the synergies among its global businesses, theCompany has created a strong driving force for its future development.

34•

Global collaborative R&D: The Company has a global collaborative R&D system and has
established global technology R&D mechanisms to share common modules, utilize common
technologies, and share patents within the scope of compliance. For example, theCompany’s R&D team in China joined hands with FPA’s and CANDY’s R&D teams todevelop the H20 spray technology, which has been applied to freestanding and built-in
dishwashers of Haier, Fisher&Paykel, CANDY and HOOVER, hence strengthening theCompany’s overall leadership in product performance.

•

Global collaborative product development: The Company has established a global
product development mechanism to coordinate global collaborative product development,
which can enable regional collaboration and supplementation across product categories. For
example, the R&D teams in South Asia and China embarked on a 10-month collaboration,
breaking away from the traditional product development model by innovating on teamorganisation, quality control, product testing and cost control leveraging complementary
local resources. The HRT-683 refrigerator jointly developed by this collaboration has
become a local mainstream high-end product.

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Global collaborative procurement: The Company has established a global procurement
guidance committee to coordinate global procurement activities. The committee has built a
global digital sourcing platform that brought together partners across industries and regions
to develop an autonomous and controlled global supply chain ecosystem. The committee
also created a global database of preferred suppliers and materials to achieve cost
reduction by aggregating common resources at the Group level. By unifying procurement
rules and processes, the Company established a standardised operating system withdifferentiated procurement strategies to enhance procurement efficiency while lowering risks.
We have also developed a Group-level digital procurement platform to enhance sharedcapabilities through connecting “materials, businesses, people and mechanisms” to theplatform, thereby improving the resilience of our global supply chain.

•

Global collaborative supply chain: The Company has built an end-to-end digitalmanagement system for the global supply chain that spanned from marketing to suppliers
to production and logistics. Using intelligent algorithms, the system enabled real-time
flexible deployment of global production capacity, and factories across the globe could
share and develop smart manufacturing technologies to boost manufacturing
competitiveness.

•

Global collaborative marketing and brand promotion: the Company operates amulti-level brand portfolio on a global scale, which can realize global collaborative brandpromotion. The Company also promotes and introduces successful marketing strategies
among regional markets around the world. For example, the Company successfully
replicated its sales and marketing model from third and fourth-tier markets in China, inmarkets such as India, Pakistan, and Thailand, which have strengthened the Company’s
brand image and its regional market competitiveness.

(vii) Industry-leading R&D and technological capabilities
To ensure better living experience for users, the Company has established a global leading R&D
system under the premise of developing original technologies. In early 2022, the Company
established a science and technology committee to leverage our technological innovation systemand strengthen our enterprises’ innovation capabilities, which have facilitated our high-end
brands, scenario brands and ecosystem brands to achieve leadership positions.
•

Leadership in terms of original technologies: In 2022, the Company has innovated arange of solutions that exceeded users’ expectations and made technology more integral to
everyday life. For example, the seamless built-in refrigerator adopted the innovative bottom
heat dissipation technology to realise a zero-gap integration with the cabinet. The use of
the dual-axis variable hinges allowed the fridge door to be opened to 113º without hitting
surrounding walls. By advancing the foam layer technology, the thickness of the whole
fridge was reduced to 600mm which matched the international standard depth of cabinets,
hence enabling the refrigerator to be flush with the cabinet.

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Certification from state authorities: As of the end of 2022, the Company received a totalof 16 State Science and Technology Progress Award and 245 leading international
achievements, more than any other company in the industry. Haier Smart Home wasamong the first batch of “Leading Digital Enterprises” selected by the Ministry of Industry
and Information Technology. The HOPE Platform was selected by Innovation China as oneof the “Top 10 Industry-Academia Collaboration Organisations” and part of the first batch of
Innovation Bases. The Platform also earned the Golden Bridge Award from the China
Technology Market Association, was named as the only five-star technology service
organisation in the home appliance industry, and became the Model National Public Service
Platforms for Small and Medium-Sized Enterprises.

•

Leadership in terms of patent quality: As of the end of 2022, Haier Smart Home has
accumulated more than 92,000 patents applications globally, including more than 59,000
invention patents. The number of overseas invention patents exceeded 16,000, covering
more than 30 countries, making us the Chinese home appliance enterprise with the largest
number of overseas patents. The Company also accumulated 11 state patent gold awards,
ranking first in the domestic market. In the ‘Global Smart Home Invention Patent Ranking’in 2022, Haier Smart Home once again topped the list with 5,691 published patentapplications, ranking first in the world for the eighth consecutive times.

•

Leadership in terms of international standards: As of the end of 2022, Haier Smart
Home has cumulatively led and participated in the formulation of 92 international standards
and 637 state/industrial standards. We are the only company in the industry to obtaincomprehensive coverage of smart home standards from international organizations including
the IEC, ISO, IEEE, OCF and Matter. We are also the only enterprise in the world to serveon both the IEC Council Board and the IEC Market Strategy Board, which have enabled
the Company to stay actively involved in international standardization efforts and have avoice in the formulation of standards.

•

Leadership in terms of experience design: In the Red Dot Design Awards 2022, Haier
Smart Home broke its own record and earned 56 product design awards, once again
topped the industry with the highest cumulative number of awards. Haier Smart Home also
won 42 accolades from the German iF Design Awards, ranking first in the industry. The
Company has cumulatively received more than 500 international design awards, as well as
5 China Excellent Industrial Design Awards, which is the only enterprise in China that haveearned three consecutive gold awards.

(viii) Staying committed to the principle of ‘value of people comes first’‘Value of people comes first’ has always been a guiding principle for Haier’s development. From
the autonomous operation team at the start of the venture to the current ‘Rendanheyi’ (人 單 合一) model, Haier encourages every employee to maximize their own values while creating values
for users. In Haier’s ‘Rendanheyi’ (人單合一) model, ‘Ren’ refers to creators; ‘Dan’ refers to user
value; ‘Heyi’ refers to the integration of values realized by employees and the values created forusers. ‘Value of people comes first’ is the highest purpose of the ‘Rendanheyi’ (人 單 合 一)
model.

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Section III Management Discussion and Analysis

Haier Smart Home adheres to the values of recognizing users’ demand as priority and denying ourown perceptions, and is committed to the ‘two creative spirits’ of entrepreneurship and innovation. We
turned employees into creators, implementers into entrepreneurs, and transformed enterprises into
open ecosystem platforms, which have supported the Company to become a global leader of smart
home in the Internet of Things era.

V.

MAJOR OPERATIONS DURING THE REPORTING PERIOD
Please refer to “I. DISCUSSION AND ANALYSIS ON OPERATIONS” and “III. INTRODUCTION OF THE
COMPANY’S BUSINESS DURING THE REPORTING PERIOD” under this section.

(I)

Analysis of principal business1.

Table of movement analysis on the related items in income statement and cash flow
statement
Unit and Currency: RMB

Items
Operating revenue
Operating cost
Selling expenses
Administrative expenses
Financial expenses
R&D expenses
Net cash flow from operating
activities
Net cash flow from investing activities
Net cash flow from financing activities
Gain on fair value change
Gain from disposal of assets
Non-operating income

Current Period

Corresponding
Period of Last Year

Change (%)

243,513,563,670.73
167,223,167,396.20
38,597,810,391.10
10,837,316,878.50–245,629,371.05
9,499,191,097.85

227,105,817,641.69
155,949,547,009.40
36,584,438,840.05
10,471,531,966.20
684,721,619.75
8,363,868,872.76

7.22
7.23
5.50
3.49
–135.87
13.57

20,153,505,783.35–8,920,323,018.92–3,822,128,075.36–122,442,933.65
206,742,815.79
136,527,269.96

23,235,380,690.95–8,062,743,538.43–15,660,138,902.78
119,277,623.85
110,983,720.04
199,068,358.48–13.26
N/A
N/A–202.65
86.28–31.42Analysis on the reasons of signification changes in certain indicators:
1)

Reasons for the changes in gain from fair value change: Gain from fair value change
decreased by 202.65% over the corresponding period, which was mainly due to thedecrease in fair value change of forward contracts;2)

Reasons for changes in gain on disposal of assets: Gain on disposal of assets increased
by 86.28% over the corresponding period, which was mainly due to the increase ingain on disposal of assets in the current period;

3)

Reason for changes in non-operating revenue: Non-operating revenue decreased by
31.42% over the corresponding period, which was mainly due to the decrease inrevenue not related to ordinary operation in the current period.

Haier Smart Home Co., Ltd. Annual Report 2022

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Section III Management Discussion and Analysis

Detailed explanation of significant changes in the operation types and the components ofprofit or sources of profit of the company during the period□ Applicable2.

√ Not applicable

Analysis of Income and Cost
□ Applicable √ Not applicable(1).

Principle Operating Activities by Sector, Product, Region and Sales Mode
Unit and Currency: RMB

By product38

OperatingrevenuePrincipal operating activities by productOperatingrevenueincreased/
Gross profit
decreased
Operating cost
margin (%)
yoy (%)

Operatingcost
increased/
decreasedyoy (%)

Air conditioner

40,059,458,698.75

28,599,397,831.67

28.61

6.74

5.73

Refrigerator

77,637,761,907.85

52,883,745,098.80

31.88

8.48

8.29

Kitchen appliances

38,740,706,547.12

26,213,735,106.82

32.34

9.92

10.44

Water Appliances

13,786,852,209.99

7,443,373,512.28

46.01

10.55

10.10

Washing Machine

57,721,991,613.33

38,583,555,563.97

33.16

5.41

6.19

Equipment parts andchannel integrated
services

14,484,542,254.19

13,065,622,141.68

9.80

–0.42

0.59

Principal operating activities by region
Operatingrevenueincreased/
Gross profit
decreased
Operating cost
margin (%)
yoy (%)

Operatingcost
increased/
decreasedyoy (%)

By region

Operatingrevenue

Domestic

116,330,655,265.51

74,630,330,387.89

35.85

4.43

1.76

Overseas

126,100,657,965.72

92,159,098,867.33

26.92

9.91

11.90

Haier Smart Home Co., Ltd. Annual Report 2022

Gross profit marginincreased/decreasedyoy (%)
Increase by 0.68
percentage points
Increase by 0.12
percentage points
Decrease by 0.31
percentage points
Increase by 0.22
percentage points
Decrease by 0.49
percentage points
Decrease by 0.90
percentage points

Gross profit marginincreased/decreasedyoy (%)
Increase by 1.69
percentage points
Decrease by 1.29
percentage points

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Section III Management Discussion and Analysis

Principal operating activities by sales mode
Operatingrevenueincreased/
OperatingGross profit
decreased
revenue
Operating cost
margin (%)
yoy (%)

Sale mode
Domestic — direct salecustomers
Domestic — distribution
and others
Overseas — direct salecustomers
Overseas — trading
companies sales(2)

Operatingcost
increased/
decreasedyoy (%)

Gross profit marginincreased/decreasedyoy (%)

11,085,779,646.45

6,024,135,893.08

45.66

2.18

–4.93

105,244,875,619.06

68,606,194,494.81

34.81

4.67

2.39

4,695,394,135.44

4,181,889,393.40

10.94

18.98

15.80

121,405,263,830.28

87,977,209,473.93

27.53

9.59

11.72

Sales volume
increased/
decreasedyoy (%)

Inventory
increased/
decreasedyoy (%)–1.1

1.6

Increase by 4.06
percentage points
Increase by 1.45
percentage points
Increase by 2.45
percentage points
Decrease by 1.38
percentage points

Table of production and sales analysis√ Applicable □ Not applicable

Main products

Units

Production
volumeSales
VolumnInventory

Production
volumeincreased/
decreasedyoy (%)

Home Appliance

10,000 units/sets

11,397

11,263

2,502

7.8

(3).

Performance of major purchase contracts and major sales contracts□ Applicable √ Not Applicable(4).

Table of cost analysis
Unit: RMB0’000
By sector

By sector

Cost component

Home ApplianceIndustryPrimary operation
costs
Raw materials
Labor
Depreciation
EnergyOthersPercentage of thePercentage of theamount for theamount for theAmount for thecorresponding
Amount for the current period incorresponding period of last year
current period
total costs (%) period of last year in total costs (%)

Percentage ofchange of theamount for thecurrent period
compared to thecorresponding
period of last year(%)

15,372,381

100.0

14,468,983

100.0

6.24

13,135,824
950,481
254,004
81,621
950,450

85.5
6.2
1.7
0.5
6.2

12,400,431
893,832
238,331
72,363864,026

85.7
6.2
1.6
0.5
6.0

5.93
6.34
6.58
12.79
10.00

Haier Smart Home Co., Ltd. Annual Report 2022

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879

Section III Management Discussion and Analysis(5).

Change of consolidation scope due to changes on shareholdings of major
subsidiaries during the reporting period□ Applicable √ Not applicable(6).

Relevant information on significant changes or adjustments in the Company’sbusiness, products or services during the reporting period□ Applicable √ Not Applicable(7).

Major distributors and major suppliersA.
Major distributors of the Company√ Applicable □ Not Applicable
Revenue from the top five distributors was RMB54,151.39 million, representing
22.2% of the total sales for the year; among the revenue from the top five
distributors, the revenue from related parties was RMB0 million, representing
0% of the total sales for the year.
The proportion of sales to a single distributor exceeded 50% of the total during
the reporting period, and new distributor or depending heavily on a few
distributors were seen among the top five distributors.
□ Applicable
B.

√ Not Applicable

Major suppliers of the Company√ Applicable □ Not Applicable
The purchase amount from the top five suppliers amounted to RMB41,880.79
million, representing 19.3% of the total purchase amount for the year; among
the purchase amount from the top five suppliers, the purchase amount from
related parties was RMB21,131.01 million, representing 9.8% of the totalpurchase amount for the year.
The proportion of purchase from a single supplier exceeded 50% of the total
during the reporting period, and new supplier or depending heavily on a few
suppliers were seen among the top five suppliers.
□ Applicable

3.

Expenses√ Applicable√ Not Applicable□ Not applicable

Financial costs decreased by 135.87% over the corresponding period, which was mainly
due to the increase in interest income and exchange gain in the current period.

40

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Section III Management Discussion and Analysis

4.

R&D expenditure(1). Table of R&D expenditure√ Applicable □ Not applicable
Unit: RMB
Expensed R&D expenditure for the current period
Capitalized R&D expenditure for the current period
Total R&D expenditure
Total R&D expenditure as a percentage in operating revenue(%)
Proportion of capitalization of R&D expenditure (%)(2).

9,499,191,098
741,064,144
10,240,255,242
4.21
7.24

Table of R&D Personnel√ Applicable □ Not applicable
Number of R&D personnel
Percentage of R&D personnel took up in the total employees(%)

24,64722

Educational structure of R&D personnel
Number of
personnel

Categories of educational structure
Doctor’s degree
Master’s degree
Bachelor’s degree
College Diploma
High School diploma or below

121
4,103
12,7645,207
2,452

Age structure of R&D personnel
Number of
personnel

Categories of age structure
Under 30 years old (not including 30)
30–40 years old (including 30 and not including 40)
40–50 years old (including 40 and not including 50)
50–60 years old (including 50 and not including 60)
60 years old and above

9,010
10,506
3,765
1,150
216

Haier Smart Home Co., Ltd. Annual Report 2022

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Section III Management Discussion and Analysis(3).

Explanation√ Applicable√ Not Applicable

Haier Smart Home always focuses on user experience. Under the guidance ofadhering to the strategy of original technology, it has continuously increased its
innovation investment, established a global leading R&D system, and has seen acontinuous emergence of innovative achievements. Original technologies havesupported the overall industry-leading positions of the Company’s high-end brands,
scenario brands and ecosystem brands. In terms of products, in 2022, the Company
created a series of excellent solutions that were beyond users‘expectations withlifestyle embodied in technology, such as flat-back refrigerator, essence washingmachine, mechanic window air conditioner and constant airflow range hood, etc. In
the next step, we will continue to increase investment in basic research andsubversive technology research. In terms of intelligence promotion: focusing on allscenario solutions such as Smart Home APP and whole house intelligence, we haveconstructed smart living scenarios based on user demand. We are continuously
increasing our investment in the research and development of IoT, cloud computing,artificial intelligence and related advanced technologies to advance the development ofhome appliances towards intelligence and scenario-based development. In terms ofgreen and dual-carbon: we will undertake the national dual-carbon strategy andactively implement the ESG concept. In 2022, the construction of the first domestic
recycling interconnected factory was completed and put into operation, integrating low
carbon and energy saving into the whole life cycle of products, driving the green
development of the whole industry chain and leading the high-quality development of
the industry.

(4).

5.

Reason for significant change in the composition of R&D personnel and its
impact on the future development of the Company□ Applicable √ Not applicable

Cash flow√ Applicable□ Not applicable

Net cash outflows from financing activities decreased by 75.59% over the corresponding
period, which was mainly due to the new policy borrowing raised in China, the newworking capital borrowing raised overseas and additional issuance of proceeds during thecurrent period.

(II)

Explanation for major changes in profit caused by non-principal businesses□ Applicable42√ Not applicable

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Section III Management Discussion and Analysis(III) Analysis of assets and liabilities√ Applicable1.

□ Not applicable

Assets and liabilities
Unit: RMB
Change in thePercentage ofPercentage of Amount at theAmount at theAmount at the end of Current
End of Current Amount at the End of Previous
Period to the
Period to Total End of Previous Period to Total End of Previous
Assets (%)
PeriodAssets (%)
Period (%)

Name of Item

Amount at theEnd of Current
PeriodTrading financial assets

519,812,880.91

0.22 2,786,075,529.09

1.28–81.34

Derivative financial assets

183,185,160.51

0.08

0.04

129.50Debt investments

1,034,222,222.22

0.44

Right-of-use assets

3,795,225,353.89

1.61 2,734,678,906.53

1.26

38.78

Development expenses

154,480,515.67

0.07

227,892,229.13

0.10–32.21

6,294,014.40

0.00–100.00

80,212,433.24

0.04

30.40

Non-current Liabilities due within 6,294,750,667.08
one year

2.67 9,624,339,170.46

4.42–34.60Long-term borrowings

5.76 3,038,573,824.53

1.40

347.28334,730,048.82

0.15–100.00

1.20 1,960,894,981.47

0.90

44.04

Trading financial liabilities

Derivative financial liabilities

104,594,040.66

13,590,866,873.43

0.04

Bonds payable

Lease liabilities

2,824,477,670.61

79,819,974.01

100.00Long-term payables

44,240,087.94

0.02

99,602,707.76

0.05–55.58Other non- current liabilities

107,332,101.07

0.05

49,461,683.90

0.02

117.00Treasury stock

3,857,807,196.38

1.64 2,424,038,819.70

1.11

59.15

Description
Mainly due to the expirationof short-term wealthmanagement products
measured at fair value
Mainly due to thefluctuation in value of
foreign currency
forward contracts
Mainly due to the newlong-term deposits
Mainly due to the increasein lease
Mainly due to the transfer
of R&D expenses
Mainly due to the expirationof foreign currency
forward contracts
Mainly due to thefluctuation in value of
foreign currency
forward contracts
Mainly due to therepayment of long-termborrowings due within
one year
Mainly due to thereplacement oflong-term borrowings
due within one year andnew policy borrowing
Mainly due to theconversion of theconvertible bonds
during the period
Mainly due to the increasein lease
Mainly due to therepayment of long-termpayablesMainly due to the increasein forward payments forpurchase of assets
Mainly due to the share
repurchase

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Section III Management Discussion and Analysis

Amount at theEnd of Current
PeriodName of Item

Change in thePercentage ofPercentage of Amount at theAmount at theAmount at the end of Current
End of Current Amount at the End of Previous
Period to the
Period to Total End of Previous Period to Total End of Previous
Assets (%)
PeriodAssets (%)
Period (%)
118,017,507.59

0.05–100.00

0.84 –1,176,851,699.92–0.54

269.15

Other equity instruments

Other comprehensive income

2.

1,990,683,498.45

Description
Mainly due to the decreasein the conversion equity
component of theconvertible bonds
Mainly due to thetranslation of foreign
currency financial
statements

Overseas Assets√ Applicable □ Not Applicable(1)

Scope of assets
Among the assets, overseas assets amounted to 10,856,027 (unit and currency:
RMB0,000), representing 46% of the total assets.

(2)

Explanation of high percentage of overseas assets√ Applicable □ Not Applicable
Unit and Currency: RMB

Name of overseas
asset

Reason for Formation

Operating mode

Overseas Home
Appliance andSmart Home
Business

Overseas mergers &acquisitions and theCompany’s own
development

Localized Operations
with the integration of
R&D, manufacturingand marketing

Operating Revenue
during the reporting
periodNet Profit of thereporting period

125,423,825,543.85

6,249,105,890.26

Note: Net profit stated in the above table represents operating profit.

3.

Restrictions on major assets as of the end of reporting period□ Applicable √ Not applicable

4.

Other Explanations□ Applicable √ Not Applicable(IV) Analysis of industry operating information□ Applicable44√ Not Applicable

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Section III Management Discussion and Analysis(V)

Analysis of investment
Overall analysis on external equity investment□ Not applicable√ Applicable

In the purpose of promoting the business development of the Company and enhancing theCompany’s corporate governance, subsidiaries of the Company have made a series ofinvestment layouts. In order to promote the development of the Company’s home robot
business, upon the consideration and approval at the 28th meeting of the 10th session of theBoard of Directors of the Company on 28 April 2022, Qingdao Haier Smart Life Appliance Co.,
Ltd. (青 島 海 爾 智 慧 生 活 電 器 有 限 公 司), a wholly-owned subsidiary of the Company, acquired
100% equity in Qingdao TAB Robotics Co., Ltd. (青 島 塔 波 爾 機 器 人 技 術 有 限 責 任 公 司) (nowknown as “Haier Robot Technology (Qingdao) Co., Ltd. (海 爾 機 器 人 科 技（青 島）有 限 公 司)) at atransaction consideration of RMB125 million. As at the end of the Reporting Period, thetransaction was completed. In order to reduce routine connected transactions and enhance
governance, upon the consideration and approval at the 2nd meeting of the 11th session of theBoard of Directors of the Company on 29 August 2022, Qingdao Haier Special Refrigerator Co.,
Ltd., a wholly-owned subsidiary of the Company, acquired 100% equity in Qingdao Haier Special
Plastic R&D Co., Ltd. (青 島 海 爾 特 種 塑 料 研 製 開 發 有 限 公 司) at a transaction consideration of
RMB152 million. As at the end of the Reporting Period, the transaction was completed.
1.

Significant equity investment√ Applicable □ Not Applicable
Unit and Currency: RMB00’000’000

Name of investee

Is subject amaininvestment
business orMain Business not
Investment

Investment
amount Shareholding

Statement
Consolidated or items (ifnotapplicable)

CapitalsourcePartners (ifapplicable)

Progress
Impact ofUpdate as at
profit or loss Lawsuit
Investment Balance
Expected
during the related or
Term (if any) Sheet Date gains (if any) Period
notDisclosure
Disclosure Indexes
date (if any) (if any)

Qingdao TAB Robotics Smart home
NoCo., Ltd. (青島塔波爾
robot business
機器人技術有限責任公司)
Qingdao Haier Special
Refrigerator door No
Plastic R&D Co., Ltd.
body business(青島海爾特種塑料研
製開發有限公司)

Acquisition

1.25

100%

Yes

/

Self-owned
funds

/

/

Transaction /completed/No

29 April 2022 L2022–027

Acquisition

1.52

100%

Yes

/

Self-owned
funds

/

/

Transaction /completed/No

30 August2022

L2022–065

Total

/

2.77

/

/

/

/

/

/

/

/

/

/

/

/

2.

/

/

Significant non-equity investment□ Applicable √ Not Applicable

Haier Smart Home Co., Ltd. Annual Report 2022

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Section III Management Discussion and Analysis

3.

Items measured at fair value√ Applicable □ Not Applicable
Unit and Currency: RMB
Profits or Losses
Cumulativeof Changes in Changes in Fair
Opening Fair Value during Value Included in
Balancethe Period
EquityAsset Type
Wealth management
products
Investments in other equity
instruments
Investments in trading
equity instrument
Investment funds
Derivative financial
instruments

2,168,622,090.00

Total

Provision for
Impairment ofduring the
Period60,591,951.03–150,669,101.68

4,851,884,944.63
330,557,610.82

104,729,258.75

150,516,274.37
176,525,574.88–37,211,579.82–67,337,319.58

2,817,487.53

7,678,106,494.70

60,772,310.38–147,851,614.15

Purchases
during the
PeriodSold/Redeemed
Amount during
the Period

Other Changes Closing Balance

5,360,147,787.60

7,574,722,860.37

14,638,968.26

1,032,370,425.42
99,999,996.80

245,376,295.96

42,532,603.96

6,535,050,813.78

7,820,099,156.33

118,296,661.83

5,851,882,930.20

46,832,494.61

336,743,065.02

12,593,549.12–50,331,412.08

168,430,847.63
61,674,330.75

127,391,293.48

6,433,370,141.86

Note: As of 31 December 2022, the aggregate balance of foreign exchange derivative transaction amounted toapproximately US$ 1.953 billion.

Investment in securities√ Applicable □ Not Applicable
Unit and Currency: RMB

46

Type ofsecurities

Securities
code

Securities
abbreviation

Stock601328Stock

Profit and loss
arising from Accumulated fair
Carrying amount changes in fair value changes
Investment profit Carrying amountat the beginning value during theincluded in Purchases during Disposals during or loss during the at the end of theof the Period
Periodequitythe Period
the Period
periodPeriodInitial investment
cost

Sources offunding

1,803,769.50

Self-funding

6,279,981.72

177,092.76

6,457,074.48

600827

Bank ofCommunications
Bailian Group

154,770.00

Self-funding

525,042.04–47,659.48

477,382.56

Stock300183

Neusoft Carrier

18,713,562.84

Self-funding

14,250,135.78–4,830,819.48

9,419,316.30

Stock
Stock

000959688455Beijing Shougang
KENGIC

99,999,996.80
29,450,000.00

Self-funding
Self-funding

224,266,143.39
46,832,494.61–55,678,783.06
110,349,395.39

Total

/

/

150,122,099.14/

292,153,797.54

54,670,612.33

Haier Smart Home Co., Ltd. Annual Report 2022

–4,701,386.20

Accounting items

99,999,996.80

245,206,369.12

46,693,359.19

70,074,347.20
157,181,890.00

Investments in other
equity instruments
Investments in other
equity instruments
Investments in other
equity instruments
Trading financial assets
Trading financial assets

99,999,996.80

245,206,369.12

46,693,359.19

243,610,010.54/

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Section III Management Discussion and Analysis

Private equity investment√ Applicable □ Not Applicable
By the end of the reporting period, the Company has historically invested in private equity
funds as follows: the Company invested 63.13% share in Qingdao Haier SAIF Smart Home
Industry Investment Center (Limited Partnership); Qingdao RRS Huitong Investment
Management Co., Ltd. (青 島 日 日 順 匯 通 投 資 管 理 有 限 公 司), a subsidiary of the Company,
invested 49% share in Guangzhou Heying Investment Partnership (Limited Partnership);
Qingdao RRS Chuangzhi Investment Management Co., Ltd. (青島日日順創智投資管理有限公 司) ，a subsidiary of the Company, invested 30% share in Huizhixiangshun Equity
Investment Fund (Qingdao) Partnership (Limited Partnership), a private equity fund, and
50% equity of Qingdao Ririshun Huizhi Investment Co., Ltd., a managing partner of funds;
Qingdao Haier Technology Investment Co., Ltd. (青島海爾科技投資有限公司), a subsidiaryof the Company, invested in private equity funds: 1% share in Beijing-Tianjin-Hebei
Industrial Coordinated Development Investment Fund (Limited Partnership) (京津冀產業協同發 展 投 資 基 金（有 限 合 伙）), 14.85% share in Shenzhen TopoScend Capital Phase I Fund
(Limited Partnership) (深圳市投控東海一期基金（有限合伙）), 24% share in Qingdao Haimu
Smart Home Investment Partnership (Limited Partnership), and invested in fundmanagement companies: 5.01% equity of CMG-SDIC Capital Co., Ltd. (國 投 招 商 投 資 管 理
有 限 公 司), 15% equity of Shenzhen TopoScend Capital Co., Ltd. (深 圳 市 投 控 東 海 投 資 有
限 公 司), 49% equity of Qingdao Haimu Investment Management Co., Ltd.

Derivative investment√ Applicable □ Not Applicable
RMB0’000
Proportionof closing
investment
amount over
net assets at Actual profit
Closingend of or loss forinvestment
reporting the reporting
amountperiodperiodOperator nameof derivatives Type of derivatives
investment
investment

Initialinvestment
amount ofderivatives
investment

Starting
date

Ending date

Opening
investment
amountBank

1,247,880

2022/1/1

2022/12/31

1,247,880

1,360,076

20,134

209,7372022/1/1

2022/12/31

209,737

0

–822

Bank

Forward foreignexchange contract
Interest rate/exchange
rate swap

Amountpurchased Amount soldduring the during the Provision forreportingreporting impairment
periodperiod(if any)

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P.48 (P1)

(C>E)

879

Section III Management Discussion and Analysis

Funding sources of derivatives
investments
For changes in the market price or fairvalue of the invested derivatives
products during the reporting period,
the specific methodology used and thesettings of relevant assumptions andparameters should be disclosed in thefair value analysis of the derivatives.

Own funds of the Company
Changes in market prices or fair value of
products,
1.

The profit or loss of the foreign exchange
forward contracts amounted to RMB201.34
million during the reporting period;

2.

The profit and loss arising from the interest
rate/exchange rate swap was RMB –8.22
million during the reporting period.

The specific methodology used and the related
assumptions and parameter settings are based on
the forward quotations of foreign exchange andinterest rate swaps of the financial institutions
4.

Detailed progression of material asset regroup and integration during the reporting
period□ Applicable √ Not applicable(VI) Sale of material assets and equity√ Applicable□ Not applicable

In order to focus on the main business of smart home, optimize resources allocation and realize
investment income, upon consideration and approval at the 28th meeting of the 10th session of
the Board of Directors of the Company on 28 April 2022, Haier Shareholdings (Hong Kong)
Limited, a wholly-owned subsidiary of the Company, transferred 25% equity interest in Qingdao
Haier Mold Co., Ltd. at a transaction consideration of RMB277 million. As at the end of thereporting period, the transaction was completed.

(VII) Analysis on major subsidiaries and Investees√ Applicable□ Not applicable

For details, please refer to the relevant contents of “(2) Explanation of high percentage ofoverseas assets” under “(III) Analysis of assets and liabilities” in this section.

(VIII) Structured entities controlled by the Company□ Applicable48√ Not applicable

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Section III Management Discussion and Analysis

VI. DISCUSSION AND ANALYSIS ON THE COMPANY’S FUTURE
DEVELOPMENT(I)

Setup and trend of the industry√ Applicable□ Not applicable

For details, please refer to the relevant contents of “II. INTRODUCTION OF THE INDUSTRY
WHERE THE COMPANY OPERATES DURING THE REPORTING PERIOD” under “Section III
Management Discussion and Analysis” in this report.

(II)

Development strategy of the Company√ Applicable□ Not applicable

It is the Company’s development strategy to become a user-oriented digital enterprise in the IoT
era and achieve leadership as the world’s first IoT-based smart home ecosystem brand.
Through product & solution upgrades and scenario innovation of competitive refrigerator, washingmachine and water heater businesses, the Company continues to enhance user value andachieve market growth and business expansion. By accelerating end-to-end transformation of thehome air conditioner and kitchen appliance businesses, the Company enhance businesscompetitiveness, achieve rapid revenue growth, and improve profitability. The Company will forge
new paths for growth by capitalising on the replacement demand for energy-efficient products
and focusing on smart buildings. By accelerating growth in new product categories such as
tumble dryers and dishwashers, and actively expanding into new business areas such as lifestyle
appliances and cleaning appliances, the Company establishes a second growth curve. The
Company develops a competitive edge for today’s world by strengthening the Three-Winged Bird
scenario brand, enhancing competitiveness in high-end suite products, design & installation &service capabilities in home improvement channels, and store digitalisation.

(III) Business plan
√ Applicable□ Not applicable

In 2023, the Company will press ahead with the three-level brand upgrade strategy of ‘high-end
brand → scenario brand → ecosystem brand’, improving operational efficiency throughend-to-end digital transformation, and implementing profit-oriented institutional changes toimprove operational quality.

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879

Section III Management Discussion and Analysis

In the domestic market: ① By focusing on user experience, transforming retail touch points
with digital platforms that integrate the five networks of distribution channel, marketing, service,
logistics and recycling, the Company will integrate online and offline touch points, digitalise allprocesses of user engagement, transaction, and delivery, and reach users more precisely.
Through reconstructing “objectives, models, mechanisms and organisations”, the Company willbuild an efficient system to manage resources and improve cost efficiency. ② The Three-Winged
Bird scenario brand, backed by its strong footholds of the Smart Home Brain, scenario-based
solutions, along with digitalised design tools, store operation and platforms, will createcustomised design solutions for users while enhancing store efficiency and user value for thebusiness.
In the overseas markets: By pursuing high-end transformation, leveraging innovative spirit, andproactively creating opportunities even amid difficult industry conditions, the Company aims tobecome the number one company in the global market. The Company will ① adhere to high-end
brand strategy by launching differentiated new products to meet user needs; ② prioritise
localisation and develop regional markets to become self-sustainable; ③ capitalise on industry
trends and cultivate room for growth by accelerating innovation of new products such as built-inunits and heat pumps; and ④ strengthen global competitiveness through leveraging synergies
across global platforms in branding, R&D, procurement, supply chain, and human resources.

(IV) Potential risks of the Company√ Applicable50□ Not applicable1.

Risk of decreasing market demand due to macroeconomic slowdown. Sales of white
goods as durable consumer appliances are subject to users’ income levels and their
expectations of future income growth which will have a certain impact on their willingness
to purchase products. A slowdown in macroeconomic growth causing a decline in users’
purchasing power will have a negative impact on industry growth. In addition, a slowdown
in real estate market will also have a negative impact on market demand, which will
indirectly affect end-user demand for home appliances.

2.

Risk of price war caused by intensified industry competitions. The white goods industry
is highly competitive with a high degree of product homogeneity, industry concentration has
continued to increase in recent years. However, the increase in industry inventory capacity
in individual sub-sectors due to the demand-supply imbalance may lead to risks such as
price wars. Furthermore, rapid technological advancements, scarce talents in the industry,
shortened product life cycles and ease of imitation are making it increasingly difficult to
profit. Although new products, services and technologies are often associated with higher
selling prices, it has become necessary for the Company to invest more in R&D. The
Company will actively invest in R&D to attract more users through continuous innovation in
products and services, to build a lasting brand awareness.

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Section III Management Discussion and Analysis

3.

Risk of fluctuations in raw material prices. The Company’s products and corecomponents use metal raw materials such as steel, aluminium, and copper, as well as
commodities such as plastics and foam. If the prices of raw materials continue to surge, itwill put certain pressure on the Company’s production and operations. In addition, theCompany relies on third party manufacturers and suppliers for key raw materials,
components, and manufacturing equipment, as well as OEM suppliers, and any disruption
in supply or significant price increases by these suppliers will have a negative impact on the
Company’s business. As a leader in the industry, the Company will take measures
including volume & price adjustment mechanism as well as hedging to reduce the risk of
raw material fluctuations on its operations.

4.

Operational risks in overseas business. The Company has steadily developed its global
business and has established production bases, R&D centres, and marketing centres inmany parts of the world, with the proportion of overseas revenue increasing year by year.
Overseas markets are subject to political and economic situations (including events such as
military conflicts and wars), legal systems and regulatory regimes of those countries andregions. Significant changes in these factors will pose certain risks to the Company’s local
operations in these markets. The Company has taken various measures to mitigate therelevant impacts, including collaborating with suppliers and distributors, improving
production efficiency to offset the impact on the overall cost of sales, potentially expanding
the Company’s supply resources to other countries, and adopting safety measures toprotect its people and assets.

5.

Risk of exchange rate fluctuations. As the Company expands its global footprint, theimport and export of the Company’s products involve the exchange of foreign currencies
such as the U.S. dollar, the Euro, and the Japanese yen. If the exchange rates of therelevant currencies fluctuate, it will have a certain impact on the Company’s financial
position and increase its financial costs. In addition, the Company’s consolidated financial
statements are denominated in Renminbi, while the financial statements of its subsidiaries
are measured and reported in the currency of their primary economic environment in which
the entity operates and are therefore subject to currency exchange risk. In this regard, theCompany uses hedging instruments to reduce its exposure to exchange rate fluctuations.

6.

Risk of policy changes. The home appliance industry is closely related to the consumer
market and the real estate market. Changes in macroeconomic policies, consumption
investment policies, real estate policies and relevant laws and regulations will affect productdemand from distributors, which in turn will affect product sales of the Company. The
Company will closely monitor changes in the relevant policies, laws, and regulations, andmake forecasts of market changes, in order to ensure further development of theCompany.

7.

Credit risk. There is possibility that the Company will be unable to collect all trade receivablesfrom its distributors, or distributors are not able to settle the Company’s trade receivables
in a timely manner, in which the Company’s business, financial status, and operation
performance may be affected. In relation to this risk, the Company will maintain flexibility byoffering credit period of 30 to 90 days to certain distributors based on their credit history
and transaction amount.

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879

Section III Management Discussion and Analysis

8.

Inventory risk. Excess inventory might occur as the Company cannot always accurately predict trends
and events and maintain appropriate inventory levels; thus, the Company may be forced to offer
discounts or promotions to manage the slow-moving inventory. On the other hand, a shortage of
inventory may lead to loss of sales opportunities for the Company. However, the Company will
manage its inventory and adjust according to market situation and will conduct regular impairment
assessment of its inventory.

9.

Risk of changes in retail channels. The retail channel landscape in China is experiencing a major
shift. National retail chains, which previously dominated first- and second-tier markets, are shrinking insize. As these chains accounted for a significant share of mid-range to high-end product sales, theirdecline will impact high-end sales for a certain period.

(V)

Others□ Applicable√ Not applicableVII. EXPLANATION OF CIRCUMSTANCES AND REASONS FOR NONDISCLOSURE BY THE COMPANY IN CONSIDERATION OF
INAPPLICABLE REGULATIONS, STATE SECRETS AND COMMERCIAL
SECRETES□ Applicable52√ Not applicable

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(C>E)

868

Section IV Corporate GovernanceI.

EXPLANATION OF CORPORATE GOVERNANCE√ Applicable□ Not applicable

During the reporting period, the Company has strictly complied with the requirements of the relevantlaws and regulations, including the Company Law of the People’s Republic of China, Securities Law of
the People’s Republic of China, Code of Corporate Governance of Listed Companies and the listing
rules of its listed jurisdictions. While maintaining high quality development in terms of performance, theCompany has been continuously improving its governance structure, regulating its operation, enhancing
the transparency and quality of its information disclosure, treating various investors fairly, focusing onshareholder return, implementing its equity incentive mechanism and upgrading the level of its
corporate governance.

1.

Improving the governance structure
The Company has set up a standardized and orderly corporate governance structure composedof the general meeting of shareholders, the Board of Directors and its special committees(including the Strategy Committee, Audit Committee, Nomination Committee, Remuneration andAssessment Committee and ESG Committee (i.e. Environmental, Social and GovernanceCommittee)), the Board of Supervisors, and the senior management. We have established agovernance mechanism with clear lines of authority and responsibility, mutual coordination andchecks and balances, which has guaranteed efficient and compliant corporate governance.
General meeting of shareholders
Strategy Committee
Board of Supervisors
Audit Committee
Board of Directors

Nomination Committee

Remuneration and Assessment Committee

Senior management

ESG Committee

Governance structure
During the reporting period, the Company has convened a total of four general meeting ofshareholders, six Board meetings, six meetings of the Board of Supervisors, two meetings of theStrategy Committee, six meetings of the Audit Committee, two meetings of the Remuneration
and Assessment Committee, two meetings of the Nomination Committee and two meetings of the
ESG Committee. All meetings and voting procedures complied with relevant provisions specified
in laws and regulations, the Articles of Association and rules of negotiation, and all voting results
were legal and valid. These laid a solid foundation for the Company’s standardized operation.

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868

Section IV Corporate Governance2.

General meetings
The Company has strictly complied with the provisions of the Articles of Association and theRules of Procedure for the General Meetings in convening and holding general meetings. General
meetings are witnessed by lawyers on site and legal opinions are issued on their legality. The
Company has established and improved effective channels of communication between
shareholders and the Board of Directors to ensure the shareholders’ right to information,
participatation and voting in respect of any significant issues of the Company. During thereporting period, the Company has held a total of four general meetings.

3.

Board of Directors
The Board of Directors is mainly responsible for deciding the Company’s operational andinvestment plans, formulating the Company’s annual financial budget and final account plans,
formulating the Company’s profit distribution plan and loss recovery plans, formulating theCompany’s plans for the increase or reduction of registered capital, issuance of bonds or othersecurities and listing, as well as the powers as stipulated in other laws and regulations and the
Articles of Association. During the reporting period, the Board of Directors has held 6 meetings.
The Board of Directors operated in accordance with rules and were able to perform their duties
under Articles of Association and relevant laws and regulations and practically implement relevant
decisions at the general meetings. The decision-making procedure and particulars of theresolutions of the Board of Directors were in compliance with Articles of Association and relevant
requirements under laws and regulations, and the resolutions made were legal and valid.
(1)

Board Diversity
The Company is fully aware that board diversity will help to improve the efficiency indecision-making of the Board of Directors, reduce management risks, and make better
decisions for the sustainable and healthy development of the Company. In determining thecomposition of the Board of Directors, the Company took full account of the diversity of themembers of the Board, including but not limited to gender, age, culture, education
background, industry experience, professional skills, knowledge, term of service and otherrelevant factors. The Nomination Committee is responsible for reviewing the effectivenessand implementation of the Board Diversity Policy and conducting regular annual diversity
assessments.
During the reporting period, the Company completed the change of session of the Board of
Directors. The new Board of Directors consists of 9 directors, including two executive
directors, three non-executive directors and four independent directors. 2 directors arefemale, accounting for 22.2% of the Board of Directors, representing an increase of 13.2%
as compared with the previous Board of Directors (9%); 4 of whom are independent
directors, accounting for 44.4% of the Board of Directors, representing an increase of 8.1%
as compared with the previous Board of Directors (36.3%). The new members of the Board
have extensive knowledge and experience in industry experience, Internet of Things,
corporate governance, global market experience, financial management and risk
management, which will help the Board to make the best decisions and promote thesustainable and healthy development of the Company.

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868

Section IV Corporate Governance

(2)

4.

Board Independence
The independent directors of the Company are all senior professionals with expertise inaccounting, finance and business management. During the reporting period, theindependent directors of the Company performed specific duties in accordance with the
Articles of Association and the listing rules of its listed jurisdictions, including participating in
the meetings of each of the Company’s special committees, providing advice to theCompany on its operation and management; and providing independent opinion onconnected transactions, profit distribution plans and other significant transactions of theCompany. By performing their duties as mentioned above, the independent directors help
protect the interests of the Company and the shareholders as a whole, and promote thedevelopment of the Company. The chairman of each of the Company’s special committees(except the Strategy Committee and ESG Committee) are all independent directors. The
number of independent directors present at the meetings of the Audit Committee, theRemuneration and Assessment Committee, the Nomination Committee and the Strategy
Committee accounted for at least one-half of the quorum of such meeting (inclusive).

Board of Supervisors
During the reporting period, the Board of Supervisors operated in accordance with rules andwere able to perform their duties under Articles of Association and relevant laws and regulations.
The number and composition of the members of the Board of Supervisors complied withrequirements under laws and regulations. During the reporting period, the Supervisors of theCompany performed their duties earnestly and supervised finance matters of the Company andperformance of duty by the Company’s director and senior management in accordance withrequirements under Articles of Association and Rules of Procedure for the Board of Supervisors.

5.

ESG Governance Structure
Good ESG governance is important in ensuring the stability of a company’s operations,
responding to unexpected crises and seizing development opportunities. The Company has
formed an ESG governance structure comprising governance, management and execution
covering its overseas business units. The ESG Committee has been established by the Board of
Directors of the Company to conduct comprehensive supervision over the ESG related matters of
the Company and perform relevant ESG governance duties on behalf of the Board of Directors.
The ESG Executive Office and Working Group have been set up under the ESG Committee totake charge of specific ESG work of the Company.
The Company’s overseas subsidiaries, GEA, FPA, CANDY and the subsidiary in India, have alsoestablished sustainable development management structures to promote the relevant ESG workin accordance with their applicable laws and regulations. For details, please refer to relevant
information in 2022 Environmental, Social and Governance Report of Haier Smart Home Co., Ltd.
published on the same date of this report.

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Section IV Corporate Governance

6.

Information disclosure
Haier Smart Home has strictly complied with the regulatory requirements on information
disclosure in China and overseas and fulfilled its information disclosure obligations. During thereporting period, on the basis of high-quality mandatory information disclosure, the Company
increased voluntary disclosure on matters of key concern to domestic and overseas investors andthe capital market, such as corporate strategy, corporate governance, green operations andsupply chain management, so as to continuously enhance the quality and transparency of
disclosure.

7.

Treating various investors fairly and focusing on shareholder return
During the reporting period, the Company strengthened communication and exchange withinvestors in an active, open, innovative and professional manner so as to enhance investors’
understanding and recognition of the Company and safeguard the legal rights of investors. In
accordance with guideline of the Management System for Investor Relation, the Company
integrated business and financial resources by the office of the board of Directors and realized
positive and all-around access to investors in a multi-layer and diversified format throughintroduction reference, annual investor conference, 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 investors, with the aim of achieving harmonious andmutual success with the Company, staff and investors.
The Company has always applied a stable and sustainable profit distribution policy. During thereporting period, the Company strictly followed the requirements set out in the Articles of
Association and in the Shareholder Return Plan for the Next Three Years of the Company inimplementing the profit distribution policy. As at 31 December 2022, the Company had achieved
cumulative cash dividends of RMB24,389 million. During the reporting period, the Company
repurchased a total of 59,055,239 shares in the A-share market, with a payment of RMB1,491
million; in the H-share market, a total of 14,970,200 shares were repurchased, with a payment of
HK$364 million.

8.

Sustainable performance evaluation and incentive mechanisms
The Company has been adhering to the management model of”RenDanHeYi”, and takingthe”maximization of the value of people“as the core. In line with the global landscape of thecapital market, the Company has established a short-term plus mid to long-term incentive
system which aligns the interests of employees and all shareholders. During the reporting period,
the Company has continued its incentive plan for 2021 and continued to introduce domestic andoverseas incentive plans with various appraisal cycle, multi-level and all-round benefits, including
A-Share Core Employee Stock Ownership Plan, H-Share Core Employee Stock Ownership Plan,
H-Share Overseas Trust Incentive Plan, and A-Share Option Incentive Scheme.
Whether there is a significant difference between the corporate governance and requirements in
respect of corporate governance of listed companies of laws, administrative regulations and the
CSRC; if so, the reasons should be explained□ Applicable56√ Applicable

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Section IV Corporate Governance

II.

SPECIFIED MEASURES ADOPTED BY THE CONTROLLINGSHAREHOLDERS AND ULTIMATE CONTROLLERS TO MAINTAIN
INDEPENDENCE WITH RESPECT TO ASSETS, PERSONNEL, FINANCE,ORGANIZATION, BUSINESS, AND THE SOLUTIONS ADOPTED,WORKING PROGRESS AND SUBSEQUENT WORKING PLANS IN CASE
OF THE COMPANY’S INDEPENDENCE BEING AFFECTED□ Applicable√ Applicable

Controlling shareholders, ultimate controllers and other parties controlled by them engaged in businessthat are same as or similar to the company, peer competition and impact of significant changes inpeer competition on the company, solutions adopted, working progress and subsequent solution plans□ Applicable√ Applicable

III. BRIEF INTRODUCTION TO THE GENERAL MEETINGS OF
SHAREHOLDERS
Index for details of websites designatedMeetings

Datefor publishing resolutions

Date of disclosure

Resolutions approved

2021 Annual General

28 June 2022

For details, please refer to the Announcement

29 June 2022

Considered and approved theMeeting

on Resolutions Passed at the 2021 Annual

resolutions related to annual

General Meeting, 2022 First A Shares

report, internal control audit

Class Meeting, 2022 First D Shares Class

report, profit distribution

Meeting and 2022 First H Shares Class

proposal, reappointment of

Meeting of Haier Smart Home Co., Ltd.
(L2022–042) published by the Company on

auditor, external guarantees,

the website of Shanghai Stock Exchange

general mandate to additional(www.sse.com.cn) and the four major

issue/repurchase, equity

securities Newspapers.

incentive, election of new

daily connected transactions,session of the Board/Supervisory Committee,
amendments to theCompany’s rules andregulation, etc.
2022 First A Shares Class
Meeting

Considered and approved theresolutions for equity incentive,
general mandate torepurchase2022 First D Shares Class
Meeting
2022 First H Shares Class
Meeting

Preferred shareholders whose voting rights have been restored requested an extraordinary general
meeting□ Applicable√ Not applicable

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Section IV Corporate Governance

Explanation of Shareholders‘general meeting√ Applicable□ Not applicable

The 2021 Annual General Meeting and the 2022 First A/D/H Shares Class Meetings of the Company
was held in successive order by way of on-site voting and network voting by poll at Room B101, Haier
RenDanHeYi Research Center, Haier Information Park, No.1 Haier Road, Qingdao, the PRC, in theafternoon on 28 June 2022, considering the annual report and other relevant resolutions. The total
number of the shares of the Company carrying voting right amounted to 9,337,037,472 shares (ofwhich 6,198,798,156 shares were A shares, 271,013,973 shares were D shares and 2,867,225,343
shares were H shares). 820 shareholders and proxies, representing 6,456,427,607 shares or 69.15% of
the total number of the shares of the Company carrying voting right, were present at the 2021 Annual
General Meeting. 770 shareholders and proxies, representing 4,203,253,922 shares or 67.81% of thetotal number of A shares of the Company carrying voting rights, were present at the 2022 First A
Shares Class Meeting; 40 shareholders and proxies, representing 147,537,203 shares or 54.44% of thetotal number of D shares of the Company carrying voting rights, were present at the 2022 First D
Shares Class Meeting; 9 shareholders and proxies, representing 2,103,823,118 shares or 73.37% of
the total number of H shares of the Company carrying voting rights, were present at the 2022 First H
Shares Class Meeting. The Directors, supervisors and senior management of the Company as well as
the lawyers engaged by the Company also attended the abovementioned four meetings. The
abovementioned four meetings were convened by the Board of the Company, and Chairman Mr. Liang
Haishan presided over these meetings. The Company had 11 Directors, of whom directors XIE Juzhi
and WU Qi were unable to attend the meetings due to personal engagement); the Company had 3
supervisors, of whom 3 supervisors attended the meetings. The secretary of the Board of theCompany attended the abovementioned meetings and other members of senior management of theCompany were invited to attend the abovementioned meetings.

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Section IV Corporate Governance

IV. DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT(I)

Changes of shareholding and remuneration of current and retired directors,
supervisors and senior management during the reporting period√ Applicable□ Not Applicable
Unit: share

Increase/decrease inshares for the
year

Name

Title (note)

GenderAge

Appointment
date

Expiration
Shareholdings Shareholdings
date ofat the beginning at the end of theappointmentof the year
year

Liang Haishan(retired)
Li Huagang

ChairmanMale

57

2019/6/18

2022/6/28

16,411,209

16,749,309

338,100

Chairman, Chief Executive
Officer
Vice president
Director, Chief Financial
Officer, vice president
Director
Director
Independent director
Independent director
Independent director
Independent director
Director

Male

54

2019/6/18

2025/6/27

764,145814,245

50,100FemaleMale

53
50

2022/6/28
2019/6/18

2025/6/27
2025/6/27

1,911,970

1,943,498

31,528

Male
Female
Male
Male
Male
Male
Male

75
71
70
67
56
56
68

2021/3/5
2021/3/5
2019/6/18
2020/5/19
2021/3/5
2021/6/25
2019/6/18

2025/6/27
2025/6/27
2025/6/27
2025/6/27
2025/6/27
2025/6/27
2022/6/28

Shao Xinzhi
Gong Wei
Yu Hon To
Li Kam Fun
Chien Da-chun
Wong Hak Kun
Li Shipeng
Wu Qi
Wu Changqi(retired)
Lin Sui (retired)
Liu Dalin
Ma Yingjie

Director
Male
Chairman of the Supervisory Male
Committee
Supervisor
Female67

2019/6/18

2022/6/28

432021/6/25

2025/6/27

542021/6/25

2025/6/27

Yu Miao

Employee supervisor

Male

41

2019/6/18

2025/6/27

2,479

2,479

Xie Juzhi

Vice president

Male

57

2021/3/5

2025/6/27

33,69533,695

Li PanVice president

Male

47

2021/2/7

2025/6/27

533,218

567,225

34,007

Zhao Yanfeng

Vice president

Male

46

2021/2/7

2025/6/27

53,50081,22927,729

Li Yang

Vice president

Male

47

2021/2/7

2025/6/27

23,02023,020Song Yujun

Vice president

Male

48

2021/2/7

2025/6/27

100,000

130,345

30,345

Guan Jiangyong

Vice president

Male

45

2021/2/7

2025/6/27

64,21895,60931,391

Wu Yong

Vice president

Male

45

2021/2/7

2025/6/27

146,743

176,208

29,465Total
remuneration
received fromthe Company
during thereportingperiodReason for increase/ (RMB0’000)
decrease(before tax)
Employee shareholding
scheme vested
Employee shareholding
scheme vested
Employee shareholding
scheme vested

77.03

YES

246.21

NO

142.61

YES
NO

30.58
30.58
30.58
30.58
30.58
30.58
17.25

NO
NO
NO
NO
NO
NO
NO

17.25

3,904

11,47011,470

7,045

3,141

Employee shareholding
scheme vested
Employee shareholding
scheme vested
Employee shareholding
scheme vested
Employee shareholding
scheme vested andshares acquired fromsecondary market
Employee shareholding
scheme vested
Employee shareholding
scheme vested
Employee shareholding
scheme vested
Employee shareholding
scheme vested
Employee shareholding
scheme vested
Employee shareholding
scheme vested

Whether
receiveremunerationfrom theCompany’s
related party

NO
YES

32.65

NO

36.34

NO

181.05NO

141.63NO

152.84NO

145.44NO

136.72

NO

139.31

NO

130.35NO

Haier Smart Home Co., Ltd. Annual Report 2022

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P.60 (P1)

(C>E)

868

Section IV Corporate Governance

Name

Title (note)

GenderAge

Appointment
date

Expiration
Shareholdings Shareholdings
date ofat the beginning at the end of theappointmentof the year
year

Huang Xiaowu

Vice president

Male

46

2021/2/7

2025/6/27

Liu Xiaomei

Female38

2022/6/28

2025/6/27

Ming Guozhen(retired)
Wang Li (retired)

Secretary to the board of
directors
Secretary to the board of
directors
Vice president

Female59

2019/6/18

Female

58

Total

/

/

/

Increase/decrease inshares for theyear

26,234

26,234

800

5,106

4,306

2022/6/28

1,395,489

1,440,474

44,9852021/2/7

2022/4/27

575,100

632,557

57,457//

21,960,296

22,739,748

779,452

Total
remuneration
received fromthe Company
during thereportingperiodReason for increase/ (RMB0’000)
decrease(before tax)
Employee shareholding
scheme vested
Employee shareholding
scheme vested
Employee shareholding
scheme vested
Employee shareholding
scheme vested/

Whether
receiveremunerationfrom theCompany’s
related party

98.00

NO

46.83

NO

25.57

NO

3.81

NO

1,954.38/

Note: (1) “Shareholdings at the beginning of the year” as stated in the above table represent the later of “the beginning of
the year” of the appointment or “appointment date” of such directors, supervisors and senior management; (2) all theaforesaid shares are A-shares.

60

Name

Major working experience

Liang Haishan(retired)Male, born in 1966, is a senior engineer. He served as head of thequality department of Qingdao Haier Refrigerator Co., Ltd., generalmanager of Qingdao Haier Air Conditioner Gen Corp., Ltd, vice presidentof Haier Group, senior vice president of Haier Group, rotating president ofHaier Group, vice chairman, Chairman and president of Haier Smart
Home Co., Ltd. He is currently the vice chairman of the board of
directors of Haier Group and president of Haier Group; he was awarded
the National May 1st Labor Medal, Outstanding Leadership Award of the
National Light Industry Enterprise Information (全 國 輕 工 業 企 業 信 息 化 優
秀 領 導 獎), Top 10 Leaders in China Strategic Emerging Industries; Prizeof Technology Advancement for China Household Appliances, First PrizeAward of Science and Technology Progress of China National Light
Industry Council, China Patent Gold Prize, Labor Model of Shandong
Province, Taishan Industry Leading Talent of Shandong Province.

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P.61 (P1)

(C>E)

868

Section IV Corporate Governance

Name

Major working experience

Li Huagang

Male, born in 1969. He graduated from Huazhong University of Scienceand Technology in 1991 with a Bachelor’s degree of Economics, andfrom China Europe International Business School in 2014 with a degreeof Executive Master of Business Administration (EMBA). He is currently
chairman and president of Haier Smart Home Co., Ltd. Mr. LI Huagang
joined Haier in 1991 and served as the sales head of the Marketing andPromotion Division of Haier (海爾商流本部銷售事業部長) and the generalmanager of China operations of Haier Smart Home. From August 2017 toMarch 2019, he served as the chief executive officer of Haier Electronics.
Since March 2019, Mr. LI has been appointed as an executive director ofHaier Electronics. He has been an executive director and president of theCompany since 2019. Mr. LI Huagang has extensive experience in thefields of corporate management, marketing, brand operation, and global
business operation. Mr. LI Huagang was successively awarded 2015
China Home Appliance Marketing Leader, Award of Outstanding
Contribution in 40-Years Development of China’s Home ApplianceIndustry 2018, 2019 Person of the Year of China’s Top Ten Brands and2021 Taishan Industry Leading Talent.
Female, born in 1970. She graduated from the University of International
Business and Economics with a degree of Executive Master of Business
Administration. She is currently the vice president and Chief Financial
Officer of Haier Group, as well as the vice chairman of Haier Smart
Home. Ms. SHAO adheres to the goal of innovation and valueenhancement, empowering the high-quality development of the industry,
and comprehensively builds the group’s financial ecosystem throughfinancial strategy formulation, financial system construction and operation,asset management, capital operation and other financial full value chain
management. In 2000, Ms. SHAO served as the chief accountant of Haier
Air Conditioning Division and the general manager of the strategy centerof Haier Group’s financial management department. In 2007, Ms. SHAO
established the first financial sharing center in the home applianceindustry, pioneering the “cloud + end” financial management innovation
model with Chinese characteristics to provide enterprises withcomprehensive financial best solutions, becoming one of the industry
benchmarks and winning the first prize of the National EnterpriseManagement Modernization Innovation Achievement. In 2019, Ms. SHAO
was appointed as the vice president of Haier Group and the operator of
the Big Sharing Empowerment Platform. In 2020, Ms. SHAO wasappointed as vice president and Chief Financial Officer of Haier Group.
Ms. SHAO has been honored as “National Advanced Accounting
Worker”, “Qingdao Top Talent”, “ACCA Outstanding Achievement Award”
and “IMA Outstanding Contribution Leader in Management Accounting”
over the years.

Shao Xinzhi

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P.62 (P1)

(C>E)

868

Section IV Corporate Governance

Name

Major working experience

Gong Wei

Male, born in 1973. He graduated from the University of International
Business and Economics in December 2011, and obtained a degree of
Executive Master of Business Administration. He also holds membershipin the CIMA Chartered Institute of Management Accountants. Mr. Gong
Wei served as the financial manager of Haier Smart Home Co., Ltd, thesenior finance manager and senior financial analyst of Haier Group, theChief Financial Officer of Haier Washing Machine Division, the Chief
Financial Officer of Haier Air Conditioning Division, the Chief Financial
Officer of Haier White Goods Group, with extensive experience infinancial management. Mr. Gong Wei was granted honorary titles such asYoung Post Expert in Qingdao City (青 島 市 青 年 崗 位 能 手), Outstanding
Accounting Workers in Shandong Province (山 東 省 優 秀 會 計 工 作 者) andNational Outstanding Accounting Workers (全 國 優 秀 會 計 工 作 者), andreceived several awards, including 2011 Top Ten CFO in China by “NewMoney” Magazine 《新理財雜志》(), 2020 International Finance Leaders of
the Year in China. He is currently a director, the Chief Financial Officer
and vice president of Haier Smart Home Co., Ltd.
Male, born in 1948. He holds a Bachelor of Social Science degree from
Chinese University of Hong Kong. He is a Fellow of the Institute ofChartered Accountants in England and Wales and an Associate Memberof Hong Kong Institute of Certified Public Accountants. Mr. Yu is achartered accountant with over 40 years’ experience in the fields ofauditing, corporate finance (including advisory on IPO, mergers &acquisitions and financial restructuring), financial investigation andcorporate governance. Mr. Yu was formerly a partner of Coopers &Lybrand (now merged as PricewaterhouseCoopers) in Hong Kong withextensive experience in the corporate finance advisory assignments inGreater China for Hong Kong corporations, private equity groups andmultinationals. Mr. Yu also served as an independent non-executive
director and the chairman of the audit committee of Haier Electronics,
over the past three years. Mr. Yu had served various public offices
including being a member of the Listing Committee of the Hong Kong
Stock Exchange from 1992 to 1995, a member of the Investment
Committee and the Audit Committee of Employees Retraining Board(established under the Employees Retraining Ordinance of Hong Kong)from 1999 to 2020, and a member of the Board of Review (establishedunder Inland Revenue Ordinance of Hong Kong) from 2006 to 2012. He
is currently a director of 11th session of the Board of Directors of Haier
Smart Home Co., Ltd.

Yu Hon To

62

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P.63 (P1)

(C>E)

868

Section IV Corporate Governance

Name

Major working experience

Li Kam Fun

Female, born in 1952. She graduated from University of Hong Kong with
Bachelor of Arts and Master of Business Administration degrees. She wasconferred with the degree of Doctor of Business Administration, honoriscausa, from the Open University of Hong Kong in 2014. Ms. Li Kam Funcurrently serves as an independent non-executive director of Nestle S.A,
a publicly listed company on the SIX Swiss Exchange. Ms. Li Kam Fun
served as an independent non-executive director of Haier Electronics,
over the past three years. Prior to joining Our Hong Kong Foundation,
Ms. Li Kam Fun had a distinguished career that spanned 34 years with
Amway Corporation. When she retired in 2011, she held the concurrent
positions of Executive Vice President of Amway Corporation andExecutive Chairman of Amway China Co. Ltd. responsible for Amway
Greater China & Southeast Asia Region. During the last three years, Ms.
Li Kam Fun had also been an independent non-executive director of
Amcor Limited (a company listed on the Australian Securities Exchange)from 2014 to 2019, an independent non-executive director of Trinity
Limited (a company listed on the Main Board of the Hong Kong Stock
Exchange) from 2011 to 2020, and the president of Our Hong Kong
Foundation from 2015–2022. Ms. Li Kam Fun’s leadership was wellrecognised in the business community. She was twice named the“World’s 100 Most Powerful Women” by Forbes Magazine in 2008 and2009. CNBC awarded Ms. Li Kam Fun with the “China TalentManagement Award” in its 2007 China Business Leaders Awards. Ms. Li
Kam Fun currently holds several positions in public service including
member of the Election Committee of Hong Kong (2021–2025), deputy
secretary of Hong Kong Coalition, director of the Chinese Association ofHong Kong & Macao Studies, honorary special representative, conference
consultant and honorary president of All-China Women’s Federation 、
honorary president of the Hong Kong Federation of Women, permanent
honorary director of The Chinese General Chamber of Commerce 、court
member of the Open University of Hong Kong and member of theadvisory panel of the Xiqu Centre of the West Kowloon Cultural District
Authority. She is currently a director of the 10th Board of Directors ofHaier Smart Home Co., Ltd.
Male, born in 1953. He served as Chief Executive Officer of IBM ASEAN/
South Asia, Chairman and Chief Executive of IBM Greater China region.
He graduated from the Department of Mathematics of Tamkang
University of Taiwan, and studied advanced management courses in theInstitute of Business Administration of Harvard University, as well as theglobal senior manager courses of International Business Machines
Corporation (IBM). He is currently an independent director of the 11th
Board of Directors of Haier Smart Home Co., Ltd, a director of ENN
Group and professor of Management Practice at the School of Businessof Renmin University of China/Academic Director of EE Centre.

Chien Da-chun

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P.64 (P1)

(C>E)

868

Section IV Corporate Governance

Name

Major working experience

Wong Hak Kun

Male, born in 1956. He received a Bachelor’s of Social Science degreefrom University of Hong Kong. He has over 36 years of experience inauditing, assurance and management in Deloitte China. He has been apartner of Deloitte China since 1992 and served as a member of theboard of directors of Deloitte China from 2000 to 2008. Prior to hisretirement in May 2017, he was Deloitte China’s National Managing
Partner of Audit & Assurance. Mr. Wong is an associate of the Hong
Kong Institute of Certified Public Accountants (HKICPA), an associate of
the Association of Chartered Certified Accountants (ACCA), an associateof the Chartered Institute of Management Accountants (CIMA), an
associate of The Chartered Governance Institute (previously known as“The Institute of Chartered Secretaries and Administrators”). He currently
serves as an independent non-executive director of Yue Yuen Industrial
Holdings (Limited), Lung Kee (Bermuda) Holdings Limited, Guangzhou
Automobile Group Co., Ltd., Hangzhou SF Intra-City Industrial Co., Ltd.
and Haier Smart Home Co., Ltd.
Male, born in 1967. He holds a bachelor’s and Master’s degree from
University of Science and Technology of China, and a PhD degree from
Lehigh University, USA. Mr. Li has extensive experience in Internet ofThings technology and artificial intelligence. Mr. Li is currently the directorof Applied Intelligence Research Center of Suzhou Industrial Technology
Research Institute. Prior to that, he served as the Chief Researcher and
Deputy Dean of Microsoft Research Asia, Chief Technology Officer of
Cogobuy Group, Vice President of iFlytek Group, Executive President andChief Scientist of Shenzhen Institute of Artificial Intelligence and Robotics.
Mr. Li is a member of the International Eurasian Academy of Sciences
and a fellow of the International Institute of Electrical and Electronics
Engineers (IEEE fellow). He was listed as one of the world’s top 1,000
computer scientists by Guide2Research and ranked top 20 in Mainland
China in 2020. Mr. Li is a renowned expert in Internet, computer vision,
cloud computing, Internet of Things and artificial intelligence. He iscurrently an independent director of the 11th Board of Directors of Haier
Smart Home Co., Ltd.

Li Shipeng

64

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P.65 (P1)

(C>E)

868

Section IV Corporate Governance

Name

Major working experience

Wu Qi

Male, born in 1967. He has 25 years of (New PCEBG) experience inworld-class management and consulting companies. He is currently an
independent director of the 11th session of the Board of Haier Smart
Home Co., Ltd. He served as the vice president (Global) and vicechairman (Greater China) of Accenture, and the chairman of Shun Zhe
Technology Development Co., Ltd. He was a member and the president(Greater China) of Roland Berger’s Global Management Committee, amember of Roland Berger’s Global Supervisory Board, a seniorconsultant for Foxconn’s D sub-business group strategy and intelligent
manufacturing and a consultant of Xnode, a famous accelerator for
startups. He was awarded 2015 Outstanding Talent in Jing’an District,
Shanghai. Mr. Wu’s experience in consulting industry involves
transportation/logistics, high-tech manufacturing, tourism, finance,
consumer goods, real estate, government departments and otherindustries. His has extensive experience in development strategy,organizational change, sales and brand strategy, corporate innovation,
digital transformation and intelligent manufacturing, post-merger
integration, regional industrial and economic development and upgrading.
He is a well-known expert in China in Industry 4.0, transportation andregional planning and development. He served as a consultant for
Hangzhou Bay Development Planning, a member of the Intelligent
Manufacturing Expert Committee of Municipal Government, deputy headof the 13th Five-Year Planning Expert Committee of Zhengzhou City,
Henan Province, vice chairman of China Cold Chain Alliance.
Wu Changqi (retired) Male, born in 1955. He is currently a professor of strategic managementand doctoral supervisor of Guanghua School of Management, Peking
University. He graduated from Shandong University with a Bachelor’s
degree of Economics in 1982, and Katholieke Universiteit Leuven in
Belgium with a Master’s degree of Business Administration and a
Doctoral degree in applied economics in 1990. He served as an assistantprofessor and associate professor in the Department of Economics ofSchool of Business and Management of Hong Kong University of Scienceand Technology, a professor and head of the Department of Strategic
Management of Guanghua School of Management of Peking University, adeputy dean of the Guanghua School of Management of Peking
University, a director of the EMBA degree programme center and a
director of Haier Smart Home. He is currently the executive vicepresident of the Academy of Development Strategy for National High-tech
Industry Zones, Peking University and the dean of the School ofManagement of Shandong University.

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P.66 (P1)

(C>E)

868

Section IV Corporate Governance

66

Name

Major working experience

Lin Sui (retired)Male, born in 1956. He was a partner of Deloitte Touche Tohmatsu
China (retired on 31 May 2019). He has been engaged in international
tax consultancy in USA and China for nearly 30 years. He participated intransactions, mergers and acquisitions, initial public offerings, financing
projects, supply chain taxation optimization, internal tax risk control andother aspects of professional tax consultancy of many PRC international
enterprises, and has abundant experience in restructuring, acquisition,
equity arrangement, tax accounting and business transformation. In recent
years, he has been mainly engaged in the consulting of digitaltransformation of corporate financial and tax management. In 1989, hepursued his studies in USA and obtained a Master’s degree in Business
Administration and a Master’s degree of Science in Taxation. He joined
Deloitte Touche Tohmatsu USA in 1993 and was transferred to Deloitte
Touche Tohmatsu China in 2002. Mr. Lin Sui is a Certified Public
Accountant in USA. Prior to his return to China, he was employed by
Ministry of Science and Technology of China as a member of theoverseas scholars’ advisory committee of the National High-tech
Development Torch Program and an expert on the United Nations
development projects in China. He served as a director of Haier Smart
Home. At present, he has been invited as an external lecturer of China
Europe International Business School and Shanghai National Institute of
Accounting, a part-time master degree tutor of Fudan University andShanghai University of Finance and Economics, Deputy Director of theAdvisory Committee of China Tax Institute of Large Business (TILB) and acouncil member of the Shanghai branch of China Association for Fiscal
and Tax Law.

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P.67 (P1)

(C>E)

868

Section IV Corporate Governance

Name

Major working experience

Liu DalinMale, born in 1980, Chinese nationality with no right of permanent
residency abroad. He graduated from the School of MechanicalEngineering of Jinan University and holds a Master’s degree in Business
Administration from Renmin University of China. He is a senior engineer.
From August 2005 to September 2010, he served as a designer of water
heater department of Heater Head Office at Haier Group, an assistant
R&D engineer, a R&D engineer and a R&D model manager of the heater
R&D center of the Heater Head Office of Haier Group successively. From
September 2010 to October 2015, he was the deputy secretary of theYouth League Committee of Haier Group. From October 2015 to July
2020, he was the deputy secretary of the Disciplinary Committee of HaierGroup. From July 2020 to March 2021, he was the executive deputy
secretary of the Disciplinary Committee of Haier Group and the presidentof the Supervisory Committee of Gooday Supply Chain Technologies Co.,
Ltd. From March 2021 to June 2022, he served as the president of theSupervisory Committee, the secretary of Society and Community
department and executive deputy secretary of the Disciplinary Committeeof Haier Group. From June 2022 to date, he serves as a member of theParty Committee, chairman of the Supervisory Committee and head of theorganization department of Haier Group. Mr. Liu has been the presidentof the Supervisory Committee of Haier Smart Home Co., Ltd. since June
2021.
Female, born in 1969. She once served as the secretary of the Youth
League Committee of Haier Smart Home Co., Ltd., the secretary of thelabour union of Haier Smart Home Co., Ltd., the contact person of thecustomer service department of Qingdao Haier Dishwasher Co., Ltd.
Currently, she is the head of Society and Community department and thesupervisor of the 11th session of the Supervisory Committee of Haier
Smart Home Co., Ltd.
Male, born in 1982, Chinese nationality. Mr. Yu holds a master’s degree.
He serves as the legal manager of Haier Smart Home Co., Ltd. sinceApril 2012, and serves as the employee supervisor of Haier Smart Home
Co., Ltd. since January 2019.

Ma Yingjie

Yu Miao

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P.68 (P1)

(C>E)

868

Section IV Corporate Governance

Name

Major working experience

Xie Juzhi

Male. He graduated from Shandong University of Finance and Economics
in July 1989 with a Bachelor’s degree, and joined Haier in the same year.
Mr. Xie has experience in whole-process product management, productwide services and product-wide marketing. Mr. Xie has held senior
positions in Electrothermal Division of Haier Group and East China
Marketing and Promotion Division of the Haier Group. Since August
2002, he has been the general manager of Haier Customer Service
Company (海 爾 顧 客 服 務 公 司). Since July 2012, he has been the Vice
President of Haier Group in charge of the Group’s integration ofcommunity sales services in first and second-tier cities, and developing
the online and offline sales of new household products. Since December
2015, he has been managing the newly developed business segments ofHaier Group, including water purification, logistics, Haier home andGooday services. He is also in charge of the water heater business since2019 and has been appointed as Chief Executive Officer and executive
director of Haier Electronics since 27 March 2019. Since April 2021, he is
responsible for supervising the smart living appliances segment. Mr. Xie
was awarded honorary titles including the Gold Award of Outstanding
Contribution Award of China’s Home Appliance Services Industry (中國家
電服務行業突出貢獻獎金獎) and Outstanding Entrepreneur of Shandong
Province (山 東 省 優 秀 企 業 家). He is currently responsible for supervising
the intelligent industrial platform and is the vice president of Haier SmartHome.
Male, born in 1976, is a senior engineer. He graduated from Wuhan
University in 1997 and obtained the double degree in economics andinternational business administration. He obtained a Master’s degree from
China Europe International Business School in 2017. He joined Haier in1997 and currently serves as the general manager of the overseas
platform of Haier Smart Home. Mr. Li has held various positions in HaierGroup, including the assistant director of Asia-Pacific Division, themanager of the Haier ASEAN Center, the manager of the Overseas
Brands Marketing Center, the manager of the Overseas Strategic Centerand the director on the operation of overseas markets. He has held
important positions of the overseas platform of Haier Group since 2004
with extensive frontline management experience in product planning,brand marketing, market exploration and corporate operation. He iscurrently the vice president of Haier Smart Home Co., Ltd.

Li Pan68

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P.69 (P1)

(C>E)

868

Section IV Corporate Governance

Name

Major working experience

Zhao Yanfeng

Male, born in 1977. He graduated from Tianjin Institute of Light Industry
and obtained a Bachelor’s degree in Mechanical and Electronic
Engineering in 2001. He graduated from Renmin University of China andobtained an Executive Master degree in Business Administration in 2019.
He is currently the vice president and general manager of therefrigeration business of Haier Smart Home Co., Ltd. Mr. Zhao joined
Haier in 2001 and served as the general manager of Haier Group’s
regional branch, general manager of the domestic market of refrigeration
business and general manager of the refrigeration business in China. He
possesses whole-process management experience in product planning,
research and development, manufacturing and marketing.
Male, born in 1976, is a senior engineer. He currently serves as thegeneral manager of washing machine and the internet of clothing
platform and vice president of Haier Smart Home Co., Ltd. Mr. Li Yang
graduated from Qingdao University of Science & Technology in 1998 andobtained a Bachelor’s degree in Fine Chemical Engineering. He joined
Haier in August. Mr. Li was the head of quality department of Haier
Smart Home and the manufacturing director and he has held important
positions of the internet of clothing platform since 2008 with extensive
experience in the quality and systemic management of washingmachines, production and manufacturing. He obtained a degree of
Executive Master of Business Administration (EMBA) from Xi’an Jiaotong
University in 2022. The ecological platform of the internet of clothing
incubated under his leadership was awarded the first prize for “Innovation
Results in Modern Management of National Light Industry Enterprises”(全 國 輕 工 業 企 業 管 理 現 代 化 創 新 成 果) in 2019. He received the “Most
Promising Entrepreneur in Qingdao in 2018” and the “Advanced Individualin Management Innovation of National Light Industry Enterprises”. He iscurrently the vice president of Haier Smart House Co., Ltd.
Male, born in 1975. He graduated from Shandong University ofTechnology with a bachelor’s degree in equipment engineering andmanagement in 1998, and received a degree of Executive Master ofBusiness Administration from Tsinghua University in 2015. He joined Haierin 1998 and served as general manager of the Operation Department ofHaier Overseas Promotion Headquarters, director and general manager ofHaier Pakistan Company, executive director of Haier India Company,
director of Haier Overseas businesses in South Asia and Southeast Asia
region, and vice president of Haier Home Appliance Industry Group.
Since 1998, he has held various important positions in Haier overseas
companies and has rich experience in product, manufacturing, R&D andmarketing. He was awarded the Labor Model of Qingdao City, theOutstanding Talent in Professional Technology in Qingdao City, Qingdao
High-level Service Talent and other honorary titles. He is currently thegeneral manager of Haier Air Industry Group and vice president of Haier
Smart Home Co., Ltd.

Li Yang

Song Yujun

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P.70 (P1)

(C>E)

868

Section IV Corporate Governance

Name

Major working experience

Guan Jiangyong

Male, born in 1978. He graduated from Northeast Electric Power
University in 2001 and obtained a Bachelor’s degree in Management
Information System. Mr. Guan joined Haier in 2001 and currently serves
as the general manager of water heater and the internet of water
platform. Mr. Guan has been responsible for product management,
production and manufacturing, product marketing and industrial pipelinemanagement and served as a regional general manager, the market
director of the water heater business and the general manager of theinternet of water platform and the water heater business. He possesses
whole-process management experience in product manufacturing,marketing, corporate planning management and industrial platforms. He iscurrently the vice president of Haier Smart Home Co., Ltd.
Male, born in 1978. He graduated from Tianjin College of Commerce in2001 and obtained a Bachelor’s degree in Heat Supply, Ventilation andAir-conditioning Engineering. He obtained the double degree of EMBA
from the School of Economics and Management of Tsinghua University
and the INSEAD in 2015. Mr. WU Yong joined Haier Group in 2001 andcurrently serves as the general manager of the kitchen appliances andthe internet of food platform of Haier Smart Home. Mr. WU has served
as the general manager of the PRC Region on manufacturing andproduction of refrigerators, overseas marketing and the air-conditioning
business since joining the Group and possesses whole-process
management experience in high-end manufacturing, marketing andindustrial platforms.
Male, born in 1977. He graduated from the College of PhotoelectricEngineering, Chongqing University with a Bachelor’s degree inengineering in 1998 and graduated from the Faculty of Business andEconomics of the University of Hong Kong with a master’s degree inbusiness administration in 2004. Mr. Huang has many years of extensive
working experience in commercial banking, strategic investment, industrial
fund, corporate finance and capital market operation and management,
and has participated in and led important strategic investment andfinancing projects involving numerous fields such as marketing channels,
logistics, home appliances and technology industry. Mr. Huang was
appointed as the vice president of the Company in 2021, responsible for,amongst others, investor relations, capital market, equity financing andstrategic investment, and served as the Director of the ESG Executive
Office of Haier. Prior to that, Mr. Huang worked as the deputy generalmanager of Haier Electronics Group Co., Ltd., a company listed on the
Stock Exchange, which is controlled by the Company. Before joining
Haier Group, Mr. Huang worked at the Ningbo branch and Shanghai
branch of the Industrial and Commercial Bank of China, Investment
Banking Division of Guosen Securities and Anglo Chinese Investment
Banking Group (英 高 投 資 銀 行 集 團).

Wu YongHuang Xiaowu

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Name

Major working experience

Liu Xiaomei

Female, born in 1985. She graduated from the Law School of Minzu
University of China with a double bachelor’s degree in law and literaturein 2009, and graduated from the Department of International Law of the
China Foreign Affairs University with a master’s degree in internationallaw in 2011, and is qualified to practice law in China. Ms. Liu joined theCompany in June 2015 and has been in charge of legal and compliancematters of corporate governance, capital market, M&A and corporate
finance at Haier Electronics Group Co., Ltd. and Haier Smart Home. Prior
to joining the Company, Ms. Liu worked for Jingtian & Gongcheng in
Beijing. Ms. Liu has accumulated extensive work experience in corporate
governance, capital market, industrial fund, and investment and financing.
Female, born in 1964. She graduated from Southwestern University of
Finance and Economics with a Master’s degree in Economics in 1986.
She is a senior economist, and she was the lecturer of investment
department of China Institute of Finance, deputy head of the Teaching
and Research section of Investment Economy Department, a member oftreasury department of Everbright International Investment Consultancy
Company, deputy director and director of general manager office, generalmanager of business management department and general manager of
personnel department, assistant to the general manager, executive vicepresident of Everbright International Investment Consultancy Company;
she was the office director of analysts professional committee of the
Securities Association of China, vice director of Qualification Management
Department of the Securities Association of China, vice director ofPractice Standards Committee (執 業 標 準 委 員 會) of the Securities
Association of China. She joined Haier in August 2007 and served as thebusiness director and merger & acquisition director of Haier Asset
Operation Division from August 2007 to May 2008. She has been a vicegeneral manager since May 2008 and the board secretary since April
2009 of Haier Smart Home. She has played a leading role andparticipated in the introduction of strategic investors, M&A of GEA/FPA
and internal integration, issue of convertible bonds/exchangeable bonds,
issue of D-Share/H-Share. She was awarded as a member of “Board
Secretary Hall of Fame (金 牌 董 秘 名 人 堂)” at the 12th session of New
Finance Election in June 2016.She served as the secretary to the Board
of Haier Smart Home.

Ming Guozhen(retired)Haier Smart Home Co., Ltd. Annual Report 2022

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Name

Major working experience

Wang Li (retired)Female, born in 1965. She graduated from Qingdao University of Science& Technology in 1986 and obtained a Bachelor’s degree in Heat Supply,
Ventilation and Air-conditioning Engineering. She obtained a Master’s
degree in Business Administration from Renmin University of China in
June 2013. Ms. Wang Li joined Qingdao Air-conditioner Company in1988. She has held various positions since 1988, including generalmanager of Haier’s central air-conditioner business, general manager ofHaier’s residential facilities business and general manager of Haier’s air
business. Ms. Wang Li has management experience in products andmarketing. Ms. Wang Li has served various industrial positions, including
a member of China Refrigeration and Air-Conditioning Industry
Association. Ms. Wang Li receives grants from the State Council and wasawarded the Outstanding Entrepreneur in Light Industry in Shandong
Province, the Labor Model of Qingdao City, the Outstanding Talent inProfessional Technology in Qingdao City and other honorary titles. She
served as the vice president of Haier Smart Home Co., Ltd.

Other information□ Applicable √(II)

Not Applicable

Appointment of current and departing of Directors, Supervisors and Senior
Management during the reporting period
1.

Appointment in shareholder units√ Applicable □ Not Applicable

Name

Name of shareholder unit

Position

Liang Haishan

Haier Group

Vice chairman of the Board, vice

Liang Haishan

Haier COSMO Co., Ltd.

Director, general manager

Shao Xinzhi

Haier Group

Vice president and Chief Financial

Start date of

End date of

appointment

appointmentpresident
2020

Officer of Haier Group
Shao Xinzhi

Qingdao Haier Venture &Supervisor

Investment Information
Co., Ltd.
Liu Dalin

Haier Group Corporation

Member of the Party Committee,
president of the Supervisory
Committee, head of theorganization department

Explanation ofNilappointment inshareholder units

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Appointment in other units√ Applicable □ Not applicable

Name

Name of other unit

Position

Liang Haishan

Haier Group Finance Co., Ltd.

Director

Li Huagang

Qingdao Haier multimedia Co

ChairmanStart date of

End date of

appointment

appointment

Ltd.
Gong Wei

Haier Group Finance Co., Ltd.

Director

Gong Wei

Qingdao Haier multimedia Co.,

Director

Ltd.
Shao Xinzhi

Haier Group Finance Co., Ltd.

ChairmanShao Xinzhi

Qingdao Junyi Holding Group

Supervisor

Co., Ltd.
Shao Xinzhi

Wanlian Holding Co., Ltd.

Supervisor

Yu Hon To

Keck Seng Investments (HongIndependent non-executive director

April 2013

Kong) Limited
Yu Hon To

MS Group Holdings Limited

Independent non-executive director

May 2018

Yu Hon To

China Resources Gas Group

Independent non-executive director

December 2012

LimitedYu Hon To

One Media Group Limited

Independent non-executive director

June 2005

Yu Hon To

China Renewable Energy

Independent non-executive director

April 2008
May 2021

January 2022

Investment Limited
Yu Hon To

Playmates Toys Limited

Independent non-executive director

Li Kam Fun

Nestle S.A

Independent non-executive director

Wong Hak Kun

Yue Yuen Industrial (Holdings)

Independent director

June 2018

Independent director

June 2018

Independent director

May 2020

Independent director

December 2021

LimitedWong Hak Kun

Lung Kee (Bermuda) Holdings
LimitedWong Hak Kun

Guangzhou Automobile Group
Co., Ltd.

Wong Hak Kun

Hangzhou SF Intra-City
Industrial Co., Ltd.

Li Shipeng

Applied Artificial Intelligence

Director

Research Center Of theSuzhou Industrial
Technology ResearchInstitute
Li Shipeng

The Chinese University ofVisiting Professor

Hong Kong (Shenzhen)
Wu Changqi

Wanhua Chemical Group Co

Independent director

April 2022

Ltd
Wu Changqi

Peking University

Professor

Wu Changqi

Shandong University

Dean of School of Management

October 2019

Wu Changqi

Tianneng Battery Group Co.,

Independent director

February 2019

Independent director

May 2021

Ltd.
Wu Changqi

Shenwan Hongyuan Group
Co., Ltd.

Lin Sui

Focus Hotmelt Company Ltd.

Independent director

August 2020

Liu Dalin

Gooday Supply Chain

Chairman of the Supervisory

March 2021

Xie Juzhi

Gooday Supply Chain

Technologies Co., Ltd.

July 2023

Committee
Director

Technologies Co., Ltd.

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Name

Name of other unit

Position

Xie Juzhi

Qingdao Eoroom Technology

Director

Start date of

End date of

appointment

appointment

Co., Ltd.
Explanation ofNilappointment in otherunits(III) Compensation of Directors, Supervisors and Senior Management√ Applicable74□ Not applicable

Decision-making process ofcompensation of Directors,
Supervisors and Senior
Management

The Remuneration and Assessment Committee of theCompany shall formulate the remuneration standards,
adjust principles, and assess and implement the principlesof the remuneration of directors, supervisors and senior
management personnel and submit to the Board of
Directors for consideration and approval.

Determining basis of matrix
compensation of Directors,
Supervisors and Senior
Management

The cash remuneration of executives in 2022 consists ofmonthly remuneration, bonuses and sharing, and is linked
to orders triggered by the upgrade of the Company’s
Internet of Things from”high-end brands“to”scenario
brands“to”ecological brands”. Focusing on the rapid
impr ov e me nt of pr ofit a bilit y a nd t hr ough digi taltransformation, the Company maintained its
competitiveness as a leader in the whole process, andachieved the commitment targets and sharing of highadded-value. Through the innovation of the mechanism, theCompany encouraged its executives to achieve higher
market goals, thus achieving a win-win situation for users,
employees, enterprises and stakeholders. At the sametime, the Company continues to promote theimplementation of the employee stock ownership and otherlong-term incentive plans; multiple incentive tools will beeffectively utilised to mobilise competent management,
frontline managers and business and technical backbones
on a wider scale, further aligning the interests ofshareholders, the Company and incentive recipients, andbringing more efficient and sustainable returns toshareholders. After the approval by the general meeting,the allowance for directors is RMB320,000/year before tax.
The travelling expenses of directors attending Board
meetings and general meetings and the expenses requiredfor performing their duties and according to the Articles of
Association will be reimbursed.

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Paid as prescribed.
Actual compensation paid to
Directors, Supervisors and Senior
Management
Total of actual compensation paid RMB19,543,800
to all Directors, Supervisors andSenior Management at the endof the reporting period(IV) Changes in of Directors, supervisors and senior management of the Company√ Applicable
Name

Position

Method of Change

Reason for Change

Li Huagang

Chairman, president

Election

Liang Haishan
Shao Xinzhi
Xie Juzhi
Gong Wei

Retirement
Election
Retirement
Election

Wu Changqi
Lin Sui
Xie Juzhi

ChairmanVice chairman
Vice chairman
Director, Chief Financial
Officer, vice president
Director
Director
Vice president

Song Yujun

Vice president

Appointment

Zhao Yanfeng

Vice president

Appointment

Wang Li

Vice president

Retirement

Liu Xiaomei

Secretary to the board of
directors
Secretary to the board of
directors

Appointment

Election of the new session of the Board andSenior Management
Election of the new session of the Board
Election of the new session of the Board
Election of the new session of the Board
Election of the new session of the Board andSenior Management
Election of the new session of the Board
Election of the new session of the Board
Election of the new session of the Senior
Management
Election of the new session of the Senior
Management
Election of the new session of the Senior
Management
Election of the new session of the Senior
Management
Election of the new session of the Senior
Management
Election of the new session of the Senior
Management

Ming Guozhen(V)□ Not Applicable

Retirement
Retirement
Appointment

Retirement

Explanation of penalties imposed by securities regulators in the past three years□ Applicable√ Not Applicable(VI) Others□ Applicable√ Not Applicable

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V.

RELEVANT INFORMATION ON THE BOARD MEETINGS HELD DURING
THE REPORTING PERIOD
Meeting

Date

Resolutions approved

The 26th meeting of the Tenth session of

6 January 2022

Considered and approved the Resolution on the Placing of New H Shares Under thethe Board of Directors
The 27th meeting of the Tenth session ofGeneral Mandate of Haier Smart Home Co., Ltd.
30 March 2022

the Board of Directors

Considered and approved Report on the 2021 Annual Financial Statements of Haier Smart
Home Co., Ltd., 2021 Annual Report and Annual Report Summary of Haier Smart Home
Co., Ltd., 2021 Annual Work Report of the Board of Directors of Haier Smart Home Co.,
Ltd., 2021 Annual Internal Control Evaluation Report of Haier Smart Home Co., Ltd., 2021
Annual Internal Control Audit Report of Haier Smart Home Co., Ltd., 2021 Annual Profit
Distribution Plan of Haier Smart Home Co., Ltd., the Proposal on Re-appointment of PRC
GAAP Auditor of Haier Smart Home Co., Ltd., the Proposal on Re-appointment of IFRS
Auditor of Haier Smart Home Co., Ltd., the Risk Assessment Report on Haier Finance Co.,
Ltd. in 2021 of Haier Smart Home Co., Ltd., the Resolution on the Anticipated Provision of
Guarantees for its Subsidiaries in 2022 of Haier Smart Home Co., Ltd., the Resolution on
the Conduct of Foreign Exchange Fund Derivatives Business of Haier Smart Home Co., Ltd.,the Resolution on the Special Report on the Deposit and Actual Use of Raised Funds in
2021 of Haier Smart Home Co., Ltd., the Resolution on Adjusting the Allowance of Directorsof Haier Smart Home Co., Ltd., the 2021 Environment, Social and Governance Report ofHaier Smart Home Co., Ltd., the Resolution on the Proposed Registration and Issue of Debt
Financing Instruments of Haier Smart Home Co., Ltd., the Resolution on Proposing theGeneral Meeting to Grant General Mandate to the Board of Directors on Additional Issuanceof A-shares of Haier Smart Home Co., Ltd., the Resolution on Proposing the General
Meeting to Grant General Mandate to the Board of Directors on Additional Issuance ofH-shares of Haier Smart Home Co., Ltd., the Resolution on Proposing the General Meeting
to Grant General Mandate to the Board of Directors on Additional Issuance of D-shares ofHaier Smart Home Co., Ltd., the Resolution in Relation to the Repurchase Plan of a Portionof Public A Shares of Haier Smart Home Co., Ltd., the Resolution on Proposing the General
Meeting to Grant the General Mandate to the Board of Directors to Repurchase not morethan 10% of the Total Number of H-shares of the Company in Issue of Haier Smart Home
Co., Ltd., the Resolution on Proposing the General Meeting to Grant the General Mandate to
the Board of Directors to Repurchase not more than 10% of the Total Number of D-sharesof the Company in Issue of Haier Smart Home Co., Ltd., the Resolution on Amending the
Articles of Association of Haier Smart Home Co., Ltd., the Resolution on Amending theRules of Procedure for the General Meetings of Haier Smart Home Co., Ltd., the Resolution
on Amending the Rules of Procedure for the Board of Directors of Haier Smart Home Co.,
Ltd., the Resolution on Amending the Management System of Investment of Haier Smart
Home Co., Ltd., the Resolution on Amending the Management Practices for Fundraising ofHaier Smart Home Co., Ltd., the Resolution on Amending the Fair Decision-Making System
for Related-party Transactions of Haier Smart Home Co., Ltd., the Resolution on Amending
the System of Independent Directors of Haier Smart Home Co., Ltd., the Resolution on
Amending the Management System of External Guarantees of Haier Smart Home Co., Ltd.,the Resolution on Amending the Management System of Foreign Exchange Derivative
Transaction Business of Haier Smart Home Co., Ltd., the Resolution on Amending theManagement System of Entrusted Wealth Management of Haier Smart Home Co., Ltd., theResolution on Amending Systems Including the Registration System of Insider and theManagement System of Investor Relations of Haier Smart Home Co., Ltd., the Resolution on
Convening the 2021 Annual General Meeting and the First A-shares/D-shares/H-sharesClass Meetings of 2022 of Haier Smart Home Co., Ltd.

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Meeting

Date

Resolutions approved

The 28th meeting of the Tenth session of

28 April 2022

Considered and approved the 2022 First Quarterly Report of Haier Smart Home Co., Ltd.,the Board of Directors

the Resolution of Haier Smart Home Co., Ltd. on the Acquisition of 100% Equity Interest in
Qingdao TAB Robot Technology Co., LTD. by a Subsidiary and Connected Transaction, theResolution of Haier Smart Home Co., Ltd. on the Transfer of 25% Equity Interest in Qingdao
Haier Mold Co., Ltd. by a Subsidiary and Connected Transaction, the Resolution of Haier
Smart Home Co., Ltd. on the Renewal of the Product and Materials Purchase Framework
Agreement between Haier Smart Home Co., Ltd. and Haier Group Corporation, theResolution of Haier Smart Home Co., Ltd. on the Renewal of the Service Purchase
Framework Agreement between Haier Smart Home Co., Ltd. and Haier Group Corporation,
the Resolution of Haier Smart Home Co., Ltd. on the Renewal of the Product and Materials
Sales Framework Agreement between Haier Smart Home Co., Ltd. and Haier Group
Corporation, the Resolution of Haier Smart Home Co., Ltd. on the Renewal of the Service
Provision Framework Agreement between Haier Smart Home Co., Ltd., the Resolution ofHaier Smart Home Co., Ltd. on Investing in Large Refrigerator Project with an Annual
Capacity of 2 Million Units, the 2022 A Share Core Employee Stock Ownership Plan of Haier
Smart Home Co., Ltd (draft) and its Summary, the 2022 H Share Core Employee Stock
Ownership Plan of Haier Smart Home Co., Ltd (draft) and its Summary, the 2022 A Share
Option Incentive Scheme of Haier Smart Home Co., Ltd. (draft) and its Summary, theManagement Practices for the Assessment of the 2022 A Share Option Incentive Scheme ofHaier Smart Home Co., Ltd., the Resolution of Haier Smart Home Co., Ltd. on Proposal to
the General Meeting to Authorize the Board of Directors and its Authorized Persons to Take
Full Control of the Matters Relating to the Company’s 2022 A Share Option Incentive
Scheme, the Resolution of Haier Smart Home Co., Ltd. on the Appointment of Vice
President, the Resolution of Haier Smart Home Co., Ltd. on the Appointment of Vice
President, the Resolution of Haier Smart Home Co., Ltd. on the Re-election of the Board of
Directors and the Election of Independent Directors, the Resolution of Haier Smart Home
Co., Ltd. on the Re-election of the Board of Directors and the Election of Non-independent
Directors

The 1st meeting of the Eleventh session of
the Board of Directors

28 June 2022

Considered and approved the Resolution of Haier Smart Home Co., Ltd. on the Election of
Chairman of the Company, the Resolution of Haier Smart Home Co., Ltd. on the Election ofVice-chairman of the Company, the Resolution of Haier Smart Home Co., Ltd. on theElection of Members of the Strategy Committee of the Board of Directors, the Resolution ofHaier Smart Home Co., Ltd. on the Election of Members of the Nomination Committee of theBoard of Directors, the Resolution of Haier Smart Home Co., Ltd. on the Election ofMembers of the Audit Committee of the Board of Directors, the Resolution of Haier Smart
Home Co., Ltd. on the Election of Members of the Remuneration and Appraisal Committeeof the Board of Directors, the Resolution of Haier Smart Home Co., Ltd. on the Election ofMembers of the ESG Committee of the Board of Directors, the Resolution of Haier Smart
Home Co., Ltd. on the Appointment of President of the Company, the Resolution of Haier
Smart Home Co., Ltd. on the Appointment of Vice-president of the Company, theResolution of Haier Smart Home Co., Ltd. on the Appointment of Chief Financial Officer of
the Company, the Resolution of Haier Smart Home Co., Ltd. on the Appointment ofSecretary to the Board of Directors of the Company, the Resolution of Haier Smart Home
Co., Ltd. on the Appointment of Representative of Securities Affairs of the Company, theResolution of Haier Smart Home Co., Ltd. on Adjusting the 2022 A Share Option Incentive
Scheme, the Resolution of Haier Smart Home Co., Ltd. on the Grant of Share Options toIncentive Scheme Participants, the Resolution of Haier Smart Home Co., Ltd. on Adjusting
the Composition of the Administration Committee of the H Share Restricted Share Unite
Scheme (2021–2025)

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Section IV Corporate Governance

Meeting

Date

Resolutions approved

The 2nd meeting of the Eleventh session of

29 August 2022

Considered and approved the 2022 Interim Report of Haier Smart Home Co., Ltd. and its

the Board of Directors

Summary, the Risk Assessment Report on Haier Finance Co., Ltd. in the First Half of 2022
of Haier Smart Home Co., Ltd., the Special Report on the Deposit and Actual Use of RaisedFunds in the First Half of 2022 of Haier Smart Home Co., Ltd., the Resolution of Haier
Smart Home Co., Ltd. on the Acquisition of 100% Equity Interest in Qingdao Haier Special
Plastic Development Co., Ltd. by a Subsidiary.

The 3rd meeting of the Eleventh session of

28 October 2022

Considered and approved the 2022 Third Quarterly Report of Haier Smart Home Co., Ltd.

the Board of Directors of Haier Smart
Home Co., Ltd.

VI. PERFORMANCE OF DUTIES BY DIRECTORS(I)

Attendance of board meetings and general meetings by directors

Name of director

Whether an
Independent
director or not

Attendance of Board meetings
Required
attendances ofBoard meetings

Liang Haishan
Li Huagang
XieJuzhi
Shao Xinzhi
Gong Wei
Wu Changqi
Lin Sui
Chien Da-chun
Wong Hak Kun
Li Shipeng
Wu Qi
Yu Hon To
Li Kam Fun

NO
NO
NO
NO
NO
NO
NO
YES
YES
YES
YES
NO
NO

3
6
3
3
3
3
3
6
6
6
6
6
6

Attendance inAttendance by
person telecommunication
3
6
3
3
3
3
3
6
6
6
6
6
6

Attendance by
proxy

Absence

0
0
0
0
0
0
0
0
0
0
0
0
0

0
0
0
0
0
0
0
0
0
0
0
0
0

1
1
1
0
0
3
3
6
6
6
6
6
6

Attendances at
generalmeetings
Absence fromNumber of
two consecutive attendance ofmeetings in
generalperson or not
meetings
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO

4
4
0
0
0
4
4
4
4
4
0
4
4

Explanation for absence from two consecutive Board meetings in person□ Applicable√ Not applicable

Number of Board meetings held in the year
Of which: Number of on-site meetings
Number of meetings held by telecommunication
Number of meetings held both on site and by telecommunication(II)

Directors’ objection to the relevant matters of the Company□ Applicable√ Not applicable(III) Others□ Applicable78√ Not applicable

Haier Smart Home Co., Ltd. Annual Report 2022

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Section IV Corporate GovernanceVII. THE SPECIAL COMMITTEES OF THE BOARD√ Applicable□ Not Applicable(1). Personnel of The Special Committees of the Board
Categories of
The Special Committees
Audit Committee
Nomination Committee
Remuneration and Appraisal
Committee
Strategy Committee
ESG (“Environment, Society
and Governance”)
Committee

Name of Personnel
Wong Hak Kun, Yu Hon To, Chien Da-chun, Wu Qi, Shao Xinzhi
Wu Qi, Li Shipeng, Li Huagang
Chien Da-chun, Li Shipeng, Li Huagang
Li Huagang, Li Shipeng, Wu Qi, Gong Wei
Li Kam Fun, Chien Da-chun, Gong Wei(2). The Company convened 6 Audit Committee meetings during the reporting period
Date of Meeting

Contents of Meeting

23 March 2022

Considered and Approved the 2021 Annual
Financial Report of Haier Smart Home Co., Ltd.,the 2021 Annual Audit Report of Internal
Control of Haier Smart Home Co., Ltd.
Considered and approved the 2021 Annual
Financial Accounts Report of Haier Smart Home
Co., Ltd., the 2021 Annual Report on the
Self-Assessment on Internal Control of Haier
Smart Home Co., Ltd., the 2021 Annual Audit
Report of Internal Control of Haier Smart Home
Co., Ltd., the Resolution of Haier Smart Home
Co., Ltd. on the Re-assignment of China
Accounting Standards Auditor, the Resolution ofHaier Smart Home Co., Ltd on the Reassignment International Accounting Standards
Auditor, the Resolution of Haier Smart Home
Co., Ltd. on the Expected Provision of
Guarantee for Subsidiaries in 2022, theResolution of Haier Smart Home Co., Ltd. on
Conducting Foreign Exchange Funds Derivatives
Business, 2021 Annual Profit Distribution Plan ofHaier Smart Home Co., Ltd., the Resolution ofHaier Smart Home Co., Ltd. on the Special
Report on the Deposit and Actual Use of Funds
Raised in 2021, 2021 Annual Report on
Performance of Duties of the Audit Committeeof the Board of Haier Smart Home Co., Ltd.

28 March 2022

Major Opinions and
Suggestions

Other Notes on
Performance of Duty

No Objections

Nil

No objections

Nil

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Date of Meeting

Contents of Meeting

27 April 2022

Considered and approved the 2022 First Quarterly
Financial Report of Haier Smart Home Co., Ltd.,the Resolution of Haier Smart Home Co., Ltd.
on the Acquisition of 100% Equity in Qingdao
TAB Robot Technology Co., Ltd. by its
Subsidiary and Connected Transaction, theResolution of Haier Smart Home Co., Ltd. on
the Transfer of 25% Equity in Qingdao Haier
Mold Co., Ltd. by its Subsidiary and ConnectedTransaction, the Resolution of Haier Smart
Home Co., Ltd. on Renewing the Product andMaterial Purchase Framework Agreement
between Haier Smart Home Co., Ltd. and HaierGroup Corporation, the Resolution of Haier
Smart Home Co., Ltd. on Renewing theServices Purchase Framework Agreement
between Haier Smart Home Co., Ltd. and HaierGroup Corporation, the Resolution of Haier
Smart Home Co., Ltd. on Renewing the Productand Material Sales Framework Agreement
between Haier Smart Home Co., Ltd. and HaierGroup Corporation, the Resolution of Haier
Smart Home Co., Ltd. on Renewing theServices Provision Framework Agreement
between Haier Smart Home Co., Ltd. and HaierGroup Corporation.
Considered and approved the 2022 Interim
Financial Report of Haier Smart Home Co., Ltd.,the 2022 Interim Risk Assessment Report on
Haier Group Finance Co., Ltd. by Haier Smart
Home Co., Ltd., the Special Report on the
Deposit and Actual Use of Funds Raised in theFirst Half of 2022 by Haier Smart Home Co.,
Ltd., the Resolution of Haier Smart Home Co.,
Ltd. on the Acquisition of 100% Equity in
Qingdao Haier Special Plastics Research andDevelopment Co., Ltd. by its Subsidiary andConnected Transaction.
Considered and approved the 2022 third quarterly
Financial Report of Haier Smart Home Co., Ltd.
Considered and approved the 2022 Annual Reporton Audit work Plan of Haier Smart Home Co.,Ltd.

25 August 2022

27 October 2022
8 December
2022

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Major Opinions and
Suggestions

Other Notes on
Performance of Duty

No Objections

Nil

No Objections

Nil

No Objections

Nil

No Objections

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Section IV Corporate Governance(3). The Company convened 2 Nomination Committee meetings during the reporting
periodDate of Meeting

Contents of Meeting

30 March 2022

Considered and approved the Report of Haier
Smart Home Co., Ltd. on the Performance ofDuty of Current Directors, Supervisors andSenior Management, the 2021 Annual Report on
the Performance of Duty of the Nomination
Committee of the Board of Haier Smart Home
Co., Ltd.
Considered and approved the Resolution on the
Proposed Candidates of Independent Directors
for the Eleventh Session of the Board of Haier
Smart Home Co., Ltd., the Resolution on the
Proposed Candidates of Non-independent
Directors for the Eleventh Session of the Board
of Haier Smart Home Co., Ltd., the Resolution
on the Proposed Candidates of Vice Presidentof Haier Smart Home Co., Ltd.

27 April 2022

Major Opinions and
Suggestions

Other Notes on
Performance of Duty

No Objections

Nil

No Objections

Nil(4). The Company convened 2 Remuneration and Appraisal Committee meetings
during the reporting period
Date of Meeting

Contents of Meeting

30 March 2022

Considered and approved the 2021 Annual Reportof Haier Smart Home Co., Ltd. on Incentives for
Senior Management of the Company and
Implementation of Remuneration Assessment for
Directors and Senior Management, the 2022
Annual Report of Haier Smart Home Co., Ltd.
on Remuneration and Assessment Scheme of
Directors and Senior Management, theResolution of Haier Smart Home Co., Ltd. on
the Adjustment of Director Allowance, the 2021
Annual Report of Haier Smart Home Co., Ltd.
on Performance of Duties of the Remuneration
and Appraisal Committee of the Board
Considered and approved the 2022 Stock
Ownership Plan of A Share Core Employee ofHaier Smart Home Co., Ltd. (Draft) andSummary, the 2022 Stock Ownership Plan of H
Share Core Employee of Haier Smart Home
Co., Ltd.(Draft) and Summary, the 2022 A
Share Option Incentive Scheme of Haier Smart
Home Co., Ltd. (Draft) and Summary, the 2022
Management Practices for the Assessment of A
Share Option Incentive Scheme of Haier Smart
Home Co., Ltd.

27 April 2022

Major Opinions and
Suggestions

Other Notes on
Performance of Duty

No Objections

Nil

No Objections

Nil

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Section IV Corporate Governance(5). The Company convened 2 Strategy Committee meetings during the reporting
periodDate of Meeting

Contents of Meeting

30 March 2022

Considered and approved the 2021 Annual Reporton the Performance of Duties of the Strategy
Committee of the Board of Haier Smart Home
Co., Ltd.,
Considered and approved the Resolution of Haier
Smart Home Co., Ltd. on the Acquisition of
100% Equity in Qingdao TAB Robot Technology
Co., Ltd. by its Subsidiary and ConnectedTransaction, the Resolution of Haier Smart
Home Co., Ltd. on the Transfer of 25% Equity
in Qingdao Haier Mold Co., Ltd. by its
Subsidiary and Connected Transaction, theResolution of Haier Smart Home Co., Ltd. on
the Investment of a New Refrigerator Projectwith an Annual Production Capacity of 2 Million
Units.

28 April 2022

Major Opinions and
Suggestions

Other Notes on
Performance of Duty

No Objections

Nil

No Objections

Nil(6). The Company convened 2 meetings of the ESG Committee during the reporting
periodDate of Meeting

Contents of Meeting

28 March 2022

Considered and approved the 2021 Corporate
Environmental, Social and Governance Report ofHaier Smart Home Co., Ltd.
Considered and approved the Report on the
Progress of ESG Works in the First Half of2022 and Related Plans in the Second Half ofthe year.

25 August 2022

Major Opinions and
Suggestions

Other Notes on
Performance of Duty

No Objections

Nil

No Objections

Nil(7). Details of Disagreements□ Applicable√ Not applicable

VIII. SUPERVISORY COMMITTEE’ EXPLANATION ON RISKS ABOUT THE
COMPANY□ Applicable√ Not applicable

Supervisory Committee had no objections to the supervising items during the reporting period.

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Section IV Corporate Governance

IX. INFORMATION ON STAFF OF THE PARENT COMPANY AND PRINCIPALSUBSIDIARIES AT THE END OF THE REPORTING PERIOD(I)

Staff Information
Number of staff of the parent company
Number of staff of Principal subsidiaries
Total number of staff
Number of employees whose retirement expenses are borne by the parent
company and the principal subsidiaries

55
109,531
109,586
0

Breakdown by Function
Function
Production
Sales
Technical
Financial
Administrative
Total

Number
61,967
18,844
24,647
1,741
2,387
109,586

Breakdown by Education Background
Education
Bachelor and above
College Diploma
Secondary vocational training diploma and below
Total

(II)

Number (person)
36,33228,53444,720109,586

Remuneration policies√ Applicable□ Not applicable

Under the guidance of the”RenDanHeYi“management model, the Company adheres to the
remuneration philosophy of uniting user pay, value creation and value sharing, and provides
employees with a short, medium and long-term remuneration incentive system that combines
labour income, super-profit sharing and capital gain, as well as all-rounded welfare policies andemployee caring schemes. The Company encourages its employees to work with anentrepreneurial mindset, aligning employee value with company value and shareholder value,
continuously improving user experience and achieving a win-win development for both theCompany and its employees.
The Company has established a rich and multi-dimensional incentive mechanism and continues
to implement the”A+H“global incentive system covering both domestic and overseas employees
to attract, motivate and stabilise the Company’s core talent.

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Section IV Corporate Governance(III) Personnel Training√ Applicable□ Not applicable

The Company puts high priority on talent cultivation and has set up a hierarchical system fortalent training accordingly. By providing employees with rich learning resources throughdiversified methods such as course training, special training and temporary exchange, theCompany promotes talent growth in multiple dimensions for employees with different needs, thus
assisting them in improving their professionalism, expertise and leadership skills. In 2022, theCompany organized a number of trainings with courses covering corporate culture, officemanagement, professional skills and other contents, and adopted live broadcast, community
forums and other learning methods.
For details, please refer to relevant information in 2022 Environmental, Social and Governance
Report of Haier Smart Home Co., Ltd. published on the same date of this announcement.

(IV) Labor Outsourcing□ Applicable

X.

√ Not applicable

PROPOSAL OF PROFIT DISTRIBUTION OR CAPITALIZATION OF
CAPITAL RESERVE(I)

Formulation, implementation or adjustment of the cash dividend policies√ Applicable□ Not applicable

The Company’s 2021 profit distribution plan was passed on its 2021 Annual General Meeting
held on 28 June 2022: based on the Company’s total existing shares (deducting the repurchased
shares) of 9,364,586,585 (including 6,224,810,911 A shares, 271,013,973 D shares and2,868,761,701 H shares), it was proposed that the Company would distribute cash dividends of
RMB4.61357 (tax inclusive) per 10 shares to all shareholders, with a total amount before tax of
RMB4,320,413,011.54(tax inclusive). The plan was implemented and completed in August 2022.
Details were set out in the Announcement on Implementation of Rights and Interests Distributionof A-shares for 2021 of Haier Smart Home Co., Ltd. (No: L2022–062) published by the Company
on the four major securities newspapers and the website of Shanghai Stock Exchange on 17
August 2022 and relevant announcements in respect of dividend distribution of D shares and H
shares published on the Company’s website, Hong Kong Stock Exchange and other publication
platforms.

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Section IV Corporate Governance

The Company has always applied a stable and sustainable profit distribution policy. During thereporting period, the Company strictly followed the requirements set out in the Articles of
Association and in the Shareholder Return Plan for the Next Three Years of the Company. During
the formulation of the profit distribution plan, the Company took full account of return forinvestors, the long-term interests of the Company, overall interests of all shareholders andsustainable development of the Company, and continued to implement the stable dividend
distribution policy to provide investors an opportunity to share the growth of value, so thatinvestors could form the expectation of a stable return. The procedures and mechanisms for
decision-making such as Articles of Association and planning of return of shareholders
implemented by the Company were complete in compliance with laws and regulations. The
process was open and transparent while the standard and ratio of dividends was clear.
Responsibilities of independent directors were clear during the policy-making process, andindependent directors were given the opportunities to play their roles. Minority shareholders werealso given the opportunity to fully express their views and demands, and the legitimate interestsof minority shareholders were adequately protected.
The dividend distribution plan of 2022 of the Company: based on the total number of shares
after deducting the repurchased shares on equity interest record date for future profit
distribution, it is proposed that the Company will distribute cash dividend of RMB5.66 per 10
shares (tax inclusive) with cash dividend of RMB5,297,529,553.10. The retained undistributed
profit would be for the Company’s principal business in order to maintain sustainable and stabledevelopment and to create value for investors. The proportion of this distribution is 36.01% of
the net profit attributable to owners’ parent company in 2022 (In 2022, the Company spent
RMB1.491 billion and HK$364 million on the purchase of A shares and H shares; if this isincluded in cash dividends, the ratio of cash dividends to net profit attributable to owners’ parent
company for the year would be more than48%).100% dividend is paid in cash. If there is any
change in the total share capital of the Company during the period from the date of this reportto the record date of the equity distribution, the total distribution amount will be remained
unchanged with corresponding adjustment to the proportion of distribution per share.

(II)

Notes to the cash dividend policies√ Applicable□ Not Applicable

Whether in compliance with regulations of the Articles of Association andRequirements of the resolutions of the general meeting
Whether the standard and ratio of dividends were clear
Whether relevant procedures and mechanisms for decision-making werecomplete
Whether independent directors performed their duties and responsibilities
Whether minority shareholders were given the opportunity to fully express theirviews and demands, and whether their legitimate interests were adequately
protected

√ Yes

□ No

√ Yes
√ Yes

□ No
□ No

√ Yes
√ Yes

□ No
□ No

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Section IV Corporate Governance(III) The Company made profits and the profits for distribution to the owners’ Parent
Company was positive during the reporting period, but no cash profit
distribution plan was proposed; the Company should disclose the reasons indetail and the purpose of undistributed profits□ Applicable√ Not Applicable(IV) Profit distribution and conversion of capital reserve into share capital for thereporting period√ Applicable□ Not Applicable
Unit and Currency: RMB

Number of shares to be distributed for every ten shares (share)
Amount to be distributed for every ten shares (RMB) (tax inclusive)
Number of shares to be converted into share capital for every ten
shares (share)
Amount of cash dividend (tax inclusive)
Net profit attributable to ordinary shareholders of listed company in the
consolidated financial statement during the year of distribution
Percentage of the net profit attributable to the ordinary shareholders of
the listed companies in the consolidated financial statement (%)
Repurchase of shares by cash included in the amount of cash dividend
Total dividend amount (tax inclusive)
Percentage of total dividend amount to the net profit attributable to theordinary shareholders of the listed companies in the consolidated
financial statement (%)

0
5.66
0
5,297,529,553.10
14,710,923,491.99
36.01
1,816,280,590.58
7,113,810,143.68
48.36

Note: The above figures involving conversion in Hong Kong dollars to RMB are translated at the exchange rate as at 30
December 2022.

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Section IV Corporate Governance

XI. THE COMPANY’S SHARE OPTION INCENTIVE SCHEME, EMPLOYEESHAREHOLDING PLAN OR OTHER EMPLOYEE INCENTIVE MEASURESAND ITS INFLUENCE(I)

Matters disclosed in temporary announcements and without any subsequent
progress or change√ Applicable□ Not Applicable

Summary of matters

Query index

Completion of registration of grant of reserved
options under the 2021 A Share Option
Incentive Scheme: According to the relevant
resolutions of the 25th meeting of the 10th
session of the Board of Directors held by
the Company on 15 December 2021, it
was confirmed that the total number ofreserved options granted under theCompany’s 2021 A Share Option Incentive
Scheme was 4,525,214. In accordance withthis resolution, the Company completed theregistration of the aforementioned grant ofshares on 17 January 2022.
Introduction of 2022 A Share Option Incentive
and completion of grant and registration:
The 2022 A Share Option Incentive
Scheme wasconsidered and approved at
the General Meeting and Class Meeting
convened on 28 June 2022. On the samedate, as considered and approved at theBoard Meeting, 104,756,896 options were
granted to the incentive recipients. The
Company completed the registration of theaforementioned grant of shares on 13 July2022.

For details, please refer to theAnnouncement of Haier Smart Home Co.,
Ltd. on the Completion of Registration of
the Grant of the Reserved Share Options
under the 2021 A Share Option Incentive
Scheme disclosed by the Company on 19
January 2022 and relevant contents.

For details, please refer to the 2022 A
Share Option Scheme of Haier Smart
Home Co., Ltd (draft) disclosed by theCompany on 29 April 2022, theAnnouncement on the Adjustment to theCompany’s 2022 A Share Option
Incentive Scheme and Grant of 2022 A
Share Option to Incentive Recipients byHaier Smart Home Co., Ltd disclosed by
the Company on 29 June 2022, andrelevant contents of the announcements ofresolutions at the General Meeting and theAnnouncement of Haier Smart Home Co.,
Ltd. on the Completion of Registration of
the Grant of the 2022 A Share Option
Incentive Scheme disclosed by theCompany on 15 July 2022.

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Section IV Corporate Governance(II)

Summary of matters

Query index

Introduction of New Phase of A Share and H
Share Core Employee Stock Ownership
Plan and Completion of Position Opening：
In order to further improve the corporate
governance mechanism, create value forshareholders and promote the full
implementation of the Company’s IoT smart
home ecological brand strategy, as
considered and authorized at the 2020
Annual General Meeting held by theCompany on 25 June 2021, the Company
considered and introduced the 2022 H
Share Core Employee Stock Ownership
Plan of Haier Smart Home Co., Ltd (Draft)
and the 2022 A Share Core Employee
Stock Ownership Plan of Haier Smart Home
Co., Ltd (Draft) at the 28th meeting of the10th session of the Board of Directors heldby the Company on 28 April 2022. During
the reporting period, the Company
completed the position opening and otherrelated works for the 2022 A Share and H
Share Core Employee Stock OwnershipPlan.

For details, please refer to the 2022 A
Share Core Employee Stock Ownership
Plan of Haier Smart Home Co., Ltd (Draft),the 2022 H Share Core Employee Stock
Ownership Plan of Haier Smart Home Co.,Ltd (Draft) disclosed by the Company on
29 April 2022, the Announcement of Haier
Smart Home Co., Ltd. on the Completionof Non-trading Transfer of Shares underthe 2022 A Share Core Employee Stock
Ownership Plan disclosed by theCompany on 22 July 2022, theAnnouncement of Haier Smart Home Co.,
Ltd. on the Completion of Share Purchaseunder the 2022 H Share Core Employee
Stock Ownership Plan disclosed by theCompany on 26 July 2022 and relevant
contents.

Incentive events not disclosed in provisional announcements or with subsequentdevelopment
Equity incentive□ Applicable √ Not Applicable
Other explanations□ Applicable √ Not Applicable
Employee stock ownership plan
□ Applicable √ Not Applicable
Other Incentives□ Applicable √ Not Applicable

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Section IV Corporate Governance(III) Share option granted to directors and senior management during the reporting
period□ Not Applicable√ Applicable

Unit: 10,000 shares

Name

Number of

SharesNumber of

new stocksubject tostock

options

Exercisable stock option

Number ofstock
options held Market value

options held

grantedsharesexercised

Stock at the ending at the end of

at theduring theduring theduring theoptions

beginning ofreportingreportingreportingexercisereportingperiodthe yearperiodperiodperiod price (RMB)

period(RMB)

Positionof the the reporting

Li Huagang

Chairman, President

91.39

0

0

0

91.39

Gong Wei

Director, Chief

45.70

0

0

0

45.70

Financial Officer, Vice
President
XieJuzhi

Vice President

91.39

0

0

0

91.39

Li PanVice President

45.70

0

0

0

45.70

Song Yujun

Vice President

31.21

0

0

0

31.21

Zhao Yanfeng

Vice President

46.82

0

0

0

46.82

Huang Xiaowu

Vice President

45.70

0

0

0

45.70

Wu Yong

Vice President

22.85

0

0

0

22.85

Li Yang

Vice President

45.70

0

0

0

45.70

Guan Jiangyong

Vice President

22.85

0

0

0

22.85

Liu Xiaomei

Secretary to the board

0

11.65

0

0

11.65

Total

/

489.31

11.65

0

0

500.96of directors/(IV) Establishment and implementation of appraisal and incentive mechanism forsenior management during the reporting period√

Applicable □ Not Applicable

The cash remuneration of executives in 2022 consists of monthly remuneration, bonuses andsharing, and is linked to orders triggered by the upgrade of the Company’s Internet of Thingsfrom”high-end brands“to”scenario brands“to”ecological brands”. Focusing on the rapid
improvement of profitability and through digital transformation, the Company maintained its
competitiveness as a leader in the whole process, and sharing of high added-value. Through theinnovation of the mechanism, the Company encouraged its executives to achieve higher market
goals, thus achieving a win-win situation for users, employees, enterprises and stakeholders. At
the same time, the Company continues to promote the implementation of the employee stock
ownership and other long-term incentive plans; multiple incentive tools will be effectively utilised
to mobilise competent management, frontline managers and business and technical backbones
on a wider scale, further aligning the interests of shareholders, the Company and incentive
recipients, and bringing more efficient and sustainable returns to shareholders.

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Section IV Corporate Governance

XII. CONSTRUCTION AND IMPLEMENTATION OF INTERNAL CONTROLSYSTEM DURING THE REPORTING PERIOD√ Applicable□ Not applicable

In accordance with the”Rules for the Preparation and Reporting of Information Disclosure by Listed
Issuers of Securities No. 21— General Provisions on the Annual Internal Control Assessment
Report“jointly issued by the China Securities Regulatory Commission and the Ministry of Finance,the”Guidelines for Self-regulation of Listed Companies on the Shanghai Stock Exchange No. 1 —Regulation of Operations”, the “Guidelines for Self-Regulation of Listed Companies on the Shanghai
Stock Exchange No. 2 — Business Handling” and other relevant guidelines and requirements, theCompany has conducted a self-assessment of its internal control work. Based on the identification ofsignificant deficiencies in the Company’s internal control of financial reporting, no significant
deficiencies in the Company’s internal control of financial reporting were identified as at the basis dateof the internal control assessment report, and the Company had maintained effective internal control offinancial reporting in all material respects in accordance with the requirements of the internal control
regulatory system and relevant regulations. Based on the identification of significant deficiencies in the
Company’s internal control of non-financial reporting, no significant deficiencies in the Company’s
internal control of non-financial reporting were identified as at the basis date of the internal control
assessment report. No events have occurred between the basis date of the internal control
assessment report and the date of issuance of the internal control assessment report that would affectthe effectiveness of the internal control assessment.
For details, please refer to the 2022 Internal Control Assessment Report of Haier Smart Home Co.,
Ltd. disclosed on the same day of this report.
Explanations on material defects found in internal control during the reporting period□ Applicable√ Not applicable

XIII. CONTROL OVER MANAGEMENT OF SUBSIDIARIES DURING THE
REPORTING PERIOD√ Applicable□ Not applicable

The listed company established an internal control and management system covering all subsidiaries
within the scope of consolidated statement, which included four major areas of strategy, finance,
operation and compliance with a total of 22 primary business processes and control metrics. In
particular,
1.

90Unified control environment, such as strategy and culture, risk management system, internal control
manual, Rendanheyi remuneration system, unified accounting and information system in thefinancial sharing center, etc.

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Section IV Corporate Governance2.

The company has clear selection methods and terms of reference in respect of appointment of
directors, supervisors and important senior management to their controlling subsidiaries.
Meanwhile, relevant departments of the parent company stipulate the criteria and scope of
authorization for major decision and important events, formulate the approval procedure for majordecision and important events beyond the scope of authorization. The management ofsubsidiaries at different levels shall exercise their authority and take responsibility within thescope of authorization.

3.

Management of major events of subsidiaries: The relevant authority of the parent company of thelisted company stipulates the criteria and scope of authorization for major decision and important
events, formulate the approval procedure for major decision and important events beyond thescope of authorization. If the Company and its subsidiaries provide external guarantees, the total
amount of which shall propose for consideration at the general meetings after approval by the
Board. Subject to the authorization by the general meetings, the Board decides the Company’s
external investment, acquisition and disposal of assets, external guarantees, entrusted wealthmanagement, related-party transactions and other events.

4.

Management of budget: The finance and budget center formulates the budget preparation policy
and guidance for the following year at the end of each year, and distributes them to eachsubsidiary together with the budget template, requiring the preparation of a comprehensive
budget in accordance with the unified budget preparation policy and guidance, which contains
details of the preparation principles, explanation of filling the template, submission process andexamination. Each subsidiary has prepared a comprehensive budget in accordance with theunified budget preparation policy and guidance. Annual budgeting of the following year iscommenced in the third quarter every year by making profit and loss budgets for each industry
and subsidiaries based on market forecasts to ensure accurate estimation in advance. The
execution and adjustment of budgets are regularly monitored and evaluated.
For non-fixed assets investment projects, the person in charge of fund of each subsidiary willsummarize the actual investment situation and report it to the manager of the investment,
financing and fund management department of Haier Smart Home. The manager of theinvestment, financing and fund management department will monitor the execution of the budgetof investment and financing by comparing the report with the corresponding budget of theinvestment plan.

5.

Operation analysis and performance evaluation: The Company regularly convenes global andindustry-specific performance and operations meetings to discuss the operations andperformance and carries out performance evaluation.

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Section IV Corporate Governance

6.

Information transmission: The Company widely collects macroeconomic and industry development
information, market information, regulatory compliance and other external information throughvarious channels, and analyzes and organizes the collected information into research reports
every month, which are submitted to different levels of management after review. The
management of the parent company holds regular meetings with industries and segments toconvey the management requirements of the parent company and to be aware of the operation
status of subsidiaries in a timely manner. At the same time, the Company has formulated theinformation security and internal report confidentiality system, which specifies the confidentiality
content, confidentiality measures, confidentiality level and transmission scope to prevent thedisclosure of commercial secrets.

7.

Test and audit of internal control: During the reporting period, the parent company conducts internal
test and audit of subsidiaries, more than 91% and 90% of revenue and assets of which belong
to the parent Company, respectively, to identify problems in a timely manner and facilitate theclosed-loop rectification of problems.

During the reporting period, there were no new significant subsidiaries.

XIV. RELEVANT EXPLANATIONS ON THE AUDIT REPORT OF INTERNALCONTROL√ Applicable□ Not applicable

The Company’s auditor Hexin Certified Public Accountants LLP has audited the efficiency of internal
control relating to the financial report of the Company, and has issued its standard unqualified audit
report for the Company’s internal control (He Xin Shen Zi (2023) No. 000367).
For the details of Audit Report of Internal Control of Haier Smart Home Co., Ltd., please refer torelevant announcements published on the website of Shanghai Stock Exchange (www.sse.com.cn) on
the same day of this report.
Whether to disclose the audit report on internal control: Yes
Type of opinion on the audit report on internal control: Standard unqualified opinion

XV. RECTIFICATION OF THE SELF-ASSESSMENT PROBLEMS UNDER THE
GOVERNANCE SPECIAL ACTION OF THE LISTED COMPANY
Not Applicable

XVI. OTHERS□ Applicable92√ Not Applicable

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Section V Environmental and Social
Responsibilities

I.

ENVIRONMENTAL INFORMATION
Established environmental protection related mechanism or not
Environmental protection funds invested during the Reporting Period(Unit: RMB10,000)

Yes
54,128

Note: During the reporting period, environmental protection funds were invested in aspects of R&D of environmental protection
technology, clean production, environmental protection equipment purchase and renovation, pollution control, ecologicalprotection, environmental management expenditure, etc.

(I)

Explanation of the environmental protection status of companies and theirimportant subsidiaries that are key emission units announced by theenvironmental protection department√ Applicable1.

□ Not Applicable

Information on pollutant discharge√
Applicable □ Not Applicable
The Company’s indirect non-wholly owned subsidiaries Qingdao Jiaonan Haier Washing
Machine Co., Ltd. (Jiaonan Washing Machine), Hefei Haier Refrigerator Co., Ltd. (“Hefei
Refrigerator”), Wuhan Haier Water Heater Co., Ltd. (“Wuhan Water Heater”), Wuhan Haier
Freezer Co., Ltd. (“Wuhan Freezer”), Qingdao Haier (Jiaozhou) Air-conditioning Co., Limited(“Jiaozhou Air-conditioning”), Qingdao Haier Special Refrigerator Co., Ltd. (“Qingdao Special
Refrigerator”), Qingdao Economy and Technology Development Zone Haier Water HeaterCo., Ltd. (“Development Zone Water Heater”), Qingdao Haier Refrigerator Co., Ltd.
(“Qingdao Refrigerator”), Qingdao Haier Special Freezer Co., Ltd. (“Qingdao Special Freezer
Factory I”), Qingdao Haier Special Freezer Co., Ltd. (“Qingdao Special Freezer Factory II”),
Qingdao Haier Special Plastic Research and Development Co., Ltd. (“Huangdao Special
Plastic”) and Tianjin Haier Cleaning Electrical Appliances Co., Ltd. (“Tianjin Washing
Machine”) are among the key emission units announced by the local environmental
protection department. The main information on pollutant discharge is as follows:(1)

Jiaonan Washing Machine①
Main pollutants：
Wastewater. According to the Technical Specification for Application andIssuance of Pollutant Permit — Wastewater Treatment (for Trial) (HJ 978–2018),
Development Zone Energy should apply for the Receipt on the Registration of
Pollution Discharge for Fixed Pollution Sources and detect 17 types ofpollutants (including specific pollutants), namely, total cadmium, total chromium,total mercury, total lead, total arsenic, hexavalent chromium, COD (Chemical
oxygen demand), ammonia nitrogen, total phosphorus, total nitrogen, PH,suspended solids, chroma, petroleum, BOD, rate of flow and temperature.
②

Way of discharge: intermittent discharge③

Number and distribution of discharge outlets: one, north of the wastewater
treatment plant, pipeline discharge

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Section V Environmental and Social Responsibilities

④

⑤

(2)

Concentration and total amount of discharge and approved total amount ofdischarge:：
According to the discharge permit, the concentration and total amount ofpollutant discharge subject to approval for the total amount are as follows:

Name ofNo. pollutant

Total
Concentration amount ofdischargeof discharge

Whether it isApproved
total amount excessiveof discharge discharge

12

61.2mg/L
6.96mg/L

60 tons
6 tonsCOD
Ammonia
nitrogen8.085 tons
0.971 tons

No
No

Pollutant discharge standards implemented: Wastewater Quality Standards for
Discharge to Municipal Sewers (GBT 31962–2015)

Hefei Refrigerator①
Main Pollutants：
Wastewater. According to the Technical Specification for Application andIssuance of Pollutant Permit — Wastewater Treatment (for Trial) (HJ 978–2018),
Development Zone Energy should apply for a pollutant discharge permit anddetect 8 types of pollutants (including specific pollutants), namely, total nitrogen(as N), total phosphorus (as P), rate of flow, suspended solids, value of PH,
Chemical oxygen demand (COD), ammonia nitrogen (NH3-N) and five-day
biochemical oxygen demand (BOD5).
Exhaust gas. According to the Volatile Organic Unorganized Emission Control
Standard (GB 37822–2019), Development Zone Energy should apply for apollutant discharge permit and detect pollutants. Main types of atmosphericpollutants: particle matter, non-methane total hydrocarbons

94②

Way of discharge: continuous discharge③

Number and distribution of discharge outlets: 1 for sewage, at the north entranceof the refrigerator Park; 22 for exhaust gas, at the refrigerator block A(10), B
factories(10) and Phase III Factory(2).

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Section V Environmental and Social Responsibilities④

Concentration of discharge and discharge standard:
According to the discharge permit, the concentration and total amount ofpollutant discharge subject to approval for the total amount are as follows:

Name ofNo. pollutant

Total
Concentration amount ofdischargeof discharge

Whether it isApproved
total amount excessiveof discharge discharge

12

99.95 mg/L
12.59 mg/L

37.55 tons
4.93 tons

300 tons
28 tonsNoNo30.28 mg/L
2.19 mg/L

11.69 tons
0.87 tons

20 tons
5 tons

No
No

3
4

COD
ammonia
nitrogentotal nitrogen
total phosphorus⑤(3)Pollutant discharge standards implemented: Wastewater Quality Standards for
Discharge to Municipal Sewers (GBT 31962–2015)
Wuhan Water Heater①
Main Pollutant：
Wastewater. According to the Technical Specification for Application andIssuance of Pollutant Permit — Wastewater Treatment (for Trial) (HJ 978–2018),
Wuhan water heater should apply for a pollutant discharge permit and detect 9
types of pollutants (including specific pollutants), namely, COD, total zinc,suspended solids, ammonia nitrogen (NH3-N), five-day biochemical oxygen
demand (BOD5), PH, anionic surface active agent, total phosphorus, and animaland vegetable oils.
②

Way of discharge: indirect discharge③

Number and distribution of discharge outlets: one, on the southwest of thewastewater treatment plant, pipeline discharge④

Concentration and total amount of discharge and approved total amount ofdischarge:
According to the discharge permit, the concentration and total amount ofpollutant discharge subject to approval for the total amount are as follows:⑤

Name ofNo. pollutant

Total
Concentration amount ofdischargeof discharge

Whether it isApproved
total amount excessiveof discharge discharge

1
2

40 mg/L
0.336 mg/L

9.075 tons
0.9075 tons

COD
Ammonia
nitrogen3.196 tons
0.391 tons

No
No

Pollutant discharge standards implemented: Wastewater Quality Standards for
Discharge to Municipal Sewers (GBT 31962–2015)

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Section V Environmental and Social Responsibilities(4)

Wuhan freezer①
Main pollutants：
Wastewater. According to the Technical Specification for Application andIssuance of Pollutant Permit — Wastewater Treatment (for Trial) (HJ 978–2018),
Wuhan freezer should apply for a pollutant discharge permit and detect 9 typesof pollutants (including specific pollutants), namely, COD, total zinc, suspended
solids, ammonia nitrogen (NH3-N), five-day biochemical oxygen demand (BOD5),PH, anionic surface active agent, total phosphorus, and animal and vegetableoils.
②

Way of discharge: indirect discharge③

Number and distribution of discharge outlets: one, on the south of the wastewater
treatment plant, pipeline discharge④

Concentration and total amount of discharge and approved total amount ofdischarge: According to the discharge permit, the concentration and total
amount of pollutant discharge subject to approval for the total amount are as
follows:

Name ofNo. pollutant

Total
Concentration amount ofdischargeof discharge

Whether it isApproved
total amount excessiveof discharge discharge

1
2

46 mg/L
0.497 mg/L

4.3628 tons
0.4365 tons

COD
Ammonia
nitrogen0.96 tons
0.01 tons

No
No

⑤

(5)

Pollutant discharge standards implemented: Wastewater Quality Standards for
Discharge to Municipal Sewers (GBT 31962–2015)
Jiaozhou Air-conditioning①
Main Pollutants：
Hazardous waste. According to the national directory, 10 types of hazardous
waste detected are namely: waste oil, sludge, slag powder, computer boards,
activated carbon, cotton filters, lightning tubes, soldering flux buckets, paintbuckets and packaging bags.
②

96

Way of discharge: Hazardous waste is transferred to a qualified hazardous waste
disposal unit for disposal

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③

④

(6)

Total amount of discharge and approved total amount of discharge:

No.

Name of hazardous waste

Total amountof transfer(tons)

1
2
3
4
5
6
7

Packaging bags
Waste oilSlag powder
Forklift battery
SludgePaint buckets
Computer board

0.08
24.88
15.48
17.92
18.06
1
14.76

Total amountof managed
plan (tons)

Whether it isexcessivedischarge

0.5
40
30
22
18.1
4
15

No
No
No
No
No
No
No

Pollutant discharge standards implemented: Directory of National Hazardous
Wastes (Version 2021), Law of the People’s Republic of China on thePrevention and Control of Environmental Pollution by Solid Waste

Qingdao Special Refrigerator①
Main Pollutants：
Exhaust gas. According to legislative requirements, Qingdao Special Refrigerator
should apply for a pollutant discharge permit and detect the primary type ofpollutant in the atmosphere, namely non-methane hydrocarbon, with the
maximum concentration of discharge not exceeding 60mg/m³; particulatematter, with the maximum concentration of discharge not exceeding 150mg/m³.
A qualified third-party testing unit is commissioned to conduct organic exhaustgas concentration testing and issue a report on a quarterly basis.
②

Way of discharge: Continuous emission③

Number and distribution of discharge outlets: four in total, one for absorption
exhaust port at the northeast corner of the plant roof, and two for welding
exhaust ports and one for foam exhaust port at the west side of the plant roof.

④

Concentration and total amount of discharge and approved total amount ofdischarge: No control regarding the total amount of discharge of organic
exhaust gas and particulate matter

No.
1

Name ofpollutantNon-methanehydrocarbon

Whether it isConcentration of Total amount Approved total amount of excessive
discharge
dischargeof discharge discharge
1.23 mg/m³/

No total amount ofdischarge control

No

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Section V Environmental and Social Responsibilities⑤(7)

Pollutant discharge standards implemented: Volatile Organic Compounds
Discharge Standards Part 7: Other Industries DB37/2801.7–2019, Integrated air
pollutants discharge standard GB16297–1996.

Development Zone Water Heater①
Main pollutants:
Exhaust gas. According to the requirements of laws and regulations,
Development Zone Water Heater should apply for a pollutant discharge permit
and detect the primary types of pollutant in the atmosphere, namely, nonmethane hydrocarbons, with the maximum concentration of discharge notexceeding 50mg/m³; particulate matter, with the maximum concentration ofdischarge not exceeding 150mg/m³. A qualified third-party testing unit iscommissioned to conduct organic exhaust gas concentration testing and issue
a report on a quarterly basis.
Wastewater: There is no wastewater treatment plant in the business department
and thus wastewater is transported by pipeline to the wastewater treatment
plant of energy companies for discharge after treatment.
②

Way of discharge: Continuous discharge③

Number and distribution of discharge outlets: twelve in total, two for exhaust
ports for powder coating line at the southeast and northeast side of the plantrespectively, nine for welding exhaust ports at the plant roof and one for foam
exhaust port at the east side of the plant roof.

④

Concentration and total amount of discharge and approved total amount ofdischarge: No control regarding the amount of discharge of organic exhaust gas
and particulate matter

No.
1

⑤

98

Name ofpollutant

Whether it isConcentration of Total amount Approved total amount of excessive
discharge
dischargeof discharge discharge

non-methane
1.29mg/m³hydrocarbons/

noNo control regarding thetotal amount of dischargeof non-methanehydrocarbons

Pollutant discharge standards implemented: Volatile Organic Compounds
Discharge Standard Part 5:Surface coating industry DB37/2801.5–2019,
Integrated emission standard of air pollutants GB16297–1996.

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Section V Environmental and Social Responsibilities(8)

Qingdao Refrigerator①
Main pollutants:
Exhaust gas. According to requirements of laws and regulations, Qingdao
Refrigerator should apply for a pollutant discharge permit and detect the
primary type of pollutant in the atmosphere, namely non-methane hydrocarbon
with the maximum concentration of discharge not exceeding 60mg/m³ andparticulate matter with the maximum concentration of discharge not exceeding
150mg/m³. A qualified third-party testing unit is commissioned to conductorganic exhaust gas concentration testing and issue a report on a quarterly
basis.
②

Way of discharge: Continuous discharge③

Number and distribution of discharge outlets: Four in total, one for absorption
exhaust port, one for welding exhaust port on the west side of the plant roof,
and two foam exhaust ports with one on the west side and one on the eastside of the plant roof.

④

Concentration and total amount of discharge and approved total amount ofdischarge: No control regarding the total amount of discharge of organic
exhaust gas and particulate matter

No.
1

⑤

(9)

Name ofpollutantnon-methanehydrocarbon

Whether it isConcentration of Total amount Approved total amount of excessive
discharge
dischargeof discharge discharge
1.2mg/m³/

No control regarding theNototal amount of discharge

Pollutant discharge standards implemented: Volatile Organic Compounds
Discharge Standards Part 7: Other Industries (DB37/2801.7–2019),
Comprehensive Emission Standards of Air Pollutants (GB16297–1996).

Qingdao Special Freezer factory I①
Main pollutants:
Exhaust gas. According to requirements of laws and regulations, it should apply
for a pollutant discharge permit and detect the primary type of pollutant in theatmosphere, namely non-methane hydrocarbon with the maximum concentrationof discharge not exceeding 50mg/m³ and particulate matter with the maximum
concentration of discharge not exceeding 150mg/m³. A qualified third-party
testing unit is commissioned to conduct organic exhaust gas concentration
testing and issue a report on a quarterly basis.
Wastewater. There is no sewage station in the business department, and the
production wastewater is piped to the sewage station of the energy company
for treatment and discharge.

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Section V Environmental and Social Responsibilities②

Way of discharge: Continuous discharge③

Number and distribution of discharge outlets: Six in total, one for exhaust port
for powder coating on the north of the plant, one for welding exhaust port on
the east of the plant, and four for foam exhaust ports on the east side of theplant roof.

④

Concentration and total amount of discharge and approved total amount ofdischarge: No control regarding the total amount of discharge of organic
exhaust gas and particulates

No.
1

⑤

Name ofpollutantnon-methanehydrocarbon

Whether it isConcentration of Total amount Approved total amount of excessive
discharge
dischargeof discharge discharge
1.53mg/m³/

No control regarding theNototal amount of discharge

Pollutant discharge standards implemented: Volatile Organic Compounds
Discharge Standards Part 5: Surface Coating Industry (DB37/2801.5–2019),
Comprehensive Emission Standards of Air Pollutants (GB16297–1996).

(10) Qingdao Special Freezer Factory II①
Main pollutants:
Exhaust gas. According to the requirements of laws and regulations, Qingdao
Special Freezer Factory II should apply for a pollutant discharge permit anddetect the primary types of pollutant in the atmosphere, namely, non-methanehydrocarbons, with the maximum concentration of discharge not exceeding
50mg/m³; particulate matter, with the maximum concentration of discharge notexceeding 150mg/m³. A qualified third-party testing unit is commissioned to
conduct organic exhaust gas concentration testing and issue a report on aquarterly basis.
Wastewater: There is no wastewater treatment plant in the business department
and thus wastewater is transported by pipeline to the wastewater treatment
plant of energy companies for discharge after treatment.

100②

Way of discharge: continuous discharge③

Number and distribution of discharge outlets: five in total, one for exhaust port
for powder coating line at the north side of the plant, one for absorption
exhaust port at the east side of the plant roof and three for foam exhaust ports
at the east side of the plant roof.

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Section V Environmental and Social Responsibilities④

Concentration and total amount of discharge and approved total amount ofdischarge: No control regarding the amount of discharge of organic exhaust gas
and particulate matter

No.
1

⑤

Name ofpollutant

Whether it isConcentration of Total amount Approved total amount of excessive
discharge
dischargeof discharge discharge

Non-methane
1.44mg/m³hydrocarbons/

noNo control regarding thetotal amount of dischargeof non-methanehydrocarbons

Pollutant discharge standards implemented: Volatile Organic Compounds
Discharge Standard Part 5:Surface coating industry DB37/2801.5–2019,
Integrated emission standard of air pollutants GB16297–1996.

(11) Huangdao Special Plastic①
Main pollutants:
Exhaust gas. According to the requirements of laws and regulations, Huangdao
Special Plastic should apply for a pollutant discharge permit and detect the
primary type of pollutant in the atmosphere, namely non-methane hydrocarbons,with the maximum concentration of discharge not exceeding 60mg/m³. A
qualified third-party testing unit is commissioned to conduct organic exhaust gas
concentration testing and issue a report on a quarterly basis.
②

Way of discharge: continuous discharge③

Number and distribution of discharge outlets: three in total, one for absorption
exhaust port at the northwest corner of the plant roof and two for foam exhaust
ports at the south side of the plant roof.

④

Concentration and total amount of discharge and approved total amount ofdischarge

No.
1

Name ofpollutant

Whether it isConcentration of Total amount Approved total amount of excessive
discharge
dischargeof discharge discharge

Non-methane
1.17mg/m³hydrocarbons/

noNo control regarding thetotal amount of dischargeof non-methanehydrocarbons

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Section V Environmental and Social Responsibilities⑤

Pollutant discharge standards implemented: Volatile Organic Compounds
Discharge Standard Part 7: Other industries DB37/2801.7–2019, Integrated
emission standard of air pollutants GB16297–1996.

(12) Tianjin Washing Machine①
Main Pollutant：
Wastewater. According to requirements of laws and regulations, a pollutant
discharge permit should be applied and enforced, and 4 types of pollutants
should be tested, namely, COD, ammonia nitrogen, PH and suspended solids.
Exhaust gas: According to requirements of laws and regulations, a pollutant
discharge permit should be applied and enforced, and 4 types of pollutants
should be tested, namely, particulate matter, sulphur dioxide, nitrogen oxides
and VOCs.
②

Way of discharge: indirect discharge for wastewater, continuous discharge forexhaust gas③

Number and distribution of discharge outlets: one for wastewater, the wastewater
treatment plant, pipeline discharge; eleven for exhaust gas, two in the plastic
injection department, six in the powder coating department and three in the
boiler room.

④

Concentration and total amount of discharge and approved total amount ofdischarge: No control regarding the total amount of discharge of organic
exhaust gas
According to the discharge permit, the concentration and total amount ofpollutant discharge subject to approval for the total amount are as follows:⑤

102

Name ofNo. pollutant

Total
Concentration amount ofdischargeof discharge

Whether it isApproved
total amount excessiveof discharge discharge

1

COD

23mg/L2

ammonia
nitrogen0.628mg/L

34.742notonnes3.127 tonnes no0.177
tonnes
0.0048tonnesPollutant discharge standards implemented: Integrated wastewater discharge
standard (DB12356–2018)

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2.

Construction and operation of pollution prevention and treatment facilities:√ Applicable □ Not Applicable
Jiaonan Washing Machine, Jiaozhou Air-conditioning, Wuhan Freezer, Wuhan Water Heater,
Tianjin Washing Machine have one, one, one, two and one wastewater treatment plants
with a designed treatment capacity of 600 tonnes/day, 300 tonnes/day, 550 tonnes/day,
300 tonnes/day,260 tonnes/day and 300 tonnes/day, respectively. The construction,
maintenance and daily operation of all wastewater treatment facilities are conducted inaccordance with the requirements of national and local environmental laws and regulations.
Information on all wastewater discharge is subject to 24-hour online monitoring and suchmonitored information is transmitted to environmental authorities in a real-time manner. All
equipment is operating normally. In addition, the Company fully promotes all plants to
install exhaust treatment facilities and VOCs online monitoring facilities. All equipment is
operating normally and exhaust produced is treated by the prevention and treatment
facilities before compliant release and is monitored.

3.

Environmental impact assessment of construction projects and other environmental
protection administrative permits√ Applicable □ Not Applicable
The Company and its subsidiaries execute construction project implementation andproduction in accordance with the requirements of laws and regulations and strictly comply
with the three simultaneous requirements of environmental protection for construction
projects in the process of environmental impact assessment, and have passed
environmental assessment acceptance and are not involved in any environmental illegal
conducts such as construction before approval.

4.

Emergency plans for environmental incidents√ Applicable □ Not Applicable
The Company and its subsidiaries have formulated Emergency Plans for Environmental
Incidents in accordance with the requirements of laws and regulations and organized drills,
and continue to improve and upgrade the plans based on drill results.

5.

Self-monitoring environmental programs√ Applicable □ Not Applicable
The Company complies with national and local environmental standard requirements in
respect of all pollutant discharge. Wastewater collected is subject to standard treatment
and is released in a compliant manner. It is under real-time monitoring through theautomatic online wastewater monitoring system, which shares its information with Haier
Smart Energy System. In March 2017, the Company passed the upgraded certification in
relation to ISO14001 environment management system. In May 2021, a professional
certification firm was appointed to conduct a review and audit on the operation of
ISO14001 system in 2020, where satisfactory results were obtained to demonstrate its
good operating condition. In May 2022, a second review and audit was conducted on theoperation of ISO14001 system in 2021.

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Section V Environmental and Social Responsibilities

(II)

6.

Administrative penalty due to environmental issues during the Reporting Period□ Applicable √ Not Applicable

7.

Other environmental information that should be disclosed□ Applicable √ Not Applicable

Explanation on environmental protection of companies other than major pollutant
emission units√ Applicable□ Not Applicable

1.

Administrative penalty due to environmental issues□ Applicable √ Not Applicable

2.

Other environmental information disclosure with reference to major pollutant
emission units√ Applicable □ Not Applicable
All divisions of the Company execute construction project implementation and production inaccordance with the requirements of laws and regulations and strictly comply with the threesimultaneous requirements of environmental protection for construction projects in theprocess of environmental impact assessment, and have passed environmental assessment
acceptance and are not involved in any environmental illegal conducts such as construction
before approval.
Through Haier Smart Energy Center, an industry leading energy big data analysis system,
the Company implements centralized dynamic monitoring and digitalized management inrespect of major energy consumption, such as water, electricity and gas, of all plants
across the country by utilizing automatized and informationalized technology and an
integrated management model. It automatically collects precise information on energy
resources and completes prediction and analysis of energy consumption information to
optimize energy adjustment, reduce energy consumption per unit production to achieve
low-carbon production.

3.

Reasons for failure to disclose other environmental information□ Applicable √ Not Applicable(III) Relevant information favorable to ecological protection, pollution prevention andcontrol and environmental responsibility fulfillment√ Applicable□ Not Applicable

In order to better protect our homeland, the Company has been committed to implementing
national “dual carbon” strategy by integrating low-carbon, recycling, energy conservation andemission reduction into daily operation and actively exploring a model for achieving carbon
reduction throughout the product lifecycle. We continuously promoted green technologies
upgrading in the industry by capitalizing on our industrial leading role in green technologies, andworked together to move towards a greener, win-win and sustainable future.

104

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Section V Environmental and Social Responsibilities

For details, please refer to relevant information in 2022 Environmental, Social andGovernance Report of Haier Smart Home Co., LTD. published on the same date of thisreport.

(IV) Measures taken during the Reporting Period to reduce its carbon emission andtheir effectiveness
Whether carbon reduction
measures were implemented

Yes

Reduction of carbon dioxide
equivalent emission (unit:
tonnes)14,017The Company’s carbon reduction measures mainly include:
Types of carbon reduction
measures (such as using clean
energy for power generation, (1) Identifying the carbon emission of products:
The Company has conducted carbon review of its
using carbon reduction
factories to understand the current status of its carbon
techniques in the production
emission and the carbon footprint of some of its
process, developing andproducts, and will take targeted carbon reduction
producing new products
actions based on the results of the carbon review.
which help reduce carbon
emission, etc.)(2) Practising green concept throughout the lifecycle:
The Company actively cooperates with parties along the
upstream and downstream industrial chain, from raw
material manufacturers to logistics enterprises, fromconsumers to recycling and dismantling factories, inorder to explore carbon reduction throughout the
product lifecycle centering around”R&D, raw materials,
production, packaging and transportation, and productrecycling“Carbon reduction.
(3)

Climate-related financial information disclosure：
The Company actively identifies, evaluates and manages
the impact of climate change risks and opportunities on
its operations, and formulates risk management andstrategic planning to prepare for strict compliance with
the TCFD disclosure framework for climate-related
financial information.
For details of the above-mentioned measures, pleaserefer to relevant information in 2022 Environmental,
Social and Governance Report of Haier Smart Home
Co., LTD. published on the same date of this report.

Note: The scope of the aforementioned CO2 equivalent emission reduction statistics is the scope 1 and scope 2 data for
the Company’s domestic operations.

Specifications□ Applicable √ Not Applicable

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Section V Environmental and Social ResponsibilitiesII.

PERFORMANCE OF SOCIAL RESPONSIBILITIES
1.

Whether the social responsibility report, sustainable development report or ESG
report is disclosed individually√ Applicable □ Not Applicable
Haier Smart Home has actively participated in health education, rural construction, voluntary
service, and other community public charity while striving to create social value and practisingsocial responsibility in order to make its contribution to promoting the construction of a fairer andbetter society wholeheartedly and sincerely.
1.

Caring about education and health
The Company pays attention to the growth and education of young people by participatingin the establishment of the Haier Education Foundation, the Hope Project and the”Light
Catcher Project“to support public welfare activities in respect of the health and education ofyoung people and children around the world.

2.

Supporting rural construction
The Company is actively involved in the revitalisation of villages by providing paired-up
assistance with villages in the areas of industry, employment, education and health, andusing its skills and knowledge to help build beautiful villages and improve their standard ofliving.

3.

Helping rescue and relief enthusiastically
The Company has extensively participated in disaster assistance around the world, took thelead in rescue operations and donated disaster relief materials.

4.

Volunteering to serve the society
All members of the Company at home and abroad insist on participating in social
governance through voluntary services, creating public value with their professional ability intheir spare time, and giving back to the society with love.
For details, please refer to the 2022 Environment, Social and Governance Report of Haier
Smart Home Co., Ltd. disclosed on the date of this report.

2.

Details of social responsibility works√ Applicable □ Not Applicable
External donation, public welfare projects

Quantity/Content

Total Contribution (RMB10,000)
Among which: Funds (RMB10,000)

797
797

Specifications√ Applicable □ Not Applicable

106

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Section V Environmental and Social Responsibilities

For details, please refer to the 2022 Environment, Social and Governance Report of Haier Smart
Home Co., Ltd. disclosed on the date of this periodic report.

III. PARTICULARS ON THE EFFORTS TO CONSOLIDATE AND EXPAND ITSACHIEVEMENTS IN POVERTY ALLEVIATION AND RURAL AREA
INVIGORATION√ Applicable□ Not Applicable

Poverty alleviation and rural revitalization projects

Quantity/Content

Total Contribution (RMB10,000)
Among which: Funds (RMB10,000)
Forms of assistance (such as poverty alleviation throughindustry development, poverty alleviation throughemployment, poverty alleviation through education, etc.)

1,117
1,117
Assistance is mainly provided in the formof poverty alleviation through educationand poverty alleviation in healthSpecifications√ Applicable □ Not Applicable
In accordance with the national targeted poverty alleviation plan and documents requirements, theCompany emphasizes poverty alleviation and conducts targeted poverty alleviation within the authority
granted on the general meeting in respect of, among others, donations.
For years, the Company has made genuine contributions to education to improve the basic culturalquality of people in poverty and skills of families in poverty, with an emphasis on shoring up the weaklink of the education sector and stopping inter-generational poverty. As of now, the Company, HaierGroup Companies (the effective controller of the Company) and its subordinate enterprises (hereafter,
the “Haier Group”) have constructed over 300 hope primary schools and hope secondary schools,
covering 26 provinces, municipalities and autonomous regions in the PRC. It also offers continuous
resource assistance to such schools every year to effectively boost the base education capacity inpoverty regions and improve education quality. At the same time, during the earthquake in Ganzi,
Sichuan, the Company set up an earthquake relief service commando to go to the front line to provide
the affected people with three free services for home appliances, i.e. free inspection, free repair andfree relocation, and opened an exclusive call channel for user services in the disaster area; on theother hand, the Company donated RMB3 million, taking up social responsibilities voluntarily andsupporting the reconstruction of disaster areas. The Company maintains its support to ruraldevelopment in respect of poverty alleviation in agricultural development and poverty alleviation infarmers’ health to promote beautiful rural development. During the Reporting Period, it offered, among
other assistance, funds to Pangxi Village, Yuxi Town and Yuya Village, Zunyi City.
In 2022, the Company’s capital expenditure in targeted poverty alleviation amounted to approximately
RMB11.17 million, primarily attributable to education poverty alleviation, poverty alleviation in health andconstruction of disaster areas, etc., to proactively respond to the government’s call for social
responsibility fulfillment.

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Section VI Significant EventsI.

FULFILLMENT STATUS OF UNDERTAKINGS(I)

The undertakings made by the ultimate controller, shareholders, related parties,
acquirer as well as the Company and other relevant parties during or up to thereporting period√ Applicable

Background ofundertakings
Undertaking
related tosignificant
reorganization

108□ Not Applicable

Type of undertaking s

Covenanter

Eliminate the right defects Haier Groupin land property etc.
Corporation

Contents of undertakings

Date andterm ofundertakings

WhetherAnyperformed indeadline for a timely andperformance strict way

During the period from September 2006 to May
27 September
2007, the Company issued shares to Haier
2006,
Group Corporation (“Haier Group”) to purchaselong-term
the controlling equity in its four subsidiaries,
namely Qingdao Haier Air-Conditioner
Electronics Co., Ltd. (青島海爾空調電子有限公司), Hefei Haier Air-conditioning Co., Limited (合肥海爾空調器有限公司), Wuhan Haier
Electronics Holding Co., Ltd. (武漢海爾電器股份有限公司), Guizhou Haier Electronics Co., Ltd.
(貴州海爾電器有限公司). With regard to the landand property required in the operation of threecompanies, namely Qingdao Haier AirConditioner Electronics Co., Ltd. (青島海爾空調
電子有限公司), Hefei Haier Air-conditioning Co.,
Limited (合肥海爾空調器有限公司), Wuhan Haier
Electronics Holding Co., Ltd. (武漢海爾電器股份有限公司) (the “Covenantees”), Haier Groupmade an undertaking (the “2006 Undertaking”).
According to the content of 2006 Undertaking
and current condition of each Covenantee, HaierGroup will constantly assure that Covenantees
will lease the land and property owned by HaierGroup for free. Haier Group will makecompensation in the event that the Covenantees
suffer loss due to the unavailability of such landand property.

Yes

Yes

Address peer competition Haier Smart Home Prior to the Transaction (hereinafter “the31 July 2020,
Co., Ltd.
Transaction” refers to the transaction in relation
long-term
to the privatization of Haier Electronics by Haier
Smart Home), Haier Electric was a controlling
subsidiary of the Company and did not havepeer competition with the Company; after thecompletion of the Transaction, Haier Electric
became a wholly-owned or controlling subsidiaryof the Company and no new peer competition
with the Company existed or will arise. There isno new peer competition or potential competition
between the Company and other related parties
controlled by the controlling shareholders or thede facto controller of the Company.

Yes

Yes

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Section VI Significant Events

Background ofundertakings

Date andterm ofundertakings

Type of undertaking s

Covenanter

Contents of undertakings

Address connectedtransactions

Haier Group
Corporation

1. The Transaction constitutes a connected
29 July 2020,
transaction and the connected transaction
long-term
procedures performed under the Transaction are
in compliance with the relevant regulations. The
pricing of the connected transaction is fair andthere are no circumstances under which theinterests of the listed company and thenon-connected shareholders are prejudiced. 2.
Upon completion of the Transaction, theCompany and its affiliates will take lawful andeffective measures to minimize and regulate theconnected transactions with the listed company,
take the initiative to safeguard the interests of
the listed company and all shareholders, andrefrain from taking advantages of connectedtransactions for improper benefits. 3. Provided
that there is no conflict with laws andregulations, if connected transactions between
the Company and its affiliates and the listedcompany occur or exist which cannot be
avoided or for which there are reasonablereasons, the Company and its affiliates willlegally enter into a transaction agreement withthe listed company to ensure strict compliancewith the procedures of connected transactions
required by the laws, regulations, regulatory
documents and the articles of association of theCompany, conduct transactions in accordancewith the principles of marketability and fair prices
to ensure the fairness and compliance ofconnected transactions, and refrain from taking
advantages of such connected transactions toengage in any acts that are detrimental to theinterests of the listed company or its minority
shareholders, and at the same time, comply with
the information disclosure obligations inaccordance with relevant regulations.

WhetherAnyperformed indeadline for a timely andperformance strict way
Yes

Yes

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Background ofundertakings

Type of undertaking s

Covenanter

Address peer competition Haier Group
Corporation

110

Haier Smart Home Co., Ltd. Annual Report 2022

Contents of undertakings

Date andterm ofundertakings

1. The Company and its controlling subsidiary, Haier 29 July 2020,
COSMO Co., Ltd., were principally engaged inlong-term
investment business during the reporting period,
and the Company and its controlling subsidiary,Haier COSMO Co., Ltd. (including its
subsidiaries and entities with more than 30%
shareholding), have no real or potential percompetition with Haier Smart Home; 2. thedomestic and overseas white goods businesses
and assets held by the Company (including theCompany’s subsidiaries and entities with morethan 30% shareholding) have been injected into
Haier Smart Home through asset consolidationand equity transfer in accordance with thecommitments made by the Company in January
2011 and the requirements for adjusting suchcommitments as considered and approved by
Haier Smart Home at its 2014 annual general
meeting; 3. Since the acquisition of 100% ofHaier New Zealand Investment Holding Company
Limited (which holds 100% of the shares in
Fisher & Paykel Appliances Holdings Limited) byHaier Smart Home’s offshore subsidiary, Haier
Singapore Investment Holding Co., Ltd.,
following the completion in July 2018, theCompany (including the Company’s subsidiaries
and entities with more than 30% shareholding)and Haier Smart Home do not have any peercompeting relationship in any business areas
both within and outside the PRC. During thereporting period, the Company (including theCompany’s subsidiaries and entities with morethan 30% shareholding) did not have any new
peer competition with Haier Smart Home; 4.
Upon completion of the Transaction, theCompany (including the Company’s subsidiaries
and entities with more than 30% shareholding)and its affiliates do not have any new or
potential peer competition with Haier Smart
Home; 5. During the period when the company
is the controlling shareholder of Haier Smart
Home and the shares of Haier Smart Home arelisted on the Hong Kong Stock Exchange, thecompany and its other subsidiaries and entities
with more than 30% shareholding will not
operate any business that competes with thebusiness engaged by Haier Smart Home and will
not engage in real or potential peer competition
with Haier Smart Home.

WhetherAnyperformed indeadline for a timely andperformance strict way
Yes

Yes

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Section VI Significant Events

Background ofundertakings

Date andterm ofundertakings

Type of undertaking s

Covenanter

Contents of undertakings

OthersHaier Group
Corporation

Upon completion of the Transaction, the company 29 July 2020,
will strictly comply with the Company Law, thelong-term
Securities Law, the relevant regulations of the
China Securities Regulatory Commission, theShanghai Stock Exchange and the articles ofassociation of Haier Smart Home, etc., fairly
exercise shareholders‘rights and fulfill
shareholders‘obligations, refrain from taking
advantage of its shareholding position forimproper benefits, ensure the listed company willcontinue to be completely separate from thecompany and other enterprises on which thecompany exercises control and exerts significant
influence in terms of management, personnel,
assets, finance, organization and business
operations, and maintain the continued
independence of the listed company in terms ofmanagement, personnel, assets, finance,
organization and business operations. Uponcompletion of the Transaction, the company willcomply with the provisions of the Notice on
Several Issues concerning Regulating FundTransactions between Listed Companies andTheir Affiliates and the External Guarantee of
Listed Companies and the Circular of China
Securities Regulatory Commission and China
Banking Regulatory Commission on Regulating
the External Guaranties Provided by Listed
Companies to regulate the external guarantees
by listed companies and their subsidiaries, andwill not misappropriate the funds of the listedcompany and their subsidiaries. The company
undertakes to strictly fulfill the above
commitments. In the event that the interests of
the listed company are damaged as a result ofany breach of the above commitments by thecompany and other enterprises on which thecompany exercises control and exerts significant
influence, the company will legally bear thecorresponding liability for damage.

WhetherAnyperformed indeadline for a timely andperformance strict way
Yes

Yes

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Background ofundertakings

112

Type of undertaking s

Covenanter

Address connectedtransactions

HCH (HK)
1. The Transaction constitutes a connected
29 July 2020,
INVESTMENT
transaction and the connected transaction
long-term
MANAGEMENT
procedures performed under the Transaction areCO., LIMITEDin compliance with the relevant regulations. The
pricing of the connected transaction is fair andthere are no circumstances under which theinterests of the listed company and thenon-connected shareholders are prejudiced. 2.
Upon completion of the Transaction, thecompany and other enterprises on which thecompany exercises control will take lawful andeffective measures to minimize and regulate theconnected transactions with the listed company,
take the initiative to safeguard the interests of
the listed company and all shareholders, andrefrain from taking advantages of connectedtransactions for improper benefits. 3. Provided
that there is no conflict with laws andregulations, if connected transactions between
the company and other enterprises on which thecompany exercise control and the listedcompany occur or exist which cannot be
avoided or for which there are reasonablereasons, the company and other enterprises on
which the company exercises control will legallyenter into a transaction agreement with the listedcompany to ensure strict compliance with theprocedures of connected transactions requiredby the laws, regulations, regulatory documents
and the articles of association of the company,
conduct transactions in accordance with theprinciples of marketability and fair prices, andrefrain from taking advantages of suchconnected transactions to engage in any actsthat are detrimental to the interests of the listedcompany or its minority shareholders, and at thesame time, comply with the information
disclosure obligations in accordance with
relevant regulations. 4. Any covenants andarrangements between the company and otherenterprises on which the company exercise
control and the listed company in relation toconnected transactions shall not prevent theother party from conducting business or dealing
with any third party for its own benefit and on
equal competitive terms in the market.

Haier Smart Home Co., Ltd. Annual Report 2022

Contents of undertakings

Date andterm ofundertakings

WhetherAnyperformed indeadline for a timely andperformance strict way
Yes

Yes

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Section VI Significant Events

Background ofundertakings

Type of undertaking sUndertaking
related torefinancing

Eliminate the right defects Haier Groupin land property andCorporateetc.

Covenanter

Contents of undertakings

Date andterm ofundertakings

Haier Group Corporation undertakes that it will
24 December
assure Haier Smart Home and its subsidiaries of2013,
the constant, stable and unobstructed use of thelong-termleased property. In the event that Haier Smart
Home or any of its subsidiaries suffers any
economic loss due to the fact that leased
property has no relevant ownership certificate,
Haier Group Corporation will makecompensation to impaired party in a timely andsufficient way and take all reasonable andpracticable measures to support the impaired
party to recover to normal operation before theoccurrence of loss. Upon the expiration of
relevant leasing period, Haier Group Corporation
will grant or take practicable measures to assure
Haier Smart Home and its subsidiaries of priority
to continue to lease the property at a price nothigher than the rent in comparable market atthat time. Haier Group Corporation will assure
Haier Smart Home and its subsidiaries of theconstant, stable, free and unobstructed use of
self-built property and land of the Group. In theevent that Haier Smart Home or any of its
subsidiaries fails to continue to use self-built
property according to its own will or in original
way due to the fact that self-built property has
no relevant ownership certificate, Haier Group
Corporation will take all reasonable andpracticable measures to eliminate obstruction
and impact, or will support Haier Smart Home or
its affected subsidiary to obtain alternative
property as soon as possible, if Haier Group
Corporation anticipates it is unable to cope withor eliminate the external obstruction and impact
with its reasonable effort. For details, pleaserefer to the Announcement of Qingdao Haier Co.,
Ltd. on the Formation, Current Situation of the
Defective Property, the Influence on Operation ofIssuer Caused by Uncertainty of Ownership,
Solution for the Defect and Guarantee Measures(L2014–005) published by the Company on thefour major securities newspapers and thewebsite of Shanghai Stock Exchange on 29
March 2014.

WhetherAnyperformed indeadline for a timely andperformance strict way
Yes

Yes

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Section VI Significant Events

Background ofundertakings

Type of undertaking s

Covenanter

Undertakings
related toEquityincentive

OthersHaier Smart Home The Company will not provide loans or any otherCo., Ltd.
forms of financial assistance, including
guaranteeing their loans, to any incentive
recipient for acquiring relevant stock options
under this incentive plan.

Other
undertakings

Asset injection

Haier Group
Corporation(II)

Contents of undertakings

Date andterm ofundertakings

WhetherAnyperformed indeadline for a timely andperformance strict way

15 September
Yes
2021/28 June
2022, thecompletion ofequity incentive
implementation

Yes

Inject the assets of Haier Photoelectric to theDecember 2015 to Yes
Company or dispose such assets through other
June 2025
ways according to the requirements of thedomestic supervision before June 2025. For
more details, please refer to the Announcementof Haier Smart Home Co., Ltd. on the Changesof Some Commitments on Asset Injection(L2020- 024) published on the four major
securities newspapers and the website ofShanghai Stock Exchange on 30 April 2020.

Yes

The Company’s explanation on whether the earnings forecast on assets or
projects was met and its reasons in the situation that earnings in the
Company’s assets or projects have a forecast, and the period of which
includes the reporting period.
□ Reached□ Not Reached√ Not Applicable(III) Completion of performance commitments and their impact on the impairment
test of goodwill□ ApplicableII.

√ Not Applicable

NON-OPERATING UTILIZATION OF FUNDS BY CONTROLLINGSHAREHOLDERS AND OTHER RELATED PARTIES DURING THE
REPORTING PERIOD□ Applicable√ Not Applicable

III. INFORMATION ON NON-COMPLIANCE GUARANTEES□ Applicable√ Not Applicable

IV. EXPLANATION OF THE BOARD OF THE COMPANY ON THE ‘NONSTANDARD AUDIT REPORT’ ISSUED BY THE ACCOUNTING FIRM
□ Applicable

114√ Not Applicable

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V.

EXPLANATION OF THE COMPANY’S ANALYSIS ON REASONS AND
EFFECTS OF CHANGES IN ACCOUNTING POLICIES AND
ACCOUNTING ESTIMATES OR CORRECTION OF SIGNIFICANTACCOUNTING ERRORS(I)Explanation of the Company’s analysis on reasons and effects of changes inaccounting policies and accounting estimates□ Applicable(II)√ Not Applicable

Explanation of the Company’s analysis on reasons and effects of correction ofsignificant accounting errors□ Applicable√ Not Applicable(III) Communication with former accounting firm
□ Applicable√ Not Applicable(IV) Other explanations□ Applicable√ Not Applicable

VI. APPOINTMENT AND DISMISSAL OF ACCOUNTING FIRM
Unit and Currency: RMB million
Current appointment
Name of domestic accounting firm
Remuneration of domestic accounting firm
Audit period of domestic accounting firm
Names of certified public accountants of domestic accounting
firm
Number of consecutive years of audit services of certified
public accountants in domestic accounting firms
Name of overseas accounting firm
Remuneration of overseas accounting firm
Audit period of overseas accounting firm

Hexin Certified Public Accountants
LLP
6.55
10 years
Zhao Bo, Li Xiang Zhi
10
HLB Hodgson Impey Cheng Limited
3.89
3 years

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Accounting firm for Internal control audit

Name

Remuneration

Hexin Certified Public
Accountants LLP

2.23

Explanation of appointment and dismissal of accounting firm
□ Applicable√ Not Applicable

Explanation of change of accounting firm during the auditing period□ Applicable√ Not ApplicableVII. POSSIBILITY OF DELISTING(I)

Reasons of warning for delisting risks□ Applicable(II)√ Not Applicable

Response measures to be taken by the Company□ Applicable√ Not Applicable(III) Circumstances and reasons for termination of listing□ Applicable√ Not Applicable

VIII. MATTERS RELATING TO BANKRUPTCY AND RESTRUCTURING□ Applicable√ Not Applicable

IX. MATERIAL LITIGATION AND ARBITRATION MATTERS□ Material litigation and arbitration matters during the year
√ No material litigation and arbitration matters during the year

116

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Section VI Significant EventsX.

PUNISHMENT AND CORRECTION ON THE LISTED COMPANY AND ITS
DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT, CONTROLLINGSHAREHOLDERS AND ULTIMATE CONTROLLERS DUE TO SUSPECT
OF LAW VIOLATIONS AND THE ISSUE OF RECTIFICATION□ Applicable √ Not applicable

XI. EXPLANATION OF THE INTEGRITY STATUS OF THE COMPANY ANDITS CONTROLLING SHAREHOLDERS AND ULTIMATE CONTROLLER
DURING THE REPORTING PERIOD□ Applicable √ Not applicable

XII. SIGNIFICANT RELATED-PARTY TRANSACTIONS(I)

Related-party transactions from daily operation
1.

Matters that have been disclosed in temporary announcements and with nosubsequent progress or change□ Applicable √ Not applicable

2.

Matters that have been disclosed in temporary announcements and with subsequent
progress or change√ Applicable □ Not ApplicablePursuant to the “Resolution on Proposal to the General Meeting to Authorize the Board of
Directors and its Authorized Persons to Sign the Framework Agreement on ConnectedTransactions for 2020–2022” 《關於提請股東大會授權董事會及其授權人士簽署(
2020–2022
年 關 聯 交 易 框 架 協 定 的 議 案》) considered and approved at the 10th meeting of the 10th
session of the Board of Directors and the Second Extraordinary General Meeting of 2020,
the “Resolution on Signing the Framework Agreement on Connected Transactions” 《關(於簽署關聯交易框架協定的議案》) considered and approved at the 14th meeting of the 10th
session of the Board of Directors, and the “Resolution of Haier Smart Home Co., Ltd. on
Renewing the Framework Agreement on Financial Services with Haier Group Corporationand Estimated Amount of Connected Transactions” 《海爾智家股份有限公司關於與海爾集(團公司續簽暨預計關聯交易額度的議案》) considered and approved at the 18th meeting of
the 10th session of the Board of Directors and the 2020 Annual General Meeting, theCompany has made estimation on the connected transactions for the next three years, asdetailed in the aforesaid announcements regarding the resolutions of the meetings.
For the actual performance of the Company’s connected transactions in the year of 2022,
please refer to”XII. Related parties and related-party transactions “under Section X —Financial and Accounting Report set out in this regular report.

3.

Matters not disclosed in temporary announcements□ Applicable √ Not applicable

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Section VI Significant Events(II)

Related-party transactions regarding acquisition or disposal of assets/equity
1.

118

Matter disclosed in temporary announcements and with no subsequent progress orchange√ Applicable □ Not Applicable
Summary of matters

Query index

The acquisition of 100% equity interest in
Qingdao TAB Robot Technology Co.,
LTD* (青 島 塔 波 爾 機 器 人 技 術 有 限 責 任公 司) and connected transaction: inorder to establish the competitiveness ofservice robots for household cleaning,
promote the development of theCompany’s cleaning appliance business,
as well as to enhance its corporate
governance and reduce routine
connected transactions, Qingdao Haier
Smart Life Electric Co. Ltd.* (青 島 海 爾
智 慧 生 活 電 器 有 限 公 司), a whollyowned subsidiary of the Company,
acquired 100% equity interest in
Qingdao TAB Robot Technology Co.,
LTD* (青 島 塔 波 爾 機 器 人 技 術 有 限 責 任公 司) held by Qingdao Haier
Interconnect Technology Co. Ltd.* (青島海 爾 互 聯 科 技 有 限 公 司) for aconsideration of RMB125 million incash.

For details, please refer to the”Announcement
in relation to the Acquisition of 100% Equity
Interest in Qingdao TAB Robot Technology
Co., LTD* (青 島 塔 波 爾 機 器 人 技 術 有 限 責 任公 司) by a Subsidiary of Haier Smart Home
Co., Ltd.* (海 爾 智 家 股 份 有 限 公 司) andConnected Transaction” as disclosed by theCompany on 29 April 2022

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Summary of matters

Query index

Transfer of 25% equity interest in Qingdao
Haier Mold Co., Ltd.* (青 島 海 爾 模 具 有
限 公 司) and connected transaction: inorder to focus on our principal businessof smart home, optimize resource
allocation and acquire investment
income, Haier Shareholdings (HongKong) Limited, a wholly-owned
subsidiary of the Company transferred
to Qingdao Haier Mold Smart Cloud
Technology Co., Ltd.* (青島海模智雲科
技 有 限 公 司) 25% equity interest in
Qingdao Haier Mold Co., Ltd.* (青 島 海
爾 模 具 有 限 公 司) for a consideration of
RMB277 million in cash.

For details, please refer to the”Announcement
in relation to the Transfer of 25% Equity
Interest in Qingdao Haier Mold Co., Ltd.* (青島海爾模具有限公司) by a Subsidiary of Haier
Smart Home Co., Ltd.* (海爾智家股份有限公司) and Connected Transaction” as disclosedby the Company on 29 April 2022

Acquisition of 100% equity interest in
Qingdao Haier Special Plastic R&D Co.,
Ltd. (“Qingdao Special Plastic”) by a
subsidiary and connected transaction:
Qingdao Haier Special Refrigerator Co.,
Ltd. (“Haier Special Refrigerator”), a
wholly-own subsidiary of the Company,
intends to acquire 30.23% equity
interest in Qingdao Haier Special Plastic
R&D Co., Ltd. held by Haier Group
Corporation for RMB45,953,500,
65.58% equity interest in Qingdao
Special Plastic held by Haier COSMO
Co. Ltd. for RMB99,683,700 and 4.19%
equity interest in Qingdao Special
Plastic held by Qingdao Haier Tooling
Development Co., Ltd. for
RMB6,362,800. After the completion of
the transaction, the subject company
became a wholly-owned subsidiary ofHaier Special Refrigerator.

For details, please refer to the”Announcement
in relation to the Acquisition of 100% Equity
Interest in Qingdao Haier Special Plastic R&D
Co., Ltd.* (青 島 海 爾 特 種 塑 料 研 製 開 發 有 限公 司) by a Subsidiary of Haier Smart Home
Co., Ltd.* (海 爾 智 家 股 份 有 限 公 司) andConnected Transaction” as disclosed by theCompany on 30 August 2022

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Section VI Significant Events

2.

Matters that have been disclosed in temporary announcements and with subsequent
progress or change□ Applicable √ Not applicable

3.

Matters not disclosed in temporary announcements□ Applicable √ Not applicable4.

If performance agreement is involved, the performance achieved during the reporting
period shall be disclosed□ Applicable √ Not applicable(III) Significant related-party transactions of joint external investment
1.

Matters that have been disclosed in temporary announcements and with nosubsequent progress or change□ Applicable √ Not applicable

2.

Matters that have been disclosed in temporary announcements and with subsequent
progress or change□ Applicable √ Not applicable

3.

Matters not disclosed in temporary announcements□ Applicable √ Not applicable(IV) Amounts due to or from related parties

(V)

1.

Matters that have been disclosed in temporary announcements and with nosubsequent progress or change□ Applicable √ Not applicable

2.

Matters that have been disclosed in temporary announcement and with subsequent
progress or change□ Applicable √ Not applicable

3.

Matters that haven’t been disclosed in temporary announcements□ Applicable √ Not applicable

Financial business between the Company and the finance company with which
it has a related relationship, or it is the company’s controlling finance company
and related parties√ Applicable120□ Not applicable

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1.

Deposit business√ Applicable □Not applicable
Unit and Currency: RMB

2.

Related party

Relationship

Haier Finance Co.,Ltd.

Subsidiary of Haier
Group

Total

/

Changes of the period
Total amount
Total amountdeposited during withdrawn during
the period
the period

Balance as at theend of the period

Maximum daily
deposit limit

Range of depositinterest

Balance as at the
beginning of theperiod32 billion

0.385% to 3.50%

28,870,880,571.84

451,072,007,538.64 448,518,469,390.35

31,424,418,720.13//

28,870,880,571.84

451,072,007,538.64 448,518,469,390.35

31,424,418,720.13

Lending business√ Applicable□ Not applicable
Unit and Currency: RMB

3.

Related party

Relationship

Haier FinanceCo., Ltd.

Subsidiary ofHaier Group

Total

/

Balance as at
the beginningof the period

Changes of the period
Total
Total loan
repayment Balance as at
amount for
amount for the end of thethe period
the period
period7 billion

336,507,659.12

60,000,000.00 336,507,659.12

60,000,000.00// 336,507,659.12

60,000,000.00 336,507,659.12

60,000,000.00

Range of loan
Loan limit
interest

Credit business or other finance businesses√ Applicable□ Not applicable
Unit and Currency: RMB

Related party

RelationshipType of businessTotal amount

Actual amountof occurrence

Haier Finance Co.,Ltd.

Subsidiary of HaierGroup

5.5 billion

412,724,607.88

Haier Finance Co.,Ltd.

Subsidiary of HaierGroup

Foreign exchange
derivatives
products
Service charge

80 million

29,446,933.09

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4.
Other explanations□ Applicable √ Not Applicable(VI) Others□ Applicable√ Not Applicable

XIII. SIGNIFICANT CONTRACTS AND THEIR EXECUTION(I)

Trusteeship, contracting and leasing
1.

Trusteeship□ Applicable√ Not applicable

During the reporting period, the Company had no material escrow matters. Up to now, thefollowing entrusted assets that have been approved by the Company’s
shareholders‘meeting are still in effect:
According to Haier Group’s commitment in 2011 on further supporting the development of
Qingdao Haier and resolving peer competition to reduce connected transactions, based on
the fact that Qingdao Haier Optoelectronics Co., Ltd. (青 島 海 爾 光 電 有 限 公 司) and its
subsidiaries, the main body of Haier Group engaging in the color television business, arestill in a period of transformation and integration, and their financial performance has not
yet met the Company’s expectations, Haier Group is unable to complete the transfer before
the aforesaid commitment period. Haier Group intends to entrust the Company with theoperation and management of the escrow assets and pay the Company an annual escrowfee of RMB1 million during the escrow period.
2.

3.

122

Contracting□ Applicable√ Not applicable

Leasing□ Applicable√ Not applicable

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Guarantee√ Applicable□ Not applicable
Unit and Currency: RMB0’000

Guarantor

Relationshipbetween theguarantor andthe listedcompany

Securedparty

Amount ofguarantee

External guarantees provided by the Company (excluding guarantees for subsidiaries)
Date ofoccurrenceof theWhether theguarantee Commencement Expiration
guarantee Whether the(date ofdate ofdate ofType of
Collateral
has been guarantee isagreement)
guarantee guarantee guarantee(if any)
fulfilled
overdue

Overdueamount oftheguarantee

Whether
there is acounterguarantee

Whether
Relatedparty
guarantee
or not RelationshipTotal amount of guarantee occurred during the reporting period (excluding guarantees for subsidiaries)
Total balance of guarantee at the end of the reporting period (A) (excluding guarantees for subsidiaries)
Guarantees provided by the Company for subsidiaries
Total amount of guarantees for subsidiaries occurred during the reporting period
Total balance of guarantees for subsidiaries at the end of the reporting period (B)1,868,555
1,284,382

Total amount of guarantees provided by the Company (including guarantees for subsidiaries)
Total amount of guarantee (A + B)
Ratio of total amount of guarantees to net assets of the Company (%)
Including:Amount of guarantees for shareholders, ultimate controllers and their related parties(C)Amount of debt guarantees provided directly or indirectly for the secured party with asset-liability ratio exceeding 70% (D)The amount of total amount of guarantee in excess of 50% of net assets (E)Total amount of the above three guarantees (C + D + E)
Explanation of possibly bearing related discharge duty for premature guarantees
Explanation of guarantee status

1,284,382
13.7
0687,7320687,732
Nil
Nil

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Section VI Significant Events(III) Entrusted others to manage cash assets
1.

Entrusted wealth management(1) Overall of entrusted wealth management√ Applicable □ Not applicable
Unit and Currency: RMB

TypeWealthmanagement inbanks
Wealthmanagement
in banks
OthersOthers√ Applicable

AmountPrematurebalance

Past due
uncollectedamountSelf-owned funds

14,286,710,000

1,464,000,000

0Fundraisingthrough CB

475,000,000

175,000,000

0Self-owned
funds (Assetmanagement
account for
employeestockownership)

14,638,968

14,638,968

0

Sources offunds□ Not applicable

By the end of the reporting period, the balance of the Company’s entrusted wealthmanagement amounted to RMB1,654 million, including three parts:①Temporarily-idle
funds wealth management by certain subsidiaries of the Company: Under the premiseof ensuring sufficient capital required by the principal operating activities and daily
operations, some subsidiaries of the Company purchased some short-term principalguaranteed wealth management products and structured deposits from majorcommercial banks to improve the yield of temporarily-idle funds and the return forshareholders within the authority of the president’s office meeting and under thecondition of ensuring fund safety. By the end of the reporting period, the balance ofthe entrusted wealth management amounted to RMB1,464 million; ②Temporarily-idle
fundraising wealth management: at the end of December 2018, the Company’s
proceeds for the issuance of convertible corporate bonds were fully landed. In orderto improve the yield of temporarily-idle funds, the Company intended to carry out
cash management with the amounts not exceeding RMB0.5 billion after approved by
the Board of Directors. By the end of the reporting period, the balance of theentrusted wealth management amounted to RMB175 million; ③Idle funds in the asset
management account of the Employee Stock Ownership Scheme: the asset
management institution purchased cash products such as money funds according to
the liquidity of the products with some idle funds in the asset management accountof the Employee Stock Ownership Scheme of the Company. The balance of cash
assets amounted to RMB15 million.

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Section VI Significant Events(2)

Individual entrusted wealth management√ Applicable □ Not applicable
Unit and Currency: RMB

Trustee
Qingdao branch of
Shanghai Pudong
Development Bank
Qingdao branch of
Shanghai Pudong
Development Bank
Qingdao branch of
Bank ofCommunications
Haier Road sub-branchof Construction Bank
Haier Road sub-branchof Construction Bank
Asset management
account of Industrial
Bank CO., LTD.
Qingdao Sub-branch of
Bank of China
Qingdao Sub-branch of
Bank of China

Type ofentrusted
wealthmanagement

Amount ofentrusted
wealthmanagement

Expiration
Commencement date ofdate of entrusted entrusted
wealthwealthmanagement
management

Linkedstructured
deposit
Linkedstructured
deposit
Linkedstructured
deposit
Linkedstructured
deposit
Linkedstructured
depositShort-term
wealthmanagement
Linkedstructured
deposit
Linkedstructured
deposit

600,000,000

2022/11/21

2023/2/21

Self-owned
funds

Not
expired

YES

YES

200,000,000

2022/10/8

2023/1/9

Self-owned
funds

Not
expired

YES

YES

314,000,000

2022/10/17

2023/1/17

Self-owned
funds

Not
expired

YES

YES

75,000,000

2022/6/10

2023/1/3

Not
expired

YES

YES

100,000,000

2022/7/6

2023/1/3

FundraisingthroughCB
FundraisingthroughCB
Self-owned
funds

Not
expired

YES

YES

Not
expired

YES

YES

14,638,968

2.

Any future
plan forentrusted
wealthmanagement

176,000,000

2022/10/26

2023/1/12

Self-owned
funds

Not
expired

YES

YES

174,000,000

2022/10/25

2023/1/11

Self-owned
funds

Not
expiredYES

YES

Others□ Applicable(3)

Sources offunds

Whether
Expected
approved
Determination Annualized return
Actual gains
by dueInvestment of returnyield(if any)or losses
Collection process

Amount ofprovisionfor
impairment(if any)√ Not applicable

Provisions for impairment of entrusted wealth management□ Applicable √ Not applicable

Entrusted loans(1) Overall entrusted loans□ Applicable √ Not applicable
Others□ Applicable(2)√ Not Applicable

Individual entrusted loans□ Applicable √ Not applicable
Others□ Applicable√ Not Applicable

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(3)

3.

Provisions for impairment of entrusted loans□ Applicable √ Not Applicable

Others□ Applicable√ Not Applicable(IV) Other Major Contracts□ Applicable√ Not Applicable

XIV. EXPLANATION OF OTHER SIGNIFICANT MATTERS THAT HAVE A
SIGNIFICANT IMPACT ON THE VALUE JUDGMENTS AND INVESTMENTDECISIONS OF INVESTORS□ Applicable126√ Not Applicable

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Section VII Changes in Shares andInformation about Shareholders

I.

CHANGES IN SHARE CAPITAL(I)

Table of Changes in shares
1.

Table of Changes in shares
Unit: share
Prior to the change

Number
I. Shares with selling
restrictions
1. Shares held by
the state
2. Shares held by
the state-owned
legal entities
3. Shares held byother domestic
investors
Including:shares held
by Domestic
non-stateowned legal
entities
Shares held bydomestic
individuals
4. Shares held byforeign investors
Including:shares held
by foreign
legal entities
Shares held byforeignindividuals
II. Tradable shares
without selling
restrictions
9,398,704,530
1. RMB ordinary
shares6,308,552,654
2. Domestic listed
foreign shares
3. Overseas listed
foreign shares 3,090,151,876
4. Others
III. Total shares
9,398,704,530

Increase and decrease of the change (＋,-)
SharesPercentage New shares
Bonusconverted(%)
issuedshares from reserve
Others100.0041,413,600

6,480,363

67.12

After the change

Number

Percentage(%)

47,893,963 9,446,598,493

100.006,308,552,654

66.78

Subtotal

32.88

41,413,600

6,480,363

47,893,963 3,138,045,839

33.22

100.0041,413,600

6,480,363

47,893,963 9,446,598,493

100.00Haier Smart Home Co., Ltd. Annual Report 2022

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2.

Statement on the changes in shares√ Applicable128□ Not Applicable(1)

H-share convertible bonds: On 27 October 2020, the China Securities Regulatory
Commission issued the Reply to the Approval of Issuance of Overseas Listed Foreign
Shares and Convertible Corporate Bonds by Haier Smart Home Co., Ltd. 《關於核準(
海 爾 智 家 股 份 有 限 公 司 發 行 境 外 上 市 外 資 股 及 可 轉 換 公 司 債 券 的 批 复》) (Zheng Jian
Xu Ke [2020] No. 2768), which approved that: (1) the Company issued no more than
2,856,526,138 overseas listed foreign shares (including additional shares issued byholders of convertible corporate bonds not exceeding HK$8.0 billion or equivalent inforeign currencies upon the exercise of the convertible rights), with a par value of
RMB1 each, all of which are ordinary shares. After the completion of this issuance,
the Company can be listed on the main board of the Stock Exchange of Hong Kong
Limited (hereinafter referred to as the “Hong Kong Stock Exchange”); (2) the issuanceof corporate bonds not exceeding HK$8.0 billion or equivalent in foreign currencies
that can be converted into the Company’s overseas listed foreign shares by theoverseas wholly-owned subsidiaries guaranteed by the Company. On 23 December
2020, 2,448,279,814 H shares of the Company, issued for the privatisation of Haier
Electronics Group Co., Ltd. (a Hong Kong listed company), were listed and traded on
the Main Board of the Hong Kong Stock Exchange and the related convertible bonds
under the H share convertible bonds scheme became valid and in effect immediately
after the listing amounting to HK$7,993,000,000. During the reporting period,
HK$394,000,000 of the convertible bonds were converted into a total of 21,450,563
H shares of the Company.

(2)

Placing of H share: Pursuant to the Resolution on Granting General Mandate to theBoard of Directors on Additional Issuance of H shares of the Company consideredand passed at the Company’s 2020 Annual General Meeting, the Resolution of Haier
Smart Home Co., Ltd. on the Issue and Listing of New H Shares on the Main Boardof the Stock Exchange of Hong Kong Limited considered and passed at the 23rd
meeting of the 10th session of the Board of Directors of the Company, etc. and the
China Securities Regulatory Commission’s “Reply to the Approval of Issuance ofOverseas Listed Foreign Shares by Haier Smart Home Co., Ltd.” 《關(於核準海爾智家 股 份 有 限 公 司 發 行 境 外 上 市 外 資 股 的 批 复》) (Zheng Jian Xu Ke [2021] No. 4055),
the Company can additionally issue no more than 73,000,000 overseas listed foreign
shares (H shares), with a par value of RMB1 each, all of which are ordinary shares.
On the 26th meeting of the 10th session of the Board of Directors of the Company
on 11 January 2022, the Resolution on the Placing of New H Shares Under the
General Mandate of Haier Smart Home Co., Ltd. was considered and passed and41,413,600 H shares will be issued by the Company.

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On 21 January 2022, in accordance with the aforesaid resolutions and reply, theCompany issued 41,413,600 overseas listed foreign shares (H shares). The newshares accounted for 0.439% of the total number of issued shares and 1.448% of thetotal number of H shares, respectively, upon completion of placing and the Stock
Exchange of Hong Kong Limited has granted the approval for the listing of andpermission to deal in the shares on its Main Board.
(3)

Cancellation of H share repurchase: On 28 June 2022, the 2021 Annual General
Meeting, the First Class Meeting of 2022 for A shares, the First Class Meeting of2022 for A D shares and the First Class Meeting of 2022 for H shares of theCompany considered and approved the Resolution on Proposing the General Meeting
to Grant the General Mandate to the Board of Directors to Repurchase not morethan 10% of the Total Number of H shares of the Company in Issue of Haier Smart
Home Co., Ltd., in which the Company intends to repurchase H shares and cancel
them within the agreed period. During the reporting period, the Company
repurchased a total of 14,970,200 H shares and all such shares have beencancelled.
Based on the above, during the reporting period, the share capital of the Company
was changed from 9,398,704,530 shares at the beginning of the reporting period to
9,446,598,493 shares.

3.

Effect of changes in shares on the financial indicators such as earnings per shareand net assets per share (if any) over the last year and the last reporting period√ Applicable□ Not Applicable

In 2022, the Company achieved net profit attributable to shareholders of the Parent
Company of RMB14,710,923,491.99, equity attributable to owners of the Parent Company
of RMB93,422,647,664.43, in terms of total share capital of 9,398,704,530 shares at the
beginning of the period, profit per share was RMB1.57 and net asset was RMB9.94 pershare accordingly; in terms of total share capital of 9,446,598,493 shares at the end of theperiod, profit per share was RMB1.56 and net asset was RMB9.89 per share accordingly.
4.

Other disclosure deemed necessary by the Company or required by
securitiesregulatory authorities□ Applicable(II)√ Not Applicable

Changes in shares with selling restriction□ Applicable√ Not Applicable

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II.

ISSUANCE AND LISTING OF SECURITIES(I)Issuance of securities as of the reporting period√ Applicable□ Not Applicable
Unit: share Currency: HKD

Type of shares and its
derivative securities

Date ofissue

Convertible corporation bonds,
convertible bonds withwarrants
Corporate bonds convertible
into H-shares

23 December
2020

Issuing
price (orinterests
rate)

Number ofissuance/

7,993,000,000

Date oflisting

23 December
2020

Number ofshares underlisting approval

7,993,000,000

Date oftermination

21 November 2022

Details of issuance of securities as of the reporting period (please specify separately for bonds
with different interest rates within the duration):√ Applicable□ Not ApplicableOn 27 October 2020, China Securities Regulatory Commission (CSRC) issued the Reply on
Approval of the Foreign Public Issuance of Convertible Bonds by Qingdao Haier Co., Ltd.” (Zheng
Jian Xu Ke [2020] No. 2768, hereinafter referred to as “CSRC Reply”), which approved: (1) Haier
Smart Home shall issue not more than 2,856,526,138 overseas listed foreign capital shares(including not more than HK$8 billion or the equivalent in foreign currencies of shares issued forthe holders of convertible corporate bonds upon the exercise of conversion rights), with a parvalue of RMB1 each and all of which are ordinary shares. Upon the completion of this issue,
Haier Smart Home can be listed on the Main Board of The Stock Exchange of Hong Kong
Limited; (2) the overseas wholly-owned subsidiary guaranteed by Haier Smart Home can issue
corporate bonds of not exceeding HK$8 billion or equivalent in foreign currencies that can beconverted into overseas listed foreign capital shares of the issuer. Pursuant to which and withthe approval of the relevant parties, the Company and Harvest International Company, a whollyowned subsidiary of the Company, issued 2,448,279,814 H-shares and convertible bonds
respectively on Hong Kong Stock Exchange on 23 December 2020 (the ex-changeable bonds ofHK$8 billion issued in November 2017 were converted into convertible bonds, and theconvertible bonds in effect amounted to HK$7,993 million, which can be converted into H-sharesof the Company). For details, please refer to the prospectus and other relevant documents
disclosed in Hong Kong market during the reporting period of the Company and the Report on
the Implementation of Material Asset Purchase and Related Party Transactions and other relevant
documents disclosed on 26 December 2020.

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Section VII Changes in Shares and Information about Shareholders

For the above-mentioned H-share convertible bonds, 105.11% of the remaining par value of thebonds were repaid in a one-off repayment of principal and interest upon maturity. During thelisting and transaction period, the H-share convertible bonds can be converted into H-shares of
the Company. Upon the maturity in November 2022, the Company repaid the principal andinterest on the outstanding H-share convertible bonds of HK$5 million. The H-share convertible
bonds were fully repaid and delisted.

(II)

Changes in total shares and shareholder structure as well as assets and liabilities
structure of the Company√ Applicable□ Not Applicable

For the total number of ordinary shares of the Company and changes in shareholder structure,please refer to the relevant explanations in ‘I. Changes in share capital’ and ‘III. Information onshareholder and ultimate controllers’ in this section. For the impact of the aforesaid changes on‘Paid-in capital (or share capital)’ in the Company’s balance sheet and other items, please referto the relevant content in ‘Section X Financial Report’ of this report.

(III) Information on existing shares specifically issued for staff□ Applicable√ Not Applicable

III. INFORMATION ON SHAREHOLDERS AND ULTIMATE CONTROLLERS(I)

Total number of shareholders
Total number of ordinary shareholders up to the end of the reporting period
Total number of ordinary shareholders as at the end of the last month prior to
the disclosure day of the annual report

137,372
130,537

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Table of top ten shareholders, top ten common shareholders (or the shareholders
not subject to selling restrictions) by the end of the reporting period
Unit: share
Shareholdings of top ten shareholders
Increase/decrease Number ofduring the shares heldreporting at the end of
periodthe period

Percentage(%)

HKSCC NOMINEES LIMITED(Note)Haier COSMO Co., Ltd. (海尔卡奥斯股份有限公司)
Haier Group Corporation

2,239,834,552

23.71

Unknown

1,258,684,824

13.32

None

1,072,610,764

11.35

None

Hong Kong Securities Clearing
Co., Ltd.
HCH (HK) INVESTMENTMANAGEMENT CO.,LIMITED
China Securities FinanceCorporation Limited
Qingdao Haier Venture &Investment Information Co.,
Ltd. (青島海爾創業投資諮詢有限公司)
Qingdao Haichuangzhi
Management Consulting
Enterprise (Limited
Partnership) (青島海創智管理諮詢企業 (有限合伙))
ALIBABA INVESTMENT LIMITED
China Merchant Bank Co., Ltd.
— Yifangda Consumer
Industry Equity Securities
Investment Fund

706,522,861

7.48

None

Domestic non-stateowned legal entity
Domestic non-stateowned legal entity
Unknown

538,560,000

5.70

None

Foreign legal entity

182,592,654

1.93

None

Unknown

172,252,560

1.82

None

Domestic non-stateowned legal entity

120,622,416

1.28

None

Domestic non-stateowned legal entity

83,823,993
71,347,982

0.89
0.76

Unknown
None

Name of shareholder(full name)132

Haier Smart Home Co., Ltd. Annual Report 2022

Number ofshares heldwith selling
restrictions

Status of shares pledged,
marked or frozen
StatusNumberNature ofshareholder

Unknown

Foreign legal entity
Unknown

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Shareholdings of top ten shareholders not subject to selling restrictions

Name of shareholder

Number of
tradable shares
without selling
restrictionsClass

HKSCC NOMINEESLIMITED
Haier COSMO Co., Ltd.
(海爾卡奧斯股份有限公 司)
Haier Group
Corporation
Hong Kong Securities
Clearing Co., Ltd.
HCH (HK) INVESTMENTMANAGEMENT CO.,LIMITED
China Securities FinanceCorporation Limited
Qingdao Haier Venture &Investment
Information Co., Ltd.
(青島海爾創業投資諮
詢 有 限 公 司)
Qingdao Haichuangzhi
Management
Consulting Enterprise(Limited Partnership)(青島海創智管理諮詢企 業（有 限 合 伙）)
ALIBABA INVESTMENT
LIMITED
China Merchant Bank
Co., Ltd. — Yifangda
Consumer Industry
Equity Securities
Investment Fund
Explanation on
repurchase account of
top ten shareholders

2,239,834,552

Class and number of shares
Number2,239,834,552

1,258,684,824

Overseas listed foreign
sharesRMB ordinary

1,072,610,764

RMB ordinary

1,072,610,764

706,522,861

RMB ordinary

706,522,861

538,560,000

Overseas listed foreign
shares538,560,000

182,592,654

RMB ordinary

182,592,654

172,252,560

RMB ordinary

172,252,560

120,622,416

RMB ordinary

120,622,416

83,823,993

Overseas listed foreign
sharesRMB ordinary

83,823,993

71,347,982

1,258,684,824

71,347,982

The Company’s repurchase account held a total of 86,292,743
sharesHaier Smart Home Co., Ltd. Annual Report 2022

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Name of shareholder

Explanation ondelegated voting
rights, entrusted
voting rights,
abstained voting
rights of the aforesaid
shareholders
Related parties orparties acting inconcert among the
aforesaid
shareholders

Number of
tradable shares
without selling
restrictions

Class and number of shares
Class
NumberNil(1)

Haier COSMO Co., Ltd. (海爾卡奧斯股份有限公司) is a holding
subsidiary of Haier Group Corporation. Haier Group
Corporation holds 51.20% of its equity. Each of Qingdao
Haier Venture & Investment Information Co., Ltd.(青 島 海 爾 創
業 投 資 諮 詢 有 限 公 司), HCH (HK) INVESTMENTMANAGEMENT CO., LIMITED and Qingdao Haichuangzhi
Management Consulting Enterprise (Limited Partnership) (青島海創智管理諮詢企業（有限合伙）) is a party acting in concert
with Haier Group Corporation;(2)
Explanation ofpreferential
shareholders withrestoration of voting
rights and theirshareholdings

The Company is not aware of the existence of any connectionsof other shareholders.
Not applicable

Number of shares held by top ten shareholders with selling restrictions and the selling
restrictions□ Applicable √ Not Applicable
Note: HKSCC NOMINEES LIMITED is the Banking Collection Account for the shareholders of the Company’s H-shares, whichis the original data provided by China Hong Kong securities registration agency to the Company after the merger
according to local market practices and technical settings, not representing the ultimate shareholder.

134

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Section VII Changes in Shares and Information about Shareholders(III) Strategic investors or general legal persons who became the top ten
shareholders due to placing of new shares□ Applicable√ Not Applicable

IV. CONTROLLING SHAREHOLDER AND THE ULTIMATE CONTROLLER(I)

Status of controlling shareholder
1

Legal person√ Applicable □ Not Applicable
Name
Person in charge of theCompany or legal
representative
Establishment datePrincipal business

Shareholding of othercontrolling andparticipating domestic
and overseas listedcompanies in thereporting period

Other explanation

Haier COSMO Co., Ltd. (海 尔 卡 奥 斯 股 份 有 限 公 司)
Zhou Yunjie (周 雲 杰)

1988–06–30
Information technology integration and Internet of Things
technology services: industrial automation technology
research and development, technical consulting; researchand development and manufacturing of electricalappliances, electronic products, mechanical products,
communication equipment and related accessories,
industrial automation control equipment, computer
hardware and software and auxiliary equipment; importand export business (operated within the scope
approved by MOFCOM); wholesale and retail: domestic
commerce (except for merchandises prohibited by thestate); investment in medical industry; investment
advisory services; enterprise management consulting.
(For projects subject to approval, business activities canonly be carried out after the approval by relevant
departments)
Indirect controlling/participating Company: ‘Qingdao Haier
Biomedical Co., Ltd.’ (青 島 海 爾 生 物 醫 療 股 份 有 限 公 司)
(stock name: ‘Haier Biomedical’, stock code: 688139),
Yingkang Life Technology Co., Ltd. (盈 康 生 命 科 技 股 份
有 限 公 司)(stock name: ‘Yingkang Life’, stock code:
300143), ‘Qingdao Bank Co., Ltd.’ (青島銀行股份有限公司) (stock name: ‘Bank of Qingdao’, stock code: 002948
and 3866.HK), ‘China International Capital Corporation
Limited’ (stock name: ‘CICC’, stock code: 601995 and3908.HK), etc.
Nil

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Section VII Changes in Shares and Information about Shareholders

2

Natural person□ Applicable √ Not Applicable

3

Explanation on the absence of controlling shareholders of the Company□ Applicable √ Not Applicable

4

Explanation on the change in controlling shareholders during the reporting period□ Applicable5√ Not Applicable

Framework of the ownership and controlling relationship between the Company andits controlling shareholder√ Applicable □ Not Applicable

Haier COSMO Co., Ltd.
( 海尔卡奥斯股份有限公司 )13.32%Haier Smart Home Co., Ltd.

136

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Section VII Changes in Shares and Information about Shareholders(II)

Status of the ultimate controller
1Legal person√ Applicable □ Not Applicable
Name
Person in charge of theCompany or legal
representative
Establishment datePrincipal business

Shareholding of othercontrolling andparticipating domestic
and overseas listedcompanies in thereporting period

Other explanation

Haier Group Corporation
Zhou Yunjie (周 雲 杰)

1980–03–24
Technology development, technology consultation,technology transfer and technology services (including
industrial Internet, etc.); data processing; digitaltechnology, intelligent technology, software technology;
research and development, sales and after-sales serviceof robots and automation equipment products; logistics
information service; research and development and salesof software technology for smart home products andsolutions systems; manufacturing of household
appliances, electronic products, communicationequipment, electronic computers and accessories,
general machinery, kitchen utensils, industrial robots;
wholesale and retail of domestic commerce (except for
the national dangerous prohibition franchise exclusive
control merchandises); import and export business (seethe foreign trade enterprise finalized certification for
details); economic and technological consultation;
research and development and transfer of technologicalachievements; rental of owned properties. (For projects
subject to approval, business activities can only be
carried out after the approval by relevant departments)
Indirect controlling/participating Company: ‘Qingdao Haier
Biomedical Co., Ltd.’ (青 島 海 爾 生 物 醫 療 股 份 有 限 公 司)
(stock name: ‘Haier Biomedical’, stock code: 688139),
Yingkang Life Technology Co., Ltd. (盈 康 生 命 科 技 股 份
有 限 公 司) (stock name: ‘Yingkang Life’, stock code:
300143), ‘Qingdao Bank Co., Ltd.’ (青島銀行股份有限公司) (stock name: ‘Bank of Qingdao’, stock code: 002948
and 3866.HK), China International Capital Corporation
Limited’ (stock name: ‘CICC’, stock code: 601995 and3908.HK), ‘Qingdao Thunderobot Technology Co., Ltd.’(stock name: ‘THUNDEROBOT’, stock code: 872190)
etc.
Nil

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2

Natural person□ Applicable √ Not Applicable

3

Explanation on the absence of ultimate controller of the Company□ Applicable √ Not Applicable

4

Explanation on the change in control over the Company during the reporting period□ Applicable √ Not Applicable

5

Framework of ownership and controlling relationship between the Company and theultimate controllers√ Applicable □ Not Applicable
Haier Group Corporation
100%

Qingdao Haier Venture &Investment Information
Co., Ltd.
( 青島海爾創業投資諮詢有限公司 )

partiesin concert
Qingdao Haichuangzhi
Management Consulting
Enterprise(Limited Partnership)( 青島海創智管理諮詢企業（有限合伙）)

1.82%(A Shares)

1.28%(A Shares)

51.20%Haier COSMO
Co., Ltd.
( 海尔卡奥斯股份有限公司 )

11.35%(A Shares)

67%

13.32%(A Shares)13%

HCH (HK)INVESTMENTMANAGEMENT
CO., LIMITED5.70%(H Shares)

100%

Haier
International
Co. Limited

0.62%(D Shares)

Haier Smart Home Co., Ltd.

6

The ultimate controller controls the Company by way of Trust or other assets
management□ Applicable √ Not Applicable(III) Introduction of controlling shareholders and ultimate controllers√ Applicable□ Not Applicable

Haier Group Company is registered as a joint-stock enterprise. According to the statement
issued by the State-owned Assets Management Office of Qingdao on 1 June 2002, it is believedthat the enterprise nature of Haier Group Company is a collective owned enterprise.

V.

THE PROPORTION OF THE ACCUMULATED NUMBER OF SHARESPLEDGED BY THE CONTROLLING SHAREHOLDERS OR THE LARGESTSHAREHOLDER OF THE COMPANY, TOGETHER WITH THE PARTIESACTING IN CONCERT WITH THEM, TO THE NUMBER OF SHARES OF
THE COMPANY HELD BY THEM AMOUNTS TO MORE THAN 80%□ Applicable138√ Not Applicable

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VI. OTHER CORPORATE SHAREHOLDERS WITH A SHAREHOLDINGPERCENTAGE OVER 10%□ Applicable√ Not ApplicableVII. EXPLANATION OF RESTRICTIONS ON SHAREHOLDING REDUCTION□ Applicable√ Not Applicable

VIII. SPECIFIC IMPLEMENTATION OF SHARE REPURCHASE DURING THE
REPORTING PERIOD√ Applicable□ Not Applicable
Unit and Currency: RMB

Name of share repurchase plan

Date of disclosure of the share repurchase plan
Number of shares proposed to repurchased andits percentage to the total share capital (%)
Proposed amount of repurchase
Proposed period of repurchasePurpose of repurchaseAmount repurchased (share)
Repurchased amount as a percentage to theunderlying shares covered by the equity
incentive scheme (%) (if any)
Progress of the Company’s reduction of its
holdings of repurchased shares by way ofcentralised bidding

Haier Smart Home Co., Ltd.’s public shareproposal in relation to the partial repurchaseof A Shares
31 March 2022
42,857,143 shares to 85,714,286 shares, 0.45
to 0.91
RMB1.5 –3 billion
31 March 2022–30 March 2023
Used for employee share ownership plans
59,055,239
Not applicableNot applicable

Note: During the reporting period, the Company also implemented the H-share repurchase scheme. For details, please refer to”2.
Statement on the changes in shares“under”Section VII Changes in Shares and Information about Shareholders “of this report
and the Announcement on the Changes in Shares of Overseas Listed Foreign Shares (H Shares) of Haier Smart Home Co.,
Ltd. 《海(尔 智 家 股 份 有 限 公 司 關 於 境 外 上 市 外 資 股 (H股) 股 份 变 动 情 況 的 公 告》) (No.: Lin 2022–082) disclosed by theCompany on 31 December 2022.

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Section VIII Relevant Information ofPreferred Shares□ Applicable140√ Not Applicable

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Section IX Relevant Information of Bonds

I.

ENTERPRISE BOND, CORPORATE BOND, AND NON-FINANCIAL
CORPORATE DEBT FINANCING INSTRUMENTS□ ApplicableII.

√ Not Applicable

CONVERTIBLE CORPORATE BOND
√ Applicable(I)□ Not Applicable

Convertible bond issue√ Applicable□ Not ApplicableOn 27 October 2020, the CSRC issued “reply to the approval for the issue of overseas listed
foreign shares and convertible corporate bonds by Haier Smart Home Co., Ltd.” 《關於核準海爾(
智 家 股 份 有 限 公 司 發 行 境 外 上 市 外 資 股 及 可 轉 換 公 司 債 券 的 批 复》) (Zheng Jian Xu Ke [2020]
No. 2768) (hereafter, the “CSRC Reply”) to approve: (1) Haier Smart Home to issue not morethan 2,856,526,138 overseas listed foreign Shares (including Shares to be issued pursuant to theexercise of conversion rights by the holders of convertible corporate bonds with an amount of not
more than HK$8 billion or equivalent in any foreign currency) with a par value of RMB1, allregistered as ordinary shares. Upon the completion of the issue, Haier Smart Home may belisted on the main board of the Hong Kong Stock Exchange; (2) With the guarantee of Haier
Smart Home, its wholly-owned foreign subsidiary issued overseas corporate bonds with anamount of not more than HK$8 billion or equivalent in any foreign currency, convertible into
overseas listed foreign shares of the issuer. Pursuant to this and approval from relevant parties,
2,448,279,814 H Shares and convertible bonds were issued by the Company and HarvestInternational Company, a wholly-owned subsidiary of the Company in the Hong Kong Stock
Exchange on 23 December 2020, respectively (exchangeable bonds of HK$8 billion issued in
November 2017 were converted into convertible bonds, resulting in valid convertible bonds ofHK$7.993 billion, which were convertible into H Shares of the Company). Please refer to theprospectus and other relevant documents disclosed by the Company in the Hong Kong market
during the reporting period and the Report on Implementation of Significant Asset Acquisition andConnected Transactions 《重大資產購買暨關聯交易實施情況報告書》() disclosed by the Company
on 26 December 2020 for details.
For the above-mentioned H-share related convertible bonds, 105.11% of the remaining par valueof the bonds were repaid in a one-off repayment of principal and interest upon maturity, andH-share convertible bonds can be converted into H-shares during the listing and trading period.
By the maturity of H-share convertible bonds in November 2022, a cumulative amount of HKD
7,988,000,000 H-share convertible bonds were converted into H-share of the Company, andcumulative number of H-shares formed as a result of the conversion was 424,661,452 shares; atmaturity of the bonds in November, the Company has repaid the principal and interest of theunconcerted H-share convertible bonds amounted to HKD 5,000,000, and the H-shareconvertible bonds have been fully repaid and delisted.

(II)

Convertible bond holders and guarantors for the reporting period□ Applicable√ Not Applicable

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Section IX Relevant Information of Bonds

As of the end of the reporting period, the H-share convertible bonds have been fully repaid.

(III) Conversion of convertible bonds for the reporting period√ Applicable□ Not Applicable
Unit and Currency: HKD

Number of convertible
corporate bond

Before theconversion

H Share Convertible
Bonds

399,000,000

Increase/decrease for the conversion
Conversion Redemption
Resale394,000,000

After theconversion

5,000,000

0Cumulative conversion of convertible bond for the reporting period√ Applicable □ Not Applicable
Name of convertible corporate bond H Share
Convertible Bonds

H Share Convertible Bonds

Amount of conversion for the Reporting Period ($)
Number of conversion for the Reporting Period (Share)
Cumulative number of conversion (Share)
Percentage of cumulative number of conversion to total
issued Shares of the Company prior to the conversion (%)
Outstanding amount ($)
Percentage of outstanding amount to total amount of
convertible bonds issued (%)

394,000,000
21,450,563
424,661,452
4.50
0
0

(IV) Historical adjustment of conversion price√ Applicable□ Not Applicable
Unit and Currency: HKD

Name of convertible corporate bondDate ofadjustment toconversion
conversion priceprice(adjusted)
23 August 2022

18.20

Latest conversion price as of the end of
the reporting period

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Haier Smart Home Co., Ltd. Annual Report 2022

Date ofdisclosure
2 September
2022

18.20

H Share Convertible Bonds
Explanation on
adjustment toMedia forconversion
disclosure
price
Hong Kong Stock
Exchange, etc.

The
implementationof theCompany’s 2021
equitydistribution plan

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Section IX Relevant Information of Bonds(V)

Liabilities, change in credit and cash arrangements of repayment in the coming
year of the Company√ Applicable□ Not Applicable

As at the end of the reporting period, liabilities of the Company amounted to RMB141,128.7121
million, in which current liabilities amounted to RMB118,632.4233 million and non-current
liabilities amounted to RMB22,496.2888 million.
The Company remains stable in every operating condition with reasonable asset structure andgood credibility and is capable of providing stable and sufficient working capital for the interestsof convertible corporate bonds and repayment of the bonds in the coming year.

(VI) Other information on convertible bonds√ Applicable□ Not ApplicableOn 23 November 2017, the first 2017 Extraordinary General Meeting of the Company adopted
the Resolution of Qingdao Haier Co., Ltd. on the Scheme for Public Offering of Convertible
Corporate Bonds (the “A-share Convertible Bonds”) upon consideration. Pursuant to theresolution at this general meeting and the approval documents of the China Securities Regulatory
Commission and others, the Company completed the issue of convertible corporate bonds inDecember 2018, with a total issue amount of RMB3,007.49 million. The bonds were listed on 18
January 2019, which is referred to as “Haier Convertible Bonds” and its bond code is 110049.
For details, please refer to the Prospectus for the Public Offering of A-share Convertible
Corporate Bonds by Qingdao Haier Co., Ltd. as disclosed on 14 December 2018, and theAnnouncement on the Listing of Convertible Corporate Bonds by Qingdao Haier Co., Ltd. as
disclosed on 16 January 2019 and other relevant documents. As the convertible bonds in 2019
met the redemption conditions and the Board of Directors of the Company decided to exercise
the redemption right after consideration and approval, the Company redeemed the balance of theconvertible bonds in full up to the registered amount on redemption registration date. After theredemption, the convertible bonds of the Company were delisted on 17 December 2019. At
present, the A-share convertible bonds have ceased to be in existence, but the funds raised fromthe issuance of the bonds have not been fully utilized. As of 31 December 2022, RMB2,823.91
million of the funds raised from A-share convertible bonds have been utilized, with a balance of
RMB235.9447 million (the account balance includes the income generated from the purchase of
wealth management products, interest on demand deposits, foreign exchange gains and losses
and the not-yet-invested capital raised). For details of the use of funds, please refer to theSpecial Audit Report of Haier Smart Home Co., Ltd. on the Deposit and Actual Utilization ofFunds Raised in 2022, which was disclosed on the same date as this report.

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Section X Financial ReportI.

AUDIT REPORT√ Applicable□ Not Applicable

Audit Report
He Xin Shen Zi. (2023) No.000369
To all shareholders of Haier Smart Home Co., Ltd.:I.

AUDIT OPINION
We have audited the financial statements of Haier Smart Home Co., Ltd. (hereinafter referred to as the‘Haier Smart Home Co.’), which comprise the Consolidated and the Company’s Balance Sheet as at
31 December 2022, the Consolidated and the Company’s Income Statement, the Consolidated and theCompany’s Cash Flow Statement, the Consolidated and the Company’s Statement of Changes inShareholders’ Equity for the year 2022, and notes related to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, theConsolidated and the Company’s financial position of the Haier Smart Home Co as at 31 December
2022, and the Consolidated and the Company’s financial performance and cash flow for the year 2022
in accordance with the requirements of Accounting Standards for Business Enterprises.

II.

BASIS OF OUR AUDIT OPINION
We conducted our audit in accordance with China Standards on Auditing. Our responsibilities underthose standards are further described in Auditor’s responsibilities for the Audit of Financial Statements
section of the report. We are independent of Haier Smart Home Co in accordance with the CICPA’s
Code of Ethics for Professional Accountants (the Code), and we have fulfilled our other ethicalresponsibilities in accordance with the Code. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.

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Section X Financial Report

III. KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements for the current period. These matters were addressed in the context
of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do notprovide a separate opinion on these matters. We identify the following matters as the key audit
matters that need to be communicated in the audit report:
Key Audit Matters

Audit Response(I)
Provision for impairment of goodwill and intangible assets with indefinite useful lives
Relevant disclosures are included in Note V. 28 We mainly implemented the following audit
Other significant accounting policies and procedures on the provisions for the impairment ofaccounting estimates and Note V.19 Impairment goodwill and intangible assets with indefinite usefullife:
of long-term assets to the financial statements.
As of 31 December 2022, the book value of (1)goodwill was RMB23.644 billion, and the bookvalue of intangible assets with indefinite useful
lives was RMB2.583 billion, without any provision
for asset impairment. Whether the provision for
impairment of long-term assets was sufficient had (2)great influence to the financial statements.
Significant management judgments are involved in
calculation of asset group’s recoverable amount, (3)such as revenue growth rate, gross margin,discount rate, etc.
(4)
Provision for impairment of goodwill andintangible assets with indefinite useful lives is
considered as the key audit matter due to thesignificant amount and management judgement
involved in calculation.

Compared the actual operating results of therelated assets group with previous year’s
forecasted figures, to assess the reliability ofthe management forecast on cash flow;
Compared the input of cash flow forecast withhistorical data, approved budget and business
plan;
Tested the calculation accuracy of the
discounted cash flow model;
Assessed the appropriateness of parametersin the cash flow conversion model, such as
the discount rate and the perpetual growthrate. The assessment is based ourunderstanding of the Company’s businesses
and the industry.

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Section X Financial Report

Key Audit Matters

Audit Response(II) Provision for impairment of inventory
Relevant disclosures are included in Note VII.8 Provision for inventories is considered as the key
audit matter due to the significant amount andInventory to the financial statements.
management judgement involved in calculation.
The Company’s inventories are measured at the We mainly implemented the following audit
lower of cost and net realizable value. As of 31 procedures on the provision for impairment ofDecember 2022, the inventory balance was inventories:
RMB43.154 billion, and the provision for
Obtained the calculation table for provision for
impairment of inventory was RMB1.611 billion and (1)impairment of inventory of the Company, andthe book value was RMB41.543 billion. Whether
reviewed the conditions and aging of thethe provision for the impairment of inventories
products models stated in the table to see
was sufficient and accurate had great influence towhether they are consistent with thethe financial statements.
information obtained through physical
The Company determines the net realizable value
inventory on a sample basis;of inventory based on the estimated selling priceCompared the major parameters estimated byminus the estimated selling expenses and related (2)management with historical data, andtaxes.
assessed the appropriateness;
Management estimates the selling price based on
Assessed the selling price estimated by thethe status of inventory. The estimation process (3)management, and checked the inventory
involves significant management judgments suchagainst the actual selling price after theas inventory status, repair rate, discount rate, etc.
balance sheet date on a sample basis;
(4)

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Haier Smart Home Co., Ltd. Annual Report 2022

Assessed selling expenses and related tax
estimated by management and compared withactual amounts incurred.

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Section X Financial Report

Key Audit Matters

Audit Response(III) Product warranty
Relevant disclosures are included in Note VII. 33 We mainly implemented the following audit
Non-current liabilities due within one year and procedures on the estimated liabilities:
Note VII. 40 Estimated liabilities to the financial(1)
Obtained the calculation table on provisions ofstatements.
the management;
Estimated liabilities of the Company are mainly
Compared the main parameters estimated by
accrued due to current obligations arising from (2)management with historical data;
product warranty. As of 31 December 2022, thebalance of the estimated liabilities and non-current
liabilities due within one year related to product (3) Tested the accuracy of the calculation on
estimated liabilities;
warranty was RMB3.502 billion, and whether theprovision for warranty was sufficient and accurate(4) Compared and analyzed the calculation results ofhad great influence to the financial statements.
the estimated liabilities and the Company’s
actual operation;
Estimated liabilities for product warranty of theCompany were measured in accordance with thebest estimate of the cost to fulfill the relevant
current obligations.
Calculation of the product warranty involves
management’s significant judgments based on
historical experience, such as: replacement rate,
repair rate, and loss due to disassemble product.
Estimated liabilities are considered as the key
audit matters due to the significant amount andmanagement judgement involved in calculation.

IV. OTHER INFORMATION
The management of Haier Smart Home Co (hereinafter referred to as the “Management”) is responsible
for other information. Other information includes the information covered in the 2022 annual report ofHaier Smart Home Co, but does not include the financial statements and our audit reports.
Our opinion on the financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistent with thefinancial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of thisother information, we are required to report that fact. We have nothing to report in this regard.

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Section X Financial ReportV.

RESPONSIBILITIES OF THE MANAGEMENT AND THOSE CHARGED
WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS
The Management is responsible for the preparation of the financial statements that give a true and fairview in accordance with the requirements as set out in the Accounting Standards for BusinessEnterprises, and for such internal control as necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Management are responsible for assessing the ability of Haier
Smart Home Co to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the management either intends toliquidate Haier Smart Home Co or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the financial reporting process of Haier
Smart Home Co.

VI. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF FINANCIAL
STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an audit report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with auditing standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individuallyor in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
As part of an audit in accordance with auditing standards, we exercise professional judgment andmaintain professional skepticism throughout the audit. We also perform the following tasks:

148

(I)

Identify and assess the risks of material misstatement of the financial statements, whether due tofraud or error, design and perform audit procedures responsible to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of notdetecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the overrideof internal control.

(II)

Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances.

(III)

Evaluate the appropriateness of accounting policies used by the Management and thereasonableness of accounting estimates and related disclosures made by the Management.

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Section X Financial Report(IV)

Conclude on the appropriateness of the Management’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cause significant doubt on the ability of Haier Smart
Home Co to continue as a going concern. If we conclude that a material uncertainty exists, weare required by the auditing standards to draw attention in our audit report to the related
disclosures in the financial statements or; if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our audit
report. However, future events or conditions may cause Haier Smart Home Co to cease tocontinue as a going concern.

(V)

Evaluate the overall presentation, structure and content of the financial statements, and whether
the financial statements represent the underlying transactions and events in a manner that
achieves fair presentation.

(VI)

Obtain sufficient and appropriate audit evidence regarding the financial information of the entities
or business activities within Haier Smart Home Co to express an opinion on the financial
statements. We are responsible for the direction, supervision and performance of the groupaudit, and remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine those matters thatare of most significance in the audit of the financial statements of the current period and therefore
constitute the key audit matters. We describe these matters in our audit report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our audit report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits ofsuch communication.
Hexin Certified Public Accountants LLP
Certified Public Accountant: Zhaobo (Engagement Partner)
Certified Public Accountant: Li Xiang Zhi
Jinan, China
30 March 2023

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Section X Financial ReportII.

FINANCIAL STATEMENTS
Consolidated Balance Sheet
31 December 2022
Prepared by: Haier Smart Home Co., Ltd.
Unit and Currency: RMB

Items
Current assets:
Monetary funds
Provision of settlement fundFunds lent
Financial assets held for trading
Derivative financial assets
Bills receivable
Accounts receivable
Financing receivables
Prepayments
Premiums receivable
Reinsurance accounts receivable
Reinsurance contract reserves receivable
Other receivables
Including: Interest receivables
Dividends receivables
Financial assets purchased under resaleagreements
Inventories
Contract assets
Assets held for saleNon-current assets due in one year
Other current assets
Total current assets
Non-current assets:
Loans and advances granted
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments
Investments in other equity instruments
Other non-current financial assets
Investment properties
Fixed assets
Construction in progress

150

Haier Smart Home Co., Ltd. Annual Report 2022

Notes

31 December
2022

31 December
2021

VII.1

54,138,815,682.51

46,097,333,903.45

VII.2
VII.3
VII.4
VII.5

519,812,880.91
183,185,160.51
9,580,191,838.15
15,913,691,537.11

2,786,075,529.09
79,819,974.01
13,354,791,068.29
14,625,260,856.04

VII.6

1,120,756,199.86

863,748,085.06

VII.7

2,380,929,623.19
513,320,376.79

1,957,886,257.19
295,017,551.76

VII.8
VII.9

41,542,713,111.82
309,930,359.25

39,913,949,898.86
304,434,294.70

VII.104,692,515,577.23
3,928,788,608.23
130,382,541,970.54 123,912,088,474.92

VII.11

1,034,222,222.22

VII.12
VII.13305,070,001.45
24,527,800,290.84
5,851,882,930.20

308,998,755.30
23,200,884,340.57
4,851,884,944.63

VII.14
VII.15
VII.1625,678,492.57
27,158,348,424.28
4,094,684,500.49

24,964,888.48
22,308,014,224.98
4,183,263,398.79

Haier 18703[1] E12a Section 10 1st Proof

Time: 06-04-2023_17:14:01

P.151 (P1)

(C>E)

852

Section X Financial Report

Items
Biological assets for production
Oil and gas assets
Right-of-use assets
Intangible assets
Development cost
Goodwill
Long-term prepaid expenses
Deferred income tax assets
Other non-current assets
Total non-current assets
Total assets
Current liabilities:
Short-term borrowings
Borrowings from central bankFunds borrowed
Financial liabilities held for trading
Derivative financial liabilities
Bills payable
Accounts payables
Receipts in advanceContract liabilities
Disposal of repurchased financial assets
Absorbing deposit and deposit in interbank market
Customer deposits for trading in securities
Amounts due to issuer for securities
underwriting
Payables for staff’s remuneration
Taxes payable
Other payables
Including: Interest payables
Dividends payables
Fees and commissions payable
Reinsurance Accounts payables
Liabilities held for saleNon-current liabilities due within one year
Other current liabilities
Total current liabilities
Non-current liabilities:
Deposits for insurance contracts
Long-term borrowings
Bonds payable
Including: Preference shares

Notes

VII.17
VII.18VII.19VII.20VII.21
VII.22
VII.2331 December
2022

31 December
2021

3,795,225,353.89
2,734,678,906.53
10,505,881,377.21
9,550,384,743.90
154,480,515.67
227,892,229.13
23,643,595,643.87 21,827,103,060.76
759,883,174.20
589,143,077.89
1,722,223,037.71
1,857,448,518.29
1,880,736,891.63
2,164,384,013.14
105,459,712,856.23 93,829,045,102.39
235,842,254,826.77 217,741,133,577.31

VII.24

9,643,374,732.46

11,226,212,134.39

VII.25
VII.26
VII.27
VII.28104,594,040.66
25,090,945,421.28
41,883,694,299.24

6,294,014.40
80,212,433.24
25,023,238,406.72
42,363,218,840.33

VII.299,329,554,748.34

10,027,091,593.60

VII.30VII.31
VII.32

4,050,464,754.37
2,872,846,827.17
17,511,771,662.70

4,119,425,287.60
2,607,822,656.37
17,570,339,925.76

1,246,573.35

10,639,313.22

VII.33
VII.34

6,294,750,667.08
9,624,339,170.46
1,850,426,115.79
2,238,767,551.40
118,632,423,269.09 124,886,962,014.27

VII.35
VII.36

13,590,866,873.43

3,038,573,824.53
334,730,048.82

Haier Smart Home Co., Ltd. Annual Report 2022

151

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Time: 06-04-2023_17:14:01

P.152

(P1)

(C>E) 852

Section X Financial Report

Items
Perpetual bonds
Lease liabilities
Long-term payables
Long-term payables for staff’s
remuneration
Estimated liabilities
Deferred income
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Owners’ equity (or shareholders’equity):Paid-in capital (or share capital)
Other equity instruments
Including: Preference shares
Perpetual bonds
Capital reserve
Less: treasury stock
Other comprehensive income
Special reserve
Surplus reserve
General risk provisions
Undistributed profits
Total equity attributable to owners (orshareholders) of the Parent Company
Minority shareholders’ interests
Total owners’ equity (or shareholders’equity)Total liabilities and owners’ equity (orshareholders’ equity)

Notes

31 December
2022

31 December
2021

VII.37
VII.382,824,477,670.61
44,240,087.94

1,960,894,981.47
99,602,707.76

VII.39VII.40VII.41
VII.22

VII.42
VII.439,446,598,493.00

9,398,704,530.00
118,017,507.59

VII.44
VII.4523,852,037,324.76
3,857,807,196.38
1,990,683,498.45

22,665,374,739.46
2,424,038,819.70–1,176,851,699.92

VII.46

4,014,190,623.24

3,438,615,909.84

VII.47

57,976,944,921.36

47,965,270,360.79

93,422,647,664.43
1,290,895,044.45

79,985,092,528.06
1,289,500,808.72

94,713,542,708.88

81,274,593,336.78

Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke

152

Haier Smart Home Co., Ltd. Annual Report 2022

1,010,547,202.34
1,173,151,761.64
1,611,029,220.17
1,948,565,477.11
948,935,134.05
852,794,567.20
2,358,860,559.19
2,121,803,173.83
107,332,101.07
49,461,683.90
22,496,288,848.80 11,579,578,226.26
141,128,712,117.89 136,466,540,240.53

235,842,254,826.77 217,741,133,577.31

Haier 18703[1] E12a Section 10 1st Proof

Time: 06-04-2023_17:14:01

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852

Section X Financial Report

Balance Sheet of the Parent Company
31 December 2022
Prepared by: Haier Smart Home Co., Ltd.
Unit and Currency: RMB

Items
Current Assets:
Monetary funds
Financial assets held for trading
Derivative financial assets
Bills receivable
Accounts receivable
Financing receivables
Prepayments
Other receivables
Including: Interest receivables
Dividends receivables
Inventories
Contract assets
Assets held for saleNon-current assets due within one year
Other current assets
Total current assets
Non-current assets:
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments
Investments in other equity instruments
Other non-current financial assets
Investment properties
Fixed assets
Construction in progress
Biological assets for production
Oil and gas assets
Right-of-use assets
Intangible assets
Development cost
Goodwill
Long-term prepaid expenses
Deferred income tax assets
Other non-current assets

Notes

XVIII.1

XVIII.2

31 December
2022

31 December
2021

5,747,356,591.19

4,043,535,735.48

913,643,071.06

546,532,442.90

3,116,793.21
14,387,031,657.57
29,783,516.95
1,015,840,000.00
9,245,507.97

275,052,864.92
16,245,280,168.41
51,632,471.99
3,615,840,000.00
1,139,135.32

1,642,423,149.85
22,702,816,770.85

337,476,209.01
21,449,016,556.04

1,034,222,222.22

XVIII.3

52,744,139,527.87
1,618,513,056.48

52,513,760,277.77
1,615,450,032.92

167,043,774.16
2,667,680.62

179,789,817.34
17,569,516.17

357,996.03
48,239,513.12

1,217,186.49
55,171,485.39

3,910,065.39

3,781,398.54
159,338,211.77
803,323,404.28

1,302,773,743.02

Haier Smart Home Co., Ltd. Annual Report 2022

153

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(P1)

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Section X Financial Report

Items
Total non-current assets
Total assets
Current liabilities:
Short-term borrowings
Financial liabilities held for trading
Derivative financial liabilities
Bills payable
Accounts payables
Receipts in advanceContract liabilities
Payables for staff’s remuneration
Taxes payable
Other payables
Including: Interest payable
Dividends payable
Liabilities held for saleNon-current liabilities due within one year
Other current liabilities
Total current liabilities
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preference shares
Perpetual bonds
Lease liabilities
Long-term payable
Long-term payables for staff’s
remuneration
Estimated liabilities
Deferred income
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Owners’ equity (or Shareholders’equity):Paid-in capital (or share capital)
Other equity instruments
Including: Preference shares
Perpetual bonds
Capital reserve
Less: treasury stock
Other comprehensive income

154

Haier Smart Home Co., Ltd. Annual Report 2022

Notes

31 December
2022

31 December
2021

56,921,867,578.91
79,624,684,349.76

55,349,401,330.67
76,798,417,886.71

521,733,555.60

183,690,889.86

13,084,442.85
9,696,654.18
7,479,878.13
32,659,845,830.05

12,605,139.93
12,323,670.21
1,747,023.87
34,484,355,762.60

5,876,886.89
33,217,717,247.70

877,995.65
5,420,156.55
34,701,020,638.67

2,195,000,000.00

12,355,000.00
420,805,600.57

19,270,000.00
448,965,654.25

2,628,160,600.57
35,845,877,848.27

468,235,654.25
35,169,256,292.92

9,446,598,493.00

9,398,704,530.00

27,300,899,019.76
2,308,138,558.42
602,091,349.74

25,802,279,483.13
1,495,170,675.08
621,302,944.83

Haier 18703[1] E12a Section 10 1st Proof

Time: 06-04-2023_17:14:01

P.155 (P1)

(C>E)

852

Section X Financial Report

Items

Notes

Special reserve
Surplus reserve
Undistributed profits
Total owners’ equity (or shareholders’equity)Total liabilities and owners’ equity (orshareholders’ equity)

31 December
2022

31 December
2021

3,409,044,397.79
5,328,311,799.62

2,833,469,684.39
4,468,575,626.52

43,778,806,501.49

41,629,161,593.79

79,624,684,349.76

76,798,417,886.71

Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke

Haier Smart Home Co., Ltd. Annual Report 2022

155

Haier 18703[1] E12a Section 10 1st Proof

Time: 06-04-2023_17:14:01

P.156

(P1)

(C>E) 852

Section X Financial Report

Consolidated Profit Statement
January-December 2022
Unit and Currency: RMB
Items
I. Total operating revenue
Including: Operating revenue
Interest income
Insurance premiums earned
Fee and commission income
II. Total cost of operations
Including: Operating cost
Interest expenses
Fee and commission expenses
Insurance withdrawal payment
Net payment from indemnity
Net provisions withdrew for insurance
contract liability
Insurance policy dividend paid
Reinsurance cost
Taxes and surcharges
Selling expenses
Administrative expenses
R&D expenses
Financial expenses
Including: Interest expenses
Interest income
Add: Other income
Investment income (losses are
represented by ‘-’)Including: investment income ofassociates and joint ventures
Income generated from the derecognitionof financial assets measured atamortized cost
Exchange gain (losses are represented by‘-’)
Gains on net exposure hedges (losses are
represented by ‘-’)Income from change in fair value (losses
are represented by ‘-’)Loss on credit impairment (losses are
represented by ‘-’)156

Haier Smart Home Co., Ltd. Annual Report 2022

Notes

2022

2021

VII.48

243,513,563,670.73 227,105,817,641.69
243,513,563,670.73 227,105,817,641.69

VII.48226,725,145,620.43 212,862,720,627.22
167,223,167,396.20 155,949,547,009.40

VII.49VII.50VII.51
VII.52
VII.53

VII.54

813,289,227.83
38,597,810,391.10
10,837,316,878.50
9,499,191,097.85–245,629,371.05
984,142,709.25
855,178,860.53
1,069,763,608.56

808,612,319.06
36,584,438,840.05
10,471,531,966.20
8,363,868,872.76
684,721,619.75
712,462,772.83
566,432,900.38
958,514,200.94

VII.55

1,832,656,952.60

2,404,876,121.61

1,582,178,829.86

1,887,911,034.17

VII.56–122,442,933.65

119,277,623.85

VII.57–431,377,480.82–520,299,915.42

Haier 18703[1] E12a Section 10 1st Proof

Time: 06-04-2023_17:14:01

P.157 (P1)

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852

Section X Financial Report

Items
Loss on assets impairment (losses are
represented by ‘-’)Gain from disposal of assets (losses are
represented by ‘-’)III. Operating profit (losses are representedby ‘-’)
Add: non-operating income
Less: non-operating expenses
IV. Total profit (total losses are representedby ‘-’)
Less: income tax expense
V. Net profit (net losses are represented by‘-’)(1) Classification by continuous operation
1. Net profit from continuous operation(net losses are represented by ‘-’)2. Net profit from discontinued
operation (net losses are
represented by ‘-’)(2) Classification by ownership of theequity1. Net profit attributable to shareholdersof the Parent Company (net losses
are represented by ‘-’)2. Profit or loss attributable to minority
shareholders (net losses are
represented by ‘-’)VI. Other comprehensive income, net of tax(I) Other comprehensive income
attributable to owners of the Parent
Company, net of tax
1. Other comprehensive income thatcannot be reclassified into the
profit or loss
(1) Changes arising from remeasurement of defined benefit
plans(2) Other comprehensive incomethat cannot be transferred into
profit or loss under equity
method(3) Changes in fair value ofinvestments in other equity
instruments

Notes

2022

2021

VII.58–1,499,859,761.26–1,418,753,618.82

VII.59206,742,815.79

110,983,720.04

VII.60VII.61

17,843,901,251.52
136,527,269.96
190,706,969.79

15,897,695,146.67
199,068,358.48
159,250,278.25

VII.62

17,789,721,551.69
3,057,539,933.16

15,937,513,226.90
2,705,253,855.89

14,732,181,618.53

13,232,259,371.01

14,732,181,618.53

13,232,259,371.01

14,710,923,491.99

13,078,840,517.10

21,258,126.54
3,164,841,092.31

153,418,853.91–148,110,004.96

3,167,199,045.79–132,249,780.03–103,425,450.86

1,201,363,091.13

33,063,471.15

36,214,421.81–136,488,922.01

1,165,148,669.32

VII.63Haier Smart Home Co., Ltd. Annual Report 2022

157

Haier 18703[1] E12a Section 10 1st Proof

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P.158

(P1)

(C>E) 852

Section X Financial Report

Items(4) Changes in fair value of credit
risks of the enterprise
2. Other comprehensive income to bereclassified into the profit or loss
(1) Other comprehensive incomethat can be transferred into
profit or loss under equity
method(2) Changes in fair value of otherdebt Investments(3) Reclassified financial assets thatare credited to othercomprehensive income(4) Credit impairment provision forother debt investments(5) Reserve for cash flow hedging(6) Exchange differences ontranslation of financial
statements denominated inforeign currencies(7) Others(II) Other comprehensive income
attributable to minority shareholders,
net of tax
VII. Total comprehensive income(I) Total comprehensive income
attributable to the owners of Parent
Company(II) Total comprehensive income
attributable to the minority
shareholders
VIII. Earnings per share:(I) Basic earnings per share (RMB/share)(II) Diluted earnings per share (RMB/
share)

Notes

2022

2021

3,270,624,496.65–1,333,612,871.16

99,921,599.99–50,414,905.68

2,308,423.98

102,858,281.74

3,168,394,472.68–1,386,056,247.22–2,357,953.48
17,897,022,710.84–15,860,224.93
13,084,149,366.05

17,878,122,537.78

12,946,590,737.07

18,900,173.06

137,558,628.98

XVIII.1

1.58

1.41

XVIII.1

1.57

1.40

For business combination under common control occurring in the current period, the net profit of theacquiree before the combination was RMB12,934,615.51, and the net profit of the acquiree for theprevious period was RMB10,786,626.61.
Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke

158

Haier Smart Home Co., Ltd. Annual Report 2022

Haier 18703[1] E12a Section 10 1st Proof

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P.159 (P1)

(C>E)

852

Section X Financial Report

Profit Statement of the Parent Company
January-December 2022
Unit and Currency: RMB
Items

Notes

2022

2021

I. Operating income
Less: operating cost
Taxes and surcharges
Selling expenses
Administration expenses
R&D expenses
Financial expenses
Including: interest expenses
Interest income
Add: other income
Investment income (losses are
represented by ‘-’)Including: investment income ofassociates and joint
venturesDerecognition income on
financial assets
measured at amortized
cost
Gains on net exposure hedges(losses are represented by ‘-’)Income from change in fair value(losses are represented by ‘-’)Loss on credit impairment (losses
are represented by ‘-’)Loss on assets impairment (losses
are represented by ‘-’)Gain from disposal of assets (losses
are represented by ‘-’)II. Operating profit (losses are represented by‘-’)
Add: non-operating income
Less: non-operating expenses
III. Total profit (total losses are representedby ‘-’)
Less: income tax expenses
IV. Net profit (net losses are represented by‘-’)

XVIII.4
XVIII.4

424,661,926.32
370,625,212.62
3,356,878.04
2,255,208.68
844,381,395.30
19,067,424.89–137,417,983.20
33,870,759.40
158,040,013.89
32,862,065.58

353,798,248.52
315,357,106.14
1,315,011.31
8,325,070.07
126,563,950.19
29,294,763.78–41,920,112.37
7,328,997.57
56,558,735.54
45,491,181.80

XVIII.5

6,431,738,015.98

3,918,401,070.56

71,408,243.76

275,575,730.42–3,315,122.80

187,273.03

102,421,078.92

40,509,776.77

5,886,099,827.67
209,515.11
149,806.55

3,919,451,761.56
855,197.78
53,850.65

5,886,159,536.23
130,412,402.20

3,920,253,108.69–12,560,593.69

5,755,747,134.03

3,932,813,702.38

Haier Smart Home Co., Ltd. Annual Report 2022

159

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P.160

(P1)

(C>E) 852

Section X Financial Report

Items

Notes

(I) Net profit from continuous operations(net losses are represented by ‘-’)(II) Net profit from discontinued operations(net losses are represented by ‘-’)V. Other comprehensive income, net of tax(I) Other comprehensive income thatcannot be reclassified into the profit orloss
1. Changes arising from remeasurement of defined benefit
plans
2. Other comprehensive income thatcannot be transferred into profit orloss under equity method
3. Changes in fair value of investments
in other equity instruments
4. Changes in fair value of credit risksof the enterprise(II) Other comprehensive income to bereclassified into the profit or loss
1. Other comprehensive income thatcan be transferred into profit or loss
under equity method
2. Changes in fair value of other debt
investments
3. Reclassified financial assets that are
credited to other comprehensive
income4. Credit impairment provision for otherdebt investments
5. Reserve for cash flow hedging
6. Exchange differences on translationof financial statements denominatedin foreign currencies
7. Others
VI. Total comprehensive income
VII. Earnings per share:(I) Basic earnings per share (RMB/share)(II) Diluted earnings per share (RMB/
share)
Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke

160

Haier Smart Home Co., Ltd. Annual Report 2022

2022

2021

5,755,747,134.03

3,932,813,702.38–19,211,595.09

631,333,648.98

2,297,267.67

608,336,353.75

2,297,267.67

608,336,353.75–21,508,862.76

22,997,295.23–21,508,862.76

22,997,295.23

5,736,535,538.94

4,564,147,351.36

Haier 18703[1] E12a Section 10 1st Proof

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P.161 (P1)

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852

Section X Financial Report

Consolidated Cash Flow Statement
January-December 2022
Unit and Currency: RMB
Items
I. Cash flow from operating activities:
Cash received from the sale of goods andrendering services
Net increase in distributor and inter-bankdeposits
Net increase in borrowing from the centralbank
Net cash increase in borrowing from otherfinancial institutes
Cash received from premiums under original
insurance contract
Net cash received from reinsurance
business
Net increase in deposits of policy holders
and investment
Cash received from interest, fee andcommissions
Net increase in cash borrowed
Net increase in cash received fromrepurchase operation
Net cash received from customer deposits
for trading in securities
Refunds of taxes
Cash received from other related operating
activities
Sub-total of cash inflows from operating
activities
Cash paid on purchase of goods andservices
Net increase in loans and advances of
distributors
Net increase in deposits in the PBOC andinter bank
Cash paid for compensation payments
under original insurance contact
Net increase in cash lent
Cash paid for interest, bank charges andcommissions
Cash paid for insurance policy dividend

Notes

2022

2021

258,086,116,120.44 259,848,073,159.87

VII.642,043,785,545.29

1,759,484,379.01

1,669,717,133.90

1,883,522,634.01

261,799,618,799.63 263,491,080,172.89
179,333,522,197.23 180,953,963,164.86

Haier Smart Home Co., Ltd. Annual Report 2022

161

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P.162

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(C>E) 852

Section X Financial Report

Items
Cash paid to and on behalf of employees
Cash paid for all types of taxes
Cash paid to other operation related
activities
Sub-total of cash outflows from operating
activities
Net cash flow from operating activities
II. Cash flow from investing activities:
Cash received from recovery ofinvestments
Cash received from return on investments
Net cash received from the disposal of fixed
assets, intangible assets and otherlong-term assets
Net cash received from disposal ofsubsidiaries and other operating entities
Other cash received from investment
activities
Sub-total of cash inflows from investing
activities
Cash paid on purchase of fixed assets,intangible assets and other long-term
assetsCash paid for investments
Net increase in secured loans
Net cash paid on acquisition of subsidiaries
and other operating entities
Other cash paid on investment activities
Sub-total of cash outflows from investing
activities
Net cash flow from investing activities
III. Cash flow from financing activities:
Cash received from capital contributions
Including: cash received from capital
contributions by minority shareholders ofsubsidiaries
Cash received from borrowings
Other cash received from financing
activities
Sub-total of cash inflows from financing
activities
Cash paid on repayment of loans
Cash paid on distribution of dividends,
profits or repayment of interest expenses

162

Haier Smart Home Co., Ltd. Annual Report 2022

Notes

2022

2021

27,235,422,735.36
10,823,009,974.50

24,400,078,515.22
10,090,612,020.78

VII.6524,254,158,109.19

24,811,045,781.08

VII.69241,646,113,016.28 240,255,699,481.94
20,153,505,783.35 23,235,380,690.95

12,147,228,999.62
686,445,555.44

6,687,038,126.49
703,938,754.46

228,856,132.92

289,831,105.17

18,224,929.86

VII.66

VII.67

13,080,755,617.84

7,680,807,986.12

8,204,474,537.11
13,538,137,214.16

7,372,428,832.38
8,151,830,046.62

40,026,037.55
218,440,847.94—
219,292,645.55

22,001,078,636.76–8,920,323,018.92

15,743,551,524.55–8,062,743,538.43

987,339,004.94

41,513,900.00

18,358,512,304.41

12,051,534,836.66

1,000,000.00

1,091,077.43

19,346,851,309.35
14,686,219,899.99

12,094,139,814.09
19,550,437,489.34

5,134,957,030.48

4,036,372,354.42

Haier 18703[1] E12a Section 10 1st Proof

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Items
Including: dividend and profit paid tominority shareholders by subsidiaries
Other cash paid to financing activities
Sub-total of cash outflows from financing
activities
Net cash flow from financing activities
IV. Effect of fluctuations in exchange
rates on cash and cash equivalents
V. Net increase in cash and cash
equivalents
Add: balance of cash and cash equivalents
at the beginning of the period
VI. Balance of cash and cash equivalents
at the end of the period

Notes

2022

2021

VII.683,347,802,454.24

4,167,468,873.11

23,168,979,384.71 27,754,278,716.87–3,822,128,075.36 –15,660,138,902.78
760,094,284.39–105,423,623.70

8,171,148,973.46–592,925,373.96

VII.7045,197,664,411.15

45,790,589,785.11

VII.7053,368,813,384.61

45,197,664,411.15

Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke

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Haier 18703[1] E12a Section 10 1st Proof

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Section X Financial Report

Cash Flow Statement of the Parent Company
January-December 2022
Unit and Currency: RMB
Items
I. Cash flow from operating activities:
Cash received from the sale of goods
and rendering of services
Refunds of taxes
Other cash received from operating
activities
Sub-total of cash inflows from operating
activities
Cash paid on purchase of goods andservices
Cash paid to and on behalf of
employees
Cash paid for all types of taxes
Other cash paid to operation activities
Sub-total of cash outflows from operating
activities
Net cash flow from operating activities
II. Cash flow from investing activities:
Cash received from recovery ofinvestments
Cash received from return on
investments
Net cash received from the disposal of
fixed assets, intangible assets andother long-term assets
Net cash received from disposal ofsubsidiaries and other operating
entities
Other cash received from investment
activities
Sub-total of cash inflows from investing
activities
Cash paid on purchase of fixed assets,intangible assets and other long-term
assetsCash paid for investments
Net cash paid on acquisition ofsubsidiaries and other operating
entities

164

Haier Smart Home Co., Ltd. Annual Report 2022

Notes

2022

2021

72,931,789.11
19,008,796.07

5,372,947,747.51
21,335,747.71

373,367,957.93

68,763,057.13

465,308,543.11

5,463,046,552.35

147,652.63

129,965,401.55

30,719,560.38
9,583,573.15
35,896,845.76

111,120,434.68
45,674,576.87
63,480,813.55

76,347,631.92
388,960,911.19

350,241,226.65
5,112,805,325.70

4,072,370,000.00

660,600,000.00

9,114,011,850.11

251,846,511.15

35,206,354.85

40,244,472.35

792,521,903.31
14,014,110,108.27

952,690,983.50

29,560,476.49
6,790,729,807.20

39,508,054.66
710,121,200.00

Haier 18703[1] E12a Section 10 1st Proof

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Items

Notes

Other cash paid on investment activities
Sub-total of cash outflows from investing
activities
Net cash flow from investing activities
III. Cash flow from financing activities:
Cash received from capital injections
Cash received from borrowings
Other cash received from financing
activities
Sub-total of cash inflows from financing
activities
Cash paid on repayment of borrowings
Cash paid on distribution of dividends,
profits or repayment of interest
expenses
Other cash paid on financing activities
Sub-total of cash outflows from financing
activities
Net cash flow from financing activities
IV. Effect of fluctuations in exchange
rates on cash and cash equivalents
V. Net increase in cash and cash
equivalents
Add: balance of cash and cash
equivalents at the beginning of theperiodVI. Balance of cash and cash equivalents
at the end of the period

2022

2021

2,862,532,098.24

155,218,996.43

9,682,822,381.93
4,331,287,726.34

904,848,251.09
47,842,732.41

940,041,004.94
2,200,000,000.00
2,877,023,451.15
3,140,041,004.94
5,000,000.00

2,877,023,451.15
5,520,000,000.00

4,344,971,295.80
1,826,254,269.50

3,463,452,916.42
3,296,944,621.19

6,176,225,565.30–3,036,184,560.36

12,280,397,537.61–9,403,374,086.46

19,756,778.54–288,145.81

1,703,820,855.71–4,243,014,174.16

4,043,535,735.48

8,286,549,909.64

5,747,356,591.19

4,043,535,735.48

Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke

Haier Smart Home Co., Ltd. Annual Report 2022

165

166

I. Closing balance for the previous year
Add: changes in accounting policies
Error correction for prior periodBusiness combination under common
control
OthersII. Opening balance for the current year
III. Increase/decrease for the current period(decrease is represented by ‘-’)(I) Total comprehensive income(II) Capital injection and reduction by
owners
1. Ordinary shares invested by owners
2. Capital contribution by holders ofother equity instruments
3. Share-based payment included inowners’ equity
4. Others(III) Profit distribution
1. Withdrawal of surplus reserves
2. Withdrawal of general risk provision
3. Distribution to owners (orshareholders)
4. Others(IV) Internal transfer of owner’s equity
1. Transfer of capital reserves into
capital (or share capital)
2. Transfer of surplus reserves into
capital (or share capital)
3. Surplus reserves used for
remedying loss
4. Changes in defined benefit plans
carried forward to retained
earnings
5. Other comprehensive income
carried forward to retained
earnings
6. Others(V) Special reserve
1. Withdrawal for the period
2. Utilization for the period(VI) Others
IV. Closing balance for the period

Items

Haier Smart Home Co., Ltd. Annual Report 2022
Capital reserve361,395,824.17
693,835,462.71–2,145,616,347.40–4,296,634,791.21

1,433,768,376.68

3,857,807,196.38

457,962,768.76
693,835,462.71–696,877,770.72–166,885,280.39
23,852,037,324.76–118,017,507.59–14,970,200.00

9,446,598,493.00

336,152.58
1,990,683,498.45

361,395,824.17–148,533,151.67
941,851,908.85

6,411,445.38
1,290,895,044.45 94,713,542,708.88–19,316,841.24 –4,315,951,632.45

693,835,462.71–2,145,616,347.40–19,316,841.24 –4,315,951,632.45

1,810,903.91
1,810,903.91

1,394,235.73 13,438,949,372.10
18,900,173.06 17,897,022,710.84(P1)6,411,445.38
93,422,647,664.43–4,296,634,791.21

191,631,911.06

1,289,500,808.72 81,274,593,336.78

17,466,708.55

P.166

172,960,573.19
57,976,944,921.36–4,296,634,791.21

Total owners’
equity1,272,034,100.17 81,082,961,425.72

Minorityshareholders’interests

Time: 06-04-2023_17:14:01

4,014,190,623.24

575,574,713.40
575,574,713.40–4,872,209,504.61–575,574,713.40–150,344,055.58
940,041,004.94

13,437,555,136.37
17,878,122,537.78

21,450,563.00

1,433,768,376.68

10,011,674,560.57
14,710,923,491.99

1,353,547,865.69
898,627,404.94

575,574,713.40–118,017,507.59

3,167,535,198.37
3,167,199,045.79

79,985,092,528.06

174,165,202.51

79,810,927,325.55

Sub-total

47,893,963.00
41,413,600.00

9,398,704,530.00

47,965,270,360.79

58,136,031.99

47,907,134,328.80

Others1,433,768,376.68

3,438,615,909.84

3,438,615,909.84

Surplus reserve

Undistributed
profits

1,186,662,585.30

Special reserve

General risk
provision–118,017,507.59

2,424,038,819.70 –1,176,851,699.92

Othercomprehensive
income47,893,963.00

116,029,170.52

118,017,507.59 22,549,345,568.94

OthersLess: treasury
stock

2022
Equity attributable to owners of the Parent Company

2,424,038,819.70 –1,176,851,699.92

Preference
shares Perpetual bonds

Other equity instruments

Unit and Currency: RMB

118,017,507.59 22,665,374,739.46

9,398,704,530.00

Paid-in capital(or share capital)

January-December 2022

Consolidated Statement of Changes in Owner’s Equity

Haier 18703[1] E12a Section 10 1st Proof(C>E) 852

Section X Financial ReportCapital reserve

9,398,704,530.00–32,352,800.00

8,211,218,327.05–3,804,025,640.63–393,281,370.24

9,432,438,755.05
13,078,840,517.10
3,271,572,697.63–136,417,222.36

12,966,493,109.72
12,946,590,737.07

67,018,599,418.34

181,073,716.47

66,837,525,701.87

Sub-total

1,614,809.17
2,424,038,819.70 –1,176,851,699.92

3,438,615,909.84

159,073,945.41
79,985,092,528.06–3,410,744,270.39

195,150,477.77

6,368,251,389.85

3,177,862,638.28–230,127,281.71

243,172.85
159,317,118.26
1,289,500,808.72 81,274,593,336.78–63,252,252.15 –3,473,996,522.54

261,635,166.10–3,221,896,635.96–63,252,252.15 –3,473,996,522.54–93,710,059.35–93,710,059.35–19,160,509.67 12,947,332,600.05
137,558,628.98 13,084,149,366.05

1,308,661,318.39 68,327,260,736.73

14,076,761.30

Person in charge of accounting department: YingKe

157,623,878.58
47,965,270,360.79–3,410,744,270.39

Total owners’
equity1,294,584,557.09 68,132,110,258.96

Minorityshareholders’interests

P.167 (P1)

Person in charge of accounting function: Gong Wei–164,742.34
118,017,507.59 22,665,374,739.46–2,246,177,826.20

393,281,370.24
393,281,370.24

393,281,370.24

38,532,831,605.74

65,044,545.95

38,467,787,059.79

Others261,635,166.10–3,221,896,635.96–3,410,744,270.39

2,395,142,269.05–130,634,970.86–132,249,780.03

3,045,334,539.60

3,045,334,539.60

Surplus reserve

Undistributed
profits

261,635,166.10–794,401,566.91-2,246,177,826.20

403,210,889.00

2,395,142,269.05

2,395,142,269.05

28,896,550.65 –1,046,216,729.06

Special reserve

General risk
provision

6,368,251,389.85

7,542,034,703.88–136,417,222.36–2,246,177,826.20

370,858,089.00

Othercomprehensive
income28,896,550.65 –1,046,216,729.06

Less: treasurystock

8,211,218,327.05

7,541,869,961.54–2,246,177,826.20

2,364,195,333.79 15,123,504,777.92

116,029,170.52

2,364,195,333.79 15,007,475,607.40

Others

370,858,089.00

9,027,846,441.00

9,027,846,441.00

Preference
shares Perpetual bonds

2021
Equity attributable to owners of the Parent Company

Time: 06-04-2023_17:14:01

Legal representative of the Company: Li Huagang

I. Closing balance for the previous year
Add: changes in accounting policies
Error correction for prior periodBusiness combination under common
control
OthersII. Opening balance for the current year
III. Increase/decrease for the current period(decrease is represented by ‘-’)(I) Total comprehensive income(II) Capital injection and reduction by
owners
1. Ordinary shares invested by owners
2. Capital contribution by holders ofother equity instruments
3. Share-based payment included inowners’ equity
4. Others(III) Profit distribution
1. Withdrawal of surplus reserves
2. Withdrawal of general risk
provision
3. Distribution to owners (orshareholders)
4. Others(IV) Internal transfer of owner’s equity
1. Transfer of capital reserves into
capital (or share capital)
2. Transfer of surplus reserves into
capital (or share capital)
3. Surplus reserves used for
remedying loss
4. Changes in defined benefit plans
carried forward to retained
earnings
5. Other comprehensive income
carried forward to retained
earnings
6. Others(V) Special reserve
1. Withdrawal for the period
2. Utilization for the period(VI) Others
IV. Closing balance for the period

Items

Paid-in capital(or share capital)

Other equity instruments

Haier 18703[1] E12a Section 10 1st Proof

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Section X Financial Report

Haier Smart Home Co., Ltd. Annual Report 2022

167

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(C>E) 852

Section X Financial ReportStatement of Changes in Owners’ Equity of the Parent Company
January-December 2021
Unit and Currency: RMB
2022
Other equity instruments

Items

Paid-in capital(or share
capital)Preference
sharesI. Closing balance for the previous
year
9,398,704,530.00
Add: changes in accounting
policies
Error correction for priorperiodOthersII. Opening balance for thecurrent year
9,398,704,530.00
III. Increase/decrease for thecurrent period (decrease isrepresented by ‘-’)47,893,963.00(I) Total comprehensive income(II) Capital injection andreduction by owners
47,893,963.00
1. Ordinary shares invested
by owners
41,413,600.00
2. Capital contribution byholders of other equity
instruments
21,450,563.00
3. Share-based payment
included in owners’
equity–14,970,200.00
4. Others(III) Profit distribution
1. Withdrawal of surplus
reserves
2. Distribution to owners (orshareholders)
3. Others(IV) Internal transfer of owner’s
equity1. Transfer of capitalreserves into capital (orshare capital)
2. Transfer of surplus
reserves into capital (orshare capital)
3. Surplus reserves used
for remedying loss
4. Changes in defined
benefit plans carriedforward to retained
earnings
5. Other comprehensive
income carried forward
to retained earnings
6. Others(V) Special reserve
1. Withdrawal for theperiod
2. Utilization for the period(VI) Others
IV. Closing balance for the period 9,446,598,493.00

168

Haier Smart Home Co., Ltd. Annual Report 2022

Perpetual
bonds

Others Capital reserve

Other
Less: treasury comprehensivestock
income Special reserve Surplus reserve

Undistributed
profits

Total owners’
equity25,802,279,483.13 1,495,170,675.08

621,302,944.83

2,833,469,684.39 4,468,575,626.52 41,629,161,593.79

25,802,279,483.13 1,495,170,675.08

621,302,944.83

2,833,469,684.39 4,468,575,626.52 41,629,161,593.79

1,498,619,536.63

812,967,883.34–19,211,595.09–19,211,595.09

575,574,713.40

1,559,004,664.94

812,967,883.34

859,736,173.10 2,149,644,907.70
5,755,747,134.03 5,736,535,538.94
793,930,744.60

898,627,404.94

940,041,004.94

339,945,261.17

361,395,824.17

639,163,385.88–318,731,387.05

639,163,385.88–1,146,669,470.39
575,574,713.40 –4,896,010,960.93 –4,320,436,247.53

812,967,883.34

575,574,713.40 –575,574,713.40–4,320,436,247.53 –4,320,436,247.53–60,385,128.31
27,300,899,019.76 2,308,138,558.42

602,091,349.74–60,385,128.31
3,409,044,397.79 5,328,311,799.62 43,778,806,501.49

Haier 18703[1] E12a Section 10 1st Proof

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2021
Other equity instruments

Items

Paid-in capital(or share
capital)I. Closing balance for the previous
year
9,027,846,441.00
Add: changes in accounting
policies
Error correction for priorperiodOthersII. Opening balance for thecurrent year
9,027,846,441.00
III. Increase/decrease for thecurrent period (decrease isrepresented by ‘-’)370,858,089.00(I) Total comprehensive
income(II) Capital injection andreduction by owners
370,858,089.00
1. Ordinary shares invested
by owners
2. Capital contribution byholders of other equity
instruments
403,210,889.00
3. Share-based payment
included in owners’
equity–32,352,800.00
4. Others(III) Profit distribution
1. Withdrawal of surplus
reserves
2. Distribution to owners(or shareholders)
3. Others(IV) Internal transfer of owner’s
equity1. Transfer of capitalreserves into capital (orshare capital)
2. Transfer of surplus
reserves into capital(or share capital)
3. Surplus reserves used
for remedying loss
4. Changes in defined
benefit plans carriedforward to retained
earnings
5. Other comprehensive
income carried forward
to retained earnings
6. Others(V) Special reserve
1. Withdrawal for theperiod
2. Utilization for the period(VI) Others
IV. Closing balance for the period 9,398,704,530.00

Preference
sharesPerpetual
bonds

Others Capital reserve

Other
Less: treasury comprehensivestock
income Special reserve Surplus reserve

Total owners’
equity20,408,352,380.95–10,030,704.15

2,440,188,314.15 4,349,961,964.23 36,216,318,396.18

20,408,352,380.95–10,030,704.15

2,440,188,314.15 4,349,961,964.23 36,216,318,396.18

5,393,927,102.18 1,495,170,675.08

631,333,648.98

393,281,370.24

631,333,648.98

118,613,662.29 5,412,843,197.61
3,932,813,702.38 4,564,147,351.36

5,393,927,102.18 1,495,170,675.08

4,269,614,516.10–17,642,864.51–17,642,864.51

5,965,040,500.85

6,368,251,389.85

245,199,533.31–798,670,067.47 1,495,170,675.08

245,199,533.31–2,326,193,542.55––
393,281,370.24 3,814,200,040.09 3,420,918,669.85
393,281,370.24 –393,281,370.24–3,420,918,669.85 –3,420,918,669.85

25,802,279,483.13 1,495,170,675.08

621,302,944.83

Legal representative of the Company: Person in charge of accounting function:
Li Huagang

Undistributed
profits

Gong Wei

2,833,469,684.39 4,468,575,626.52 41,629,161,593.79

Person in charge of accounting
department: YingKeHaier Smart Home Co., Ltd. Annual Report 2022

169

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Section X Financial Report

III. GENERAL INFORMATION OF THE COMPANY
1.

Overview of the Company√ Applicable□ Not Applicable

The predecessor of Haier Smart Home Co., Ltd (hereinafter 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, with the document of Qing Ti
Gai [1989] No. 3 issued on 24 March 1989, based on the reconstruction of the original Qingdao
Refrigerator Factory, a limited company was set up by directional fund raising 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 wasconverted from a directional offering company to a public subscription company and issued
additional 50 million shares to the public and listed with trading on Shanghai Stock Exchange inNovember 1993. In October 2018, D-shares in issue of the Company were listed on the China
Europe International Exchange AG. In December 2020, H-shares in issue of the Company werelisted on the Stock Exchange of Hong Kong Limited by way of introduction.
The Company’s registered office is located at the Haier Science and Technology Innovation
Ecological Park of Laoshan District, Qingdao, Shandong Province, and the headquarters is
located at the Haier Science and Technology Innovation Ecological Park of Laoshan District,
Qingdao, Shandong Province.
The Company is mainly engaged in research and development, manufacturing and sales of home
appliances including refrigerators/freezers, kitchen appliances, air-conditioners, laundry appliances
and water appliances, and other smart home business, as well as providing smart homepackaged solutions.
The ultimate controlling parent company of the Company is Haier Group Corporation.
These financial statements have been approved for publication by the Board of the Company on
30 March 2023.

2.

Scope of consolidated statements√ Applicable□ Not Applicable

For details of changes in the scope of consolidated financial statements for the current period,
please refer to ‘VIII. Changes in Consolidation Scope’ and ‘IX. Interest in Other Entities’ of this
note.

170

Haier Smart Home Co., Ltd. Annual Report 2022

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Section X Financial Report

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 forEnterprises — Basic Standards published by the Ministry of Finance, specific accounting
standards, and guidance on application of accounting standards for enterprises, interpretations toaccounting standards for enterprises and other relevant requirements (hereinafter collectively
referred to as the ‘Accounting Standards for Enterprises’) which issued subsequently, and incombination with the disclosure provisions of the Rules for the Information Disclosure andCompilation 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 andaccounting estimation.

2.

Going Concern√ Applicable□ Not Applicable

The Company has ability to continue its operation for at least 12 months since the end of thereporting period and there are no significant events affecting its ability to continue as a going
concern.

V.

SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
Specific accounting policies and accounting estimates:√ Applicable□ Not Applicable

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 foraccounts receivable (Note V.10); the measurement of inventories (Note V.11); the depreciation andamortization of the investment properties (Note V.13); the depreciation of fixed assets (Note V.14), theamortization of intangible assets (Note V.18), the criterion for determining of long-term assets
impairment (Note V.19); and the date of revenue recognition (Note V.25), etc.

1.

Statement of compliance with Accounting Standards for Enterprises
The financial statements prepared by the Company meet the requirements of the AccountingStandards for Enterprises, which accurately and completely reflected information relating to thefinancial position as of 31 December 2022, results of operations in 2022 and cash flows of theCompany.

2.

Accounting period
The accounting year of the Company is from 1 January each year to 31 December of the same
year in solar calendar.

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Section X Financial Report3.

Operating period√ Applicable□ Not Applicable

The Company takes the period from the acquisition of assets for processing to the ultimate
realization of cash or cash equivalents as a normal operating cycle. The Company takes 12months as an operating period, which is also the classification basis for the liquidity of its assets
and liabilities.

4.

Recording currency
Renminbi is the recording currency of the Company

5.

Accounting methods of business combinations under common control and notunder common control√ Applicable□ Not Applicable

A business combination is a transaction or event that brings together two or more separate
entities into one reporting entity. Business combinations are classified into business combinations
under common control and business combinations not under common control.
(1)Business combinations under common control
A business combination under common control is a business 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 business combination
under common control, the party that obtains the control over the other parties on the
combination date is the acquirer, and other parties involving in the business combination
are the transferors. The combination date is the date on which the acquiring party
effectively obtains the control over the party being acquired.
For business combination under common control, the transferor’s assets and liabilities
obtained by the Company (as the acquirer) in a business combination are accounted for at
the carrying amount of the transferor in the ultimate controller’s consolidated financial
statements as at the date of combination, except for adjustments due to differences inaccounting policies. The difference between the carrying amount of the combinationconsideration paid by the Company (or the aggregate nominal value of shares issued) andthe carrying amount of net assets obtained in a business combination shall be adjusted tocapital reserve, in case the capital reserve is insufficient for the elimination, the retained
earnings shall be adjusted.

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Intermediary fees (such as audit, legal services and valuation consultancy) and otherrelevant management fees incurred in the business combination by the Company (as theacquirer) 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 (share premium), where the capitalreserve (share premium) is insufficient, and to surplus reserves and undistributed profits inorder. Trading expenses in direct relation to the issuance of debt instrument as theconsideration for the combination is included in the initial recognition amount of the debt
instrument.
(2)

Business combinations involving entities not under common control
A business combination not under common control is a business combination in which allof the combining entities are not ultimately controlled by the same party or parties both
before and after the combination. For business combination not under common control, theparty that obtains the control of the other parties at the combination date is the acquirer;
other parties involving in the business combination are the transferors. The combination
date is the date on which the acquirer effectively obtains control of the transferors.
In business combination involving entities not under common control, the cost of
combination of the Company (as the acquirer) shall be the sum of the assets paid,
obligations incurred or assumed and the fair value of the equity securities issued by theCompany for obtaining control of the transferor at the date of acquisition. Intermediary fees
(such as audit, legal services and valuation consultancy) and other relevant management
fees incurred by the Company for the purpose of business 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 Company as combination consideration is included in theinitial 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 arise within 12 months after theacquisition date and makes it necessary to adjust the contingent consideration on theacquisition date, the goodwill arising from the business combination shall be amended
accordingly.
The cost of combination and identifiable net assets obtained by the Company (as theacquirer) in a business combination involving entities not under common control aremeasured at fair value on the acquisition date. Where the cost of the combination exceeds
the acquirer’s interest in the fair value of the transferor’s identifiable net assets, thedifference is recognized as goodwill; where the cost of combination is lower than theacquirer’s interest in the fair value of the transferor’s identifiable net assets, the difference
is initially recognized in profit or loss for the current year after the Company conducted areview of computation for the identifiable assets, liabilities or fair value of contingent
liabilities and combination cost, and where the combination cost is still lower than the fairvalue of the identifiable net assets of the transferor obtained during the course of
combination, then the difference is recorded in the profit and loss.

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Section X Financial Report6.

Preparation method of consolidated accounting statements√ Applicable174□ Not Applicable(1)

Scope of consolidated financial statements
The Company incorporated all subsidiaries under its control (including the separate entities
controlled by the Company) into the scope of consolidation financial statements, including
the enterprises under the Company’s control, divisible part in the investees and structured
entities. Control refers to the Company having power over the investee and is entitled tovariable returns from its involvement with the investee and has the ability to use its powerover the investee to affect the amount of those return.

(2)

To unify the accounting policies, balance sheets date and accounting periods of theCompany and subsidiaries
When preparing consolidated financial statements, adjustments are made if subsidiaries’
accounting policies or accounting periods are different from that of the Company, in
accordance with the Company’s accounting policies and accounting periods.

(3)

Offset matters in the consolidated financial statements
The consolidated financial statements shall be prepared by the Company on the basis of
the financial statements of the Company and subsidiaries and based on other relevant
information. In preparing the consolidated financial statements, all significant balances,transactions and unrealized profits between the Company and subsidiaries and amongsubsidiaries are eliminated. In preparing the consolidated financial statements, the Company
treats the entire enterprise group as one accounting entity and reflects the overall financial
position, operating results and cash flows of the Group in accordance with therequirements for recognition, measurement and presentation of relevant accounting
standards for enterprises and consistent accounting policies. The owner’s equity of thesubsidiaries not attributable to the Company shall be presented separately as ‘minority
equity’ under the owner’s equity item in the consolidated balance sheet. The minority equity
attributable to net profit or loss of subsidiaries in the current period shall be presented as‘minority interest’ under the ‘net profit’ item in the consolidated profit statement. Where theamount of loss of a subsidiary attributable to the minority shareholders exceeds their shareof the opening balance of owner’s equity of the subsidiary, the excess shall be allocatedagainst minority equity. The long-term equity investment of the Company held by thesubsidiaries, deemed as treasury stock of the corporate group as well as the reduction ofowners’ equity, shall be presented as ‘Less: Treasury stock’ under the owner’s equity itemin the consolidated balance sheet.

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Accounting treatment of subsidiaries acquired from combination
For subsidiaries acquired from business combination under common control of theCompany, the opening amount of the consolidated balance sheet is adjusted, as if thebusiness combination has taken place since the ultimate controller began its control. The
income, expenses and profits of subsidiaries or business combinations from the beginningof the current period to the end of the reporting period are included in the consolidated
profit statement. The cash flows from the beginning of the current period to the end of thereporting period of a subsidiary or business combination are included in the consolidated
cash flow statement, and the related items in the comparative statements are adjusted
Where control can be exercised over the investee under the same control due to additional
investment and other reasons, the Company shall deem the parties participating in thebusiness combination to have made adjustments in their current status when the ultimate
controller began its control. Equity investments held by the Company before control of thetransferor are recognised for profit or loss, other comprehensive income and other changes
in net assets between the later of the date on which the original equity interest is acquired
and the date on which the Company and the transferor are under the same control and thedate of combination, which are offset against the opening retained earnings or current profit
or loss, respectively, in the period of the comparative statements.
For subsidiaries acquired from business combination under non-common control, theopening amount of the consolidated balance sheet is not adjusted. The income, expenses
and profits of the subsidiary or business from the date of purchase to the end of thereporting period are included in the consolidated profit statement. The cash flows of thesubsidiary or business from the date of purchase to the end of the reporting period areincluded in the consolidated statement of cash flows. Where control can be exercised overan investee that is not under the same control due to additional investment or otherreasons, the Company remeasures the equity interest of the investee held before thepurchase date based on the fair value of the equity interest at the purchase date, and thedifference between the fair value and its carrying amount is included in the current
investment income. Where the equity interest in the transferor held before the purchasedate relates to other comprehensive income under the equity method and other changes inowner’s equity other than net profit or loss, other comprehensive income and profit
distribution, other comprehensive income and other changes in owner’s equity relating
thereto are transferred to investment income of the current period as at the purchase date,
except for other comprehensive income arising from the remeasurement of net liabilities orchanges in net assets of defined benefit plans by the investee.

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Section X Financial Report(5)

Dispose of equity interests in subsidiaries achieved in stages until losing control①
General treatment
During the Reporting Period, when the Company disposes of a subsidiary or
business, the income, expenses and profits of that subsidiary or business from the
beginning of the period to the date of disposal are included in the consolidated
income statement of the Company; The cash flows from the beginning of the period
to the disposal date of the subsidiary or operation are included in the consolidated
statement of cash flows of the Company.
When control over the investee is lost due to the disposal of part of the equity
investment or other reasons, the Company remeasures the remaining equity
investment after disposal at its fair value at the date when control is lost. The
difference between the sum of the consideration obtained on disposal of the equity
interest and the fair value of the remaining equity interest, less the sum of the shareof the net assets of the original subsidiary calculated by the Company based on theoriginal shareholding ratio and goodwill calculated on a continuing basis from the dateof purchase or consolidation, is included in investment income in the period in which
control is lost and goodwill is written off. The Company converts other comprehensive
income relating to the equity investment in the original subsidiary, etc to investment
income in the current period when control is lost.

②

176

Disposal of subsidiaries step by step
Where the Company disposed of equity investment in a subsidiary step by step
through multiple transactions until control is lost, for example, the terms, conditions
and economic impact of each transaction that disposes of the equity investment in a
subsidiary meet one or more of the following conditions, the Company accounts for
multiple transactions as a single transaction:i.

The transactions were entered into simultaneously or with mutual influence in
mind;

ii.

The transactions as a whole are capable of achieving a complete commercial
outcome;iii.

The occurrence of one transaction depends on the occurrence of at least one
other transaction;

iv.

The transaction is uneconomical by itself but economic when considered inconjunction with other transactions.

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Where each transaction that disposes of an equity investment in a subsidiary until
control is lost is a blanket transaction, the Company accounts for each transaction asa transaction that disposes of the subsidiary and loses control; However, theCompany recognises the difference between each disposal price before the loss ofcontrol and the share of net assets of the subsidiary corresponding to the disposal of
the investment as other comprehensive income in the consolidated financial
statements and is transferred to profit or loss in the period in which control is lostwhen control is lost.
Where each transaction that disposes of an equity investment in a subsidiary until theloss of control is not a blanket transaction, the relevant policy for partial disposal ofan equity investment in a subsidiary without loss of control is accounted for before
the loss of control by the Company; When control is lost, accounting is performed in
the same manner as would be done for a disposal subsidiary.
(6)

Purchase of minority interests in subsidiaries
The difference between the Company’s costs of newly acquired long-term equity
investment resulting from the purchase of minority interests and the share of net assets
attributable to the subsidiary calculated on an ongoing basis from the date of purchase (orthe date of combination) based on the newly increased shareholding ratio, the equity
premium in the capital reserve in the consolidated balance sheet is adjusted, and if theequity premium in the capital reserve is insufficient to offset, the retained earnings isadjusted.

(7)

Partial disposal of equity investments in subsidiaries without loss of control
The Company adjusts the equity premium in the capital reserve in the consolidated balance
sheet for the difference between the disposal price obtained from the partial disposal of thelong-term equity investment in the subsidiary without loss of control and the share of the
net assets of the subsidiary that would continue to be calculated from the purchase date or
the combination date corresponding to the disposal of the long-term equity investment, or
adjust the retained earnings if the equity premium in the capital reserve is insufficient tooffset.

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7.

Classification of joint arrangement and accounting methods of joint operations√ Applicable□ Not Applicable

A joint arrangement refers to an arrangement jointly controlled by two or more parties. In
accordance with the Company’s rights and obligations under a joint arrangement, the Company
classifies joint arrangements into joint operations and joint ventures.
(1)

Joint operations
Joint operations refer to a joint arrangement in which the Company is a party and isentitled 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 businessenterprises: 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 theobligations 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 in appropriation to the share of the Company; ④ recognize
revenue from disposal of joint operations in appropriation to the share of the Company; ⑤recognize fees solely occurred by the Company and recognize fees from joint operations inappropriation to the share of the Company.
When the Company, as a joint venture, invests or sells assets to or purchase assets (theassets 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 otherparties 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 — Asset Impairment, 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 the Company’s share of commitment
in relation to the its purchase of assets from joint operations.

(2)

178

Joint ventures
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 ‘22. Long-term equity
investment’ of Note V.

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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 andwhich are subject to an insignificant risk on change in value.

9.

Foreign currency businesses and translation of foreign currency statements√ Applicable(1)□ Not Applicable

Foreign currency transactions
If foreign currency transactions occur, they are translated into the amount of functional
currency by applying the exchange rate at the transaction date.
Monetary items denominated in foreign currencies are translated by the Company intofunctional currencies at the rates of exchange ruling at the balance sheet date. All foreignexchange difference are credited in the profit or loss of the current period, except thosearising from the funds denominated in foreign currency specially borrowed for theestablishment of the qualifying assets are treated based on the principal of capitalization ofborrowing costs.
Non-monetary items in foreign currency measured at historical cost are translated by theCompany using the spot exchange rate prevailing on the date when transaction occurredand its functional currency shall remain unchanged. Non-monetary items denominated inforeign 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 thetranslated 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 inexchange rate).

(2)

Translation of foreign currency financial statements
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 theCompany, their financial statements denominated in foreign currencies shall be translated toperform accounting and prepare the consolidated financial statements.
The assets and liabilities of the foreign currency balance sheet of the Company aretranslated using the spot exchange rate at the balance sheet date; all items except for‘undistributed profits’ of the owner’s equity are translated at the spot exchange rate on thetransaction date. The revenue and expenses in the foreign currency income statement of
the Company are translated using the approximate rate of the spot exchange rate on thetransaction date. Exchange differences on translation of financial statements denominated inforeign currencies are presented as the ‘other comprehensive income’ in the owner’s equityof the balance sheet.

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Section X Financial Report

Foreign currency cash flow and cash flows of a foreign subsidiary of the Company istranslated using the approximate rate of the spot exchange rate on the date of the cash
flows. The impact of exchange rate changes on cash amount is regarded as areconciliation item and reflected separately in the cash flow.
When disposing overseas operations, the translation difference in the foreign currency
financial statements as shown in the owner’s equity of the balance sheet and related to theoverseas operation shall be transferred from owner’s equity to profit or loss in the current
period of disposal. If part of the overseas operations is disposed of, the translationdifference in the foreign currency financial statements of the disposal part shall becalculated based on the proportion of the disposal and transferred to profit or loss in thecurrent period of disposal.

10. Financial instruments√ Applicable□ Not Applicable

A financial instrument refers to any contract that gives rise to a financial asset of one entity anda financial liability or equity instrument of another entity. A financial asset or financial liability andequity instrument is recognized when the Company becomes a party to the contract of afinancial instrument.
(1)

Classification, recognition and measurement of financial assets
On initial recognition of a financial asset, according to the business model for managing
financial assets and the contractual cash flow characteristics of financial assets, theCompany classifies financial assets into: Financial assets measured at amortized cost;financial assets measured at fair value through other comprehensive income; financial
assets measured at fair value through profit or loss of the current period.
Financial assets are measured at fair value upon initial recognition. For financial assets
measured at fair value through profit and loss of the current period, related transaction
costs are directly included in profit and loss of the current period; for other types offinancial assets, related transaction costs are included in their initial recognized amounts.
For the accounts receivable or bills receivable arising from the sale of products or theprovision of labor services that do not contain or consider the significant financing
components, etc, the Company shall take the consideration amount entitled to be received
as the initial recognized amount.

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1)

The debt instruments held by the Company:①
Financial assets measured at amortized cost
The Company’s business model for managing such financial assets is: With theaim of obtaining contractual cash flow, the contractual cash flow characteristics
of such financial assets shall be consistent with the basic lending arrangements,that is, the cash flow generated on a specific date is only the payment for the
principal and the interest based on the outstanding principal amount. For suchfinancial assets, the Company recognizes the interest income in accordancewith the effective interest method. Such financial assets are subsequently
measured at amortised cost. The gains or losses arising from amortisation or
impairment are recognised in profit or loss of the current period. Such financial
assets of the Company mainly include cash and cash equivalents, bills
receivable, accounts receivable, other receivables, creditor’s right investment
and long-term receivables. The Company lists the creditor’s rights investments
and long-term receivables matured within one year (including one year) from thebalance sheet date as non-current assets matured within one year; thecreditor’s rights investments matured within one year (including one year) whenbeing obtained are listed as other current assets.
②

Financial assets measured at fair value through other comprehensive income
The Company’s business mode for managing such financial assets is: With theaim of obtaining contractual cash flow and selling the financial assets, thecontractual cash flow characteristics of such financial assets shall be consistent
with the basic lending arrangements. Such financial assets are measured at fairvalue through other comprehensive income, but impairment gains and losses,
exchange gains and losses, and interest income calculated by the effective
interest method are included in profit and loss of the current period. Suchfinancial assets of the Company mainly include financing receivables and othercreditor’s rights investments. The Company lists other creditor’s rights
investments matured within one year (including one year) from the balance
sheet date as non-current assets matured within one year; other creditor’srights investments matured within one year (including one year) when being
obtained are listed as other current assets.

③

Financial assets measured at fair value through profit or loss of the current period
The Company classifies financial assets other than those above measured atamortized cost and those measured at fair value through other comprehensive
income as financial assets measured at fair value through profit or loss of thecurrent period. In addition, at the time of initial recognition, in order to eliminate
or significantly reduce accounting mismatch, the Company designated somefinancial assets as financial assets measured at fair value through profit or lossof the current period. Such financial assets are subsequently measured at fairvalue and changes in fair value are included in profit or loss of the current
period. Such financial assets that are matured more than one year and are
expected to be held for more than one year from the balance sheet date arelisted as other non-current financial assets.

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Section X Financial Report2)

Equity instrument investments of the Company:
The Company classifies equity instrument investments that have no control, joint
control and significant influence on itself as financial assets measured at fair value
through profit or loss of the current period; investments that are expected to be held
for more than one year from the balance sheet date are listed as other non-current
financial assets.
In addition, the Company designated some non-trading equity instrument investments
as financial assets measured at fair value through other comprehensive income, which
are listed as other equity instrument investments. Such designation cannot be
revoked once made. The Company includes the relevant dividends and interest
income of such financial assets in profit and loss of the current period, and changes
in fair value are included in other comprehensive income. When the financial asset isderecognised, the Company transfers the cumulative gain or loss previously included
in other comprehensive income directly to retained earnings and is not included in
profit or loss of the current period.

(2)

Classification, recognition and measurement of financial liabilities
On initial recognition, financial instruments or their components issued by the Company areclassified into financial liabilities or equity instruments based on the contractual terms of thefinancial instruments and the economic nature, rather than solely on its legal form, together
with the definition of financial liability and equity instruments.
The Company classifies financial liabilities as financial liabilities at fair value through profit
and loss of the current period and other financial liabilities at initial recognition.
Financial liabilities at fair value through profit and loss of the current period aresubsequently measured at fair value. Any gains or losses arising from changes in the fairvalue and any interest expenses related to the financial liabilities are recognized in profit orloss of the current period. The financial liabilities at fair value through profit and loss of thecurrent period of the Company mainly consist of financial liabilities held for trading.
Other financial liabilities are subsequently measured at amortized costs using effective
interest method. Other financial liabilities of the Company are financial liabilities measured atamortized cost, including bills payable, accounts payable, other payables, borrowings,
bonds payable, etc. Such financial liabilities are recognized initially at fair value lesstransaction costs and subsequently measured using the effective interest method. Financial
liabilities with a maturity of less than one year (including one year) are listed as current
liabilities: those with maturity of more than one year but are mature within one year fromthe balance sheet date (including one year) are listed as non-current liabilities due within
one year; the rest are presented as non-current liabilities.

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Section X Financial Report(3)Classification and treatment of financial liabilities and equity instruments
The Company classifies financial liabilities and equity instruments on the following
principles: (1) Where the Company is unable to unconditionally avoid delivering cash or
another financial asset to fulfil a contractual obligation, the contractual obligation meets thedefinition of a financial liability. Although some financial instruments do not explicitly include
the terms and conditions imposing the contractual obligation to deliver cash or anotherfinancial asset, they may indirectly give rise to the contractual obligation through otherterms and conditions. (2) Where a financial instrument shall or may be settled in the
Company’s own equity instrument, consideration shall be given to whether the Company’s
own equity instrument as used to settle the instrument is a substitute of cash or anotherfinancial asset or the residual interest in the assets of the Company after deducting all of its
liabilities. In the former case, the instrument shall be the Company’s financial liability; in thelatter case, the instrument shall be the equity instrument of the Company. Under certain
circumstances whereby a financial instrument contract stipulates that the Company shall or
may use its own equity instrument to settle the financial instrument, and the amount of thecontractual right or obligation equal to the number of its own equity instruments to bereceived or delivered multiplied by their fair value at the time of settlement, the contract
shall be classified as a financial liability, regardless of whether the amount of thecontractual right or obligation is fixed, or fluctuates in full or in partly in response tochanges in a variable other than the market price of the Company’s own equity instruments(for example an interest rate, a commodity price or a financial instrument price).
When classifying a financial instrument (or a component thereof) in consolidated financial
statements, the Company shall consider all terms and conditions agreed between membersof the Group and the holders of the financial instrument. If the Group as a whole has an
obligation in respect of the instrument to settle it by delivering cash or another financial
asset or in such a way that it would be a financial liability, such instrument shall beclassified as a financial liability.
If the financial instrument or its component is attributable to the financial liability, therelevant interests, dividends, gains or losses, and gains or losses arising from redemption
or refinancing, shall be recorded in the profit or loss of the current period.
If the financial instrument or its component is attributable to equity instrument, theCompany treats it as change in equity when it is issued (including refinanced), repurchased,sold or cancelled. Changes in fair value of equity instrument is not recognized by theCompany. Transaction costs related to equity transactions are deducted from equity. The
Company recognizes the distribution to holders of the equity instruments as distribution of
profits, and dividends paid do not affect total amount of shareholders’ equity.

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Section X Financial Report(4)

Recognition and measurement on transfer of financial assets
A financial asset shall be de-recognized when one of the following conditions is met: ① thecontractual right for receiving cash flows from the financial asset is terminated; ②thefinancial asset is transferred, and the risk and rewards of ownership of the financial asset
have been substantially transferred to the transferee; and ③ the financial asset istransferred; the Company neither transfers nor retains substantially all the risks and rewardsof ownership of the financial asset, but ceases the control over the financial asset. If theCompany neither transfers nor retains substantially all the risks and rewards of ownership ofthe financial asset, and the control over the financial asset is not ceased, the financial asset
and the related financial liabilities should be recognized based on the degree of continuing
involvement. The degree of continuing involvement means the level of risks borne by theCompany resulting from the change in value of the financial asset.
On de-recognition of other equity instruments investment, the difference between the
carrying amount and the sum of the consideration received and the cumulative changes infair value that had been recognized directly in other comprehensive income is recognized in
the retained earnings. On de-recognition of other financial assets, the difference between
the carrying amount and the sum of the consideration received and the cumulative changes
in fair value that had been recognized directly in other comprehensive income is recognizedin current profit or loss.
For financial assets that are sold with recourse or endorsement, the Company needs todetermine whether the risk and rewards of ownership of the financial asset have been
substantially transferred. If the risk and rewards of ownership of the financial asset havebeen substantially transferred, the financial asset shall be derecognized. If the risk andrewards of ownership of the financial asset have been substantially retained, the financial
asset shall not be de-recognized. If the Company neither transfers nor retains substantially
all the risks and rewards of ownership of the financial asset, the Company shall assess
whether the control over the financial asset is retained, and the financial assets shall be
accounted for according to the above paragraphs.

(5)

Derecognition of financial liabilities
If the current obligation of a financial liability (or part of it) has been discharged, theCompany derecognizes the financial liability (or part of the financial liability). The Company(borrower) enters into an agreement with the lender to replace the original financial liability
in the form of a new financial liability, and if the new financial liability is substantiallydifferent from the original financial liability, the original financial liability is derecognized andthe new financial liability is recognized. If the Company makes substantial changes to thecontractual terms of the original financial liability (or a part thereof), the original financial
liability is derecognized and the new financial liability is recognized in accordance with therevised terms.
If the financial liability (or a part thereof) is derecognized, the difference between the
carrying amount and the consideration paid (including the transferred non-cash assets or
liabilities assumed) is recognized in current profit or loss.

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Section X Financial Report(6)

Offsetting financial assets and financial liabilities
When the Company has the legal right to offset recognized financial assets and financial
liabilities, and the legal right can be executed at present, and the Company has a plan tosettle the financial assets and financial liabilities at the same time or at net amount, thefinancial assets and financial liabilities can be presented in the balance sheet at net amountafter offsetting. Except for the above circumstances, financial assets and financial liabilities
cannot be offset and shall be presented separately in the balance sheet.

(7)

Determination of fair value of financial assets and financial liabilities
Fair value is the amount at which an asset could be sold or a liability could be transferred
between willing parties in an orderly transaction on a measurement date. The fair value of afinancial instrument that is traded in an active market is determined at the quoted price inthe active market. Quoted price in the active market represents quoted price which can beeasily obtained periodically from exchange market, brokers, industry associations or pricing
services agency, etc., which is the transactions amount in arm’s length transactions. The
fair value of a financial instrument that is not traded in an active market is determined byusing a valuation technique. Valuation techniques include using prices of recent market
transactions between knowledgeable and willing parties, reference to the current fair valueof another financial asset that is substantially the same with this instrument, discounted
cash flow analysis and option pricing models, etc. During the valuation, the Company
adopts an applicable valuation technique under current conditions and there are enoughavailable data and other information to support. Those inputs should be consistent with the
inputs a market participant would use when pricing the asset or liability, and the Company
should maximize the use of relevant observable inputs. When related observable inputs
can’t be acquired or are not feasible to be acquired, then use unobservable inputs.
In summary, the Company categorizes inputs for fair value measurement into three levels
and uses the inputs by the order of Level 1, Level 2 and Level 3. Level 1: quoted prices(unadjusted) in active markets for identical assets or liabilities at the measurement date.
Level 2: inputs other than quoted prices included within Level 1 that are observable for theasset or liability, either directly or indirectly. Level 3: unobservable inputs for the asset or
liability.

(8)

Impairment of financial assets
For financial assets measured at amortized cost and debt instrument investments measured
at fair value through other comprehensive income, contract assets and financial guarantee
contracts, the Company recognizes the loss provision based on the expected credit losses.
The Company considers reasonable and reliable information about past events, current
conditions and forecasts of future economic conditions, and takes the risk of default as aweight, and calculates the probability-weighted amount of the present value of thedifference between the cash flow receivable and the cash flow expected to be received of
the contract to confirm the expected credit losses.

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On each balance sheet date, the Company measures the expected credit losses offinancial instruments in different phases. If the credit risk has not increased significantly
since the initial recognition, the financial instruments are in the first phase. The Company
measures the loss provision according to the expected credit losses in the next 12 months;
if credit risk has increased significantly but credit impairment has not yet occurred since theinitial recognition, the financial instruments are in the second phase. The Company
measures the loss provision according to the expected credit losses of the instruments
during the entire duration; if credit impairment has occurred since the initial recognition, thefinancial instruments are in the third phase. The Company measures the loss provisionaccording to the expected credit losses of the instruments during the entire duration.
For financial instruments with lower credit risk on the balance sheet date, the Company
measures the loss provision according to the expected credit losses in the next 12 months,
assuming that its credit risk has not increased significantly since the initial recognition.
For financial instruments in the first phase and second phase and financial instruments withrelatively lower credit risk, the Company calculates interest income based on their bookbalance before the deduction of provisions and effective interest rate. For financial
instruments in the third phase, the Company calculates interest income based on theiramortized cost after the impairment provision has been deducted from the book balanceand effective interest rate.
For bills receivable, accounts receivable and contractual assets, whether there exist
significant financing components, the Company measures loss provision based on expectedcredit loss over the entire duration.
The Company classifies accounts receivable into groups on the basis of shared credit risk
characteristics, and calculates the expected credit losses on groups, the bases of group
determination are as follows:
For each group of bills receivable, the Company applies exposure at default and expectedcredit losses rate over the entire duration to calculate the expected credit losses by taking
into account the historical credit losses experience, the existing conditions and forecast of
future economic conditions.
For each group of accounts receivable, the Company makes the comparison of expectedcredit losses rates of accounts receivable in overdue days and over the entire duration to
calculate the expected credit losses by taking into account the historical credit losses
experience, the existing conditions and forecast of future economic conditions.
For each group of other accounts receivable, the Company applies exposure at default andexpected credit losses rate within the next 12 months or over the entire duration to
calculate the expected credit losses by taking into account the historical credit losses
experience, the existing conditions and forecast of future economic conditions.

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The Company recognizes the loss impairment provision or reversed in profit or loss of thecurrent period. For held debt instruments at fair value through other comprehensive
income, the Company recognizes loss/gain on impairment in profit or loss of the current
period, and adjusts other comprehensive income at the same time.

11. Inventory√ Applicable□ Not Applicable(1)

Classification of inventory
Inventory refers to finished products and commodities held by the Company in daily
activities for sale, products in progress, materials and supplies consumed in the process of
production or provision of labour services, including mainly raw materials, turnovermaterials, materials for commissioned processing work, packaging materials, products inprogress, semi-finished products through in-house manufacturing, finished products(products in stock) and project construction, among others.

(2)

Pricing of dispatch of inventory
The actual cost of inventories upon delivery is calculated using the weighted averagemethod.

(3)

Impairment provision for inventory
At the balance sheet date, inventory is measured at the lower of cost and net realisablevalue.
The net realisable value of inventories that can be directly put to sale, including finishedproducts, commodities and materials for sale is determined as the estimated selling price ofsuch inventory less estimated selling expenses and related tax expenses; the net realisablevalue of or inventories held for production, is determined as the estimated selling price offinished products manufactured less estimated cost incurred upon completion, estimatedselling expenses and related tax expenses; the net realisable value of inventory held for the
execution of sales contract or labour contract is computed on the basis of the contract
price. If the quantity of inventories held by the Company is more than the quantity ordered
under a sales contract, the net realisable value of the inventories in excess is computed on
the basis of the general selling price.
Inventory impairment provision is made on the basis of individual inventory items, provided
that if certain inventories are related to a series of products manufactured and sold in thesame region with identical or similar end uses or purposes and are difficult to measureseparately with other items, their cost and net realisable value may be measured on an
aggregate basis. Inventories The cost and net realizable value of inventories in large
quantity with low unit prices are measured according to inventory types.
At the balance sheet date, if the cost of inventory of the Company is higher than its net
realisable value, impairment provision is made and charged to current profit or loss. If thefactor causing the write-down of inventory value has been removed, the amount ofwrite-down should be reversed and transferred out of the previous inventory impairment
provision amount. The reversed amount is included in current profit or loss.

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Section X Financial Report(4)

Inventory system
The Company adopts the perpetual inventory system as its inventory system.

(5)

Amortisation of low-value consumables and packaging materials
The Company adopts one-off amortisation of its low-value consumables and packaging
materials.

12. Long-term equity investments√ Applicable□ Not Applicable

Long-term equity investments hereunder refer long-term equity investments in which theCompany exercises control, joint control or significant influence over the investee.
(1)

Determination of initial investment cost①
The initial cost of long-term equity investments acquired through business combination
involving parties under common control should be recognised as the share of thecarrying value of the owner’s equity of the acquired party; the initial cost of long-term
equity investments acquired through business combination involving parties not undercommon control should be recognised as the combination costs determined at thedate of acquisition;
②

(2)

188

The Company invested in other equity investment other than long-term equity
investments acquired through combination, the initial investment cost of long-term
equity investments acquired with cash payment is the acquisition price actually paid;
the initial investment cost of long-term equity investments acquired with the issuanceof equity- based securities is represented by the fair value of equity-based securities;
the initial investment cost of long-term equity investments acquired through debt
restructuring is determined in accordance with relevant provisions under “Accounting— Debt Restructuring”; the initialStandards for Business Enterprises No.12
investment cost acquired in exchange for non-monetary assets shall be determined inaccordance with relevant provisions of the standard.

Subsequent measurement and recognition of profit or loss①
Cost method
Long-term equity investments in which the Company is able to exercise control overthe investee is accounted for using the cost method. Under the cost method, thecarrying value of long-term equity investments, other than additional investment or
recouped investment, shall remain constant. The Company declared the distribution of
profit or cash dividend to the investee and calculated the portion of entitlement,
which is recognised as investment income.

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Equity method
The equity method is used by the Company to account for long-term equity
investments in associates and joint ventures. Under the equity method, the initialinvestment cost is not adjusted for any excess of the initial investment cost over theshare of the net fair value of the investee’s identifiable assets. When the initialinvestment cost is less than the share of the fair value of the investment’s identifiable
net assets, the difference is recognised in current profit or loss and the cost of
long-term equity investment is adjusted accordingly.
Under the equity method, share of net profit or losses and other comprehensive
income of the investee are recognised by the Company as investment income andother comprehensive income, respectively, and the carrying amount of the long-term
equity investment is adjusted accordingly. Share of profit or cash dividend declaredby the investee is charged against the carrying value of the long-term equity
investment; changes in owners’ equity of the investee other than net profit or loss,
other comprehensive income and profit distribution are adjusted against the carrying
value of long-term equity investment and included in capital reserve. Share of net
profit or loss of the investee is recognised by the Company on the basis of the fairvalue of the identifiable assets of the investee when the investment is acquired andadjusted against the net profit of the investee. If the accounting policy andaccounting period of the investee are inconsistent with those of the Company, thefinancial statements of the investee is adjusted to align with the accounting policy andaccounting period of the Company, and investment income and other comprehensive
income is recognised accordingly.
Net losses of the investee is recognised by the Company by deducting the carrying
value of the long-term equity investment together with long-term equity that insubstance forms part of the net investment in the investee until it reaches zero.
Moreover, if the Company has incurred obligations to assume additional losses of theinvestee, estimated liabilities are recognised according to the obligation expected to
be assumed and charged to current investment loss. If the investee records net profit
in future periods, the Company shall recognise its share of gains after applying suchshare of gains to make up for the unrecognised share of loss.

(3)

Change of accounting method for long-term equity investment①
Change from fair value measurement to the equity method: If an equity investment in
the investee not previously affording control, joint control or significant influence andaccounted for in accordance with the standard for recognition and measurement offinancial instruments becomes capable of affording joint control or significant influence
over the investee as a result of increased shareholding following additional
investment, the accounting method should be changed to the equity method, and thefair value of the original equity investment determined according to the standard forrecognition and measurement of financial instruments plus the fair value ofconsideration paid for the acquisition of the new investment shall be changed theinitial investment cost under the equity method.

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Section X Financial Report②

Change from fair value measurement or equity method to cost method: if an equity
investment previously held in the investee not previously affording control, joint control
or significant influence and accounted for in accordance with the standard forrecognition and measurement of financial instruments, or a long- term equity
investment previously held in associates or joint ventures becomes capable ofaffording control over the investee, it is accounted for long-term equity investment
formed through business combination.

③

Change from equity method to fair value measurement: if a long-term equity investment
previously held in the investee affording joint control or significant influence ceases toafford joint control or significant influence as a result of decrease in shareholding
percentage following partial disposal, the remaining equity investment is recognised inaccordance with the standard for recognition and measurement of financial
instruments, and the difference between the fair value at the date of loss of joint
control or significant influence and the carrying value is included in current profit or
loss.

④

Change from cost method to equity method or fair value measurement: when preparing
separate financial statements, if the Company losses control over an investee due todisposal of some equity-based investment and other reasons, the Company accounts
for the remaining equity affording joint control or significant influence over an investee
as a result of disposal based on the equity method, and the remaining equity will be
adjusted as if it is accounted for using the equity method from the date ofacquisition; for the remaining equity not affording joint control or significant influence
over an investee as a result of disposal, it is accounted for in accordance with
relevant requirements of Accounting Standards for Business Enterprises No. 22—
Recognition and measurement of financial assets, and the differences between the fairvalue and book value on the date when control is lost are included in profit or loss.
When preparing consolidated financial statements, it shall be accounted for inaccordance with relevant requirements of Accounting Standards for BusinessEnterprises No.33— Consolidated financial statements.

(4)

190

Bases for determining joint control or significant influence over an investee
Joint control is the contractually agreed sharing of control over an arrangement, which
relevant activities of such arrangement must be decided by unanimously agreement fromparties who share control. If all the parties or a group of parties must act in concert todecide on the relevant activities of certain arrangement, it can be considered that all parties
or a group of parties have collective control over the arrangement. When determining if
there is any joint control, it should first be determined if the arrangement is controlledcollectively by all parties or a combination of parties, and then determined whether
decisions about activities related to the arrangement must be made by the unanimous
agreement of those parties who have collective control over the arrangement. If there are
two or more party groups that can collectively control certain arrangement, it does notconstitute joint control. When determining if there is any joint control, the relevant
protection rights will not be taken into account.

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Significant influence is the power of the investor to participate in the decision-making of aninvestee’s financial and operational policies, but neither control nor jointly control theformulation of such policies with other parties. When determining if there is any significant
influence on the investee, the influence of the voting shares of the investee held directly or
indirectly and the potential voting rights held by the Company and other parties which are
exercisable in the current period and converted to the equity of the investee, including thewarrants, stock options and convertible bonds that are issued by the investee and can beconverted in the current period, shall be taken into account by the Company.
When the Company holds directly or indirectly through the subsidiary 20% (inclusive) to
50% of the voting shares of the investee, it is generally considered to have significant
influence on the investee, unless there is concrete evidence to prove that it cannot
participate in the production and operational decisions of the investee and cannot posesignificant influence in this situation.
The Company usually determines whether there is significant influence on the investee
through the following one or several circumstances:①

Representation at the board or similar authority of the investee.

②

Participation in the decision-making process of the investee’s financial and operational
policies.

③

Having important transactions with the investee.

④

Posting of management personnel at the investee.

⑤

Providing key technical data to the investee.

Having one or several of the above circumstances does not mean that the Company musthave significant influence on the investee. The Company needs to comprehensively
consider all the facts and circumstances to make an appropriate judgment.
(5)

Methods for impairment test and impairment provision
At the balance sheet date, the Company inspects whether there are indications of possible
impairment of a long-term equity investment. If there are indications of impairment, an
impairment test should be performed to ascertain its recoverable amount, and an
impairment provision equivalent to the margin by which the recoverable amount is lower
than the carrying value should be made. Once recognised, impairment loss will not bereversed in subsequent accounting periods. The recoverable amount is determined as thehigher of net fair value of the long-term equity investment on disposal and present value of
estimated future cash flow.

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Section X Financial Report(6)

Disposal of long-term equity investments
Upon the Company’s disposal of long-term equity investments, the difference between the
carrying value and consideration actually acquired is included in current profit or loss. Upondisposal of long-term equity investment, the portion previously included in othercomprehensive income is accounted for according to the relevant percentage on the same
basis adopted in the direct disposal of the relevant assets or liabilities by the investee.

13. Investment properties(1)

Types and measurement models of investment properties
The Company’s investment properties include the following types: leased land-use rights,
leased buildings and land-use rights held for transfer upon appreciation.
The Company’s investment properties is initially measured at cost and subsequently on a
cost basis.

(2)

Adoption of cost model as accounting policy
Among the Company’s investment properties, leased buildings are subject to depreciation
on a straight-line basis in accordance with accounting policies identical with accounting
policies for fixed assets. Leased land-use rights and land-use rights held for disposal after
appreciation land- use rights in investment properties are amortised using the straight-line
method in accordance with accounting policies identical with fixed asset accounting
policies for intangible assets.
At the balance sheet date, the Company inspects whether there are indications of possible
impairment of an investment property. If there are indications of impairment, an impairment
test should be performed to ascertain its recoverable amount, and an impairment provisionequivalent to the margin by which the recoverable amount is lower than the carrying value
should be made. Once recognised, impairment loss will not be reversed in subsequentaccounting periods.
Where the investment properties are sold, transferred, retired or damaged, the differencesfrom disposal after deducting the carrying amount and related taxes are recognised in profit
or loss for the current period by the Company. When the Company has evidence indicating
the self-occupied houses and buildings are converted to leasing or leasing out its
properties held for sale under operating leases, the carrying amount of such fixed assets,intangible assets or inventories before the conversion are transferred to investment
properties. When the Company has evidence indicating the property held to earn rentals orfor capital appreciation are converted to self-occupation or the property intended for
operating lease purpose are open for sale, the carrying amount of such properties before
the conversion are transferred to fixed assets, intangible asset or inventories.

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14. Fixed assets√ Applicable(1)□ Not Applicable

Recognition criteria
Fixed assets of the Company refer to tangible assets held for the production ofcommodities, provision of labour services, lease or operational management with a usefullife of more than one accounting year. Fixed assets are recognised if all of the following
conditions are met:①

Economic benefits relating to such fixed assets are likely to flow into the Company;②

The cost of the fixed assets can be reliably measured.

Subsequent expenditure incurred for a fixed asset that meets the recognition criteria shallbe included in the cost of the fixed asset, and the carrying amount of the component of
the fixed asset that is replaced shall be derecognised. Otherwise, such expenditure shall berecognised in profit or loss for the period in which it is incurred.
Fixed assets of the Company are initially measured at cost. The purchase cost of a fixed
asset comprises its purchase price, related taxes and any directly attributable expenditure
for bringing the asset to its working condition for its intended use, such as transportation
costs and installation expenses. If the payment for a purchased fixed asset is deferredbeyond the normal credit terms, the cost of the fixed asset shall be determined based on
the present value of the instalment payments. The difference between the actual payment
and the present value of the purchase price is recognised in profit or loss over the credit
period, except for such difference that is capitalised according to Accounting Standard forBusiness Enterprises No. 17 — Borrowing Costs (ASBE No. 17).
(2)

Depreciation method√ Applicable □ Not Applicable
The Company’s fixed assets are mainly classified into: buildings, machinery equipment,
transportation equipment and office and other equipment; depreciation is conducted on astraight-line basis. The useful life and estimated net residual value of fixed assets are
determined based on the nature and use of the fixed assets. At the end of the year, theuseful life and estimated residual value of and depreciation method for fixed assets arereviewed, and adjustment is made for any difference with the original estimated amount.
Other than fully depreciated fixed assets which remain in use and the land which isseparately priced and recorded, the Company measures depreciation for all fixed assets.

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Section X Financial Report

The type, depreciation method, estimated useful lives, estimated residual values and yearly
depreciation of the Company’s fixed assets are as follows:Type

Depreciation
methodBuildings
Machinery equipment
Transportation equipment
Office and other equipment

Life average method
Life average method
Life average method
Life average method

Depreciation
life(years)Residual
ratio

8–40
4–20
5–10
3–10

0–5%
0–5%
0–5%
0–5%

(3)

Methods for impairment test and impairment provision for fixed assets
At the balance sheet date, the Company inspects whether there are indications of possible
impairment of fixed assets. If there are indications of impairment, an impairment test shouldbe performed to ascertain its recoverable amount, and an impairment provision equivalent
to the margin by which the recoverable amount is lower than the carrying value should be
made. Once recognised, impairment loss will not be reversed in subsequent accounting
periods.

(4)

Disposal of fixed assets
Fixed assets are derecognised upon disposal, or when no economic benefits are expectedfrom use or disposal. The difference between gains on disposal, transfer, retirement or
damage of fixed assets, net of their book value and related taxes, are included in profit andloss.

15. Construction in progress√ Applicable
(1)

194

□ Not Applicable

Measurement of construction in progress
The cost of the Company’s construction in progress is recognised at actual construction
expenses, including all necessary construction expenses incurred during the construction,and borrowing costs capitalized before the work reaches the expected conditions for use
and other related costs.

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(2)

(3)

Criteria for and timing of the transfer of construction in progress to fixed assets
The Company’s construction in progress is transferred to fixed assets when the work iscompleted and reaches the expected conditions for use. The criteria for judgement of
expected conditions for use should meet one of the following:①

The physical construction (including installation) of fixed assets has been completed infull or substantially completed in full;②

Trial production or operation has commenced and the result indicates that the asset
can operate normally or can manufacture compliant products in a consistent manner,or the trial operation indicates that it can operate or conduct business normally;③

The amount of fixed asset expenditure of the construction is minimal or almost certain
not be further incurred;④

Fixed assets acquired have reached design or contractual requirements, or are
essentially consistent with design and contractual requirements.

Methods for impairment test and impairment provision for construction in progress
At the balance sheet date, the Company inspects whether there are indications of possible
impairment of construction in progress. If there are indications of impairment, an
impairment test should be performed to ascertain its recoverable amount, and an
impairment provision equivalent to the margin by which the recoverable amount is lower
than the carrying value should be made. Once recognised, impairment loss will not bereversed in subsequent accounting periods.
The recoverable amount is determined as the higher of net fair value of the asset lessdisposal cost and the present value of estimated future cash flow.

16. Borrowing costs√ Applicable(1)□ Not ApplicablePrinciple for recognition of capitalisation of borrowing cost
Borrowing costs incurred by the Company that can be directly attributed to the acquisitionor production of assets qualified for capitalisation are capitalised and included in relevant
asset costs; other borrowing costs are recognised as cost at the amount incurred at thetime of incurrence and charged to current profit or loss. Assets qualified for capitalisationrefer to fixed assets, investment properties and inventory that require a considerably long
period of acquisition or production activities to reach the expected conditions for use or
sale.

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Section X Financial Report(2)

Computation of capitalised amounts
Capitalisation period: from the point of time at which the capitalisation of borrowing costs
begins to the point of time at which capitalisation ceases. The period of suspension ofcapitalisation of borrowing costs is not included.
Period of suspension of capitalisation: In case of abnormal disruption during the acquisitionor production process for a consecutive period of more than 3 months, the capitalisation
period for borrowing costs should be suspended.
Computation of capitalised amount: ① For specific borrowings, the amount is determined
as interest expense incurred for the period in respect of the specific borrowing less interest
income received through the deposit of unutilised borrowed funds or investment gains
received through provisional investments; ② For general borrowings utilised, the amount isdetermined as the weighted average amount of the portion of cumulative asset expenses inexcess of the asset expense of specific borrowings multiplied by the capitalisation rate forthe general borrowings utilised, where the capitalisation rate is the weighted averageinterest rate of general borrowings; ③ where there is a discount or premium in the
borrowings, the amortisation of such discount or premium for each accounting period isdetermined according to the effective interest rate and the interest amount for each period
is adjusted accordingly.

17. Right-of-use assets√ Applicable□ Not Applicable

Right-of-use assets are the rights of the Company as lessee to use leased assets during thelease period. At the inception date of the lease, the Company as lessee recognises right- of-use
assets and lease liabilities in respect of the lease, other than short-term leases and leases of
low-value assets which are subject to simplified treatment.
The Company’s right-of-use assets are initially measured at cost, which includes:

196

(1)

The amount of lease liability under initial measurement;(2)

The lease payment made on or before the inception date of the lease term, less the relevant
amount of lease incentive received if such incentive is available;(3)

The initial direct cost of the Company as lessee;(4)

Estimated cost to be incurred for the demolishing and removal of leased assets, restorationof venues where the leased assets are located or restoration of the leased assets to theconditions agreed under the lease terms.

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The Company charges depreciation in respect of right-of-use assets using the average service life
method. Where the acquisition of ownership of the leased asset at the end of the lease period
can be reasonably ascertained by the Company, depreciation is charged over the remaining
useful life of the leased assets. If the acquisition of ownership of the leased asset at the end of
the lease period cannot be reasonably ascertained, depreciation is charged during the lease termor the remaining useful life of the leased assets, whichever is shorter.
The Company shall determine whether impairment of right-of-use assets has occurred andaccount for impairment loss which has been identified in accordance with the provisions of“Accounting Standards for Business Enterprises No. 8 — Asset Impairment”.
When the Company remeasures lease liabilities in accordance with the accounting standard, thecarrying value of the right-of-use assets is adjusted accordingly. If the carrying value of the rightof-use assets is reduced to zero but the lease liabilities still require further adjustment, theremaining amount is charged to current profit or loss.
Where lease modification results in a reduced scope of lease or shortened lease term, thecarrying value of the right-of-use assets is reduced accordingly, and the relevant gain or loss
resulting from the partial or full termination of the lease is included in current profit or loss. For
other lease modifications resulting in the remeasurement of lease liabilities, the carrying value ofthe right-of-use assets is adjusted accordingly.

18. Intangible assets
Intangible assets are the identifiable non-monetary assets which have no physical form and arepossessed or controlled by the Company, and are recognized when the following conditions aremet:①

it is probable that economic benefits attributable to the intangible assets will flow into theCompany;②

the costs of the intangible assets can be measured reliably.

(1)

Measurement of intangible assets
Intangible assets of the Company are initially recognized at costs. The actual costs ofpurchased intangible assets include the consideration and relevant expenses actually paid.
For intangible assets contributed by investors, relevant actual costs are determined basedon the value agreed in the investment contract or agreement. But if the value agreed in theinvestment contract or agreement is not a fair value, the actual costs should be determinedbased on the fair value. The cost of a self-developed intangible asset is the total
expenditure incurred in bringing the asset to its intended use. Intangible assets acquired ina business combination not under common control that are owned by the acquiree but notrecognised in its financial statements are recognised as intangible assets at fair value on
initial recognition of the acquiree’s assets.

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Subsequent measurement of intangible assets of the Company: ①Intangible assets withfinite useful lives are amortized on a straight-line basis; their useful lives and amortization
methods are reviewed at the end of each year, and adjusted accordingly if there is any
variance with the previous estimates; ②Intangible assets with indefinite useful lives are notamortized and their useful lives are reviewed at the end of each year. If there is anobjective evidence that the useful life of an intangible asset is finite, an estimation should
be made on the useful life and the intangible asset should be amortized using the straightline method.
(2)

Criterion of determining indefinite useful life
The useful life of an intangible asset is indefinite if the period in which the asset brings
economic benefits for the Company is unforeseeable, or the useful life could not be
ascertained.
Criterion of determining indefinite useful lives: ① the period is 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 the period in which the intangible assets generate benefits for
the Company still could not be estimated after considering the industrial practice or
relevant expert opinions.
At the end of each year, the Company reviews the useful lives of the intangible assets withindefinite useful lives. The assessment is primarily reviewed by relevant departments that
use the intangible assets, using the down-to-top approach, to determine if there arechanges to the determination basis of indefinite useful lives.

(3)

Methods of test and provision for impairment of intangible assets
At the balance sheet date, the Company reviews intangible assets to check whether there
is any sign of impairment. If yes, the recoverable amount is recognized through an
impairment test and provision for impairment is made based on the difference between the
carrying value and the recoverable amount.
Impairment loss will not be reversed in subsequent accounting periods once provision ismade for it. The recoverable amount of intangible assets should be based on the higher ofthe net fair value of the assets less the disposal expense and the present value of
estimated future cash flow of the assets.

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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
stage is recognized in the profit or loss as incurred. Expenses incurred in the development
stage are capitalized only if all of the following conditions are met: ①the technicalfeasibility of completing the intangible assets so that they will be available for use or for
sale; ②the intention to complete the intangible assets for use or for sale; ③ how theintangible assets will generate economic benefits, including there is evidence that the
products produced by the intangible assets has a market or the intangible assets
themselves have a market; if the intangible assets are for internal use, there is evidence
that there exists usage for the intangible assets; ④ the availability of adequate technical,
financial and other resources to complete the development and gain the ability to use or
sell the intangible assets; ⑤ the capability to reliably measure the expenditures attributable
to the development stage of the intangible assets.
Specific standards for distinguishing research stage and development stage of an internal
research and development project: the Company refers to the research stage as the stageof planned investigation and search for obtaining new technology and knowledge, whichfeatures planning and exploration; before commercial production or other uses, theCompany regards the stage of applying the research achievements and other knowledge ina plan or design to produce new or substantially improved materials, equipment andproducts as development stage, which features pertinence and is very likely to form
results.
All the expenditures incurred on research and development which cannot be distinguishedbetween research stage and development stage are recognized in the profit or loss.

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19. Impairment of long-term assets√ Applicable□ Not Applicable

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 sign of impairment at the balance sheet date. If the result of the impairment test
indicates that the recoverable amount of the assets is less than the carrying amount, a provision
for impairment will be made based on the difference and will be recorded in impairment loss. The
recoverable amount is the higher of the net fair value of the assets less the disposal expense
and the present value of estimated future cash flow of the assets. Provision for asset impairment
is calculated and recognized on the individual asset basis. If it is not possible to estimate therecoverable amount of an individual asset, the recoverable amount of the asset group to which
the asset belongs is determined. An asset group is the smallest asset portfolio that can generatecash inflows independently.
Goodwill arising from a business combination and an intangible asset with an indefinite useful life
is tested for impairment at least at each year end, irrespective of whether there is any indicationthat the asset may be impaired. Intangible assets that have not been ready for intended use aretested for impairment each year.
When the Company carries out impairment test of the goodwill, the carrying amount of the
goodwill, arising from business combination, shall be allocated to the related asset groups on
reasonable basis since the 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 isallocated to the related asset groups or asset group portfolios, it shall be allocated in the
proportion of the fair value of each asset group or asset group portfolio against the total fairvalue of related asset groups or asset group portfolios. 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 asset groups or asset group
portfolios.
When impairment test is made by the Company to the related asset groups or asset group
portfolios including goodwill, if there is a sign that the related asset groups or asset group
portfolios are prone to impair, the Company shall first conduct impairment test on the asset
groups or asset group portfolios excluding goodwill, calculate the recoverable amount andrecognize the corresponding impairment loss by comparing with its carrying amount. The
Company shall then conduct impairment test on the asset groups or asset group portfolios
including goodwill and compare the carrying amount (including the carrying amount of allocatedgoodwill) of related asset groups or asset group portfolios with the recoverable amount thereof.
Impairment loss shall be recognized in accordance with the differences when the recoverable
amount of the related asset groups or asset group portfolios is lower than the carrying amountthereof. The amount of the impairment loss is first reduced by the carrying amount of the
goodwill allocated to the asset group or set of asset groups, and then the carrying amount ofother assets (other than the goodwill) within the asset group or set of asset groups, pro rata
based on the carrying amount of each asset.
Once the above impairment loss on assets is recognized, it shall not be reversed by theCompany in any subsequent accounting period.

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20. Long-term prepaid expense√ Applicable□ Not Applicable

Long-term prepaid expenses of the Company are expenditures which have incurred but thebenefit period of which is more than one year (exclusive). They are amortized by installments overthe benefit period based on each item under the expenses. If items under the long-term pre-paid
expenses are no longer beneficial to the subsequent accounting periods, the amortized value ofsuch unamortized items is then fully transferred to the profit or loss.

21. Staff’s remuneration
Staff’s remunerations are all forms of compensation and other relevant expenditure given by theCompany in exchange for services rendered by employees, including short-term remunerations,post-employment benefits, termination benefits and other long-term benefits.
Short-term remunerations include short-term salaries, bonus, allowance, subsidies, employee
welfare, housing provident fund, labor union fee and education fee, medical insurance premiums,
work-related injury insurance premiums, maternity insurance premiums, short-term compensatedleave, short-term profit-sharing plans, etc. During the accounting period when employees renderservices, short-term remunerations that actually incurred shall be recognized as liabilities andcredited into the current profit or loss or the cost of relevant assets on an accrual basis by thebenefit objects.
Post-employment benefits mainly include the basic pension insurance, enterprise annuity, etc., In
accordance with the risks and obligations undertaken by the Company, the post- employment
benefits are classified as defined contribution plans and defined benefit plans. Defined
contribution plans: the Company shall recognize the sinking funds paid on the balance sheet dateto individual entities in exchange for services from employees in the accounting period as
liabilities, and shall credit such funds into the profit or loss or the cost of relevant assets inaccordance with the benefit objects. Defined benefit plans: the cost for providing benefits isdetermined using the expected cumulative welfare unit method, with actuarial valuations being
carried out by independent actuary at the interim and annual balance sheet date. The costs forstaff’s remunerations incurred by the defined benefit plans of the Group are categorized asfollows: (1) service cost, including current period service cost, past service cost and settlement
profit or loss. Specifically, current period service cost means the increase of the present value of
defined benefit obligations resulted from the current period services offered by employees. Past
service cost means the increase or decrease of the present value of defined benefit obligations
resulted from the revision of the defined benefit plans related to the prior period services offeredby employees; (2) interest expenses of defined benefit plans; (3) changes caused by theremeasurement of liabilities for defined benefit plans. Unless other accounting standards requireor permit the credit of the costs for employee welfare into the cost of assets, the Company will
credit (1) and (2) above into the profit or loss; and recognize (3) above as other comprehensive
income and will not transfer it back to the profit or loss in subsequent accounting periods.

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Termination benefits: The indemnity proposal provided by the Company for employees for the
purpose of terminating labor relations with employees before expiry of the labor contracts or
encouraging employees to accept downsizing voluntarily. When the following conditions are met,
the Company will recognize and credit into the profit or loss the accrued liabilities arising fromthe indemnity as a result of terminating labor relations with the employees: the Company has
made a formal plan for termination of labor relations or has made an offer for voluntary
redundancy which will be implemented immediately; and the Company could not unilaterally
withdraw the plan for termination of labor relations or the redundancy offer. Early retirement plansfor employees will be handled in the principle the same as the termination benefits above. The
Company will credit the salaries and social insurance premiums to be paid to the early retirees
during the period from the date of early retirement to the normal retirement date to the profit orloss when recognition conditions for estimated liabilities are met.

22. Lease liabilities√ Applicable□ Not Applicable

On the commencement date of the lease term, the Company as the lessee shall recognize theright-of-use assets and lease liabilities for the lease. The Company’s lease liabilities are initiallymeasured at the present value of the lease payment that has not been paid on thecommencement date of the lease term.
When calculating the present value of the lease payment, the Company adopts interest rate
implicit in lease as discount rate; if it is impossible to determine the interest rate implicit in lease,
the incremental borrowing rate of the Company (i.e. lessee) shall be adopted as the discountrate.
The interest rate implicit in lease refers to the interest rate that makes the sum of the present
value of the lessor’s lease receivable amount and the present value of the unguaranteed residual
value equal to the sum of the fair value of the leased asset and the initial direct cost of thelessor. The lessee’s incremental borrowing rate refers to the interest rate that the lessee isrequired to pay for borrowing funds under similar mortgage conditions in a similar economic
environment in order to obtain assets close to the value of the right-of-use assets during asimilar period.
The Company shall calculate the interest expenses of lease liabilities over the lease term at the
fixed periodic interest rate, and include it into current profit or loss or assets cost.
After the commencement date of the lease term, where the assessment results of the renewal of
the option, the termination of the lease option and the purchase option have changed, theCompany re-determines the lease payment and re-measures the lease liabilities in accordancewith the present value of the lease payment after changes and the revised discount rate.
After the commencement date of the lease term, in the event that the future lease paymentchanges due to a change in expected payment under a guaranteed remaining value or changes
in an index or rate used in determining the lease payments, the Company shall re-measure leaseliabilities based on present value of the lease payment after changes. In such cases, thediscount rate adopted by the Company shall remain unchanged; however, if the change in lease
payment results from a change in floating interest rates, the Company shall use a revised
discount rate.

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23. Estimated liability√ Applicable□ Not Applicable(1)

Criterion for determining of estimated liability
If an obligation in relation to contingencies such as external guarantees, discounting ofcommercial 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 tolead to an outflow of economic interests and its amount can be reliably measured, suchobligation shall be recognized as an estimated liability.

(2)

Measurement of estimated liability
The estimated liability shall be initially measured according to the best estimate of thenecessary expenses for the performance of the present obligation. If there is a continuous
range for the necessary expenses and if all the outcomes within this range are equally likely
to occur, the best estimate shall be determined according to the middle estimate within therange.; if there are two or more items involved, the best estimate should be determinedaccording to all possible outcomes and relevant probabilities.
At the balance sheet date, the carrying value of estimated liabilities should be reviewed. If
there is objective evidence that the carrying value could not reflect in the current best
estimate, the carrying value shall be adjusted to reflect the current best estimate.

24. Share-based payments√ Applicable□ Not Applicable

For equity-settled share-based payment transaction in return for services from employees, it shallbe measured at the fair value of equity instruments granted to the employees at the grant date.
For the payment of such fair value that may only be exercised if services are fulfilled during thevesting period or the specified performance condition is achieved, the amount of such fair value
shall, based on the best estimate of the number of exercisable equity instruments during thevesting period, be recognized in relevant costs or expenses in straight-line method with theincrease 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 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 fairvalue 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 that may be exercised if services are fulfilled during the vesting period or
the specified performance condition is achieved, on each balance sheet date within the vesting
period, the services acquired in the current period shall, based on the best estimate of exercise,be recognized in relevant costs or expenses at the fair value of the liability assumed by theCompany, and the liabilities shall be adjusted correspondingly.
At each balanced sheet date and the settlement date prior to the settlement of liabilities, the fairvalue of the liability is re-measured with its change consolidated in profit/loss.

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Section X Financial Report

When there is changes to 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 themodification increases the number of equity instruments granted, the increase in fair value of theequity instruments is recognized as a corresponding increase in service achieved. Increase in thefair value of equity instruments refer to the difference between the fair values of the equity
instrument on the modified date before or after the modification. If the Company modifies thevesting conditions in such manner conductive to the employees, including the shortening of thevesting period, change or cancellation of the performance conditions (rather than market
conditions), the Company shall consider the modified vesting conditions upon the disposal ofvesting conditions. If the modification reduces the total fair value of shares paid or the Company
uses other methods not conductive to employees to modify the terms and conditions of sharebased payment plans, it will continue to be accounted for the services obtained in theaccounting 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 Company cancel equity instruments granted which will be treatedas accelerating the exercise of rights and any amount to be charged over the remaining vesting
period should be recognized immediately in the profit or loss, while at the same time recognize
the capital reserve. Employees or other parties can choose to meet non-vesting conditions, but
for those that are not met in the vesting period, the Company will treat it as cancellation ofequity instruments granted.

25. Revenue√ Applicable□ Not Applicable

Revenue is the total inflow of economic benefits formed by the Company and its subsidiaries
during day-to-day operations which might lead to increase of shareholders’ equity and be
irrelevant to capital invested by shareholders.
The Company and its subsidiaries performed performance obligations stated in the contract, i.e.,
recognized revenue when the client obtains the control right of relevant goods or services.
Where the contract includes two or more performance obligations, during the starting date of thecontract, the Company and its subsidiaries allocate transaction price to various single
performance obligation in accordance with the relevant proportion of separate selling price ofgoods or services promised by various single performance obligation, and measure revenue inaccordance with transaction price allocated to various single performance obligation.
Transaction price is the amount of consideration that the Company and its subsidiaries are
expected to be entitled to collect due to transfer of goods and services transferred to the client,excluding the amount collected for any third party. The transaction price recognized by theCompany and its subsidiaries does not exceed the amount of recognized revenue when relevant
uncertainties are eliminated and might not incur material carrying back. The amount that is
expected to be returned to the client is taken as liability of returned goods and is not recordedin transaction price.

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When one of the following conditions is met, the Company and its subsidiaries performperformance obligations during a certain time horizon, otherwise, it belongs to fulfilling
performance obligations at a certain time point:①

The client simultaneously obtains and consumes economic benefits as the Company and its
subsidiaries perform the contract;②

The client is able to control goods under construction during the process of performance of
the Company and its subsidiaries;③

Goods produced by the Company and its subsidiaries during the process of performance
have no alternative use, and the Company and its subsidiaries are entitled to collect theamount for the cumulative completed and performed portion to date during the entire
contractual period.

For the performance obligations performed during a certain time horizon, the Company and its
subsidiaries recognize revenue in accordance with the schedule of performance during such time
horizon. When the schedule of performance can’t be reasonably recognized, where the costs thathave been incurred by the Company and its subsidiaries are estimated to be compensated,revenue shall be recognized in accordance with the amount of costs that has been incurred until
the schedule of performance can be reasonably confirmed.
For performance obligations performed at a certain time point, the Company and its subsidiaries
recognize revenue at the time point when the client obtains the control right of relevant goods orservices. When judging whether the client has obtained control right over goods or services, theCompany and its subsidiaries will consider the following signs:①

The Company and its subsidiaries enjoy the right of instant collection over such goods andservices;②

The Company and its subsidiaries have transferred the material objects of such goods tothe client;③

The Company and its subsidiaries have transferred statutory ownership right of the goods
or major risks and rewards of the ownership to the client;④

The client has accepted such goods or service.

The right that the Company and its subsidiaries are entitled to collect the consideration forhaving transferred goods or services to the client (and such right depends on other factors otherthan time lapse) is presented as contractual asset, and contractual asset is provisioned
impairment on the basis of expected credit losses. The right owned by and unconditionallycollected from the client by the Company and its subsidiaries (only depend on time lapse) shallbe presented as accounts receivable. Obligations that the Company and its subsidiaries havecollected or shall collect consideration from the client and shall transfer goods or services to theclient are presented as contractual obligations.

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Specific accounting policies relating to major activities that the Company and its subsidiaries
obtain revenue are described as follows:

206

(1)

Sale of goods
Generally, contracts for sale of goods between the Company and its clients only include
performance obligation of transferring the whole machine of home appliance. Generally, on
the basis of taking into account the following factors comprehensively, the Company
recognizes the revenue at the time point of transfer of control right of goods: the right of
instant collection for obtaining goods, transfer of major risks and rewards on ownership ofgoods, transfer of statutory ownership of goods, transfer of assets of material objects ofgoods, the client’s acceptance of such goods.

(2)

Construction contract income
Construction contract between the Company and the client generally includes performanceobligations of construction and installation of commercial air-conditioner and smart home,because the client is able to control goods under construction during the Company’s
performance process, the Company takes them as performance obligations performed
during a certain time horizon, and recognizes revenue in accordance with the schedule ofperformance, and it is an exemption when the schedule of performance can’t bereasonably confirmed. The Company confirms the schedule of performance of services
provided in accordance with the input method. When the schedule of performance can’t bereasonably confirmed, where the costs that have been incurred by the Company are
estimated to be compensated, the revenue will be recognized in accordance with theamount of costs that has been incurred until the schedule of performance can bereasonably confirmed.

(3)

Warranty obligations
According to contractual agreement and regulations of laws, the Company provides quality
assurance for goods sold and project constructed. For guarantee-type quality assurance inorder to ensure the client that goods sold comply with existing standards, the Company
conducts accounting treatment in accordance with estimated liabilities. For service-type
quality assurance in order to ensure the client that we also provide a separate service otherthan that the goods sold comply with existing standards, the Company takes it as aseparate performance obligation, and allocates partial transaction price to service-type
quality assurance in accordance with the relevant proportion of separate selling price ofgoods and service-type quality assurance, and recognizes revenue when the client obtains
control right over services. When assessing whether quality assurance provides a separate
service other than ensuring the client that the goods sold comply with existing standards,
the Company shall consider factors such as whether such quality assurance is understatutory requirements or industrial practices, the term of quality assurance and the natureof the Company’s commitment to perform the tasks.

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26. Government grants√ Applicable□ Not Applicable(1)

Types of government grants
Government grants refer to the gratuitous monetary assets or non-monetary assets
obtained by the Company from the government, excluding the capital invested by thegovernment as an owner. The government grants are mainly divided into asset-related
government grants and revenue-related government grants.

(2)

Accounting treatment of government grants
Asset-related government grants shall be recognized as deferred income in current profit orloss on an even basis over the useful life of relevant assets; government grants measured
at nominal amount shall be recognized directly in current profit or loss. Revenue-related
government grants shall be treated as follows: ①those used to compensate relevant
expenses or losses to be incurred by the enterprise in subsequent periods are recognized
as deferred income and recorded in current profit or loss when such expenses arerecognized; ②those used to compensate relevant expenses or losses that have been
incurred by the enterprise are recorded directly in current profit or loss.

(3)

Basis for determination of asset-related government grant and revenue-related
government grant
If the government grant received by the Company is used for purchase, construction orother project that forms a long-term asset, it is recognized as asset-related government
grant.
If the government grant received by the Company is not asset-related, it is recognized asrevenue-related government grant.
Government grant received without clear objective shall be classified as asset-related
government grant or revenue-related government grant by:(4)①

Government grant subject to a certain project shall be separated according to the
proportion of expenditure budget and capitalization budget, and the proportion shallbe reviewed and modified if necessary on each balance sheet date;②

Government grant shall be categorized as revenue-related if its usage is described ingeneral statement and no specific project is specified in the relevant government
document.

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 the profit or loss in the current period over theestimated useful life of the relevant asset starting from the date when the asset is available
for use.

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Recognition of government grants
Government grant measured at the amounts receivable is recognized at the end of theperiod when there is clear evidence that the relevant conditions set out in the financial
subsidy policies and regulations are fulfilled and the receipt of such financial subsidy isassured.
Other government grants other than those measured at the account receivable isrecognized upon actual receipt of such subsidies.

27. Deferred tax assets/deferred tax liabilities√ Applicable□ Not Applicable

Deferred income tax assets and deferred income tax liabilities of the Company are recognized:

208

(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 ascertainedby the tax laws and regulations, 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 asset or discharging the liability.

(2)

Deferred income tax asset is recognized to the extent that there is enough taxable income
for the deduction of the deductible temporary difference. At the balance sheet date, if there
is sufficient evidence that there will be enough taxable income in the future for the
deduction of the deductible temporary difference, the deferred income tax asset notrecognized in previous accounting period is recognized. If there is no sufficient evidence
that there will be enough taxable income in the future for the deduction of the deferredincome 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 frominvestments in subsidiaries and associated companies, unless the Company could control
the time of reversal of the temporary differences and the temporary differences would not
be probably reversed in the foreseeable future. For deductible temporary differences arisingfrom investments in subsidiaries and associated companies, deferred income tax asset isrecognized if the temporary difference will be very probably reversed in the foreseeable
future and it is highly probable that taxable income will be available in the future to deduct
the deductible temporary difference.

(4)

No deferred income tax liability is recognized for a temporary difference arising from the initialrecognition of goodwill. No deferred income tax asset or deferred income tax liability isrecognized 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 income (or deductible loss). At the balance sheet date,deferred income tax assets and deferred income tax liabilities are measured at the tax rates
that apply to the period when the asset is expected to be recovered or the liability is
expected to be settled.

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28. Other significant accounting policies and accounting estimates√ Applicable(1)□ Not Applicable

Asset securitisation
The Company has securitised certain receivables to entrust the assets to specific-purpose
entities which would issue such securities to investors. As asset service provider, theCompany is responsible for the provision of maintenance and daily management of theassets, formulation of annual asset disposal plans, formulation and implementation of asset
disposal plan, signing of relevant asset disposal agreements and preparation asset service
reports on a regular basis.
In applying the accounting policy for the securitisation of financial assets, the Company has
considered the extent to which the risk and reward of the assets have been transferred toother entities, and the extent to which the Company exercises control over the entity:(2)①

When the Company has transferred substantially all risk and reward relating to theownership of a financial asset, such financial asset is derecognised;②

When the Company retains substantially all risk and reward relating to the ownershipof a financial asset, the Company continues to recognise such financial asset;③

If the Company neither transfers nor retains substantially all risk and reward relating tothe ownership of a financial asset, the Company considers whether it has control overthe financial asset. If the Company does not retain control, the financial asset isderecognised, and the rights and obligations arising from or retained the transfer are
recognised as assets and liabilities, respectively. If the Company retains control, thefinancial asset is recognised according to the extent of continued involvement in thefinancial assets.

Hedge accounting
Hedge refers, in respect of the risk exposure arising from the company’s management ofspecific risks such as foreign exchange risks, interest rate risks, price risks and credit risks,
to risk management activity of designating financial instruments as hedging instruments
such that the change in the fair value or cash flow of the hedging instruments can be
expected to set off the change in the fair value or cash flow of the hedged item.
The hedged item refers to an item designated for hedge against the risk of change in fairvalue or cash flow that can be reliably measured.
Hedging instruments are financial instruments designated for hedge, the change in fair value
or cash flow of which is expected to set off the change in the fair value or cash flow of thehedged item.

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The Company assesses whether the hedge relationship fulfills the requirement for hedge
effectiveness at the inception date of the hedge and continuously in subsequent periods.
The effectiveness of hedge refers to the extent to which the change in the fair value orcash flow of the hedging instruments can offset the change in the fair value or cash flow of
the hedged item caused by the risk against which the hedge is made. The change in thefair value or cash flow of a hedging instrument in excess or shortfall of the change in thefair value or cash flow of the hedging instruments can offset the change in the fair value orcash flow of the hedged item represents the ineffective portion of the hedge.
(3)

Significant accounting estimates
In the course of applying accounting policies, the Company is required to makejudgements, estimations and assumptions on the carrying values of statement items thatcannot be accurately measured owing to uncertainties to which operating activities are
subject. Such judgements, estimations and assumptions are made based on the pastexperience of the management and taking into consideration of other relevant factors. Suchjudgements, estimations and assumptions affect the reported amounts of income,expenses, assets and liabilities and the disclosure of contingent liabilities as at the balance
sheet date. However, the actual outcome resulting from the uncertainty of such estimates
could be different from the current estimates of the management, thereby resulting insignificant adjustments to the carrying value of the future assets or liabilities affected. The
Company regularly reviews such judgements, estimations and assumptions on a going
concern basis. If the change in accounting estimates affects only the current period inwhich the change occurs, the affected amount is recognized for the period in which thechange occurs; if both the current period and future periods are affected, the affectedamount is recognised for the current period and the future periods.
At the balance sheet date, important aspects in which the Company is required to makejudgements, estimations and assumptions on the amount of items on the financial
statements are as follows:①

210

Estimated liabilities
The Company estimates and makes provision for product warranty and estimatedcontract loss according to contract terms, existing knowledge and historicalexperience. When such contingencies have given rise to a present obligation, and theperformance of such present obligation is likely to result in the outflow of economic
benefit from the Company, the Company recognises estimated liabilities for thecontingencies based on the best estimates of expenses required for the performanceof relevant present obligations. The recognition and measurement of estimatedliabilities is dependent to a large extent on management judgement. In the course ofjudgement, the Company is required to assess factors such as risks, uncertainties
and the time value of currency relating to such contingencies. In particular, theCompany recognises estimated liabilities in respect of after-sales undertaking tocustomers for return and replacement, maintenance and installation of goods sold.
The recognition of estimated liabilities has taken into account the maintenanceexperience and data of the Company for recent years, although past experience inmaintenance may not reflect maintenance in the future. Any increase or decrease inthis provision might affect the profit or loss of future years.

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Section X Financial Report②

Provision for ECL
The Company measures ECL through default risk exposure and the ECL rate, which
is determined based on the default probability rate and default loss rate. In
determining the ECL rate, the Company uses data such as internal historic credit loss
experience and adjusts the historic data taking into consideration current conditions
and prospective information. When considering prospective information, indicators
adopted by the Company include the risk of economic downside, expected growth inunemployment rate, and changes in external market conditions, technical conditions
and customer conditions. The Company monitors and reviews the assumptions
relating to ECL computation on a regular basis. There was no significant change toaforesaid estimation technique and key assumptions during the year.

③

Impairment provisions for inventory
The Company makes impairment provisions for inventory of which cost is higher than
net realisable value and obsolete and slow-moving inventory based on the lower ofcost and net realisable value according to its inventory accounting policy. The
impairment of inventory to its net realisable value is based on assessment of thesellability of inventory and its net realisable value. The authentication of inventory
impairment requires the management to obtain conclusive evidence and makejudgment and estimates taking into consideration factors such as the purpose of
inventory and post-balance sheet date events. Any difference between the actual
outcome and the previous estimate will affect the carrying value of inventory and thecharge or reversal of impairment provisions for inventory during the period in which
the estimates are modified.

④

Fair value of financial instruments
For financial instruments without an active trading market, the Company determines
its fair value using valuation techniques. Such valuation techniques include discounted
cash flow model analysis and others. During the assessment, the Company isrequired to make estimates on future cashflow, credit risk, market volatility rate andrelevance and select an appropriate discount rate. Such relevant assumptions are
subject to uncertainty, and any change will affect the fair value of financial
instruments.

⑤

Impairment of other equity instrument investments
The Company’s determination of impairment for other equity instrument investments islargely dependent on the management’s judgment and assumptions to determine
whether impairment should be recognised. In the course of making judgments andassumptions, the Company is required to assess the extent and duration of the fairvalue of the investment being lower than cost, as well as the financial conditions andshort-term business prospects of the investee, including industry conditions,
technological revolution, credit rating, default rate and counterparty risks.

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212⑥

Impairment provision for long-term assets
At the balance sheet date, the Company assesses whether there are indications ofpossible impairment of non-current assets other than financial assets. In addition to
the annual impairment test, intangible assets with indefinite useful life are also tested
for impairment when there are indications of the same. Impairment tests on noncurrent assets other than financial assets are conducted when there are indications
that its carrying value may not be recoverable. An impairment has occurred when the
carrying value of an asset or asset group is higher than the recoverable amount (thehigher of net fair value less disposal cost and the present value of estimated future
cash flow). The net fair value less disposal cost is determined with reference to theagreed selling price of similar assets in a fair transaction or observable market prices
less incremental costs attributable directly to the disposal of such asset. In estimating
the present value of future cashflow, significant judgement is required to be made in
respect of the production volume and selling price of the asset or (asset group),
relevant operating cost and discount rate for the computation of present value. The
Company takes into consideration all available relevant information when making
estimates on the recoverable amount, including forecasts on production volume,
selling price and relevant operating costs based on reasonable and justifiableassumptions. The Company conducts goodwill impairment tests at least annually. Thisrequires estimates on the present value of future cashflow of asset group or portfolioof asset groups to which goodwill has been allocated. When making estimates on thepresent value of future cashflow, the Company is required to make estimates on
cashflow generated from future asset group or portfolio of asset groups, and at thesame time select an appropriate discount rate to determine the present value of
future cashflow.

⑦

Depreciation and amortisation
Depreciation and amortisation of investment properties, fixed assets and intangible
assets is charged on a straight-line basis over their useful life after taking theirresidual values into account. The Company reviews the useful life on a regular basis
to determine the amount of depreciation and amortisation charge to be allocated toeach reporting period. The useful life is determined based on past experience relating
to similar assets taking into consideration expected technological upgrades. If there
are significant changes in previous estimates, the depreciation and amortisation
charge for future periods will be adjusted.

⑧

Deferred income tax assets
The Company recognises deferred income tax assets in respect of all unutilised tax
losses, to the extent that it is probable that sufficient taxable profit will be available tooffset the loss. This requires the exercise of significant judgement by the Company’s
management to estimate the timing and amount of future taxable profit, taking into
account its tax planning strategy, to determine the amount of deferred income tax
assets to be recognised.

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Income tax
In the Company’s usual operating activities, the final tax treatment and computationof certain transactions are subject to uncertainty. Whether certain items can bepresented on a pretax basis is subject to approval of the competent taxation
authority. If the final confirmed outcome of such taxation matters is different from theamount of the initial estimates, such difference will affect the current income tax anddeferred income tax for the period of final confirmation.

⑩

Provision for sales rebate
The Company and its subsidiaries adopt a sales rebate policy for sales agent
customers. Based on relevant provisions of the sales agreements, vetting of specifictransactions, market conditions, channel inventory level and past experience withreference to the status of completion of agreed appraisal indicators by sales agent
customers, the Company and its subsidiaries makes estimates on and provision forsales rebate on a regular basis. The provision of sales rebate involves judgment andestimation by the management. In the event of any material change in previous
estimates, the aforesaid difference will affect the sales rebate for the period for which
the estimates are changed.

29. Changes in significant accounting policies and accounting estimates(1).

Changes in the significant accounting policies□ Applicable(2).

√ Not Applicable

Changes in the significant accounting estimates□ Applicable√ Not Applicable

VI. TAXATION
1.

Main tax categories and rates
Main tax categories and rates√ Applicable□ Not Applicable

Tax types

Basis of taxation

Value-added tax

Taxable revenue from sales ofgoods and rendering services
Circulation tax payable
Circulation tax payable
Taxable income

City maintenance and construction tax(Local) education surcharge
EIT

Tax rate
6%, 9%, 13%7%1%, 2%, 3%
Statutory tax rateor preferential
rates as follows

Disclosure of tax entities with different enterprise income tax rates□ Applicable√ Not Applicable

Haier Smart Home Co., Ltd. Annual Report 2022

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Section X Financial Report2.

Preferential tax√ Applicable□ Not ApplicableCompanies subjected to preferential tax and preferential tax rate:
Company214

Tax rate

Qingdao Haier Refrigerator Co., Ltd.

15.00%

Qingdao Haier Special Refrigerator Co.,Ltd.
Qingdao Haier Dishwasher Co., Ltd.

15.00%

Qingdao Haier Special Freezer Co., Ltd.

15.00%

Qingdao Haier Intelligent Home
Appliance Technology Co., Ltd.
Wuhan Haier Electronics Holding Co.,Ltd.
Wuhan Haier Freezer Co., Ltd.

15.00%

Hefei Haier Refrigerator Co., Ltd.

15.00%

Hefei Haier Air-conditioning Co., Limited

15.00%

Zhengzhou Haier Air-conditioning Co.,Ltd.
Shenyang Haier Refrigerator Co., Ltd.

15.00%

Qingdao Haier Air-Conditioner
Electronics Co., Ltd.
Qingdao Meier Plastic Powder Co., Ltd.

15.00%

Qingdao Hai Gao Design and
Manufacture Co., Ltd.
Qingdao Hairi High Technology Co., Ltd

15.00%

Qingdao Haier (Jiaozhou) Airconditioning Co., Limited
Qingdao Haier Intelligent Technology
Development Co., Ltd.
Foshan Haier Freezer Co., Ltd.

15.00%

Qingdao Haier Central Air Conditioning
Co., Ltd.

15.00%Haier Smart Home Co., Ltd. Annual Report 2022

15.00%

15.00%
15.00%

15.00%

15.00%

15.00%

15.00%
15.00%

Preferential tax
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterpriseHaier 18703[1] E12a Section 10 1st Proof

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Section X Financial ReportCompany

Tax rate

Haier U+smart Intelligent Technology(Beijing) Co., Ltd.
Beijing Zero Micro Technology Co., Ltd.

15.00%

Qingdao Haier Electronic Plastic Co.,Ltd.
Qingdao Wei Xi Intelligent Technology
Co., Ltd.
Qingdao Haier Special Refrigerating
Appliance Co., Ltd.
Qingdao Haier Smart Kitchen ApplianceCo., Ltd.
Hefei Haier Air Conditioning Electronics
Co., Ltd.
Beijing Lingli Technology Co., Ltd.

15.00%

Qingdao Hairuijiejing Electronics Co.,Ltd.
Shanghai Haier Medical Technology
Co., Ltd.
Qingdao Yunshang Yuyi IOT Technology
Co., Ltd.
Haier (Shanghai) Home Appliance
Research and Development Center
Co., Ltd.
Haier (Shenzhen) R&D Co., Ltd.

15.00%

Laiyang Haier Smart Kitchen ApplianceCo., Ltd.
Guangdong Heilong Intelligent
Technology Co. Ltd
Dalian Haier Refrigerator Co., Ltd.

15.00%

Hefei Haier Washing Machine Co., Ltd.

15.00%

Qingdao Haier Washing Machine Co.,Ltd.
Qingdao Jiaonan Haier Washing
Machine Co., Ltd.
Foshan Shunde Haier Electric Co., Ltd.

15.00%

Tianjin Haier Cleaning Electrical
Appliances Co., Ltd.
(天 津 海 爾 洗 滌 電 器 有 限 公 司)

15.00%

15.00%

15.00%
15.00%
15.00%
15.00%
15.00%

15.00%
15.00%
15.00%

15.00%

15.00%
15.00%

15.00%
15.00%

Preferential tax
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterpriseHaier Smart Home Co., Ltd. Annual Report 2022

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Section X Financial ReportCompany216

Tax rate

Preferential tax

Qingdao Economic and Technological
Development Zone Haier Water
Heater Co., Ltd.
Wuhan Haier Water Heater Co., Ltd.

15.00%

entitled to the preferential taxation
policies as a hi-tech enterprise

15.00%

Foshan Drum Washing Machine Co.,Ltd.
Qingdao Strauss Water Equipment Co.,Ltd.
Qingdao Haier Strauss Technology Co.,Ltd.
Qingdao Haier New Energy ElectricAppliance Co., Ltd.
Qingdao Haier Washing Appliance Co.,Ltd.
Qingdao Haier Lexin Cloud Technology
Co., Ltd. (青 島 海 爾 樂 信 雲 科 技 有 限
公 司)
Hefei Haier Drum Washing Machine Co.,Ltd.
Qingdao Haier Smart Electrics
Equipment Co. Ltd.
Qingdao Haier Smart Living Appliance
Co. Ltd. (青島海爾智慧生活電器有限公 司)
Qingdao Ririshun Lejia IOT Technology
Co., Ltd.
Jiangxi Haier Medical Technology Co.,Ltd.

15.00%

entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise

15.00%
15.00%
15.00%
15.00%
15.00%

15.00%
15.00%
15.00%

15.00%
15.00%

Chongqing Haier Electrical Appliance
Sales Co., Ltd. and some Westerncompanies
Chongqing Haier Air-conditioning Co.,Ltd.

15.00%

Chongqing Haier Refrigeration
Appliance Co., Ltd.

15.00%

Guizhou Haier Electronics Co., Ltd.

15.00%Haier Smart Home Co., Ltd. Annual Report 2022

15.00%

entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies under the Western
Development initiative of the PRC
entitled to the preferential taxation
policies under the Western
Development initiative of the PRC
entitled to the preferential taxation
policies under the Western
Development initiative of the PRC
entitled to the preferential taxation
policies under the Western
Development initiative of the PRC
entitled to the preferential taxation
policies under the Western
Development initiative of the PRC

Haier 18703[1] E12a Section 10 1st Proof

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Section X Financial ReportCompany

Tax rate

Chongqing Xin Ririshun Electric Sales
Co., Ltd and some Westerncompanies
Chongqing Haier Washing Machine Co.,Ltd

15.00%

Chongqing Haier Water Heater Co., Ltd

15.00%

Chongqing Haier Drum Washing
Machine Co., Ltd

15.00%

Qingdao Haier Technology Co., Ltd.

10.00%

15.00%

Preferential tax
entitled to the preferential taxation
policies under the Western
Development initiative of the PRC
entitled to the preferential taxation
policies under the Western
Development initiative of the PRC
entitled to the preferential taxation
policies under the Western
Development initiative of the PRC
entitled to the preferential taxation
policies under the Western
Development initiative of the PRC
entitled to half deduction thepreferential taxation policies as a
key software enterpriseVII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS
Unless otherwise specified, the following closing balances represent the amount as at 31 December
2022 and opening balances represent the amount as at 31 December 2021; amount for the period
represents the amount from 1 January to 31 December 2022 and amount for the previous period
represents the amount from 1 January to 31 December 2021.

1.

Monetary funds√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Closing balance

Opening balance

Cash on hand
Cash in bank
Other cash balances
Total
Include: — total amount of overseas deposits

5,312,391.11
52,955,417,379.16
1,178,085,912.24
54,138,815,682.51
11,963,648,575.80

3,085,964.28
45,010,311,638.51
1,083,936,300.66
46,097,333,903.45
8,966,246,518.74

Other monetary funds mainly included investment fund, deposit on third party payment platforms,
guarantees and other restricted fund, etc.

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Financial assets held for trading
Items
Short-term wealth management products
Investments in other equity instruments
Investment funds
Forward foreign exchange contracts
Total

3.

Closing balance

Opening balance

14,638,968.26
336,743,065.02
168,430,847.63

2,168,622,090.00
330,557,610.82
150,516,274.37
136,379,553.90
2,786,075,529.09

519,812,880.91

Derivative financial assets√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Closing balance

Opening balance

178,992,877.32
4,192,283.19
183,185,160.51

72,822,190.59
6,997,783.42
79,819,974.01

Items

Closing balance

Opening balanceBank acceptance notes
Commercially acceptance notes
Balance of bills receivable
Allowance for bad debts
Bills receivable, net

9,346,227,149.92
237,902,374.08
9,584,129,524.00
3,937,685.85
9,580,191,838.15

13,053,809,505.49
368,076,810.80
13,421,886,316.29
67,095,248.00
13,354,791,068.29

Forward foreign exchange contracts
Forward commodity contracts
Total

4.

Bills receivable(1)

Bills receivable presented by types

Provision for bad debts on a collective basis□ Applicable(2)√ Not Applicable

Changes in allowance for bad debts of bills receivable in the current period:

Items

Allowance for bad debts
Total

218

Haier Smart Home Co., Ltd. Annual Report 2022

Openingbalance

67,095,248.00
67,095,248.00

Increase forthe current period
Provision forthe current
Other
periodmovement

Decrease forthe current period

ReversalWrite-off/othermovement

1,901,562.15
1,901,562.15

61,256,000.00
61,256,000.00

Closingbalance

3,937,685.85
3,937,685.85

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Section X Financial Report

The Company’s bills receivables were mainly generated from daily operation activities suchas sales of commodity, provision of labor, etc., and the allowance for bad debts wasmeasured based on expected credit loss over the entire duration whether there exist
significant financing components.
The bills receivable pledged by the Company at the end of the period was
RMB8,716,194,311.64 (amount at the beginning of the period RMB12,526,757,275.50).

5.

Accounts receivable①②

Accounts receivable are disclosed by aging as follow:
Aging

Closing balance

Opening balanceWithin one year
1–2 years
2–3 years
Over 3 years
Balance of accounts receivable
Allowance for bad debts
Accounts receivable, net

15,983,198,223.16
744,571,231.78
249,911,820.64
129,303,240.96
17,106,984,516.54
1,193,292,979.43
15,913,691,537.11

14,776,616,491.33
376,187,052.43
78,861,353.76
135,768,657.33
15,367,433,554.85
742,172,698.81
14,625,260,856.04

By method of provision of allowance for bad debts
Categories
Book balance
Account receivables
subject to provision forbad debts on a
separate basis669,106,556.78
Account receivables
subject to provision forbad debts on acollective basis
16,437,877,959.76
Total
17,106,984,516.54

Closing balance
Allowance for
Percentage ofbad debts
provision (%)

Carrying value

658,051,988.70

98.35

11,054,568.08

535,240,990.73
1,193,292,979.43

3.26 15,902,636,969.03
6.98 15,913,691,537.11

Haier Smart Home Co., Ltd. Annual Report 2022

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Section X Financial Report(continued)
Categories
Book balance
Account receivables
subject to provision forbad debts on a
separate basis
381,406,983.17
Account receivables
subject to provision forbad debts on acollective basis
14,986,026,571.68
Total
15,367,433,554.85③

Opening balance
Allowance for
Percentage ofbad debts
provision (%)

Carrying value

320,303,932.13

83.98

61,103,051.04

421,868,766.68
742,172,698.81

2.82 14,564,157,805.00
4.83 14,625,260,856.04

Account receivables subject to provision for bad debts on a collective basis
Aging

Within 1 year
1–2 years
2–3 years
Over 3 years
Total

Book balance

Closing balance
Allowance
for bad debts

Percentage ofprovision (%)

15,670,232,732.83
444,886,453.80
204,386,489.30
118,372,283.83
16,437,877,959.76

340,620,524.48
33,709,717.14
78,004,660.46
82,906,088.65
535,240,990.73

2.17
7.58
38.17
70.04
3.26

Book balance

Opening balance
Allowance
for bad debts

Percentage ofprovision (%)

14,549,378,136.84
229,160,440.39
76,516,782.74
130,971,211.71
14,986,026,571.68

312,565,470.27
9,396,866.15
23,388,497.43
76,517,932.83
421,868,766.68

2.15
4.10
30.57
58.42
2.82

(continued)

Aging
Within 1 year
1–2 years
2–3 years
Over 3 years
Total

220

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6.

Changes in allowance for bad debts of accounts receivable in the current period:
Items

Opening balance

Increase for the current period
Provision for thecurrent period Other movement

Allowance for bad debts

742,172,698.81 511,476,608.99

61,256,000.00

Decrease for the current period Closing balance
Write-off/other
Reversal
movement

90,784,265.89

30,828,062.48 1,193,292,979.43⑤

The aggregate amount of the top 5 account receivables as at the end of the period was
RMB3,981,240,561.25, accounting for 23.27% of the book balance of account receivables(amount at the beginning of the period: RMB3,856,035,612.12, accounting for 25.09% of
the book balance of account receivables).

⑥

Actual write-off of accounts receivable in the current period
The amount of accounts receivable actually written off in the current period is
RMB35,724,496.02 (amount for the corresponding period: RMB10,143,124.34) and there is
no important bad debt write-off of accounts receivable.

⑦

The company’s accounts receivable that were terminated due to the transfer offinancial assets in the current period
The amount of accounts receivable that the company terminated at the end of the period
due to the transfer of financial assets was RMB7,752,646,133.49 (amount at the beginningof the period: RMB4,127,671,197.04) and the transfer method was outright sale factoring/asset securitization.

⑧

Restricted accounts receivable in the current period
The amount of accounts receivable restricted at the end of the period is
RMB1,944,980,392.98 (amount at the beginning of the period: RMB1,913,582,226.30).

Prepayments
(1)

(2)

Prepayments are presented by aging:
Aging

Closing balance

Opening balanceWithin one year
1–2 years
2–3 years
Over 3 years
Total

1,097,684,518.38
9,392,472.99
7,826,299.09
5,852,909.40
1,120,756,199.86

823,420,072.64
22,367,994.84
9,728,842.63
8,231,174.95
863,748,085.06

The total amount of the top 5 in the prepayments at the end of the period is
RMB285,279,364.51, which accounts for 25.45% of the prepayment balance (amount at the
beginning of the period: RMB174,076,576.41, accounting for 20.15%).

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7.

Other receivables√ Applicable □ Not Applicable
Unit and Currency: RMB
Items

Closing balance

Opening balance

Interest receivable
Other receivables
Total

513,320,376.79
1,867,609,246.40
2,380,929,623.19

295,017,551.76
1,662,868,705.43
1,957,886,257.19(1)

Interest receivable√ Applicable □ Not Applicable
Unit and Currency: RMB
Aging

Closing balance

Opening balance

365,716,532.95
117,786,419.18
19,790,000.00
10,027,424.66
513,320,376.79

231,649,800.22
47,983,727.86
15,384,023.68

Aging

Closing balance

Opening balanceWithin one year
1–2 years
2–3 years
Over 3 years
Balance of other receivables
Allowance for bad debts
Other receivables, net

1,395,900,684.43
216,523,682.62
23,617,332.57
387,087,496.32
2,023,129,195.94
155,519,949.54
1,867,609,246.40

1,275,398,749.49
109,677,138.52
355,219,038.13
113,213,998.61
1,853,508,924.75
190,640,219.32
1,662,868,705.43

Within one year
1–2 years
2–3 years
Over 3 years
Total

(2)

Other receivables①

222

295,017,551.76

The total amount of the top 5 other receivables at the end of the period is
RMB913,820,290.12, accounting for 45.17% of the book balance of other receivables(amount at the beginning of the period: RMB588,207,363.50, accounting for 31.73%of the book balance of other receivables).

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Provision of allowance for bad debts
Allowance for bad debts

Stage 1
Expected credit
losses for the
coming 12
monthsOpening balance
Provision for the current period
Reversal for the current period
Write-off and others
for the current period
Closing balanceStage 3
Lifetime
expected credit
losses (creditimpaired)

Total

112,022,673.37
17,263,203.57
4,676,503.70

78,617,545.95

190,640,219.32
17,263,203.57
4,676,503.70–9,007,063.30
133,616,436.54

56,714,032.95
21,903,513.00

47,706,969.65
155,519,949.54

Changes in allowance for bad debt provision of other receivables in the current
periodOpeningbalance

Items

Allowance for bad debts

8.

Stage 2Lifetime
expected credit
losses (notcredit-impaired)

190,640,219.32

Increase forthe current period
Provision forthe current
Other
periodmovement
17,263,203.57

Decrease forthe current period

Reversal
4,676,503.70

Closingbalance

Write-off/othermovement
47,706,969.65 155,519,949.54④

Other receivables written off during the period
The amount of other receivables actually written off in the current period is
RMB56,385,567.52 (amount for the corresponding period: RMB4,293,611.04) and no
significant other receivables are written off for bad debts.

⑤

Other receivables mainly include deposits, quality guarantees, employee loans, tax
refunds, and advance payments, etc.

Inventories(1)

Category of inventories
Items

Raw materials
Work in progress
Finished goods
Total

Closing BalanceBook value
Impairment
balance
Provision
6,220,344,034.47
74,028,876.21
36,858,876,539.39
43,153,249,450.07

171,673,251.23
1,438,863,087.02
1,610,536,338.25

Opening BalanceBook value
Impairment
balance
Provision
5,173,523,964.42
115,676,026.77
35,990,645,130.23
41,279,845,121.42

117,428,681.85
1,248,466,540.71
1,365,895,222.56

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Impairment provision of inventories
Openingbalance

Items

Raw materials
Work in progress
Finished goods
Total

9.

117,428,681.85

Decrease forthe current period

Reversal

96,267,946.53

Write-off/othermovement
42,023,377.15

1,248,466,540.71 1,124,401,331.26
1,365,895,222.56 1,220,669,277.79

75,747,450.78
75,747,450.78

Closingbalance

171,673,251.23

858,257,334.17 1,438,863,087.02
900,280,711.32 1,610,536,338.25

Contractual assets(1)

Details
Items

Relating to construction
service contract
Total
(2)

Closing BalanceBook value
Impairment
balance
Provision

379,905,624.96
379,905,624.96

69,975,265.71
69,975,265.71

Opening BalanceBook value
Impairment
balance
Provision

304,434,294.70
304,434,294.70

Impairment provision

Items

Relating to construction
service contract
Total

224

Increase forthe current period
Provision forthe current
Other
periodmovement

Haier Smart Home Co., Ltd. Annual Report 2022

Openingbalance

Increase forthe current period
Provision forthe current
Other
periodmovement

69,975,265.71
69,975,265.71

Decrease forthe current period

Reversal

Closingbalance

Write-off/othermovement

69,975,265.71
69,975,265.71

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10. Other current assets(1)

Details
Items

Closing BalanceBook value
Impairment
balance
Provision

Bank deposit for wealthmanagement products
Deductible taxes
Returns cost receivables
OthersTotal(2)

1,642,421,944.45
2,710,135,299.65
563,233,565.88
57,543,006.31
4,973,333,816.29

280,818,239.06
280,818,239.06

Opening BalanceBook value
Impairment
balance
Provision

316,590,333.42
3,275,762,776.66
585,140,752.69
79,847,733.16
4,257,341,595.93

328,552,987.70
328,552,987.70

Impairment Provision

Items

Returns costreceivables
Total

Openingbalance

Increase forthe current period
Provision forthe current
Other
periodmovement

328,552,987.70 280,818,239.06
328,552,987.70 280,818,239.06

Decrease forthe current period

Reversal

Closingbalance

Write-off/othermovement

328,552,987.70 280,818,239.06
328,552,987.70 280,818,239.06

11. Debt investments
Items

Time deposit — 3 years
Total

Closing balance
principal
Interest
1,000,000,000.00
1,000,000,000.00

Opening balance
Principal
Interest

34,222,222.22
34,222,222.22

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12. Long-term equity investments√ Applicable□ Not Applicable

Investees

Opening balance

Investment
increase
Associate：
Haier Group Finance Co., Ltd.
Bank of Qingdao Co., Ltd.
Wolong Electric (Jinan) MotorCo., Ltd.
Qingdao Hegang New Material
Technology Co., Ltd.
Qingdao Haier SAIF Smart
Home Industry Investment
Center (Limited Partnership)
Mitsubishi Heavy Industries
Haier (Qingdao)
Air-conditioners Co., Ltd.
Qingdao Haier Carrier
Refrigeration Equipment
Co., Ltd.
Qingdao Haier Multimedia Co.,Ltd
Qingdao Haier Moulds Co., Ltd.
Hefei Feier Smart Technology
Co., Ltd.
Anhui Kunhe Smart Technology
Co., Ltd.
Zhejiang Futeng Fluid
Technology Co., Ltd.
Beijing Mr. Hi Network
Technology Company
LimitedBeijing Xiaobei Technology Co.,Ltd.
Beijing ASU Tech Co., Ltd.
Shenzhen Genyuan
Environmental Protection
Technology Co., Ltd.
Qingdao Haimu Investment
Management Co., Ltd.
Qingdao Haimu Smart Home
Investment Partnership(Limited Partnership)
Hainengwanjia (Shanghai)Technology Development
Co., Ltd. (海能萬嘉（上海）科技發展有限公司)
Qingdao Guochuang Intelligent
Household Appliance
Research Institute Co., Ltd.
Guangzhou Heying Investment
Partnership (Limited
Partnership)

226

7,108,709,375.38
2,654,248,436.12

352,102,643.20

Increase/decrease for the current period
Adjustment in
Investment profit
otherrecognized undercomprehensive
Other changes
in equity
equity method
income665,707,466.58
210,748,314.67

4,170,482.08–54,294,726.05–152,429,907.54

Declaration of
cash dividends
or profits–218,400,000.00–76,288,906.40

151,837,378.99

22,860,428.75

312,493,256.21

9,482,737.24–7,173,662.00

393,598,372.59–57,153,662.41–17,199,060.82

682,901,976.73

113,559,283.53–81,000,000.00

409,053,808.05

22,213,959.56–17,900,226.81

277,102,563.88
269,158,534.54–123,552,329.38

265,106.27–265,106.27

1,877,574.14

120,208.47

82,098,847.75–4,291,438.91

3,419,373.38

7,507,759.75
2,687,341.82
15,529,700.01–17,876,874.22

15,176,607.99

6,914,487.73
2,465,299.70

56,466.72

59,424,662.44–518,749.56

772,938.88

52,835,228.01

285,793,577.87

Haier Smart Home Co., Ltd. Annual Report 2022

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44,793.82

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Investees

Opening balance

Investment
increase
Qingdao Home Wow Cloud
Network Technology Co.,Ltd.
Bingji (Shanghai) Corporate
Management Co., Ltd.
Youjin (Shanghai) Corporate
Management Co., Ltd.
RRS (Shanghai) Investment Co.,Ltd.
Haier Best Water Technology
Co., Ltd.
Huizhixiangshun Equity
Investment Fund (Qingdao)
Partnership (Limited
Partnership)
Qingdao Ririshun Huizhi
Investment Co., Ltd.
Qingdao Xinshenghui
Technology Co., Ltd.
Meiling Candy Washing MachineCo., Ltd.
EuropaltersItaliaS.r.l.
OryginLLC
Konan Electronic Co., Ltd.
HNR Company (Private) Limited
HPZ LIMITED
HaierRayaElectricS.A.E
CONTROLADORAMABES.
A.deC.V.
MiddleEast Air conditioning
Company,Limited
Total

Increase/decrease for the current period
Adjustment in
Investment profit
otherrecognized undercomprehensive
Other changes
in equity
equity method
income2,600,050.50–52,833.50

972,200,487.88

42,224,805.16

1,766,819,068.86

76,772,373.02

3,211,580,125.21

139,586,132.77

79,785,557.39

67,661,160.00

119,008,967.03

119,797,980.61

2,083,482.78

2,000,000.00

Declaration of
cash dividends
or profits

922,921.01–1,366,770.63

9,964,773.52

1,389,264.77–124,866.83

69,273,712.61
114,055,318.97
71,269,048.97
10,568,507.40

2,472,773.58–31,378,609.43–3,739,243.20–8,309,799.99–186,357.53

4,131,983,673.10

501,663,292.98

161,545,695.15–10,972,791.00–98,292,483.70–2,359,212.96
1,583,499,537.32

860,416.38
99,921,600.01–148,181,296.73–516,491,489.73

22,752,232.07
9,361,965.48

10,318,898.13
23,327,293,929.87

6,398,539.80
13,918,442.26

17,668,356.54–689,346.51

615,486,932.76–237,150.00

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Investees

Associate：
Haier Group Finance Co.,Ltd.
Bank of Qingdao Co., Ltd.
Wolong Electric (Jinan)
Motor Co., Ltd.
Qingdao Hegang New
Material Technology Co.,Ltd.
Qingdao Haier SAIF Smart
Home Industry
Investment Center(Limited Partnership)
Mitsubishi Heavy Industries
Haier (Qingdao) Airconditioners Co., Ltd.
Qingdao Haier Carrier
Refrigeration Equipment
Co., Ltd.
Qingdao Haier Multimedia
Co., Ltd
Qingdao Haier Moulds Co.,
Ltd.
Hefei Feier Smart
Technology Co., Ltd.
Anhui Kunhe Smart
Technology Co., Ltd.
Zhejiang Futeng Fluid
Technology Co., Ltd.
Beijing Mr. Hi Network
Technology Company
LimitedBeijing Xiaobei Technology
Co., Ltd.
Beijing ASU Tech Co., Ltd.
Shenzhen Genyuan
Environmental Protection
Technology Co., Ltd.
Qingdao Haimu Investment
Management Co., Ltd.
Qingdao Haimu Smart
Home Investment
Partnership (Limited
Partnership)

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Increase/decrease
for the current period
Other The disposal of
movement the investment

Closing balance

Impairment
Provision
Closing Balance

7,560,187,324.04
2,934,085,854.00
174,697,807.74

314,802,331.45

319,245,649.36

715,461,260.26

413,367,540.80–21,000,000.00

153,550,234.50–88,300,000.00–272,577,907.92

1,997,782.61
77,807,408.84

7,507,759.75–7,507,759.75–2,687,341.82
12,829,433.78

6,914,487.73
2,521,766.42

58,905,912.88–6,914,487.73

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Investees

Hainengwanjia (Shanghai)Technology Development
Co., Ltd. (海 能 萬 嘉（上 海）科 技 發 展 有 限
公 司)
Qingdao GuochuangIntelligent Household
Appliance ResearchInstitute Co., Ltd.
Guangzhou Heying
Investment Partnership(Limited Partnership)
Qingdao Home Wow Cloud
Network Technology Co.,Ltd.
Bingji (Shanghai) Corporate
Management Co., Ltd.
Youjin (Shanghai) Corporate
Management Co., Ltd.
RRS (Shanghai) Investment
Co., Ltd.
Haier Best Water
Technology Co., Ltd.
Huizhixiangshun Equity
Investment Fund
(Qingdao) Partnership(Limited Partnership)
Qingdao Ririshun Huizhi
Investment Co., Ltd.
Qingdao Xinshenghui
Technology Co., Ltd.
Meiling Candy Washing
Machine Co., Ltd.
EuropaltersItaliaS.r.l.
OryginLLC
Konan Electronic Co., Ltd.
HNR Company (Private)
Limited
HPZ LIMITED
HaierRayaElectricS.A.E
CONTROLADORAMABES.
A.deC.V.
MiddleEast Air conditioning
Company,Limited
Total

Increase/decrease
for the current period
Other The disposal of
movement the investment

Closing balance

Impairment
Provision
Closing Balance

772,938.88

45,016,334.20

285,793,577.87

2,547,217.00
1,014,425,293.04
1,843,591,441.88
3,351,166,257.98
148,369,638.40

238,806,947.64
4,083,482.78
8,598,002.89–24,016,630.01
15,760,505.28
13,918,442.26
67,770,092.99
74,366,909.55
88,751,047.98–9,879,160.89
4,685,927,386.53—

8,820,101.55–309,161,040.64 24,652,368,172.86–845,634.54–124,567,882.02

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13. Investments in other equity instruments(1)

Details of investments in other equity instruments√ Applicable □ Not Applicable
Unit and Currency: RMB

(2)

Items

Closing balance

Opening balance

SINOPEC Fuel Oil Sales Corporation Limited
COSMO IOT Ecosystem Technology
Co., Ltd.
Other
Total

1,234,500,000.00

1,290,487,901.40

2,817,408,000.00
1,799,974,930.20
5,851,882,930.20

2,812,000,000.00
749,397,043.23
4,851,884,944.63

Dividends from investment in other equity instruments during the current period:
Items

Amount for the current period

SINOPEC Fuel Oil Sales Corporation Limited
Other
Total

21,597,813.60
10,009,543.62
31,607,357.22

14. Investment properties(1)

The changes in investment properties measured at cost this year are as follows:

Items
I. Original book value
1. Opening balance
2. Increase for the period(1) External acquisition(2) Inventories/fixed
assets/construction inprogress transferred in(3) Increase in businesscombinations
3. Decrease for the period(1) Disposal(2) Disposal ofsubsidiaries(3) Other transferring out
4. Change in foreignexchange rate and others
5. Closing balance

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Haier Smart Home Co., Ltd. Annual Report 2022

Houses andbuildings Land use rights

Total

34,022,711.50

2,128,550.51

36,151,262.01

2,629,072.85
36,651,784.35

2,128,550.51

2,629,072.85
38,780,334.86

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Items
II. Accumulated depreciation
and accumulated
amortization
1. Opening balance
2. Increase for the period(1) Provision oramortization
3. Decrease for the period(1) Disposal(2) Disposal ofsubsidiaries(3) Other transferring out
4. Change in foreignexchange rate and others
5. Closing balance
III. Provision for impairment
1. Opening balance
2. Increase for the period(1) Provision
3. Decrease for the period(1) Disposal(2) Disposal ofsubsidiaries(3) Other transferring out
4. Change in foreignexchange rate andothers
5. Closing balance
IV. Book value
1. Closing book value
2. Opening book value

Houses andbuildings Land use rights

Total

10,555,753.15

630,620.38

11,186,373.53

1,331,401.97

40,236.22

1,371,638.19

543,830.57
12,430,985.69

670,856.60

543,830.57
13,101,842.29

24,220,798.66
23,466,958.35

1,457,693.91
1,497,930.13

25,678,492.57
24,964,888.48(2)

The depreciation and amortization amount charge for the period is RMB1,371,638.19 (amountfor the corresponding period: RMB1,337,191.36).

(3)

The recoverable amount of the investment real estate of the Company at the end of theperiod is not less than its book value, so no provision for impairment is made.

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15. Fixed assets
Presented by item
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items

Closing balance

Opening balance

Fixed assets
Disposals of fixed assets
Total

27,158,348,424.28

22,303,470,855.46
4,543,369.52
22,308,014,224.98

27,158,348,424.28

Fixed assets(1) Fixed assets:

Items
I. Original book value:
1. Opening balance
2. Increase for the period(1) Acquisition(2) Construction in progresstransferred in(3) Increase in business combinations
3. Decrease for the period(1) Disposal or write-off(2) Disposal of subsidiaries(3) Transfer to hold for sale
4. Change in foreign exchange rate andothers
5. Closing balance
II. Accumulated depreciation
1. Opening balance
2. Increase for the period(1) Provision(2) Increase in businesscombinations
3. Decrease for the period(1) Disposal or write-off(2) Disposal of subsidiaries(3) Transfer to hold for sale
4. Change in foreign exchange rate andothers
5. Closing balance

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Houses andbuildings

Production
equipment

Transportationequipment

11,353,869,023.33

26,574,628,944.96

179,083,687.93

101,657,525.97

1,188,385,651.07

2,167,409.42

2,891,101,753.55
590,522.62

2,743,020,391.66
710,633.26

21,453,507.31

46,129,650.12

628,913,476.22

9,351,808.74
754,649.79

336,041,830.45
14,637,131,005.80

1,446,702,112.84
31,324,534,257.57

545,067.44
193,143,213.57

3,922,452,407.13

13,228,502,231.17

107,950,259.30

543,265,392.34

2,588,160,230.25

19,634,196.19

23,016,988.16

487,050,458.86

8,638,193.13
645,746.91

95,722,496.92
4,538,423,308.23

705,541,332.74
16,035,153,335.30

770,125.42
119,070,640.87

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Items
III. Provision for impairment
1. Opening balance
2. Increase for the period(1) Provision(2) Increase in business combinations
3. Decrease for the period(1) Disposal or write-off(2) Disposal of subsidiaries(3) Transfer to hold for sale
4. Change in foreign exchange rate andothers
5. Closing balance
IV. Book value
1. Closing book value
2. Opening book value

Houses andbuildings

Production
equipment

Transportationequipment

29,499,438.21

21,647,562.09

173,485.13

109,381.58

2,384,431.73

5,463,734.01

58,084.82–1,022,795.89
28,586,023.90–2,365,489.53
16,202,770.28–5,371.31
110,029.00

10,070,121,673.67
7,401,917,177.99

15,273,178,151.99
13,324,479,151.70

73,962,543.70
70,959,943.50

Office furniture

Other

Total

1,031,464,831.77

2,464,395,005.90

41,603,441,493.89

94,436,679.81

51,377,212.28

1,438,024,478.55

229,928,105.43

358,718,424.14
1,148,899.85

6,244,222,182.09
2,450,055.73

51,864,855.66
434,468.68

117,788,696.08
37,980.00

854,048,486.82
1,227,098.47

21,106,516.36
1,324,636,809.03

158,930,592.75
2,916,743,458.84

1,963,326,119.84
50,396,188,744.81

565,874,594.66

1,418,493,692.20

19,243,273,184.46

243,101,288.42

268,425,659.27

3,662,586,766.47

32,221,331.47
414,487.19

51,780,228.89
36,090.25

602,707,200.51
1,096,324.35

Fixed assets (continued)
Items
I. Original book value:
1. Opening balance
2. Increase for the period(1) Acquisition(2) Construction in progresstransferred in(3) Increase in business combinations
3. Decrease for the period(1) Disposal or write-off(2) Disposal of subsidiary(3) Transfer to hold for sale
4. Change in foreign exchange rate andothers
5. Closing balance
II. Accumulated depreciation
1. Opening Balance
2. Increase for the period(1) Provision(2) Increase in business combinations
3. Decrease for the period(1) Disposal or write-off(2) Disposal of subsidiary

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Items(3) Transfer to hold for sale
4. Change in foreign exchange rate andothers
5. Closing Balance
III. Provision for impairment
1. Opening balance
2. Increase for the period(1) Provision(2) Increase in business combinations
3. Decrease for the period(1) Disposal or write-off(2) Disposal of subsidiary(3) Transfer to hold for sale
4. Change in foreign exchange rate andothers
5. Closing balance
IV. Book value
1. Closing book value
2. Opening book value

Other

Total

12,524,084.75
788,864,149.17

73,571,430.33
1,708,674,462.66

888,129,470.16
23,190,185,896.23

258,528.08

5,118,440.46

56,697,453.97

697,457.73

3,191,271.04

6,270.95

2,936,006.73

8,464,096.51–8,869.75–367,677.72–3,770,204.20

243,387.38

2,512,213.74

47,654,424.30

535,529,272.48
465,331,709.03

1,205,556,782.44
1,040,782,873.24

27,158,348,424.28
22,303,470,855.46(2)

In the current period, the balance of the construction in progress transferred to the originalvalue of the fixed assets in a total of RMB6,244,222,182.09 (amount for the corresponding
period: RMB4,269,007,467.86).

(3)

As at 31 December 2022, the net book value of the buildings for which the Company has
not yet obtained certificates of title was RMB2.037 billion (opening amount of RMB274
million), of which RMB1.884 billion was put into use at the end of 2022 and the relevant
certificates of title were being processed. The Company can legally and effectively occupy
and operate the above-mentioned buildings for which no certificates of title have beenobtained.

(4)

There was no mortgage secured by the fixed assets mortgage at the end of the period andat the beginning of the period.

(5)

Disposals of fixed assets

Items
Relocation of Qingdao
Industrial Park
Total

234

Office furniture

Haier Smart Home Co., Ltd. Annual Report 2022

Closing
Balance

Reason for
Opening transferring toBalance disposal

4,543,369.52 Demolition
4,543,369.52

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16. Construction in progress
Presented by item
√ Applicable □ Not Applicable
Unit and Currency: RMB
Closing
Balance

Items
Construction in progress
Construction materials
Total

Opening
Balance

4,094,684,500.49 4,183,263,398.79
4,094,684,500.49 4,183,263,398.79

Construction in progress(1) Balance of construction in progress√ Applicable □ Not Applicable
Unit and Currency: RMB
Projects

Europe Candy Project
Eastern European Project
America GEA Project
Shanghai Washing
Appliances Project
Qingdao Air Conditioning
Electronics Project
Zhengzhou New Energy
Project
New Zealand FPA ProjectHefei Drum Washing
Machine Project
Foshan Freezer Project
Qingdao Jiaozhou
Washing Appliances
Project
Qingdao Water Ecology
Technology Project
Hailvyuan Recycling
Technology Project
Qingdao Smart
Appliances ProjectSpecial Refrigerator
Project
Haier Dishwasher Project
Wuhan Haier freezer
Project
Chongqing Water Heater
Project
Chongqing Washing
Appliances Project
Tianjin Washing Appliance
Project

Closing Balance
Impairment
Book balance
Provision

Book Value

Opening Balance
Impairment
Book balance
provision

Book Value

467,370,049.46
392,579,594.60
338,096,215.95

467,370,049.46
392,579,594.60
338,096,215.95

153,117,404.68
183,534,295.62
722,008,600.99

153,117,404.68
183,534,295.62
722,008,600.99

315,004,188.48

315,004,188.48

4,756,839.22

4,756,839.22

313,855,913.14

313,855,913.14

57,933,662.48

57,933,662.48

197,524,472.64
176,619,361.43

197,524,472.64
176,619,361.43

125,734,579.67
111,516,266.46

125,734,579.67
111,516,266.46

98,411,863.30
97,616,741.69

98,411,863.30
97,616,741.69

54,949,612.93
199,726,996.70

54,949,612.93
199,726,996.70

93,825,106.07

93,825,106.07

167,168.14

167,168.14

92,905,882.13

92,905,882.13

75,470,633.24

75,470,633.24

58,589,285.46

58,589,285.46

67,092,916.99

67,092,916.99

39,116,050.61

39,116,050.61

66,136,656.59
64,842,812.91

66,136,656.59
64,842,812.91

220,203,225.72
91,964,708.57

220,203,225.72
91,964,708.57

64,045,346.34

64,045,346.34

103,052,450.36

103,052,450.36

61,350,349.63

61,350,349.63

17,708,337.38

17,708,337.38

59,889,999.86

59,889,999.86

59,146,925.20

59,146,925.20

59,409,379.45

59,409,379.45

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Projects

Qingdao Development
Zone Water Heater
Project
Hefei Refrigerator Project
OthersTotal(2)

Closing Balance
Impairment
Book balance
Provision

59,124,223.22
57,694,281.98
877,291,584.56
4,095,895,119.41

59,124,223.22
28,850,846.94
57,694,281.98 208,080,465.14
1,210,618.92 876,080,965.64 1,744,048,203.99
1,210,618.92 4,094,684,500.49 4,184,468,380.51

Book Value

28,850,846.94
208,080,465.14
1,204,981.72 1,742,843,222.27
1,204,981.72 4,183,263,398.79

Details of significant changes of construction in progress for the period

Opening Increase for thebalance current period

Project name236

Book Value

Opening Balance
Impairment
Book balance
provision

Transfer to
fixed assets Other decrease

Changein foreignexchange rate
and others Closing balance Source of fundEurope Candy Project
Eastern European Project
America GEA Project
Shanghai Washing
Appliances Project
Qingdao Air Conditioning
Electronics Project
Zhengzhou New Energy
Project
New Zealand FPA ProjectHefei Drum Washing
Machine Project
Foshan Freezer Project
Qingdao Jiaozhou
Washing Appliances
Project
Qingdao Water Ecology
Technology Project
Hailvyuan Recycling
Technology Project
Qingdao Smart
Appliances ProjectSpecial Refrigerator
Project
Haier Dishwasher Project
Wuhan Haier freezer
Project
Chongqing Water Heater
Project
Chongqing Washing
Appliances Project
Tianjin Washing Appliance
Project
Qingdao Development
Zone Water Heater
Project
Hefei Refrigerator Project

153,117,404.68
183,534,295.62
722,008,600.99

558,282,924.59
579,942,619.46
561,061,906.71

308,622,314.33
374,945,381.00
996,350,326.02

4,756,839.22

744,624,823.61

434,377,474.35

315,004,188.48 Self-funding

57,933,662.48

344,820,217.35

88,897,966.69

313,855,913.14 Self-funding

125,734,579.67
111,516,266.46

189,899,480.45
213,046,224.99

118,109,587.48
153,925,175.85

54,949,612.93
199,726,996.70

83,357,570.79
39,362,551.12

39,895,320.42
141,472,806.13

98,411,863.30 Self-funding
97,616,741.69 Self-funding

167,168.14

169,026,880.93

75,368,943.00

93,825,106.07 Self-funding

OthersTotal

1,744,048,203.99 1,801,838,916.53 2,671,879,554.13
4,184,468,380.51 6,026,477,127.68 6,244,332,582.09

92,905,882.13

64,592,034.52
4,048,060.52
51,376,034.27

5,982,045.83

467,370,049.46 Self-funding
392,579,594.60 Self-funding
338,096,215.95 Self-funding

197,524,472.64 Self-funding
176,619,361.43 Self-funding

92,905,882.13 Self-funding

58,589,285.46

174,296,964.23

157,415,616.45

75,470,633.24 Self-funding

39,116,050.61

47,146,371.58

19,169,505.20

67,092,916.99 Self-funding

220,203,225.72
91,964,708.57

20,007,471.04
80,495,751.96

174,074,040.17
107,617,647.62

66,136,656.59 Self-funding
64,842,812.91 Self-funding

103,052,450.36

30,197,051.77

69,204,155.79

64,045,346.34 Self-funding

17,708,337.38

63,724,952.10

20,082,939.85

61,350,349.63 Self-funding

80,594,688.42

20,704,688.56

59,889,999.86 Self-funding

59,409,379.45

31,743,637.58

32,006,091.83

59,146,925.20 Self-funding

28,850,846.94
208,080,465.14

74,138,742.78
45,961,497.56

43,865,366.50
196,347,680.72

Haier Smart Home Co., Ltd. Annual Report 2022

59,124,223.22 Self-funding
57,694,281.98 Self-funding
Self-funding/fund
3,284,018.17 877,291,584.56
raising
129,282,193.31 4,095,895,119.41

Haier 18703[1] E12a Section 10 1st Proof

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Section X Financial Report(3)

Impairment provision of construction in progress

Project nameLejia IOT Project
Others
Total

Openingbalance

Increase forthe current
periodTransfer to
fixed assets

837,735.85
367,245.87
1,204,981.72

107,523.90
107,523.90

110,400.00
110,400.00

Otherdecrease

Change inforeignexchange
rate andothersClosingbalance

8,513.30
8,513.30

837,735.85
372,883.07
1,210,618.92

17. Right-of-use assets
Items
I. Original book value:
1. Opening balance
2. Increase for the current period(1) Increase
3. Decrease for the current period(1) Disposal(2) Disposal of subsidiary
4. Change in foreign exchange rate
and others
5. Closing balance
II. Accumulated depreciation
1. Opening balance
2. Increase for the current period(1) Provision
3. Decrease for the current period(1) Disposal(2) Disposal of subsidiary
4. Change in foreign exchange rate
and others
5. Closing balance
III. Impairment provision
1. Opening balance
2. Increase for the current period(1) Provision
3. Decrease for the current
period(1) Disposal(2) Disposal of subsidiary
4. Change in foreign exchange
rate and others
5. Closing balance
IV. Book Value
1. Closing book balance
2. Opening book balanceHouses andbuildings

Production
equipment

Transportationequipment

3,565,296,279.05

43,142,180.40

205,005,241.06

1,643,558,415.83

7,023,796.16

44,625,189.74

721,830,499.56
686,878.07

4,821,027.13

39,758,835.98

187,362,591.58
4,673,699,908.83–7,970,760.99
37,374,188.44

3,339,682.93
213,211,277.75

1,186,766,506.57

18,538,537.80

104,827,622.22

723,469,841.56

7,352,846.54

63,260,043.73

678,927,696.64
410,841.82

4,821,027.13

37,747,434.96

53,185,390.50
1,284,083,200.17–2,098,028.65
18,972,328.56–4,840,901.53
125,499,329.46

3,389,616,708.66
2,378,529,772.48

18,401,859.88
24,603,642.60

87,711,948.29
100,177,618.84

Haier Smart Home Co., Ltd. Annual Report 2022

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Right-of-use assets (continued)
Items
I. Original book value:
1. Opening balance
2. Increase for the current period(1) Increase
3. Decrease for the current period(1) Disposal(2) Disposal of subsidiary
4. Change in foreign exchange rate
and others
5. Closing balance
II. Accumulated depreciation
1. Opening balance
2. Increase for the current period(1) Provision
3. Decrease for the current period(1) Disposal(2) Disposal of subsidiary
4. Change in foreign exchange rate
and others
5. Closing balance
III. Impairment provision
1. Opening balance
2. Increase for the current period(1) Provision
3. Decrease for the current period(1) Disposal(2) Disposal of subsidiary
4. Change in foreign exchange rate
and others
5. Closing balance
IV. Book Value
1. Closing book balance
2. Opening book balance

238

Haier Smart Home Co., Ltd. Annual Report 2022

Office furniture

Other

Total

56,885,631.59

392,228,761.08 4,262,558,093.18

9,351,245.42

148,918,518.62 1,853,477,165.77

2,174,726.79

210,488,135.97–10,926,649.16

979,073,225.43
686,878.07

53,135,501.06

33,871,179.06
205,676,043.42
364,530,322.79 5,341,951,198.87

17,981,428.91

199,765,091.15 1,527,879,186.65

10,217,962.96

91,808,692.08

896,109,386.87

2,174,726.79

210,488,135.97

934,159,021.49
410,841.82–3,173,259.18
22,851,405.90

14,233,933.63
57,307,134.77
95,319,580.89 1,546,725,844.98

30,284,095.16
38,904,202.68

269,210,741.90 3,795,225,353.89
192,463,669.93 2,734,678,906.53

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18. Intangible assets
Items
I. Original book value
1. Opening balance
2. Increase for the current period(1) Purchase(2) Internal research anddevelopment(3) Increase in businesscombination
3. Decrease for the current period(1) Disposal(2) Disposal of subsidiary(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others
5. Closing balance
II. Accumulated amortization
1. Opening balance
2. Increase for the current period(1) Provision(2) Increase in businesscombination
3. Decrease for the current period(1) Disposal(2) Disposal of subsidiary(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others
5. Closing balance
III. Impairment provision
1. Opening balance
2. Increase for the current period(1) Provision(2) Increase in businesscombination
3. Decrease for the current period(1) Disposal(2) Disposal of subsidiary(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others
5. Closing balance
IV. Book Value
1. Closing book balance
2. Opening book balance

Proprietary
technology

Licenses andfranchises

Land use rights

1,852,677,632.57

4,242,396,745.16

1,266,446,332.10

1,037,735.83

36,954,158.55

350,861,991.46

124,845,373.37

21,150,987.85

20,244,270.89

88,335,587.32
2,045,745,341.24

382,545,587.95
4,641,652,220.77

469,714.81
1,617,778,038.37

946,309,396.14

822,985,645.24

215,300,271.80

200,049,471.79

146,606,413.97

31,360,014.54

21,150,987.80

17,118,801.38

52,518,817.42
1,177,726,697.55

60,519,964.34
1,012,993,222.17–66,681.10
246,593,605.24

868,018,643.69
906,368,236.43

3,628,658,998.60
3,419,411,099.92

1,371,184,433.13
1,051,146,060.30

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Intangible assets (continued)

Items
I. Original book value
1. Opening balance
2. Increase for the current period(1) Purchase(2) Internal research anddevelopment(3) Increase in businesscombination
3. Decrease for the current period(1) Disposal(2) Disposal of subsidiary(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others
5. Closing balance
II. Accumulated amortization
1. Opening balance
2. Increase for the current period(1) Provision(2) Increase in businesscombination
3. Decrease for the current period(1) Disposal(2) Disposal of subsidiary(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others
5. Closing balance
III. Impairment provision
1. Opening balance
2. Increase for the current period(1) Provision(2) Increase in businesscombination
3. Decrease for the current period(1) Disposal(2) Disposal of subsidiary(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others
5. Closing balance
IV. Book Value
1. Closing book balance
2. Opening book balance

240

Haier Smart Home Co., Ltd. Annual Report 2022

Trademark rights

Application
management
software andothersTotal

2,475,717,142.63

4,195,088,908.80

14,032,326,761.26

261,891,814.26

650,745,700.10

703,363,975.05

828,209,348.42

10,091,872.50

10,091,872.50

39,931.49

62,882,800.64

104,317,990.87

107,299,533.43
2,582,976,744.57

236,804,464.65
5,344,358,234.62

815,454,888.16
16,232,510,579.57

2,441,416,170.95

4,426,011,484.13

696,925,839.98

1,074,941,740.28

26,462,001.31

64,731,790.49

153,850,762.12
3,265,730,771.74

266,822,862.78
5,703,044,296.70

55,930,533.23

55,930,533.23

32,345,627.57

32,345,627.57

23,584,905.66

23,584,905.66

2,055,042,557.22
1,697,742,204.62

10,505,881,377.21
9,550,384,743.90

2,582,976,744.57
2,475,717,142.63

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At the end of the period, the intangible assets developed through the Company accounted forthe 20.47% of the original value at the end of the period (accounting for 17.06% at the
beginning of the period).

19. Development cost

Items

91ABD. ERP IT
Program
IOT Project
Others
Total

Openingbalance

Increase forthe current
period41,946,252.47
110,027,251.84
75,918,724.82
227,892,229.13

91,741,744.72
75,735,477.82
739,267,880.70
906,745,103.24

Decrease for the current period
Recognized as
Included inintangible
current profit
Disposal of
asset
and losssubsidiary

128,722,339.21
185,762,729.66
513,724,279.55
828,209,348.42

165,680,958.99
165,680,958.99

Change inforeignexchange rate
and others

Closingbalance

2,573,460.44

7,539,118.42

11,160,030.27
13,733,490.71

146,941,397.25
154,480,515.67

20. Goodwill

Items

Opening balance

GEA
Candy
OthersTotal

18,938,463,729.43
1,877,121,985.56
1,011,517,345.77
21,827,103,060.76

Increase for thecurrent period

13,817,128.58
13,817,128.58

Decrease for thecurrent period

Change in foreignexchange rate andothersClosing balance

1,743,253,534.79
52,831,999.59
6,589,920.15
1,802,675,454.53

20,681,717,264.22
1,929,953,985.15
1,031,924,394.50
23,643,595,643.87

In the case of a goodwill impairment test, the Company compares the carrying amount of therelevant asset group or asset group combination (including goodwill) with its recoverable amount.
If the recoverable amount is less than the book value, corresponding difference will berecognized in profit or loss.
The recoverable amount of the asset group (including goodwill) is calculated with discounted
estimated future cash flow method based on a management-approved 5–15 years budget. Future
cash flows beyond the budget period are estimated using the estimated perpetual annual growthrate. The perpetual annual growth rate (mainly 2%) adopted by the management is consistent
with industry forecast data and does not exceed the long-term average growth rate of eachproduct. The management determines the compound income growth rate (mainly 2.29%–6.68%)
and the EBITDA profit margin (mainly 4.29%–12.43%) based on historical experience and market
development forecasts, and adopts the pre-tax interest rate that can reflect the specific risks of
the relevant asset group as the discount rate (mainly 10.2%–16.25%). The management analyzes
the recoverable amount of each asset group based on these assumptions and believes that there
is no need to make provision for goodwill.

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21. Long-term amortized expenses

Items

Change inforeignexchange rate
and others

Closing balance

Opening balance

Increase for thecurrent period

Amortization forthe current
period341,401,034.69

451,003,919.97

334,678,428.86

79,964.56

457,806,490.36

154,175,600.78
93,566,442.42
589,143,077.89

17,739,906.50
111,560,990.57
580,304,817.04

28,204,841.03
48,454,979.49
411,338,249.38

2,747,442.97–1,053,878.88

146,458,109.22
155,618,574.62
759,883,174.20

Renovation
Improvement on leased
property
Others
Total

Other decrease

1,773,528.65

22. Deferred income tax assets/deferred income tax liabilities
(1)

(2)

(3)

Deferred income tax assets before elimination
Items

Closing balance

Opening balance

Provision for assets impairment
Liabilities
Internal unrealized earnings eliminated
due to combination
Uncovered losses
R&D expenses
OthersTotal

484,686,533.08
1,524,046,160.33

354,806,051.43
1,405,119,092.59

848,773,608.23
217,344,490.61
615,110,766.72
347,135,709.18
4,037,097,268.15

619,291,715.60
817,306,157.01
56,914,918.90
393,477,903.16
3,646,915,838.69

Deferred income tax liabilities before elimination
Items

Closing balance

Opening balance

Asset amortisation
Remeasurement of fair value of the reaming
equity on the day when the control right
was lost
Changes in fair value of investments in other
equity instruments
OthersTotal

3,006,598,088.30

2,318,829,386.48

878,623,804.46

878,623,804.46

293,662,487.81
494,850,409.06
4,673,734,789.63

292,476,080.49
421,341,222.80
3,911,270,494.23

The deferred income tax assets and the deferred income tax liabilities eliminated at the endof the period was RMB2,314,874,230.44 (amount at the beginning of the period
RMB1,789,467,320.40).
Other explanation:□ Applicable242√ Not Applicable

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23. Other non-current assets
Items

Closing balance

Opening balance

Prepayments for equipment and land
OthersTotal

1,671,590,606.02
209,146,285.61
1,880,736,891.63

1,859,693,694.07
304,690,319.07
2,164,384,013.14

24. Short-term borrowings√ Applicable□ Not Applicable
Unit and Currency: RMB

ItemClosing balance

Opening balance

Borrowings — secured by pledge
Borrowings — secured by guarantee
Borrowings — secured by credit
Interest payable for short-term borrowings
Total

70,878,338.07
84,506,733.93
9,479,489,787.33
8,499,873.13
9,643,374,732.46

255,103,925.36
304,896,830.40
10,661,927,352.96
4,284,025.67
11,226,212,134.39

Closing balance

Opening balance

25. Financial liabilities held for trading
Items
Forward foreign exchange contracts
Total

6,294,014.40
6,294,014.40

26. Derivative financial liabilities√ Applicable□ Not Applicable
Unit and Currency: RMB

Items
Forward foreign exchange contracts
Forward commodity contracts
Interest rate swap agreement
Total

Closing balance

Opening balance

92,580,419.48
12,013,621.18

60,527,532.76

104,594,040.66

19,684,900.48
80,212,433.24

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27. Bills payable√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Closing balance

Opening balanceCommercial acceptance notes
Bank acceptance notes
Total

2,212,721,304.36
22,878,224,116.92
25,090,945,421.28

3,022,602,833.31
22,000,635,573.41
25,023,238,406.72

28. Accounts payables√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Closing balance

Opening balance

Accounts payables
Total

41,883,694,299.24
41,883,694,299.24

42,363,218,840.33
42,363,218,840.33

The book balance at the end of the period was mainly the unpaid expenditures on material andlabour.

29. Contractual liabilities√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Closing balance

Opening balanceContractual liabilities
Total

9,329,554,748.34
9,329,554,748.34

10,027,091,593.60
10,027,091,593.60

The book balance at the end of the period is mainly due to the advance payment that has beencollected and has not yet performed the contractual obligations.

244

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30. Payables for staff remuneration√ Applicable(1)□ Not Applicable

Payables for staff remuneration
Unit and Currency: RMB

(2)

Items

Opening balance

Increase for thecurrent period

Decrease for thecurrent period

Closing balance

I. Short-term remuneration
II. Post-employment
benefits defined
contribution plan
III. Termination benefits
IV. Other benefits due
within one year
Total

3,988,907,110.68

25,946,782,966.68

26,119,959,546.22

3,815,730,531.14

19,100,855.17
9,818,188.41

1,370,126,936.35
67,018,092.95

1,323,781,624.17
41,669,406.96

65,446,167.35
35,166,874.40

101,599,133.34
4,119,425,287.60

58,929,753.80
27,442,857,749.78

26,407,705.66
27,511,818,283.01

134,121,181.48
4,050,464,754.37

Short-term remuneration√ Applicable □ Not Applicable
Unit and Currency: RMB

Items
I. Salaries, bonus,
allowances and benefit
II. Employee welfare
III. Social benefit
IV. Housing fundV. Labor union fee andeducation fund
VI. Short-termcompensated leave
VII. Others
Total

Opening balance

Increase for thecurrent period

Decrease for thecurrent period

Closing balance

2,848,692,628.83
321,996,794.22
171,645,833.66
11,137,621.51

19,241,002,573.90
972,603,845.99
1,746,401,940.66
507,873,900.28

19,430,129,697.82
961,551,256.01
1,693,687,072.96
513,974,914.65

2,659,565,504.91
333,049,384.20
224,360,701.36
5,036,607.14

3,790,540.75

121,507,187.96

116,272,286.45

9,025,442.26

268,213,164.85
363,430,526.86
3,988,907,110.68

491,622,903.29
2,865,770,614.60
25,946,782,966.68

499,213,550.01
2,905,130,768.32
26,119,959,546.22

260,622,518.13
324,070,373.14
3,815,730,531.14

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Defined contribution plan
√ Applicable □ Not Applicable
Unit and Currency: RMB

Items

Opening balance

Increase for thecurrent period

Decrease for thecurrent period

Closing balance

18,396,477.11
132,417.35

1,280,918,422.91
35,062,369.94

1,235,152,520.94
34,847,957.35

64,162,379.08
346,829.94

571,960.71
19,100,855.17

54,146,143.50
1,370,126,936.35

53,781,145.88
1,323,781,624.17

936,958.33
65,446,167.35

1. Basic pension insurance
2. Unemployment insurance
3. Enterprise annuity
payment
Total(4)

Termination benefits

Items
Termination compensation
Total

Closing balance

Openingbalance

35,166,874.40
35,166,874.40

9,818,188.41
9,818,188.41

31. Taxes payable√ Applicable□ Not Applicable
Unit and Currency: RMB

246

Openingbalance

Items

Closing balance

Value-added tax
Corporate income tax
Individual income tax
City maintenance and construction tax
Education surcharge
The electrical and electronic products waste
treatment fund
Other taxes
Total

860,587,585.73
961,934,808.61
1,702,692,154.06 1,308,563,619.70
100,168,757.87
94,885,149.39
28,202,062.65
40,423,487.04
14,512,234.06
16,193,890.94

Haier Smart Home Co., Ltd. Annual Report 2022

97,068,373.00
95,522,090.50
69,615,659.80
90,299,610.19
2,872,846,827.17 2,607,822,656.37

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32. Other payables√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Closing balance

Opening balance

Dividends payable
Other payables
Total

1,246,573.35
17,510,525,089.35
17,511,771,662.70

10,639,313.22
17,559,700,612.54
17,570,339,925.76

Closing balance

Opening balance

1,246,573.35
1,246,573.35

10,639,313.22
10,639,313.22

Items

Closing balance

Opening balance

Other payables
Total

17,510,525,089.35
17,510,525,089.35

17,559,700,612.54
17,559,700,612.54(1)

Dividends payable
Name of unit
Other public shareholders
Total

(2)

Other payables

The closing balance mainly included the incurred but unpaid costs.

33. Non-current liabilities due within one year
√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Closing balance

Opening balanceLong-term borrowings due within one year
Lease liabilities due within one year
Anticipated liabilities due within one year
Total

2,854,446,929.32
903,249,632.59
2,537,054,105.17
6,294,750,667.08

6,745,950,334.20
687,991,183.42
2,190,397,652.84
9,624,339,170.46

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34. Other current liabilities√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Closing balance

Opening balance

Payable refund
Tax amount to be transferred to output tax
OthersTotal

624,887,787.38
1,198,555,405.78
26,982,922.63
1,850,426,115.79

655,801,519.33
1,568,670,492.94
14,295,539.13
2,238,767,551.40

35. Long-term borrowings√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Closing balance

Opening balance

Borrowings — unsecured by credit
Borrowings — secured by guarantee
Total

13,567,316,873.43
23,550,000.00
13,590,866,873.43

3,038,573,824.53
3,038,573,824.53

The interest rates of the Company’s long-term borrowings: 1.19%–5.31%.

36. Bonds payable
In November 2017, Harvest International Company, the Company’s wholly-owned subsidiary,
issued HK$8 billion five-year exchangeable corporate bonds, with a coupon rate of zero and arate on investment of 1%. In September 2020, the Company considered and approved thescheme to convert the exchangeable bonds into convertible bonds. The underlying shares of theoriginal exchangeable bonds were changed from the shares of Haier Electronic to newly issued
H-shares of Haier Smart Home (referred to as EB to CB Scheme). On 23 December 2020,
H-shares of Haier Smart Home were listed and traded, and the EB-to-CB Scheme took effect.
The outstanding principle amount of the original exchangeable bonds was HK$7.993 billion. The
maturity date, coupon rate and yield rate of the bond remain unchanged. The liability component
and equity component of convertible bonds at the initial recognition:

Items
Initial recognition:
Including：
Equities of the convertible bondLiabilities of the convertible bond

248

Haier Smart Home Co., Ltd. Annual Report 2022

Convertible corporate bonds on
23 December 2020
9,105,660,619.93
2,364,195,333.79
6,741,465,286.14

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Changes in the liability portion of corporate bonds in the current period:

Items
Convertible corporate bonds (CB)
Total

Increase for theOpening balance current period
334,730,048.82
334,730,048.82

Less: bondAccrued bond interest paid forInterest for thethe current
current period
period5,847,637.75
5,847,637.75

Redemption in
Sharesthe current converted in the
period current period
4,848,724.30
4,848,724.30

361,395,824.17
361,395,824.17

Exchange rate
impact Closing balance
25,666,861.90
25,666,861.90

37. Lease liabilities
Items

Closing balance

Opening balance

Lease liabilities
Less: lease liabilities due within one year
Total

3,727,727,303.21
903,249,632.60
2,824,477,670.61

2,648,886,164.89
687,991,183.42
1,960,894,981.47

Closing balance

Opening balance

36,500,000.00
7,740,087.94

36,500,000.00
63,102,707.76

44,240,087.94

99,602,707.76

38. Long-term payables
Items
Investment from CDB development fund
OthersLess: long-term payables due within one year
Total

Under the Investment Contract of China Development Fund executed by the Company and its
subsidiaries including Qingdao Haier Air Conditioner Gen Corp., Ltd., Qingdao Haier (Jiaozhou)
Air-conditioning Co., Limited together with China Development Fund Co. Ltd. in 2015 and 2016,
China Development Fund Co. Ltd. invested RMB73 million in Qingdao Haier (Jiaozhou)
Air-conditioning Co., Limited. China Development Fund Co. Ltd. obtained an annual return of
1.2% by means of dividends or buyback premium for the above investments. As of the end of
the period, the subsidiaries of the Company made buyback in amount of RMB36.5 million.

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39. Long-term employee benefits payable□ Not Applicable√ Applicable(1)Long-term employee benefits payable√ Applicable □ Not Applicable
Unit and Currency: RMB
Items
I. Post-employment benefits: net liability ofdefined benefit plan
II. Termination benefits
III. Provision for work-related injury
compensation
Total

(2)

Closing balance

Opening balance

417,072,669.76
386,522,704.17

517,077,143.43
453,425,129.57

206,951,828.41
1,010,547,202.34

202,649,488.64
1,173,151,761.64

Defined benefits plan
Some subsidiaries of the Company have set several defined benefit plans for the qualified
staff. Under these plans, the employees are entitled to the retirement benefits agreed insuch defined benefit plans.
These plans are exposed to interest rate risks, changes in life expectancy of the beneficiaryand 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 projected unit credit method.

①

250

The defined benefit plan of Haier Asia Co., Ltd., a subsidiary of the Company
Actuarial assumptions used to defined benefit plans
Items

Rate

Discount rate
Expected rate of return

0.50%
2.00%

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Present value of defined benefit obligations
Items

AmountI. Opening balance
II. Defined benefit cost recognized in current profit or loss
1. Current service cost
2. Past service cost
3. Settlement gains (loss indicated in ‘ — ’)
4. Interest costIII. Defined benefit cost recognized in other comprehensive
income1. Actuarial loss (gain indicated in ‘ — ’)
IV. Other changes
1. The consideration paid at the time of settlement
2. Benefit paid
3. Exchange differences
V. Closing balance

279,152,422.12
8,755,696.92
7,455,244.10

1,300,452.82–2,115,953.62–2,115,953.62–32,490,184.11–16,945,470.21–15,544,713.90
253,301,981.31

Fair value of plan assets
Items

AmountI. Opening balance
II. Defined benefit cost recognized in current profit and loss
1. Interest income
III. Defined benefit cost recognized in other comprehensive
income1. Return on plan assets (except those included in net
interests)
2. Changes in impact of asset cap (except those included
in net interests)
IV. Other changes
1. Employer contributions
2. Benefit paid
3. Exchange differences
V. Closing balance

337,081,685.24
6,137,579.93
6,137,579.93–23,745,622.09–23,745,622.09–25,728,500.35
2,351,112.64–9,140,773.62–18,938,839.37
293,745,142.73

Neither the Company’s ordinary shares or bonds, nor the properties occupied by theCompany are included in the plan assets.

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Net liability (net asset) of defined benefit plan
Items
I. Opening balance
II. Defined benefit cost recognized in current profit or loss
III. Defined benefit cost recognized in other comprehensive
incomeIV. Other changes
V. Closing balance

Amount–57,929,263.12
2,618,116.99
21,629,668.47–6,761,683.76–40,443,161.42

The average term for the defined benefit obligation is 11.73 years at the balance
sheet date.

②

The defined benefit plan of Roper Corporation, a subsidiary of the Company
Roper Corporation, a subsidiary of the Company, has provided post-employment
defined benefit plan of health care benefits to eligible employees.
Actuarial assumptions used in defined benefit plans
Items

Rate

Discount rate

5.59%

Present value of defined benefit obligations
Items
I. Opening balance
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss
1. Current service cost
2. Past service cost
3. Settlement gains (loss indicated in ‘ — ’)
4. Interest cost
IV. Defined benefit cost recognized in other comprehensive
incomes
1. Actuarial loss (gain indicated in ‘ — ’)
V. Other changes
1. The consideration paid at the time of settlement
2. Benefit paid
3. Plan amendments
4. Exchange differences
VI. Closing balance

252

Haier Smart Home Co., Ltd. Annual Report 2022

Amount128,979,684.17
11,160,460.51
7,310,935.93

3,849,524.58–29,716,130.82–29,716,130.82
13,353,406.38–7,637,603.12
9,659,287.75
11,331,721.75
123,777,420.24

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Net liability (net asset) of defined benefit plan
Items

AmountI. Opening balance
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss
IV. Defined benefit cost recognized in other comprehensive
incomes
V. Other changes
VI. Closing balance

128,979,684.17
11,160,460.51–29,716,130.82
13,353,406.38
123,777,420.24

The average term for the defined benefit obligation is 11.22 years at the balance
sheet date.

③

The defined benefit plan of Haier U.S. Appliance Solutions, Inc., a subsidiaryof the Company
Haier U.S. Appliance Solutions, Inc., a subsidiary of the Company, has provided
post-retirement defined benefit plan of health care benefits for the eligible employees.
Actuarial assumptions used in defined benefit plans
Items

Rate

Discount rate

5.51%

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Present value of defined benefit obligations
Items
I. Opening balance
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss
1. Current service cost
2. Past service cost
3. Settlement gains (loss indicated in ‘ — ’)
4. Interest cost
IV. Defined benefit cost recognized in other comprehensive
incomes
1. Actuarial loss (gain indicated in ‘ — ’)
V. Other changes
1. The consideration paid at the time of settlement
2. Benefit paid
3. Exchange differences
VI. Closing balance

Amount221,602,455.52
5,965,648.96

5,965,648.96–24,365,460.38–24,365,460.38–8,098,449.97–26,970,932.93
18,872,482.96
195,104,194.13

Net liability (net asset) of defined benefit plan
Items
I. Opening balance
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss
IV. Defined benefit cost recognized in other comprehensive
incomes
V. Other changes
VI. Closing balance

254

Haier Smart Home Co., Ltd. Annual Report 2022

Amount221,602,455.52
5,965,648.96–24,365,460.38–8,098,449.97
195,104,194.13

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The defined benefit plan of Haier U.S. Appliance Solutions, Inc., a subsidiaryof the Company
Haier U.S. Appliance Solutions, Inc., a subsidiary of the Company, has provided
defined benefit plan of pension for the eligible employees.
Actuarial assumptions used in defined benefit plans
Items

Rate

Discount rate

5.51%

Present value of defined benefit obligations
Items

AmountI. Opening balance
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss
1. Current service cost
2. Past service cost
3. Settlement gains (loss indicated in ‘ — ’)
4. Interest cost
IV. Defined benefit cost recognized in other comprehensive
incomes
1. Actuarial loss (gain indicated in ‘ — ’)
V. Other changes
1. The consideration paid at the time of settlement
2. Benefit paid
3. Exchange differences
VI. Closing balance

166,510,439.87
4,081,765.48

4,081,765.48–23,095,869.18–23,095,869.18–20,629,461.15–34,139,499.45
13,510,038.30
126,866,875.02

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Fair value of plan assets
Items
I. Opening balance
II. Defined benefit cost recognized in current profit or loss
1. Interest income
III. Defined benefit cost recognized in other comprehensive
incomes
1. Return on plan assets (except those included in net
interests)
2. Changes in impact of asset cap (except those included
in net interests)
IV. Other changes
1. Employer contributions
2. Benefits paid out
3. Exchange differences
V. Closing balance

Amount126,020,077.85–10,974,063.63–10,974,063.63–23,006,241.35
2,502,057.77–35,597,949.95
10,089,650.83
92,039,772.87

Net liability (net asset) of defined benefit plan
Items
I. Opening balance
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss
IV. Defined benefit cost recognized in other comprehensive
incomeV. Other changes
VI. Closing balance

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Haier Smart Home Co., Ltd. Annual Report 2022

Amount40,490,362.02
4,081,765.48–12,121,805.55
2,376,780.20
34,827,102.15

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Provision for work-related injury compensation
Haier U.S. Appliance Solutions, Inc., a subsidiary of the Company, made a provision forwork-related injury claims for the staff injured during the production accidents from
1 January 1991, which was used to pay for the claim made by the injured staff. The
provision was calculated by Beechercarlson Insurance Services, LLC., based on actuarial
method and a discount rate of 3.72%.
Items

AmountI. Opening balance
II. Business combination not under common control
III. Compensation recognized in current profit and loss
IV. Actual compensation paid
V. Other changes
VI. Closing balance

202,649,488.64
96,295,893.87–64,397,610.92–27,595,943.18
206,951,828.41

Classification of the balance of defined benefit plan
Items
Short-term Benefit
Long-term Benefit
Total

Closing balance

Opening balance

36,444,790.69
417,072,669.76
453,517,460.45

32,502,729.33
517,077,143.43
549,579,872.76

40. Estimated liabilities√ Applicable□ Not Applicable
Unit and Currency: RMB

Items
Active litigation
Others
Projection of warranty expenses andinstallation fees
Total

Opening balance

Closing balance

29,259,869.48
252,996,489.56

18,469,174.18
262,077,808.56

1,666,309,118.07
1,948,565,477.11

1,330,482,237.43
1,611,029,220.17

Significant assumption and estimation relating to estimation of warranty expenses and installation
fees: the Company reasonably estimated the warranty expenses and installation fees rate basedon its actual expenses on the warranty expenses and installation fees as well as sales data in thepast. The Company estimated the warranty expenses and installation fees that are likely to be
incurred in the future according to its policies on the warranty expenses and installation fees, aswell as the actual sales data.

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41. Deferred income√ Applicable□ Not Applicable
Unit and Currency: RMB

Items
Government grants
Total

Opening balance

Increase for the Decrease for thecurrent period
current period

Closing balance

852,794,567.20
852,794,567.20

262,630,986.65
262,630,986.65

166,490,419.80
166,490,419.80

948,935,134.05
948,935,134.05

Openingbalance

Increase forthe current
periodDecrease forthe current
periodClosingbalance

9,398,704,530

62,864,163

14,970,200

9,446,598,493

42. Share capital

Share category
I. Restricted shares
1. State-owned shares
2. Shares held bydomestic non-stateowned legal entities
3. Shares held bydomestic individuals
4. Shares held byoffshore non-stateowned legal entities
II. Non-restricted shares
1. Ordinary shares in
RMB
2. Domestic listed
foreign Shares
3. Offshore listed foreign
Shares
4. Others
III. Total shares

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Haier Smart Home Co., Ltd. Annual Report 2022

6,308,552,654

6,308,552,654

3,090,151,876

62,864,163

14,970,200

3,138,045,839

9,398,704,530

62,864,163

14,970,200

9,446,598,493

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43. Other equity instruments
Items

Opening balance

Increase for the Decrease for thecurrent period
current period

118,017,507.59
118,017,507.59

118,017,507.59
118,017,507.59

Equity portion of
convertible bond
Total

Closing balance

44. Capital reserve√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Opening balance

Increase for the Decrease for thecurrent period
current period

Share premium (share capital
premium)
Others capital reserve
Total

21,590,525,556.91
1,074,849,182.55
22,665,374,739.46

1,445,824,970.89
912,283,606.31
2,358,108,577.20

Closing balance

786,112,567.91 22,250,237,959.89
385,333,423.99 1,601,799,364.87
1,171,445,991.90 23,852,037,324.76

The main reasons for the change in capital premium: The non-public issue of H shares for thecurrent period resulted in the increase in capital premium of RMB898,627,404.94; the conversionof CB for the current period resulted in the increase in capital premium of RMB457,962,768.76;
the cancellation of treasury stock for the current period resulted in the decrease in capital
premium of RMB315,351,869.05; a business combination under the same control occurred forthe current period resulted in the decrease in capital premium of RMB304,818,769.28.
The main reasons for the change in other capital reserves: the amortized share-based payment
for the current period included in other capital reserves of RMB912,283,606.31; the exercise ofstock ownership plan for the current period resulted in the decrease in other capital reserves of
RMB218,448,143.60.

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45. Other comprehensive income
Items

Amounts for the current period

Amount before
Opening balance current income tax–341,470,688.45

a
b
c
d
e
Total

1,618,386.47–1,916,614,455.79
1,005,776,349.60
73,838,708.25–1,176,851,699.92

99,921,599.99
816,720.90
3,158,845,054.75–150,689,650.82
38,812,373.94
3,147,706,098.76

Deduction
Attributable toof Impact on
the parent
income tax company after tax—
9,010,066.04
13,862,982.16–5,738,054.65
17,134,993.55

99,921,599.99
2,308,423.98
3,168,394,472.68–136,488,922.01
33,063,471.15
3,167,199,045.79

Attributable
to minority
shareholders
after tax
–0.00
7,518,362.96–9,549,417.93–337,746.65
10,848.14–2,357,953.48

OthersClosing balance–241,549,088.46

336,152.58
336,152.58

3,926,810.45
1,251,780,016.89
869,623,580.17
106,902,179.40
1,990,683,498.45

Notes:(1)

Item a, b, and c are other comprehensive income that will be reclassified to profit or loss, the details are as follows:
Item a represents other comprehensive income classified to profit and loss under the equity method.
Item b represents cash flow hedge reserves (the effective part of the cash flow hedge profit and loss).
Item c represents exchange differences on translation of financial statements denominated in foreign currencies.

(2)

Item d and e are other comprehensive income that cannot be reclassified into profit or loss. Details are as follows:
Item d represents the change in fair value of investments in other equity instruments.
Item e represents changes arising from remeasurement of net liabilities or assets of defined benefit plans.

46. Surplus reserve√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Opening balance

Statutory surplus reserve
Discretionary surplus reserve
Reserve fundEnterprise expansion fundTotal

3,390,959,108.25
26,042,290.48
11,322,880.64
10,291,630.47
3,438,615,909.84

Increase for the Decrease for thecurrent period
current period
575,574,713.40

575,574,713.40

Closing balance
3,966,533,821.65
26,042,290.48
11,322,880.64
10,291,630.47
4,014,190,623.24

Pursuant to the Company Law of the People’s Republic of China and the Articles of Association,
the Company is required to appropriate the statutory surplus reserve at 10% of its net profit.

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47. Undistributed profits√ Applicable□ Not Applicable

Items

Amounts

Undistributed profits at the end of previous year
Change in accounting policy
Combination under common control
Undistributed profits at the beginning of the year
Add: net profit attributable to owners of the parent company
Other transfer in
Adjustment due to implementation of enterprise accounting standard
Profit available for appropriation for the year
Less: appropriation of statutory surplus reserve
Appropriation of staff incentive and welfare fund
Dividend payable for ordinary shares
Undistributed profits at the end of period

47,907,134,328.80
58,136,031.99
47,965,270,360.79
14,710,923,491.99
172,960,573.19
62,849,154,425.97
575,574,713.40
4,296,634,791.21
57,976,944,921.36

48. Operating income and operating cost(1)

Operating income
Amount for thecurrent period

Items
Primary business
Other Business
Total
(2)

Amount for theprevious period

242,431,313,231.23 226,120,377,524.14
1,082,250,439.50
985,440,117.55
243,513,563,670.73 227,105,817,641.69

Primary business income and primary business cost by product category

Categories
Air conditioner
Refrigerator
Kitchen appliance
Water appliance
Washing machine
Equipment product andintegrated channel
services
Total

Amount for the current period
Primary business Primary businessincomecost

Amount for the previous period
Primary business Primary businessincomecost

40,059,458,698.75
77,637,761,907.85
38,740,706,547.12
13,786,852,209.99
57,721,991,613.33

37,531,431,456.40
71,569,789,213.81
35,244,040,315.09
12,470,593,776.21
54,758,839,273.57

28,599,397,831.67
52,883,745,098.80
26,213,735,106.82
7,443,373,512.28
38,583,555,563.97

27,048,946,901.15
48,835,867,469.21
23,735,209,066.45
6,760,377,744.75
36,334,162,716.43

14,484,542,254.19 13,065,622,141.68 14,545,683,489.06 12,989,119,690.80
242,431,313,231.23 166,789,429,255.22 226,120,377,524.14 155,703,683,588.79

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49. Taxes and surcharge√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Amount for thecurrent period

Amount for theprevious period

City maintenance and construction tax
Education surcharge
Property tax
Land use tax
Stamp duty
OthersTotal

290,126,011.45
190,906,821.86
61,713,388.92
21,637,047.83
206,692,727.74
42,213,230.03
813,289,227.83

302,871,487.15
217,297,845.37
58,844,071.60
16,126,888.33
176,355,444.58
37,116,582.03
808,612,319.06

50. Selling expenses√ Applicable□ Not Applicable
Unit and Currency: RMB

Items
Selling expenses
Total

Amount for thecurrent period

Amount for theprevious period

38,597,810,391.10
38,597,810,391.10

36,584,438,840.05
36,584,438,840.05

The Company’s selling expenses are mainly salary expenses, logistic and storage fees,
advertising and promotion fees, and after-sales expenses.

51. Administrative expenses√ Applicable□ Not Applicable
Unit and Currency: RMB

Items
Administrative expenses
Total

Amount for thecurrent period

Amount for theprevious period

10,837,316,878.50
10,837,316,878.50

10,471,531,966.20
10,471,531,966.20

The Company’s administrative expenses are mainly salary expenses, office fees, depreciation andamortization of assets fees, etc.

262

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52. R&D expenses√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Amount for thecurrent period

Amount for theprevious period

R&D expenses
Total

9,499,191,097.85
9,499,191,097.85

8,363,868,872.76
8,363,868,872.76

The Company’s R&D expenses are mainly salary expenses, R&D equipment expenses, design
and R&D expenses.

53. Financial expenses√ Applicable□ Not Applicable

Items
Interest expense
Less: interest income
Less: cash discountExchange gains and losses(gains are represented by ‘-’)OthersTotal

Amount for thecurrent period

Amount for theprevious period

984,142,709.25
855,178,860.53
142,905,868.01

712,462,772.83
566,432,900.38
163,118,260.27–371,894,224.02

577,463,512.90
124,346,494.67
684,721,619.75

140,206,872.26–245,629,371.05

Interest expenditure in lease liabilities in the current period is RMB96,997,943.85 (amount for thecorresponding period: RMB113,104,014.07).

54. Other income√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Amount for thecurrent period

Amount for theprevious period

Government grants related to revenue
Government grants related to assets
Total

966,389,191.58
103,374,416.98
1,069,763,608.56

875,988,212.18
82,525,988.76
958,514,200.94

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55. Investment income (losses are represented by ‘-’)Items
Long-term equity investments income calculatedby the equity method
Investment income from disposal of long-term
equity investments
Investment income from other equity instrument
investments during holding period
Income from wealth management products
Investment income from disposal of financial
assets measured at fair value with changes
included in current profit and loss
Total

Amount for thecurrent period

Amount for theprevious period

1,582,178,829.86

1,887,911,034.17

27,123,485.74

5,189,653.78

31,607,357.22
92,625,406.55

58,638,795.05
60,011,933.94

99,121,873.23
1,832,656,952.60

393,124,704.67
2,404,876,121.61

56. Gains on changes in fair value (losses are represented by ‘-’)Items
Change in fair value of forward foreignexchange contracts
Change in fair value of equity investments
Change in fair value of fund investments
OthersTotal

Amount for thecurrent period

Amount for theprevious period–134,151,416.10

53,963,469.20
46,729,587.36
18,097,485.77
487,081.52
119,277,623.85

59,522,888.36–37,211,579.82–10,602,826.09–122,442,933.65

57. Credit impairment loss (losses are represented by ‘-’)√ Applicable□ Not Applicable
Unit and Currency: RMB

264

Items

Amount for thecurrent period

Amount for theprevious period

Bad debts losses on bills receivable
Bad debts losses on accounts receivable
Bad debts losses on other receivable
Total

1,901,562.15–420,692,343.10–12,586,699.87–431,377,480.82–55,738,551.40–362,209,683.09–102,351,680.93–520,299,915.42

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58. Impairment loss on assets (losses are represented by ‘-’)Items
Impairment losses on inventory
Impairment losses on other current assets
Impairment losses on fixed assets
Impairment losses on construction in progress
Impairment losses on intangible assets
Impairment losses on long-term equity investment
Impairment losses on contract assets
Total

Amount for thecurrent period

Amount for theprevious period–1,144,921,827.01–280,818,239.06–3,191,271.04–107,523.90–1,057,658,740.03–325,647,466.98–4,624,930.91–372,747.55–29,631,196.82–818,536.53–845,634.54–69,975,265.71–1,499,859,761.26–1,418,753,618.82

59. Gains on disposal of assets (losses are represented by ‘-’)Items

Amount for thecurrent period

Amount for theprevious period

Gains on disposal of non-current assets
Losses on disposal of non-current assets
Total

257,217,030.01–50,474,214.22
206,742,815.79

127,741,157.10–16,757,437.06
110,983,720.04

60. Non-operating income√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Amount for thecurrent period

Amount for theprevious period

Total gains on disposal of non-current assets
Quality claims and fines
OthersTotal

2,647,656.16
46,841,255.42
87,038,358.38
136,527,269.96

1,546,396.81
37,390,034.91
160,131,926.76
199,068,358.48

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61. Non-operating expenses√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Amount for thecurrent period

Amount for theprevious period

Total losses on disposal of non-current assets
OthersTotal

27,077,182.74
163,629,787.05
190,706,969.79

22,285,702.85
136,964,575.40
159,250,278.25

Items

Amount for thecurrent period

Amount for theprevious period

Current income tax expense
Deferred income tax expense
Total

2,751,728,843.58
305,811,089.58
3,057,539,933.16

2,507,855,951.35
197,397,904.54
2,705,253,855.89

62. Income tax expenses
(1)

(2)

Statement of income tax expenses

Reconciliation between accounting profit and income tax expenses for the current
periodItems
Total accounting profit
Income tax expense calculated pursuant to statutory tax rate
Impact from different tax rates applicable to subsidiaries
Impact from adjustment to income tax in prior periods
Impact from non-taxable income
Impact from non-deductible cost, expense and loss
Impact from deductible provisional differences or deductible lossesof unrecognized deferred tax
OthersTotal income tax expense

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Amounts
17,789,721,551.69
4,447,430,387.92–832,397,707.79–215,282,210.40–493,234,020.50
199,136,849.33
226,227,840.39–274,341,205.79
3,057,539,933.16

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63. Other comprehensive income√ Applicable□ Not Applicable

Please refer to notes VII.45 for details.

64. Other cash received from operating activities√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Amount for thecurrent period

Deposits and securities
Government grants
Non-operating income excluding government grants
Interest income
OthersTotal

146,194,549.40
856,331,974.78
49,872,811.00
554,921,958.03
62,395,840.69
1,669,717,133.90

65. Other cash paid to operating activities√ Applicable□ Not Applicable
Unit and Currency: RMB

Items
Cash paid on selling expenses
Cash paid on administrative and R&D expenses
Cash paid on financial expenses
Non-operating expenses
OthersTotal

Amount for thecurrent period
17,494,555,343.05
6,533,466,704.27
133,646,664.77
21,293,448.35
71,195,948.75
24,254,158,109.19

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66. Other cash paid to investing activities√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Amount for thecurrent period

Disposal of subsidiaryTotal

218,440,847.94
218,440,847.94

67. Other cash received from financing activities√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Amount for thecurrent period

OthersTotal

1,000,000.00
1,000,000.00

68. Other cash paid to financing activities√ Applicable□ Not Applicable
Unit and Currency: RMB

Items
Repurchase of shares
Cash paid to leaseCash paid for acquisition of subsidiaries through business combination
under common control
Purchase of minority interests in subsidiaries
Others
Total

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Amount for thecurrent period
2,012,393,016.13
956,996,323.37
312,957,760.00
56,960,660.00
8,494,694.74
3,347,802,454.24

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69. Net profit adjusted to cash flow of operating activities
Net profit adjusted to cash flow of operating
activities

Amount for thecurrent period

Amount for theprevious period

1. Net profit
Add: impairment provision for assets
Depreciation of fixed assets
Amortization of intangible assets
Amortization of long-term prepaid expenses
Losses on disposal of fixed assets, intangible
assets and other long-term assets (‘-’
represents ‘gains’)
Loss and gains on change of fair value (‘-’
represents ‘gains’)
Financial expenses (‘-’ represents ‘gains’)
Loss on investments (‘-’ represents ‘gains’)
Decrease in deferred income tax assets (‘-’
represents ‘increase’)Increase of deferred income tax liabilities (‘-’
represents ‘decrease’)Decrease in inventories (‘-’ represents ‘increase’)Decrease of operational account receivables (‘-’
represents ‘increase’)Increase of operational account payables (‘-’
represents ‘decrease’)
OthersNet cash flow generated from operational activities
2. Significant investment and financing
activities not involving cash inflows andoutflows:
Capital transferred from debts
Convertible corporate bonds due within one year
Fixed assets under finance lease
3. Net changes of cash and cash equivalents:
Cash balance at the end of the period
Less: cash balance at the beginning of the period
Add: cash equivalents balance at the end of theperiodLess: cash equivalents balance at the beginning of
the period
Net increase of cash and cash equivalents

14,732,181,618.53
1,931,237,242.08
4,560,067,791.53
1,074,941,740.28
411,338,249.38

13,232,259,371.01
1,939,053,534.24
3,899,373,994.04
905,996,786.57
257,802,793.09–182,313,289.21–90,244,414.00

122,442,933.65
612,248,485.23–1,832,656,952.60–119,277,623.85
1,289,922,731.05–2,404,876,121.61–452,670,928.44

115,139,652.25

758,482,018.03
82,258,252.29–2,773,685,039.99 –11,480,423,018.54
1,781,282,453.76

5,372,841,776.18–1,597,814,712.03
1,008,424,173.16
20,153,505,783.35

9,875,284,130.88
360,268,847.35
23,235,380,690.95

361,395,824.17

6,368,251,389.85

53,368,813,384.61
45,197,664,411.15

45,197,664,411.15
45,790,589,785.11

8,171,148,973.46–592,925,373.96

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70. Cash and cash equivalents
Items

Closing balance

Opening balance

I. CashIncluding: Cash on handBank deposits always available for payment
Other monetary funds always available forpayment
II. Cash equivalents
Including: bond investments due within threemonthsIII. Closing balance of cash and cash equivalents

53,368,813,384.61
5,312,391.11
52,955,417,379.16

45,197,664,411.15
3,085,964.28
45,010,311,638.51

408,083,614.34

184,266,808.36

53,368,813,384.61

45,197,664,411.15

71. Monetary items in foreign currency
Items

Monetary funds
USD
EUR
JPY
HKD
OthersSubtotal
Accounts receivables
USD
EUR
JPY
OthersSubtotal
Short-term borrowings
USD
EUR
JPY
HKD
OthersSubtotal
Accounts payables
USD
EUR

270

Closing balance
Balance inforeign currency

Exchange rate

1,290,843,958.56
47,915,506.82
2,642,036,348.79
647,479,463.24

6.96467.42290.052358
0.8933

770,735,456.70
480,679,854.02
4,448,523,930.25

337,460,553.02
551,092,544.77

Opening balance
Exchange rate

Balance in RMB

8,990,211,833.81
850,630,647.69
355,672,015.56
149,225,110.60
138,331,739.15 10,520,503,841.74
578,393,404.51
483,444,582.35
2,630,279,781.27
12,692,888,774.30

6.37577.21970.055415
0.8176

5,423,365,820.48
1,077,360,530.99
582,993,720.39
395,264,290.53
2,955,290,563.22
10,434,274,925.61

6.96497.42290.052358

5,368,095,382.34
3,568,038,488.40
232,915,815.94
3,648,407,445.01
12,817,457,131.69

721,343,093.77
413,528,990.85
4,064,574,659.93

6.37577.21970.055415

4,599,067,162.94
2,985,555,255.25
225,238,404.78
3,668,237,038.46
11,478,097,861.43

2,350,277,767.57
4,090,704,850.58

2,600,000,000.00

6.96467.42290.052358
0.8933

347,844,969.69
883,863,602.21
623,360,869.80
2,600,000,000.00

6.37577.21970.055415
0.81762,217,755,173.25
6,381,230,048.85
34,543,542.60
2,125,760,000.00
328,850,057.11
11,088,138,821.81

1,941,535,383.62
626,564,863.63

6.9646 13,522,017,332.77
7.4229 4,650,928,326.21

2,033,952,669.54
640,851,532.98

6.3757 12,967,872,035.21
7.2197 4,626,755,812.65

Haier Smart Home Co., Ltd. Annual Report 2022

Balance in RMB

Balance inforeign currency

2,322,580,000.00
518,039,984.83
9,281,602,602.98

Haier 18703[1] E12a Section 10 1st Proof

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Section X Financial Report

Items

JPY
NZD
OthersSubtotal

Closing balance
Exchange rate

Balance in RMB

7,649,104,013.60
150,709,317.71

0.052358
4.4162

Non-current liabilities due in one year
USD
501,395,115.52
EUR
82,207,419.42
JPY
2,057,044,588.88
RUB
471,424,350.04
OthersSubtotalLong-term borrowings
USD
EUR
RUB
JPY
OthersSubtotal

Opening balance

Balance inforeign currency

742,230,000.00
698,254,017.68
250,000,000.00

Balance inforeign currency

Exchange rate

Balance in RMB

400,491,787.94
665,562,488.87
3,276,292,812.40
22,515,292,748.19

8,161,874,338.90
151,371,298.46

0.055415
4.3553452,290,266.49
659,267,416.20
3,268,885,987.84
21,975,071,518.39

6.96467.42290.052358
0.0942

3,492,016,421.53
610,217,453.64
107,702,740.58
44,408,173.77
86,526,344.63
4,340,871,134.16

757,148,488.12
214,053,730.55
3,705,244,389.61
651,073,870.06

6.37577.21970.055415
0.0855

4,827,351,615.72
1,545,403,718.47
205,326,117.85
55,666,815.89
1,589,397,292.33
8,223,145,560.26

6.96467.42290.09420.052358

5,169,335,058.00
5,183,069,747.86
23,550,000.00

403,838,717.50
37,498,911.17
186,061,000.00
3,197,333,012.36

6.37577.21970.08550.055415

2,574,754,511.17
270,730,888.98
15,908,215.50
177,180,208.88

1,014,924,067.59
11,390,878,873.45

3,038,573,824.53

Haier Smart Home Co., Ltd. Annual Report 2022

271

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Section X Financial Report

VIII. CHANGES OF CONSOLIDATION SCOPE
1.

Business combination not under common control√ Applicable(1)□ Not Applicable

Business combination not under common control occurring in the current period√ Applicable □ Not Applicable
Unit and Currency: RMB(2)Name of the acquiree

Point of time ofacquisition ofequityCost foracquisition ofequityThe
proportionof equityacquiredMidwest Sales & Service Inc.

July 2022

5,949,248.00

100

Method ofacquisition ofequityCombinationdate

Basis fordetermining the
combination

Revenue ofthe acquiree
fromcombination
date to theend of theperiodAcquisition of asset

July 2022

Asset delivery

26,121,516.00

272–191,464.04

Combination cost and goodwill
Midwest Sales& Service Inc.

Items

(3)

Net profit of
the acquiree
fromcombination
date to theend of theperiod— Cash— Contingent consideration

5,949,248.00

Total combination costLess: acquired identifiable
Share of fair value of net assets
Amount of goodwill

5,949,248.00
3,965,339.58
1,983,908.42

Identifiable assets and liabilities of the acquiree on the combination date
Items

Midwest Sales & Service Inc.
Fair value
Book value

Accounts receivables
Prepayments
Inventories
Fixed assets
Intangible assets
Accounts payables
Other payables
Net assets
Less: minority interests
Net assets acquired

2,706,845.21
166,538.44
1,112,129.27
364,162.70
1,500,000.00–1,715,934.54–168,401.50
3,965,339.58–1,715,934.54–168,401.50
2,592,557.10

3,965,339.58

2,592,557.10

Haier Smart Home Co., Ltd. Annual Report 2022

2,706,845.21
166,538.44
1,266,800.74
336,708.75

Haier 18703[1] E12b Section 10

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2.

Business combination under common control√ Applicable(1)□ Not Applicable

Business combination under common control occurring in the current period

The proportion ofequity acquired in
the businesscombination

Name of the acquiree
Qingdao Ririshun Service Co., Ltd.

Haier Robot Technology (Qingdao)
Co., Ltd. (海爾機器人科技（青島）有限公司)
Qingdao Haier Special Plastic R&D
Co., Ltd.

The basis for thetransaction of
constituting businesscombination undercommon control

100.00% Controlled by Haier Group
Corporation before andafter combination
100.00% Controlled by Haier Group
Corporation before andafter combination
100.00% Controlled by Haier Group
Corporation before andafter combination

Recognition basis of
Combination date combination date
2022.6 Subject equity-related right andobligation transferred to theCompany2022.6 Subject equity-related right andobligation transferred to theCompany2022.9 Subject equity-related right andobligation transferred to theCompany(Continued)

Name of theacquiree

The incomeof theacquiree fromthe beginningof the current
period tocombination
date

Qingdao Ririshun
Service Co., Ltd.
37,211.90
Haier Robot
Technology(Qingdao) Co., Ltd.
(海 爾 機 器 人 科 技（青 島）有 限 公 司) 205,120,142.19
Qingdao Haier
Special Plastic
R&D Co., Ltd.
476,266,547.25

Net profit of
the acquiree
from thebeginningof thecurrent
period tocombination
date

The incomeof theacquireeduring thecomparison
periodNet profit of
the acquireeduring thecomparison
period1,421,013.21

94,116,731.27–4,254,036.49

3,052,468.49 243,526,079.57

7,385,686.65

8,461,133.81 753,473,339.41 10,367,061.02

Haier Smart Home Co., Ltd. Annual Report 2022

273

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Section X Financial Report(2)

Combination cost
Combination cost
Qingdao Ririshun Service Co.,Ltd.
Haier Robot Technology(Qingdao) Co., Ltd. (海 爾 機
器 人 科 技（青 島）有 限 公 司)
Qingdao Haier Special Plastic
R&D Co., Ltd.

(3)

Equity50,957,800

32,169,100

125,000,000

N/A

152,000,000

N/A

Book value of acquiree’s assets and liabilities as at the combination date
Items

Monetary funds
Accounts receivables
Inventory
Other current assets
Less: Accounts payables
Payables for staff’s remuneration
Taxes payable
Other current liabilities
Net assets

Items

Monetary funds
Accounts receivables
Inventory
Other current assets
Long-term asset
Deferred income tax assets
Less: Accounts payables
Payables for staff’s remuneration
Taxes payableNon-current liabilities due within
one year
Other current liabilities
Net assets

274

Cash

Haier Smart Home Co., Ltd. Annual Report 2022

Qingdao Ririshun Service Co., Ltd.
End of the
Combination dateprevious period
46,604,249.71
1,041,138.30
1,837,248.48
4,840.17
12,023,461.45
65,143.90
383,755.86
118,797.58
36,896,317.87

59,493,989.32
1,144,058.93
1,879,270.49
778,605.93
26,719,700.69
988,310.00
337.90112,271.42
35,475,304.66

Haier Robot Technology (Qingdao) Co.,
Ltd. (海 爾 機 器 人 科 技（青 島）有 限 公 司)
End of the
Combination dateprevious period
70,965,249.26
35,633,561.58
64,895,694.34
742,124.92
2,638,785.39
108,357,839.93
997,688.00
2,702,903.89

54,371,498.79
32,228,299.73
36,212,378.79
990,753.45
1,559,671.95
2,638,785.39
64,054,579.25
1,069,738.28
1,824,903.82

647,508.67
3,514,317.62
58,655,157.38

1,324,322.70
4,125,155.16
55,602,688.89

Haier 18703[1] E12b Section 10

1st Proof

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Section X Financial Report

Qingdao Haier Special Plastic R&D
Co., Ltd.
End of the
Combination dateprevious period

Items

Monetary funds
Accounts receivables
Inventory
Other current assets
Long-term asset
Deferred income tax assets
Less: Accounts payables
Payables for staff’s remuneration
Taxes payable
Other current liabilities
Net assets

3.

115,521,114.49
92,983,452.02
28,093,776.31
1,692,415.37
17,888,167.23

126,298,139.94
102,437,201.57
12,687,209.27

104,855,934.97
3,109,652.36
859,443.39
11,552,679.62
135,801,215.08

108,198,443.08
3,485,652.36
2,313,952.81

9,245,933.66

136,670,436.19

Disposal of subsidiary
Whether single disposal of investment in subsidiary will result in losing control power:

Items
Equity disposal price
Proportion of equity disposal
Method of equity disposal
Time of loss-of-control
Basis for determination the time ofloss-of- control
Difference between considerationand its share of net assets of thesubsidiary as respect to thedisposal in the consolidated level

Yantai Ririshun
Electronics
Co., Ltd.

Shanghai
Hainengwanjia
Youyue(Shanghai)
Information
Technology
Development Technology Co.,
Ltd. (上 海 優 悅Co., Ltd. (海 能
信息科技
萬 嘉（上 海）科 技
有 限 公 司)發 展 有 限 公 司)26,139,242.23
81.00%
Disposal
2022.151%
Disposal
2022.91,045,500.00
62.50%
Disposal
2022.12Cancellation

Transfer

Transfer–4,432,192.08

8,171,950.75

Haier Smart Home Co., Ltd. Annual Report 2022

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Section X Financial Report(Continued)
Qingdao Haier
Tianjin Internet
Strauss Smartof clothes
HangzhouChip
Ecological
GandaoTechnology Technology Co.,Intelligent
Ltd. (青 島 海 爾
Co., Ltd.
Technology Co.,施特勞斯智芯Ltd. (杭州甘道智 (天 津 衣 聯 網 生 態
科 技 有 限 公 司)
科 技 有 限 公 司)
能 科 技 有 限 公 司)

Items
Equity disposal price
Proportion of equity disposal
Method of equity disposal
Time of loss-of-control
Basis for determination the time ofloss-of- control
Difference between considerationand its share of net assets of thesubsidiary as respect to thedisposal in the consolidated level4.

33,000.00
100%
Disposal
2022.1167.90%
Cancellation
2022.2

Transfer

Transfer

Cancellation

293,204.50

135,796.59

2,226.81

Changes of consolidation scope due to other reasons√ Applicable276

1,000,000.00
51.00%
Disposal
2022.11□ Not Applicable(1)

Chongqing Yunshang Yilian Technology Co., Ltd., a subsidiary of the Company, establisheda subsidiary, Chengdu Yunshang Meier Yilian Technology Co., Ltd. (成都云裳美尔衣聯科技
有 限 公 司) for the period.

(2)

Chongqing Yunshang Yilian Technology Co., Ltd., a subsidiary of the Company, establisheda subsidiary, Beijing Yunshang Yilian Technology Co., Ltd. (北京云裳衣聯科技有限公司) forthe period.

(3)

Chongqing Yunshang Yilian Technology Co., Ltd., a subsidiary of the Company, establisheda wholly-owned subsidiary, Chengdu Yunshang Yilian Technology Co., Ltd. (成 都 云 裳 衣 聯
科 技 有 限 公 司) for the period.

(4)

Chongqing Haier Water Heater Co., Ltd., a subsidiary of the Company, established a whollyowned subsidiary, Qingdao Haier Water Ecology Technology Co., Ltd. (青 島 海 爾 水 生 態 科
技 有 限 公 司) for the period.

(5)

Qingdao Haier Air-Conditioner Electronics Co., Ltd., a subsidiary of the Company, establisheda wholly-owned subsidiary Qingdao Haixiangzhi Technology Co., Ltd. (青島海享智科技有限公 司) for the period.

Haier Smart Home Co., Ltd. Annual Report 2022

Haier 18703[1] E12b Section 10

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Section X Financial Report(6)

Hefei Haier Refrigerator Co., Ltd., a subsidiary of the Company, established a wholly-owned
subsidiary, Qingdao Haier Refrigeration Appliance Co., Ltd. (青 島 海 爾 製 冷 電 器 有 限 公 司)
for the period.

(7)

Qingdao Haier Dishwasher Co., Ltd., a subsidiary of the Company, established awholly-owned subsidiary, Chongqing Haier Washing Appliance Co., Ltd. (重庆海尔洗涤电器有 限 公 司) for the period.

IX. INTERESTS IN OTHER ENTITIES
1.

Interests in subsidiaries(1)

Composition of the Group

Principal place ofbusiness

Place ofregistration

Flourishing Reach
LimitedMainland of China

BermudaHaier Electronics
Group Co., Ltd.

Mainland of China
and Hong Kong

BermudaHaier U.S. Appliance
Solutions, Inc.

the United States

the UnitedStatesHaier Singapore
Investment Holding
Co., Ltd.

Singapore andother overseas
areas

Singapore

Haier New ZealandInvestment Holding
Company Limited

New Zealand

New Zealand

Candy S.p.A

EuropeItaly

Qingdao Haier Air
Conditioner Gen
Corp., Ltd.

Qingdao High-tech
Zone

QingdaoHigh-tech
Zone

Name of subsidiary

Nature of business% ofvotingright

Method100.00%100.00%Establishment

100.00%100.00%Establishment

100.00%100.00%Establishment

100.00%100.00%Business
combination
under common
control

100.00%100.00%Business
combination
under common
control

100.00%100.00%Business
combination notunder common
control

100.00%Business
combination
under common
control

Shareholding
DirectIndirect

Group company, whichmainly engage ininvestment holding, theproduction and sale ofwashing machines andwater heaters,
distribution service
Group company, whichmainly engage ininvestment holding, theproduction and sale ofwater equipment,
distribution service
Group company, whichmainly engage in home
appliances production
and distribution
business
Group company, whichmainly engage in home
appliances production
and distribution
business
Group company, whichmainly engage in home
appliances production
and distribution
business
Group company, whichmainly engage in home
appliances production
and distribution
business
Manufacture and sale ofhousehold airconditioners

100.00%Haier Smart Home Co., Ltd. Annual Report 2022

277

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Principal place ofbusiness

Place ofregistration

Guizhou Haier
Electronics Co., Ltd.

Huichuan District,Zunyi City,
Guizhou Province

Hefei Haier Airconditioning Co.,
Limited

Hefei Haier
Industrial Park

HuichuanDistrict, Zunyi
City, Guizhou
Province
Hefei Haier
Industrial Park

Wuhan Haier
Electronics Holding
Co., Ltd.

Wuhan Haier
Industrial Park

Qingdao Haier
Air- Conditioner
Electronics Co., Ltd.
Qingdao Haier
Information Plastic
Development Co.,Ltd.
Dalian Haier Precision
Products Co., Ltd.

Name of subsidiary

278

% of
votingright

Nature of business

Shareholding
DirectIndirect

Manufacture and sale ofrefrigerator

59.00%

59.00%

Manufacture and sale of
air-conditioners

100.00%100.00%Wuhan Haier
Industrial Park

Manufacture and sale of
air-conditioners

60.00%

60.00%

QingdaoDevelopment
Zone

QingdaoDevelopment
Zone

Manufacture and sale of
air-conditioners

100.00%100.00%

Qingdao High-tech
Zone

QingdaoHigh-tech
Zone

Manufacturing of plastic
products

100.00%100.00%Dalian Export
Expressing Zone

Dalian Export
Expressing
Zone

Manufacture and sale ofprecise plastics

90.00%

90.00%

Hefei Haier Plastic
Co., Ltd.

Hefei Economic &Technological
Development
Area

Manufacture and sale ofplastic parts

95.17%

4.83%

100.00%

Qingdao Meier Plastic
Powder Co., Ltd.

QingdaoDevelopment
Zone

Hefei Economic&
Technological
Development
Area
QingdaoDevelopment
Zone

40.00%

60.00%

100.00%Chongqing Haier
Precision Plastic
Co., Ltd.

Jiangbei District,
Chongqing City

Jiangbei District,
Chongqing
City

Manufacture of plastic
powder, plastic sheet
and high-performancecoatings
Plastic products, sheet
metal work, electronics
and hardware

90.00%

10.00%

100.00%

Qingdao Haier
Refrigerator Co.,Ltd.

Qingdao High-tech
Zone

QingdaoHigh-tech
Zone

Qingdao Haier
Refrigerator(International) Co.,Ltd.
Qingdao Household
Appliance
Technology andEquipment ResearchInstitute
Qingdao Haier Whole
Set Home Appliance
Service Co., Ltd.

PingduDevelopment
Zone, Qingdao

PingduDevelopment
Zone, Qingdao

Qingdao High-tech
Zone

Qingdao High-tech
Zone

Haier Smart Home Co., Ltd. Annual Report 2022

MethodBusiness
combination
under common
control
Business
combination
under common
control
Business
combination
under common
control
Business
combination
under common
control
Business
combination
under common
control
Business
combination
under common
control
Business
combination
under common
control

Manufacture andproduction offluorine-freerefrigerators
Manufacture ofrefrigerators

100.00%100.00%Business
combination
under common
control
Business
combination
under common
control
Establishment

100.00%100.00%Establishment

QingdaoHigh-tech
Zone

Research anddevelopment of home
appliances mold andtechnological equipment

100.00%100.00%Establishment

QingdaoHigh-tech
Zone

Research, development
and sales ofhealth- related small
home appliance98.33%

98.33%

Establishment

Haier 18703[1] E12b Section 10

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Principal place ofbusiness

Place ofregistration

Qingdao Haier Special
Refrigerator Co.,Ltd.
Qingdao Haier
Dishwasher Co.,Ltd.
Qingdao Haier Special
Freezer Co., Ltd.

QingdaoDevelopment
Zone
QingdaoDevelopment
Zone
QingdaoDevelopment
Zone

QingdaoDevelopment
Zone
QingdaoDevelopment
Zone
QingdaoDevelopment
Zone

Dalian Haier
Air- conditioning
Co., Ltd.
Dalian Haier
Refrigerator Co.,Ltd.
Qingdao Haier
Electronic Plastic
Co., Ltd.

Dalian Export
Expressing Zone

Dalian Export
Expressing
Zone
Dalian Export
Expressing
Zone
QingdaoDevelopment
Zone

Wuhan Haier Freezer
Co., Ltd

Wuhan Economic &Technological
Development
Zone High-tech
Industrial Park

Qingdao Haidarui
Procurement Service
Co., Ltd.
Qingdao HaierIntelligent Home
Appliance
Technology Co.,Ltd.

Qingdao High-tech
Zone

Chongqing Haier
Air-conditioning Co.,Ltd.
Qingdao Haier
Precision Products
Co., Ltd.

Jiangbei District,
Chongqing City
Qianwang ang
Road, Jiaonan
City

Jiangbei District,
Chongqing
City
Qianwang ang
Road, Jiaonan
City

Qingdao Haier Air
Conditioning
Equipment Co., Ltd.
Dalian Free Trade
Zone Haier
Air-conditioning
Trading Co., Ltd.
Dalian Free Trade
Zone Haier
Refrigerator Trading
Co., Ltd.

Jiaonan City,
Qingdao

Jiaonan City,
Qingdao

Dalian Export
Expressing Zone

Dalian Export
Expressing
Zone

Dalian Export
Expressing Zone

Dalian Export
Expressing
Zone

Name of subsidiary

Dalian Export
Expressing Zone
QingdaoDevelopment
Zone

Qingdao High-tech
Zone

Wuhan Economic&
Technological
Development
Zone High-tech
Industrial Park
QingdaoHigh-tech
Zone
QingdaoHigh-tech
Zone

Nature of business

Shareholding
DirectIndirect% ofvotingright

MethodManufacture and sales offluorine-freerefrigerators
Manufacture of dishwashing machine andgas stove
Research, manufactureand sales of freezer andother refrigeration
products
Air conditioner processing
and manufacturing100.00%100.00%Establishment

100.00%100.00%Establishment

100.00%100.00%Establishment

90.00%

90.00%

Establishment

Refrigerator processing
and manufacturing100.00%100.00%Establishment

Development, assemblingand sales of plastics,
electronics andproducts
Research, manufactureand sales of freezer andother refrigeration
products

100.00%100.00%Establishment

95.00%

5.00%

100.00%Establishment

Develop, purchase andsell electrical products
and components
Development andapplication of home
appliances,
communication,
electronics and network
engineering technology
Manufacture and sales of
air conditioners

98.00%

2.00%

100.00%Establishment

91.46%

1.01%

92.47%

Establishment

76.92%

23.08%

100.00%Establishment

70.00%

70.00%

Establishment

100.00%100.00%Establishment

100.00%100.00%Establishment

100.00%100.00%Establishment

Development andmanufacture of precise
plastic, metal plate,mold and electronic
products for home
appliances
Manufacture of home
appliances andelectronics
Domestic trade

Domestic trade

Haier Smart Home Co., Ltd. Annual Report 2022

279

Haier 18703[1] E12b Section 10

1st Proof

Time: 03-04-2023_16:28:41

P.280 (P1)

(C>E)

868

Section X Financial Report

Principal place ofbusiness

Place ofregistration

Chongqing Haier
Electronics Sales
Co., Ltd.
Chongqing Haier
Refrigeration
Appliance Co., Ltd.
Haier Refrigerator Co.,Ltd.

Jiangbei District,
Chongqing City

Hefei Haier
Industrial Park

Jiangbei District,
Chongqing
City
Jiangbei District,
Chongqing
City
Hefei Haier
Industrial Park

Qingdao HaierIntelligent Building
Technology Co.,
Ltd. (青島海爾智慧
樓宇科技有限公司)
Chongqing
Goodaymart ElectricAppliance Sale Co.,Ltd.
Qingdao Haier(Jiaozhou)
Air-conditioning Co.,
LimitedQingdao Haier
Component Co.,Ltd.
Haier Shareholdings(Hong Kong) Limited
Harvest International
Company
Shenyang Haier
Refrigerator Co.,Ltd.

QingdaoDevelopment
Zone

QingdaoDevelopment
Zone

Jiangbei District,
Chongqing City

Jiangbei District,
Chongqing
City

Jiaozhou City,
QingdaoName of subsidiary

Foshan Haier Freezer
Co., Ltd.
Zhengzhou Haier
Air-conditioning Co.,Ltd.

Qingdao Haidayuan
Procurement Service
Co., Ltd.
Qingdao HaierIntelligent
Technology
Development Co.,Ltd.
Qingdao Hairi HighTechnology Co.,Ltd.
Qingdao Hai Gao
Design and
Manufacture Co.,
Ltd.

280

% of
votingright

MethodNature of business

Shareholding
DirectIndirect

Sales of home appliances

95.00%

5.00%

100.00%Establishment

Processing andmanufacturing ofrefrigerator
Processing andmanufacturing ofrefrigerator
Air-conditioning engineer

84.95%

15.05%

100.00%Establishment

100.00%Establishment

100.00%100.00%Establishment

Sales of home appliancesand electronics

51.00%

51.00%

Establishment

Jiaozhou City,
Qingdao

Manufacture and sale of
air-conditioners

100.00%100.00%Establishment

Jiaozhou City,
QingdaoJiaozhou City,
Qingdao100.00%100.00%Establishment

Hong Kong

Hong Kong

Manufacture and sales ofplastic and precise
sheet metal products
Investment

100.00%Establishment

Cayman Islands

Cayman Islands

Investment

100.00%Establishment

Shenbei New Area,
Shenyang City

Shenbei New
Area,
Shenyang CityS
Sanshui District,Foshan City
Zhengzhou
Economic andTechnological
Development
Zone
QingdaoDevelopment
Zone
QingdaoHigh-tech
Zone

Manufacture and sales ofrefrigerator

100.00%100.00%Establishment

Manufacture and sales ofrefrigerator
Manufacture and sales offreezer

100.00%100.00%Establishment

100.00%100.00%Establishment

Develop, purchase andsell electrical products
and components
Development andresearch of home
appliance products

100.00%100.00%Establishment

100.00%100.00%Establishment

Qingdao High-tech
Zone

QingdaoHigh-tech
Zone

Design, manufacture andsales of product modeland mould

100.00%100.00%

Qingdao High-tech
Zone

QingdaoHigh-tech
Zone

Industrial design andprototype production

75.00%

75.00%

Business
combination
under common
control
Business
combination
under common
control

Jiangbei District,
Chongqing City

Sanshui District,Foshan City
Zhengzhou
Economic andTechnological
Development
Zone
QingdaoDevelopment
Zone
Qingdao High-tech
Zone

Haier Smart Home Co., Ltd. Annual Report 2022

100.00%100.00%100.00%

Haier 18703[1] E12b Section 10

1st Proof

Time: 03-04-2023_16:28:41

P.281

(P1)

(C>E) 868

Section X Financial Report% ofvotingright

Principal place ofbusiness

Place ofregistration

Beijing Haier Guangke
Digital Technology
Co., Ltd.

Beijing

Beijing

Development, promotion
and transfer oftechnology

55.00%

55.00%

Shanghai Haier
Medical Technology
Co., Ltd.
Qingdao Haier
Technology Co.,Ltd.

Shanghai

Shanghai

Wholesale and retail of
medical facility

66.87%

66.87%

Qingdao

QingdaoDevelopment and sales ofsoftware and information
product

100.00%100.00%

Qingdao

Qingdao100.00%100.00%

Qingdao

Qingdao

Entrepreneurshipinvestment andconsulting
Development, production
and sales of appliances

Business
combination
under common
control
Establishment

100.00%100.00%Establishment

Qingdao

Qingdao

Sales of home appliancesand digital products

100.00%100.00%Establishment

Qingdao

Qingdao100.00%100.00%Establishment

DalianDalianSales of home appliances,international freight
forwarding
Sales of home appliances,international freight
forwarding

100.00%100.00%

Qingdao

Qingdao

Hefei

Name of subsidiary

Qingdao Haier
Technology
Investment Co., Ltd.
Qingdao Casarte
Smart Living
Appliances Co., Ltd.
Qingdao
Haichuangyuan
Appliances Sales
Co., Ltd.
Haier Overseas
Electric ApplianceCo., Ltd.
Haier Group (Dalian)
Electrical Appliances
Industry Co., Ltd.
Qingdao Haier Central
Air Conditioning Co.,Ltd.
Chongqing Haier
Home Appliance
Sale Hefei Co., Ltd.
Qingdao Weixi Smart
Technology Co.,Ltd.
Haier U+smart
Intelligent
Technology (Beijing)Co., Ltd.
Haier (Shanghai)Electronics Co., Ltd.
Shanghai Haier
Zhongzhi Fang
Chuang Ke
Management Co.,Ltd.
Qingdao Haier Smart
Kitchen ApplianceCo., Ltd.
GE Appliance(Shanghai) Co., Ltd.

Nature of business

Shareholding
DirectIndirect

MethodBusiness
combination
under common
control
Establishment

100.00%100.00%

Hefei

Production and sales of
air and refrigerationequipment
Sales of home appliances

Business
combination
under common
control
Establishment

100.00%100.00%Establishment

Qingdao

QingdaoIntelligent sanitary ware

71.43%

71.43%

Establishment

Beijing

Beijing

Software development

100.00%100.00%Establishment

Shanghai

Shanghai

100.00%100.00%Establishment

Shanghai

Shanghai

Sales, research anddevelopment of home
appliances
Business management
consulting, chuangke
management

100.00%100.00%Establishment

Qingdao

Qingdao100.00%100.00%Establishment

Shanghai

Shanghai

100.00%100.00%Establishment

Production and sales ofkitchen smart home
appliances
Sales of home appliances

Haier Smart Home Co., Ltd. Annual Report 2022

281

Haier 18703[1] E12b Section 10

1st Proof

Time: 03-04-2023_16:28:41

P.282 (P1)

(C>E)

868

Section X Financial Report

Name of subsidiary

Qingdao Haier Special
Refrigerating
Appliance Co., Ltd.
Beijing Zero Micro
Technology Co.,Ltd.
Laiyang Haier Smart
Kitchen ApplianceCo., Ltd.
Hefei Haier Air
Conditioning
Electronics Co., Ltd.
Haier (Shanghai)Home Appliance
Research andDevelopment Center
Co., Ltd.
Haier (Shenzhen) R&D
Co., Ltd.

Guangzhou Haier Air
Conditioner Co.,Ltd.
Qingdao Yunshang
Yuyi IOT Technology
Co., Ltd.
Qingdao Haizhi
Robotics Co., Ltd.
(青島海知機器人
科技有限公司)Qingdao Jijia CloudIntelligent
Technology Co.,Ltd.
Qingdao Haimeihui
Management
Consulting Co., Ltd.
(青島海美匯管理諮詢有限公司)
Wuxi Yunshang
Internet of Clothing
Technology Co.,
Ltd.(無錫雲裳衣聯網科技有限公司)
Qingdao Haidacheng
Procurement Service
Co., Ltd.
Guangdong Heilong
Intelligent
Technology Co. Ltd(廣東黑龍智能科技
有限公司)

282

% of
votingright

Method100.00%100.00%Establishment

55.00%

55.00%

Establishment

100.00%100.00%Establishment

Production and sales ofhome appliances

100.00%100.00%Establishment

ShanghaiResearch anddevelopment of home
appliances

100.00%100.00%Establishment

ShenzhenShenzhen

100.00%100.00%Establishment

Guangdong

Guangdong

100.00%100.00%Establishment

Qingdao

QingdaoDevelopment, researchand technical services ofhousehold andcommercial electrical
Manufacturing ofrefrigeration and air
conditioning equipment
IoT technology researchand development

60.00%

60.00%

Establishment

Qingdao

Qingdao

Asset management,
equity investment

100.00%100.00%Establishment

Qingdao

Qingdao

R&D and sales of lighting
appliances

80.00%

80.00%

Establishment

Qingdao

Qingdao

Leasing and businessservices

100.00%100.00%Establishment

Wuxi

Wuxi

Internet of Things
technology R & D

100.00%100.00%Establishment

Qingdao

Qingdao100.00%Establishment

Guangzhou

Guangzhou

Develop, purchase andsell electrical products
and components
Scientific research andtechnology service
sector

76.72%

Business
combination notunder common
control

Principal place ofbusiness

Place ofregistration

Qingdao

Qingdao

Production and sales ofhome appliances

Beijing

Beijing

Laiyang

Laiyang

Promotion oftechnologicaldevelopment
Production and sales ofhome appliances

Hefei

Hefei

Shanghai

Haier Smart Home Co., Ltd. Annual Report 2022

Nature of business

Shareholding
DirectIndirect100.00%76.72%

Haier 18703[1] E12b Section 10

1st Proof

Time: 03-04-2023_16:28:41

P.283

(P1)

(C>E) 868

Section X Financial Report

Name of subsidiary

Principal place ofbusiness

Place ofregistration

Beijing% ofvotingright

MethodNature of business

Shareholding
DirectIndirectBeijing

Scientific research andtechnology service
sector100.00%100.00%Establishment

Qingdao

Qingdao

51.00%

51.00%

Qingdao

QingdaoElectronic equipment
technology research,development, transfer,consulting and services
Technology developmentof smart home
products, wholefurniture customization,etc.

100.00%Business
combination notunder common
control
Establishment

Qingdao

QingdaoTechnical services,development,
consulting, transfer, etc.

100.00%100.00%Establishment

Qingdao

Qingdao100.00%100.00%Establishment

Qingdao Internet ofWine Technology
Co., Ltd. (青島酒聯
網物聯科技有限公司)

Qingdao

Qingdao100.00%100.00%Establishment

Qingdao Linghai Air
Conditioning
Equipment Co., Ltd.
(青島菱海空調設備
有限公司)
Shenzhen Yunshang
Internet of Clothes
Technology Co.,
Ltd. (深圳雲裳衣聯網科技有限公司)

Qingdao

Qingdao

Residential interior
decoration, professional
construction operation,
special equipment
installation, upgrading
and repair, etc.
Urban distribution andtransportation services,
import and export ofgoods, technology
import and export andfood business, etc.
Manufacture andproduction of air
conditioner andrefrigeration equipment

100.00%100.00%Establishment

ShenzhenShenzhen

100.00%100.00%Establishment

Qingdao Haixiangxue
Human Resources
Co., Ltd. (青島海享學人力資源有限公司)
Jiangxi Haier Medical
Technology Co.,Ltd.
Qingdao Haizhi
Yunlan Technology
Co., Ltd. (青島海智
雲嵐科技有限公司)

Qingdao

Qingdao100.00%Establishment

Jiangxi

Jiangxi

Wholesale and retail of
medical equipment

100.00%100.00%Establishment

Qingdao

QingdaoTechnical service
development

100.00%100.00%Establishment

Beijing Haixianghui
Technology Co.,
Ltd. (北京海享匯科
技有限公司)
Qingdao HairuijiejingElectronics Co., Ltd.
(青島海瑞潔凈電子有限公司)
Haier Smart Home
Experience Cloud
EcologicalTechnology Co.,
Ltd. (海爾智家體驗
雲生態科技有限公司)
Haier Smart Home
(Qingdao) Network
Co., Ltd. (海爾智家（青島）網絡有限公司)Haier Smart Home
(Qingdao) Network
Operation Co., Ltd.
(海爾智家（青島）網絡運營有限公司)

Import and export
business, Internet,
Internet of things, bigdata, AI, AR andtechnical services
operation
Professional intermediary
activities

100.00%100.00%Haier Smart Home Co., Ltd. Annual Report 2022

283

Haier 18703[1] E12b Section 10

1st Proof

Time: 03-04-2023_16:28:41

P.284 (P1)

(C>E)

868

Section X Financial Report

Name of subsidiary

Qingdao Haishengze
Technology Co.,Ltd.
Qingdao Hailvyuan
Recycling
Technology Co.,Ltd.
Qingdao Haier HVAC
Equipment Co., Ltd.
(青島海爾暖通空調
設備有限公司)Qingdao Haier HomeAI Industry
Innovation Center
Co., Ltd. (青島海爾
家庭人工智能產業
創新中心有限公司)
Zhejiang Weixi IoT
Technology Co.,
Ltd. (浙江衛璽物聯
科技有限公司)Qingdao Haier Quality
Inspection Co., Ltd.
(青島海爾質量檢測有限公司)
Qingdao
Haiyongcheng
Certification Service
Co., Ltd. (青島海永
成認證服務有限公司)
Qingdao Zhonghai
Borui Testing
Technology Service
Co., Ltd. (青島中海博睿檢測技術服務有限公司)
Qingdao Haier Special
Plastic Development
Co., Ltd.
Haier Robot
Technology(Qingdao) Co., Ltd.
(海爾機器人科技（青島）有限公司)
Qingdao Ririshun
Service Co., Ltd.

Qingdao Haizhiling
Air Conditioning
Engineering Co.,
Ltd. (青島海智菱
空調工程有限公司)

284

% of
votingright

Method100.00%100.00%Establishment

100.00%100.00%Establishment

25.00%

100.00%Establishment

Integrated service of AI
industry application
system100.00%100.00%Establishment

Zhejiang

IoT application service

100.00%100.00%Establishment

Qingdao

Qingdao

Inspection and testing ofhome appliance100.00%

Qingdao

Qingdao

Product certification
service100.00%100.00%Business
combination
under common
control
Business
combination
under common
control

Qingdao

QingdaoHome appliance testing
and technology
consulting

100.00%100.00%Business
combination
under common
controls

Qingdao

Qingdao

Manufacture and sale ofrefrigerator doors

100.00%100.00%

Qingdao

Qingdao

Manufacture and sale ofservice robots

100.00%100.00%Business
combination
under common
controls
Business
combination
under common
controls

Qingdao

Qingdao

After-sale service of home
appliances

100.00%100.00%

Qingdao

Qingdao

Software development
and sale of daily
necessities

100.00%100.00%Principal place ofbusiness

Place ofregistration

Qingdao

Qingdao

Qingdao

Qingdao

Qingdao

Qingdao

Manufacture and sale of
air-conditioners

Qingdao

Qingdao

Zhejiang

Haier Smart Home Co., Ltd. Annual Report 2022

Nature of business

Shareholding
DirectIndirect

Air conditioning
equipment technicalservices
Electrical and electronic
products waste
treatment
75.00%

100.00%Business
combination
under common
controls
Establishment

Haier 18703[1] E12b Section 10

1st Proof

Time: 03-04-2023_16:28:41

P.285

(P1)

(C>E) 868

Section X Financial Report

Name of subsidiary

Haier Smart Home
(Xiongan, Hebei)
Technology Co.,
Ltd. (海爾智家科技（河北雄安）有限公司)
Qingdao Ruibo
Ecological
Environmental
Technology Co.,
Ltd. (青島瑞博生態
環保科技有限公司)
Qingdao Sanyiniao
Technology Co.,
Ltd. (青島三翼鳥科技有限公司)
Qingdao Jingzhi
RecycleEnvironmental
Technology Co.,
Ltd. (青島鯨智再生
環保科技有限公司)
Qingdao Yunshang
Jieshen Yilian
Technology Co.,
Ltd. (青島雲裳潔神
衣聯科技有限公司)
Shanghai Yunshang
Yuyi IoT Technology
Co., Ltd. (上海雲裳
羽衣物聯科技有限公司)
Shijiazhuang
Yunshang Yilian
Technology Co.,
Ltd. (石家莊雲裳衣聯科技有限公司)
Nanjing Yunshang
Yilian Technology
Co., Ltd. (南京雲裳
衣聯科技有限公司)
Shanxi Yunshang
Yilian Technology
Co., Ltd. (山西雲裳
衣聯科技有限公司)
Tianjin Yunshang
Yilian Technology
Co., Ltd. (天津雲裳
衣聯網科技有限公司)
Chongqing Yunshang
Haihong Yilian
Technology Co.,
Ltd. (重慶雲裳海宏
衣聯科技有限公司)

Principal place ofbusiness

Place ofregistration

Qingdao% ofvotingright

Method100.00%Establishment

100.00%Establishment

Nature of business

Shareholding
DirectIndirect

Qingdao

Promotion of energysaving technology

100.00%

Qingdao

Qingdao

Environmental and AI
technology consulting

Qingdao

QingdaoTechnology service andadvertisement design

100.00%100.00%Establishment

Qingdao

Qingdao

Operation of dangerous
waste

100.00%100.00%Establishment

Qingdao

Qingdao

Professional cleaning andsale of daily necessities

51.00%

51.00%

Establishment

Shanghai

Shanghai

Professional cleaning andsale of daily necessities

100.00%100.00%Establishment

Shijiazhuang

Shijiazhuang

Professional cleaning andsale of daily necessities

51.00%

51.00%

Establishment

NanjingNanjing

Professional cleaning andsale of daily necessities

80.00%

80.00%

Establishment

Shanxi

Shanxi

Professional cleaning andsale of daily necessities

51.00%

51.00%

Establishment

Tianjin

Tianjin

Professional cleaning andsale of daily necessities

51.00%

51.00%

Establishment

Chongqing

Chongqing

Professional cleaning andsale of daily necessities

51.00%

51.00%

Establishment

100.00%Haier Smart Home Co., Ltd. Annual Report 2022

285

Haier 18703[1] E12b Section 10

1st Proof

Time: 03-04-2023_16:28:41

P.286 (P1)

(C>E)

868

Section X Financial Report

Name of subsidiary

Chengdu Yunshang
Meier Yilian
Technology Co.,
Ltd. (成都雲裳美爾
衣聯科技有限公司)
Beijing Yunshang
Yilian Technology
Co., Ltd. (北京雲裳
衣聯科技有限公司)
Chengdu Yunshang
Yilian Technology
Co., Ltd. (成都雲裳
衣聯科技有限公司)
Qingdao Haier Water
Ecology Technology
Co., Ltd. (青島海爾
水生態科技有限公司)
Qingdao HaixiangmianTechnology Co.,
Ltd. (青島海享眠科技有限公司)
Qingdao Haier Kitchen
IoT Technology Co.,
Ltd. (青島海爾廚聯
網物聯科技有限公司)
Tibet HaifengIntelligent Innovation
Technology Co.,
Ltd. (西藏海峰智能
創新科技有限公司)
Qingdao Haixiangzhi
Technology Co.,
Ltd. (青島海享智科技有限公司)
Qingdao Haier
Refrigeration
Appliance Co., Ltd.
(青島海爾製冷電器
有限公司)
Chongqing Haier
Washing ApplianceCo., Ltd. (重慶海爾洗滌電器有限公司)
Microenterprises suchas Qingdao Hai
Heng Feng Electrical
Appliances Sale &Service Co., Ltd.

286

% of
votingright

Method51.00%

51.00%

Establishment

Professional cleaning andsale of daily necessities

51.00%

51.00%

Establishment

ChengduProfessional cleaning andsale of daily necessities

100.00%100.00%Establishment

Qingdao

QingdaoTechnology service,development andconsultation

100.00%100.00%Establishment

Qingdao

Qingdao

Sale of food and daily
necessities

100.00%100.00%Establishment

Qingdao

QingdaoTechnology service andsale of daily necessities

100.00%100.00%Establishment

Tibet

Tibet

Development of softwareand medical equipment

100.00%100.00%Establishment

Qingdao

Qingdao

Manufacturing of home
appliances

100.00%100.00%Establishment

Qingdao

Qingdao

Manufacturing of home
appliances

100.00%100.00%Establishment

Chongqing

Chongqing

Manufacturing of home
appliances

100.00%100.00%Establishment

All over thecountry

All over thecountry

Sales of home appliances

Principal place ofbusiness

Place ofregistration

ChengduChengduProfessional cleaning andsale of daily necessities

Beijing

BeijingChengduHaier Smart Home Co., Ltd. Annual Report 2022

Nature of business

Shareholding
DirectIndirect

Establishment

Haier 18703[1] E12b Section 10

1st Proof

Time: 03-04-2023_16:28:41

P.287

(P1)

(C>E) 868

Section X Financial Report

Reasons for including subsidiaries which the Company has 50% 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 financeand operation of companies like Qingdao Hai Heng Feng Electrical Appliances Sale &Service Co., Ltd, which were included into the scope of consolidated financial statements.
(2)

Material non-wholly owned subsidiaries

Name ofsubsidiaries

Shareholdingof minority
shareholders

Profit or loss
Balance ofDistributeattributable
minority
dividends toto minority
minority shareholders’shareholders
for the shareholders equity at theend of thecurrent in the current
periodperiodperiod41.00%

18,163,882.93 –13,120,000.00 113,721,893.53

40.00%

9,406,875.12

Guizhou Haier
Electronics Co.,Ltd.
Wuhan Haier
Electronics
Holding Co., Ltd.
(3)

258,330,069.24

Summarized financial information in respect of material non-wholly owned
subsidiaries
Name ofsubsidiary

Guizhou Haier
Electronics
Co., Ltd.
Wuhan Haier
Electronics
Holding Co.,Ltd.

Closing balance
Current assets

Non-current
assetsTotal assets

Current
liabilities

Non-current
liabilities

Total liabilities

470,967,911.51

74,062,299.71

545,030,211.22

261,666,739.20

5,993,000.00

267,659,739.20

924,844,806.17

133,143,608.30 1,057,988,414.47

412,163,241.37

412,163,241.37

Haier Smart Home Co., Ltd. Annual Report 2022

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Section X Financial Report(continued)
Name ofsubsidiary

Guizhou Haier
Electronics
Co., Ltd.
Wuhan Haier
Electronics
Holding Co.,
Ltd.

Opening balance
Current assets

Non-current
assetsTotal assets

Current
liabilities

Non-current
liabilities

Total liabilities

548,369,499.75

90,003,558.19

638,373,057.94

368,134,127.34

5,170,612.06

373,304,739.40

795,204,982.68

144,368,337.05

939,573,319.73

317,265,334.43

317,265,334.43

Amount for the current period
Totalcomprehensive
incomeNet profit

Cash flow of
operatingactivities

1,600,827,796.63

44,302,153.48

44,302,153.48–15,368,670.01

1,742,719,032.53

23,517,187.80

23,517,187.80–71,319,433.90

Amount for the previous period
Totalcomprehensive
incomeNet profit

Cash flow of
operatingactivities

1,434,916,082.22

34,970,709.04

34,970,709.04

428,271,861.58

1,658,928,537.91

15,000,470.71

15,000,470.71

124,310,705.76

Name of subsidiary

Operating income
Guizhou Haier Electronics Co., Ltd.
Wuhan Haier Electronics Holding
Co., Ltd.

(continued)
Name of subsidiary

Operating income
Guizhou Haier Electronics Co., Ltd.
Wuhan Haier Electronics Holding
Co., Ltd.

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Section X Financial Report

2.

Transactions leading to the change of shareholding in subsidiaries but not losing
the control√ Applicable(1)□ Not Applicable

Description of changes in the share of owners’ equity in subsidiaries√ Applicable□ Not Applicable

Capital contribution by minority shareholders of the subsidiary of the Company leads tochanges in the Company’s shareholding ratio.
(2)

Impact of the transactions on minority interest and the equity attributable to shareholders of
the Company:
Items

OthersTotal Consideration for acquisition/disposal
Less: share of net assets of subsidiaries in respect tothe shareholding proportion acquired/disposed
Difference
Including: adjustment to increase capital reserve3.

54,639,935.57
5,258,549.54–49,381,386.03–49,381,386.03

Interests in joint ventures and associates√ Applicable(1)□ Not Applicable

Joint ventures and associates
Principal place of Place ofName of joint venture and associates

businessregistration

Nature of

Accounting treatment

Nature of businessbusinessof investment

Haier Group Finance Co.,Ltd

Qingdao

Qingdao

Financial services

42.00%

Equity method

Bank of Qingdao Co.,Ltd

Qingdao

Qingdao

Commercial Bank

8.19%

Equity method

Wolong Electric (Jinan) Motor Co., Ltd.

Jinan

Jinan

Motor Manufacturing30.00%

Equity method

Qingdao Hegang New Material Technology

Qingdao

Qingdao

Steel plate manufacturing

23.94%

Equity method

Qingdao

Qingdao

Venture Capital

63.13%

Equity method

Qingdao

Qingdao

Manufacturing of home

45.00%

Equity method

49.00%

Equity method

20.20%

Equity method

Co., Ltd. (青島河鋼新材料科技股份有限公司)
Qingdao Haier SAIF Smart Home Industry
Investment Center (Limited Partnership)
Mitsubishi Heavy Industries Haier (Qingdao)
Air-conditioners Co., Ltd.
Qingdao Haier Carrier Refrigeration

appliances
Qingdao

QingdaoEquipment Co., Ltd.
Qingdao Haier Multimedia Co., Ltd

Manufacturing of home
appliances

Qingdao

Qingdao

R&D and sales of
television

Hefei Feier Smart Technology Co., Ltd.

Hefei

Hefei

Technology development

40.00%

Equity method

Anhui Kunhe Intelligent Technology Co., Ltd.

Hefei

Hefei

Electrical equipment R&D

30.00%

Equity method

Haier Smart Home Co., Ltd. Annual Report 2022

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Nature of

Accounting treatment

Name of joint venture and associates

Principal place of Place ofbusinessregistration

Nature of businessbusinessof investment

Zhejiang Futeng Fluid Technology Co., Ltd.

HuzhouHuzhouGas compression

48.00%

Equity methodmachinerydevelopment andmanufacturing
Beijing Mr. Hi Network Technology

Beijing

Beijing

Technology development

36.29%

Equity method

Beijing

Beijing

Technical service import

36.45%

Equity method

14.70%

Equity method

Company Limited
Beijing ASU Tech Co., Ltd.

and export business
Shenzhen Genyuan Environmental Protection

ShenzhenShenzhenTechnology Co., Ltd.
Qingdao Haimu Investment Management

Technical advisory
services

Qingdao

Qingdao

Investment management

49.00%

Equity method

Qingdao

Qingdao

Investment management

24.00%

Equity method

Qingdao

QingdaoDevelopment of home

35.51%

Equity method

Co., Ltd.
Qingdao Haimu Smart Home Investment
Partnership (Limited Partnership)
Qingdao Guochuang Intelligent Household

appliances

Appliance Research Institute Co., Ltd.
(青島國創智能家電研究院有限公司)
Hainengwanjia (Shanghai) Technology

Shanghai

ShanghaiConstruction work

20.00%

Equity method

Guangzhou

Guangzhou

Investment

49.00%

Equity method

Qingdao

QingdaoHome online service

24.93%

Equity method

Shanghai

Shanghai

Investment management

45.00%

Equity method

Shanghai

Shanghai

Investment management

45.00%

Equity method

Shanghai

Shanghai

Investment management

45.00%

Equity method

Qingdao

Qingdao

Water equipment

49.00%

Equity method

Development Co., Ltd. (海能萬嘉（上海）科技發展有限公司)
Guangzhou Heying Investment Partnership(Limited Partnership)
Qingdao Home Wow Cloud Network
Technology Co., Ltd
Bingji (Shanghai) Corporate Management
Co., Ltd.
Youjin (Shanghai) Corporate Management
Co., LtdRRS (Shanghai) Investment Co., Ltd.
(日日順（上海）投資有限公司)
Haier Best Water Technology Co., Ltd.
(倍世海爾飲水科技有限公司)

technology
development service
Qingdao

Qingdao

Investment management

30.00%

Equity method

Qingdao RRS Huizhi Investment Co., Ltd.

Qingdao

Qingdao

Investment management

50.00%

Equity method

Qingdao Xinshenghui Technology Co., Ltd.

Qingdao

QingdaoTechnology service

20.00%

Equity method

HuizhiXiangshun Equity Investment Fund
(Qingdao) Partnership (Limited
Partnership)(青島鑫晟匯科技有限公司)

development

Europalters Italia S.r.l.

EuropeEuropeSales of home appliances

40.00%

Equity method

Konan Electronic Co., Ltd

Japan

Japan

Motor Manufacturing50.00%

Equity method

HPZ LIMITED

Nigeria

Nigeria

Manufacturing of home

25.01%

Equity method

31.72%

Equity method

48.41%

Equity method

49.00%

Equity method

appliance
HNR Company (Private) Limited

Pakistan

Pakistan

Manufacturing of home
appliance

ControladoraMabeS.A.deC.V.

MexicoMexicoManufacturing of home
appliance

Middle East Air conditioning
Company,Limited

290

Haier Smart Home Co., Ltd. Annual Report 2022

Saudi Arabia

Saudi Arabia

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Section X Financial Report(2)

Major financial information of important associates√ Applicable □ Not Applicable①

The basic profile of important associates:
Haier Group Finance Co., Ltd. (hereinafter referred to as ‘Finance company’) wasestablished by Haier Group Corporation and its three affiliates. Registration place andprincipal place of business: No.178–2 Haier Road, Laoshan District, Qingdao City. The
Company’s subsidiaries hold an aggregate of 42.00% equity interest in Finance
Company.

②

Financial information of important associates:
Unit and Currency: RMB
Items

Finance company
Closing balance/ Opening balance/
Amount for theAmount for theprevious period
current period

Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Minority equity interests
Equity attributable to shareholders of
the parent company
Including: share of net assets calculated
per shareholding percentage
Operating income
Net profit
Other comprehensive income
Total comprehensive income
Dividend received from associates for the year

62,367,859,305.44
12,622,422,390.73
74,990,281,696.17
56,509,751,262.74
480,084,424.03
56,989,835,686.77

61,294,606,916.47
9,404,030,263.35
70,698,637,179.82
53,403,515,414.15
369,623,253.07
53,773,138,667.22

18,000,446,009.40

16,925,498,512.60

7,560,187,323.95
2,037,253,129.20
1,585,017,777.56
9,929,719.24
1,594,947,496.80
218,400,000.00

7,108,709,375.29
2,039,657,544.66
1,503,077,521.32–38,457,038.17
1,464,620,483.15
218,400,000.00

Haier Smart Home Co., Ltd. Annual Report 2022

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Section X Financial Report(3)

Summarized financial information of insignificant joint ventures and associates

Investment in associates
Bank of Qingdao Co., Ltd.
Wolong Electric (Jinan) Motor Co., Ltd.
Qingdao Hegang New Material Technology Co., Ltd.
(青 島 河 鋼 新 材 料 科 技 股 份 有 限 公 司)
Qingdao Haier SAIF Smart Home Industry Investment
Center (Limited Partnership)
Mitsubishi Heavy Industries Haier (Qingdao)
Airconditioners Co., Ltd.
Qingdao Haier Carrier Refrigeration Equipment Co.,Ltd.
Qingdao Haier Multimedia Co., Ltd
Qingdao Haier Moulds Co., Ltd.
Hefei Feier Smart Technology Co., Ltd.
Anhui Kunhe Intelligent Technology Co., Ltd.
Zhejiang Futeng Fluid Technology Co., Ltd.
Beijing Mr. Hi Network Technology Company Limited
Beijing Xiaobei Technology Co., Ltd.
Beijing ASU Tech Co., Ltd.
Shenzhen Genyuan Environmental Protection
Technology Co., Ltd.
Qingdao Haimu Investment Management Co., Ltd.
Qingdao Haimu Smart Home Investment Partnership(Limited Partnership)
Hainengwanjia (Shanghai) Technology Development
Co., Ltd. (海 能 萬 嘉（上 海）科 技 發 展 有 限 公 司)
Qingdao Guochuang Intelligent Household Appliance
Research Institute Co., Ltd.
(青 島 國 創 智 能 家 電 研 究 院 有 限 公 司)
Guangzhou Heying Investment Partnership (Limited
Partnership)
Qingdao Home Wow Cloud Network Technology Co.,Ltd
Bingji (Shanghai) Corporate Management Co., Ltd.
Youjin (Shanghai) Corporate Management Co., Ltd
RRS (Shanghai) Investment Co., Ltd.
(日 日 順（上 海）Investment有 限 公 司)
Haier Best Water Technology Co., Ltd.
(倍 世 海 爾 飲 水 科 技 有 限 公 司)

292

Haier Smart Home Co., Ltd. Annual Report 2022

Closing balance/ Opening balance/
Amount for theAmount for theprevious period
current period
2,934,085,854.00 2,654,248,436.12
174,697,807.74
151,837,378.99
314,802,331.45

312,493,256.21

319,245,649.36

393,598,372.59

715,461,260.26

682,901,976.73

413,367,540.80
153,550,234.50

12,829,433.78

409,053,808.05
277,102,563.88
269,158,534.54
265,106.27
1,877,574.14
82,098,847.75
7,507,759.75
2,687,341.82
15,529,700.01

6,914,487.73
2,521,766.42

6,914,487.73
2,465,299.70

58,905,912.88

59,424,662.44

1,997,782.61
77,807,408.84
7,507,759.75

772,938.88

45,016,334.20
285,793,577.87

285,793,577.87

2,547,217.00
2,600,050.50
1,014,425,293.04
972,200,487.88
1,843,591,441.88 1,766,819,068.86
3,351,166,257.98 3,211,580,125.21
148,369,638.40

79,785,557.39

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Investment in associates
HuizhiXiangshun Equity Investment Fund (Qingdao)
Partnership (Limited Partnership)
Qingdao RRS Huizhi Investment Co., Ltd.
Qingdao Xinshenghui Technology Co., Ltd.
(青 島 鑫 晟 匯 科 技 有 限 公 司)
Meiling Candy Washing Machine Co., Ltd.
(美 菱 卡 迪 洗 衣 機 有 限 公 司)
EuropaltersItaliaS.r.l.
Orygin LLC
Konan Electronic Co., Ltd
HNR Company (Private) Limited
HPZ LIMITED
Haier Raya Electric S.A.E
ControladoraMabeS.A.deC.V.
Middle East Air conditioning Company,Limited
Total book value of investment
Total amount of the following financial data ofassociates calculated based on shareholding
percentage
Net profit
Other comprehensive income
Total comprehensive income

Closing balance/ Opening balance/
Amount for theAmount for theprevious period
current period

238,806,947.64
4,083,482.78

119,008,967.03
2,083,482.78

8,598,002.89

9,964,773.52

15,760,505.28
13,918,442.26
67,770,092.99
74,366,909.55
88,751,047.98

22,752,232.07
9,361,965.48

69,273,712.61
114,055,318.97
71,269,048.97
10,568,507.40
4,685,927,386.53 4,131,983,673.10
8,820,101.55
10,318,898.13
17,092,180,848.82 16,218,584,554.49

917,792,070.74 1,276,185,381.16–34,119,700.06
95,751,117.93
1,013,543,188.67 1,242,065,681.10

Haier Smart Home Co., Ltd. Annual Report 2022

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Section X Financial Report

X.

SEGMENT REPORT√ Applicable□ Not Applicable

The Company is principally engaged in manufacture and sales of home appliances and relevant
services business, manufacture of upstream home appliances parts, distribution of products of third
party, logistics and after-sale business. The Company has three business segments: (1) China smart
home business segment; (2) Overseas home appliance and smart home business segment; (3) Other
business segments. The management of the Company assesses operating performance of eachsegment and allocates resources according to the division. Sales between segments were mainly
based on market price.
(1)

China smart home business segment consists of:①

Internet of Food solutions: mainly engages in production and sales of refrigerator/freezers
and kitchen appliances.

②Internet of Clothing solutions: mainly engages in production and sales of washing machine
products.

③

Air energy solutions: mainly engages in production and sales of air conditioners.

④

Whole house water solutions: mainly engages in production and sales of water home
appliances such as water heaters and water purification products.

(2)

Overseas home appliance and smart home business segment mainly includes overseas businesssegments such as GEA, FPA, Candy and so on.

(3)

Other business segments: mainly include channel, equipment components, small home appliancebusiness and others.

Due to centralized management under the headquarters or exclusion from the assessment scope ofsegment management, the total assets of segments exclude monetary funds, financial assets held for
trading, derivative financial assets, dividends receivable, held-for-sale financial assets, other current
assets, debt investment, long-term accounts receivable, long-term equity investment, other equity
instruments investment, other non-current financial assets, goodwill and deferred income tax assets;
the total liabilities of segments exclude long-term and short-term borrowings, financial liabilities held for
trading, derivative financial liabilities, taxes payable, interests payable, dividends payable, held-for-saleliabilities, bonds payable, deferred income tax liabilities and other non-current liabilities; profits ofsegments exclude financial expenses, profit or loss in fair value changes, income from investment, andincome on disposal of assets, Non-value-added tax refundable upon imposition component of otherincome, non-operating incomes and expenses and income tax.

294

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Section X Financial Report(1)

Information of reportable segments
Segment information for the period
Segment information

China smart home business
Internet ofInternet of Food solutions

Air energy

clothing

Whole housesolutionssolutions W

water solutions

Refrigerator/

Kitchenfreezers

appliances

Air conditioners

Washing machine

Water home
appliances

Segment revenue

43,199,470,772.09

3,763,429,363.37

33,946,969,623.71

31,613,988,663.17

13,854,726,199.27

Including: external revenue

39,027,034,631.31

3,113,540,694.76

28,386,620,301.46

27,076,387,016.95

13,542,203,958.47

Inter-segment revenue

4,172,436,140.78

649,888,668.61

5,560,349,322.25

4,537,601,646.22

312,522,240.80

Total segment operating cost

39,396,647,949.90

3,695,684,203.26

33,076,503,084.49

28,544,566,501.17

12,141,922,308.40

Segment operating profit

3,802,822,822.19

67,745,160.11

870,466,539.22

3,069,422,162.00

1,712,803,890.87

Total segment assets

14,577,249,272.86

2,326,675,305.96

15,101,978,985.73

14,156,800,879.35

6,504,143,011.57

Total segment liabilities

34,825,770,806.25

1,674,425,538.49

11,709,730,530.33

8,711,401,637.34

5,287,383,764.72(continued)
Overseas home
appliance and smart

Inter-segment

home business

Other businesseliminations

Total

Segment revenue

125,423,825,543.85

84,251,398,520.89–92,540,245,015.62

243,513,563,670.73

Including: external revenue

124,703,758,491.87

7,664,018,575.91

720,067,051.98

76,587,379,944.98–92,540,245,015.62

119,174,719,653.59

Segment information

Inter-segment revenue

243,513,563,670.73

6,249,105,890.26

85,153,874,973.61–902,476,452.72–92,585,243,582.25

Segment operating profit

44,998,566.63

14,914,888,578.56

Total segment assets

64,106,295,908.67

46,119,831,030.71–43,669,842,995.53

119,223,131,399.32

Total segment liabilities

34,773,662,612.50

56,005,860,058.46–43,436,908,965.22

109,551,325,982.87

Total segment operating cost

228,598,675,092.17

Haier Smart Home Co., Ltd. Annual Report 2022

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Section X Financial Report

Segment information for the corresponding period of last year
Segment information

China smart home business
Internet of Food solutions

Air energy

Internet ofInternet ofsolutionsclothing solutions

clothing solutions

Refrigerator/

Kitchenfreezers

appliances

Air conditioners

Air conditioners

Water home
appliances

Segment revenue

41,743,157,017.74

3,495,589,873.43

32,192,834,146.73

30,658,121,874.87

12,701,189,534.01

Including: external revenue

36,854,876,837.94

3,013,351,768.25

27,412,948,533.30

25,916,495,249.83

12,478,797,708.26

Inter-segment revenue

4,888,280,179.80

482,238,105.18

4,779,885,613.43

4,741,626,625.04

222,391,825.75

Total segment operating cost

38,754,084,806.60

3,442,698,782.42

31,944,204,039.40

27,951,528,749.31

11,242,746,656.47

Segment operating profit

2,989,072,211.14

52,891,091.01

248,630,107.33

2,706,593,125.56

1,458,442,877.54

Total segment assets

17,849,098,835.46

2,547,615,110.79

17,958,004,697.79

20,919,506,189.82

8,406,963,618.39

Total segment liabilities

42,593,142,081.38

2,371,416,306.28

15,600,383,361.76

11,249,225,999.71

7,865,505,122.98(continued)
Overseas home
appliance and smart
Other businesseliminations

Total

Segment revenue

113,725,197,263.88

91,716,273,350.33–99,126,545,419.30

227,105,817,641.69

Including: external revenue

113,090,283,595.32

8,339,063,948.79

634,913,668.56

83,377,209,401.54–99,126,545,419.30

107,799,170,859.34

Inter-segment revenue

227,105,817,641.69

5,926,026,404.54

91,912,861,706.02–196,588,355.69–99,170,658,940.10

Segment operating profit

44,113,520.80

13,229,180,982.23

Total segment assets

57,368,272,498.73

51,126,662,397.31–63,373,327,405.31

112,802,795,942.98

Total segment liabilities

33,874,070,274.78

59,750,131,702.98–63,106,428,270.31

110,197,446,579.56

Total segment operating cost

296

Inter-segment

home business

Segment information

Haier Smart Home Co., Ltd. Annual Report 2022

213,876,636,659.46

Haier 18703[1] E12b Section 10

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Section X Financial Report(2)

Geographical information‘Other countries/regions’ in this report refers to all other countries/regions (including Hong Kongand Macau Special Administration Region and Taiwan) other than the mainland China for the
purpose of information disclosure
External transaction revenue

Items
Mainland China
Other countries/regions
Among which:America
Australia
South Asia
EuropeSoutheast Asia
Middle East and Africa
Japan
OthersTotal

Amount for thecurrent period

Amount for theprevious period

116,754,660,544.84
126,758,903,125.89

111,866,568,165.67
115,239,249,476.02

76,629,831,084.82
6,962,360,306.70
8,283,959,988.29
23,031,521,394.12
5,179,557,555.83
1,970,513,900.11
3,568,558,534.13
1,132,600,361.89
243,513,563,670.73

70,277,292,639.70
7,011,702,914.33
7,138,132,421.70
19,736,797,708.72
4,740,118,325.43
1,478,785,406.72
3,491,226,268.28
1,365,193,791.14
227,105,817,641.69

Total non-current assets
Items

Closing balance

Opening balance

Mainland China
Other countries/regions
Total

19,355,615,775.70
29,019,302,954.24
48,374,918,729.94

16,573,428,753.11
25,209,296,729.73
41,782,725,482.84

Total non-current assets exclude: debt investments, long-term receivable, long-term equity
investments, other equity instrument investments, other non-current financial assets, goodwill anddeferred income tax assets.

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XI. DISCLOSURE OF FAIR VALUE
1.

Fair value of assets and liabilities measured at fair value
The level to which the fair value measurement result belongs is determined by the lowest level towhich the input value is significant to the fair value measurement as a whole:
Level 1: Unadjusted quotes for the same asset or liability in an active market.
Level 2: Inputs that are directly or indirectly observable for related assets or liabilities, except forLevel 1 inputs.
Level 3: Unobservable inputs of related assets or liabilities.
At the end of the period
Items

Continuously measured
at fair value
Financial assets held for trading
Including: Bank wealth management
products
Investment fundInvestment in equity instruments
Derivative financial assets
Including: Forward foreign exchange
contract
Forward commodity contract
Other equity instruments
Including: Equity instruments measured
at fair value and changes of which
included in other comprehensive
incomeDerivative financial liabilities
Including: Forward foreign exchange
contract
Forward commodity contracts
Other non-current liabilities
Including: put option liability

298

Haier Smart Home Co., Ltd. Annual Report 2022

Input used for fair value measurement
Important
Important
Quotes in an
observableunobservable
active market
input
input
(Level 1)(Level 2)(Level 3)

395,687,084.83

14,638,968.26

109,486,827.82

14,638,968.26
168,430,847.63
227,256,237.20

109,486,827.82
183,185,160.51

Total

519,812,880.91
14,638,968.26
168,430,847.63
336,743,065.02
183,185,160.51

178,992,877.32
178,992,877.32
4,192,283.19
4,192,283.19
16,353,773.34 1,027,550,923.67 4,807,978,233.19 5,851,882,930.20

16,353,773.34 1,027,550,923.67 4,807,978,233.19 5,851,882,930.20
104,594,040.66
104,594,040.66
92,580,419.48
12,013,621.18
16,916,789.10
16,916,789.10

92,580,419.48
12,013,621.18
16,916,789.10
16,916,789.10

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At the beginning of the period
Items

Continuously measured at fair value
Financial assets held for trading
Including: Bank wealth management
products
Forward foreign exchange contract
Investment fundInvestment in equity instruments
Derivative financial assets
Including: Forward foreign exchange
contract
Interest rate swap agreement
Other equity instruments
Including: Equity instruments measured
at fair value and changes of which
included in other comprehensive
incomeOther non-current assets
Including: Other non-current financial
assetsFinancial liabilities held for trading
Including: Forward foreign exchange
contract
Derivative financial liabilities
Including: Forward foreign exchange
contract
Interest rate swap agreement

Input used for fair value measurement
Important
Quotes in an
Importantunobservable
active market observable input
input(Level 1))(Level 2)(Level 3)

374,782,417.76

2,305,001,643.90

106,291,467.43

2,168,622,090.00
136,379,553.90

Total

2,786,075,529.09

79,819,974.01

2,168,622,090.00
136,379,553.90
150,516,274.37
330,557,610.82
79,819,974.01

21,055,159.54

72,822,190.59
6,997,783.42
2,812,000,000.00

2,018,829,785.09

72,822,190.59
6,997,783.42
4,851,884,944.63

21,055,159.54

2,812,000,000.00

2,018,829,785.09
46,832,494.61

4,851,884,944.63
46,832,494.61

46,832,494.61
6,294,014.40

46,832,494.61
6,294,014.40

6,294,014.40
80,212,433.24

6,294,014.40
80,212,433.24

60,527,532.76
19,684,900.48

60,527,532.76
19,684,900.48

150,516,274.37
224,266,143.39

106,291,467.43

For financial instruments traded in an active market, the Company determines its fair value basedon its quotes in an active market; for financial instruments not traded in an active market, theCompany uses valuation techniques to determine its fair value.

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2.

The basis for determining the fair value of the continual Level 2 fair value
measurement items
Items
Financial assets held for trading
Including: Bank wealth management
products
Derivative financial assets
Including: Forward foreign exchange
contract
Forward commodity contract
Other equity instruments investment
Including: equity instruments measured atfair value through other comprehensive
incomeDerivative financial liabilities
Including: Forward foreign exchange
contract
Forward commodity contracts

300

Haier Smart Home Co., Ltd. Annual Report 2022

Fair value at theend of the period

Valuation techniques

14,638,968.26

Discounted cash flow

178,992,877.32

Discounted cash flow

4,192,283.19

Discounted cash flow—

1,027,550,923.67

Recent transaction
methods

92,580,419.48

Discounted cash flow

12,013,621.18

Discounted cash flow

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Continual Level 3 fair value measurement major items, the valuation techniques
adopted and information of important parameters
Items

Fair value at theend of the period

Other equity instruments
Including:
1. COSMO IoT
2,817,408,000.00
Technology
Co., LTD. (卡奥斯物聯科技股份有限公司)

2. SINOPEC FuelOil Sales
Corporation
Limited (中國石化銷售股份有限公司)

1,234,500,000.00

ValuationtechniqueSignificant
unobservable input Range

Sensitivity of fair value
to the input

Market approach

1. Average EV/
Sales multipleof peers
2. Discount forlack ofmarketability

1. 1.46 to 1.48
2. 19% to 21%

Market approach

1. Average P/E
multiple ofpeers
2. Discount forlack ofmarketability

1. 32.38 to
33.04
2. 28.2% to30.2%

1. 1% increase(decrease) in average
EV/Sales multiple of
the Comparable
Companies would
result in increase(decrease) in fairvalue by RMB116
million.
2. 1% increase(decrease) in thelack of marketability
would result in
decrease (increase)in fair value by
RMB146 million.
1. 1% increase(decrease) in average
P/E multiple of theComparable
Companies would
result in increase(decrease) in fairvalue by RMB12.3
million.
2. 1% increase(decrease) in thelack of marketability
would result in
decrease (increase)in fair value by
RMB17.4 million.

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4.

Financial instruments not measured at fair value
Financial assets and financial liabilities not measured at fair value include: monetary funds, bills
receivable, accounts receivable, other receivables, other current assets, long-term and short-termborrowings, bills payable, accounts payable, other payables, long-term payables, bonds payable,
etc. The difference between the book value and the fair value of financial assets and financial
liabilities not measured at fair value at the end of the period is small.

XII. RELATED PARTIES AND RELATED PARTY TRANSACTIONS(I)Explanation for basis of identifying related party— Related Party
According to Accounting Standards for Business Enterprises No. 36
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 morethan two) are also considered to be related if they are subject to common control, joint control
or significant influence from another party.
According to Management Practices for Information Disclosure of Listed Company (China
Securities Regulatory Commission Order No. 182), related legal entity or individual will beidentified as related parties in certain occasions.

302

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Relationships between related parties
1.

Information about the parent company and other companies holding shares of theCompany

Name
Haier Group
Corporation
Haier COSMO Co.,
Ltd. (海尔卡奥斯股份有限公司)HCH (HK) Investment
Management Co.,
LimitedQingdao Haier Venture& Investment
Information Co.,Ltd.
Qingdao Haichuangzhi
Management
Consulting
Enterprise (Limited
Partnership)
Haier International
Co., Limited

Type ofenterprise

Registered place

RegisteredcapitalLegal
Relationships withrepresentative the Company

Interestin theCompany

Voting rights
to theCompany

Collective
ownershipcompany
Joint-stockcompany

Qingdao High-tech
Zone Haier Park

311,180,000

Zhou Yunjie

Parent Company

11.35%

11.35%

Qingdao High-tech
Zone Haier Park

631,930,000

Zhou Yunjie

13.32%

13.32%

Privatecompany

Hong Kong

HKD 10,000

/

5.70%

5.70%

Company withlimitedliability

Qingdao Free TradeZone

923,000,000

Zhou Yunjie

1.82%

1.82%

Limitedpartnershipcompany

Qingdao High-tech
Zone Haier Park

118,924,416/

Subsidiary of
ParentCompany
Parties acting inconcert ofParentCompany
Parties acting inconcert ofParentCompany
Parties acting inconcert ofParentCompany

1.28%

1.28%

Privatecompany

Hong Kong

HKD 2

/

Parties acting inconcert ofParentCompany

0.62%

0.62%

2.

Subsidiaries
The details of the subsidiaries of the Company are detailed in Note IX.1.

3.

Joint ventures and associates
The details of associates and joint ventures of the Company are detailed in Note VII.11 and
IX.3.

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4.

304

Connected companies with no relationship of control
Name

Relationship with the Company

Qingdao Haier Parts Procurement Co., Ltd.
Gooday Supply Chain Technologies Co., Ltd.
Chongqing Haier Electrical Appliances Sales
Co., Ltd.
Shanghai Cotai Supply Chain Management
Co., Ltd.
Dalian Haier International Trade Co., Ltd.
Qingdao Goodaymart Supply Chains Co.,Ltd.
Qingdao Haier Moulds Co., Ltd.
Qingdao Haier International Trading Co., Ltd.
Cosmoplat Chuangzhi IOT Technology Co.,Ltd.
Qingdao Dingxin Electronic Technology Co.,Ltd.
Qingdao Haier International Travel Agency
Co., Ltd.
Shanghai Zhiyu Technology Co., Ltd.
Cosmoplat Chuangzhi IOT Technology(Chongqing) Co., Ltd.
Qingdao Haina Cloud Intelligent System Co.,Ltd.
Chongqing Zhonglian Energy Technology
Co., Ltd.
Qingdao Blue Whale Technology Co., Ltd.
Qingdao Xiaoshuai Intelligent Technology
Co., Ltd.
Haier International Co., Ltd.
Hongkong Gooday Supply Chain
Management Limited
Gooday (Qingdao) International Supply Chain
Service Co., Ltd.
Qingdao Manniq Intelligent Technology Co.,
Ltd.
Thunderobot International (HK) Limited
Chongqing Zhonglian Energy Technology
Co., Ltd
Qingdao Haier New Materials R & D Co.,Ltd.
HNR Company (Private) Limited
Wolong Electric (Jinan) Motor Co., Ltd.
HPZ Limited
Mitsubishi Heavy Industry Haier (Qingdao) Air
Conditioner Co., Ltd.
Controladora Mabe S.A.deC.V.
Qingdao Haier Multi-media Co., Ltd.

Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group

Haier Smart Home Co., Ltd. Annual Report 2022

Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary and associate of HaierGroup
Associate
Associate
Associate
Associate
Associate
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Name

Relationship with the Company

Qingdao HBIS Composite New Material Co.,
Ltd.
Hefei Hegang New Material Technology Co.,Ltd.

Subsidiary of associate
Subsidiary of associate(III) Related transactions
1.

Details of the Company’s procurement of goods and services from related parties are as
follows:√ Applicable□ Not Applicable
Unit and Currency: RMB

Related parties
Controladora Mabe S.A.deC.V.
Qingdao Haier Parts Procurement Co., Ltd.
Gooday Supply Chain Technologies Co., Ltd.
HNR Company (Private) Limited
Chongqing Haier Electrical Appliances Sales
Co., Ltd.
Shanghai Cotai Supply Chain Management
Co., Ltd.
Dalian Haier International Trade Co., Ltd.
Qingdao Goodaymart Supply Chains Co.,Ltd.
Qingdao Haier Moulds Co., Ltd.
Qingdao Haier International Trading Co., Ltd.
Cosmoplat Chuangzhi IOT Technology Co.,
Ltd.
Wolong Electric (Jinan) Motor Co., Ltd.
Qingdao HBIS Composite New Material Co.,Ltd.
Qingdao Ding Xin Electronics Technology
Co., Ltd.
Cosmoplat Chuangzhi IOT Technology(Chongqing) Co., Ltd. (卡 奧 斯 創 智 物 聯
科 技（重 慶）有 限 公 司)
Hefei Hegang New Material Technology Co.,
Ltd.
Other related parties
Total

Amount for thecurrent period

Amount for theprevious period

13,123,708,450.38
7,059,896,523.58
4,444,169,934.17
3,073,674,460.32

12,314,855,657.89
538,564,747.23
3,848,406,918.04
2,733,833,669.59

3,054,825,152.17

5,274,865,476.66

1,471,945,927.42
529,797,174.58

1,624,701,243.17
507,660,692.05

421,203,765.86
413,503,657.29
397,359,401.03

690,524,339.94
654,961,221.67
570,588,757.78

322,583,108.75
233,769,115.21

2,121,388,092.90
1,013,817,589.80

156,388,498.04

923,986,491.86

101,558,830.18

885,837,757.21

119,852,149.42

1,031,357,405.38

117,415,909.49
2,848,081,174.13
37,889,733,232.02

1,190,287,247.15
4,051,040,692.74
39,976,678,001.06

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Details of the Company’s sales of goods to related parties are as follows:

Related parties
Controladora Mabe S.A.deC.V.
Qingdao Haier International Trading Co., Ltd.
HNR Company (Private) Limited
Qingdao Haier Multi-media Co., Ltd.
Qingdao Haier International Travel Agency
Co., Ltd.
HPZ Limited
Other related parties
Total

306

Haier Smart Home Co., Ltd. Annual Report 2022

Amount for thecurrent period

Amount for theprevious period

1,023,743,811.97
672,339,983.04
602,998,664.66
136,786,578.47

730,275,993.98
613,142,450.61
681,960,950.97
88,327,957.96

119,166,052.08
215,683,256.42
118,748,741.50
90,831,902.38
829,514,949.57
917,809,275.26
3,503,298,781.29 3,338,031,787.58

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Amount of unsettled items of related parties

Items and name of customers

Closing
Balance

Opening
Balance

Bills receivable:
Qingdao Ding Xin Electronics Technology Co.,Ltd.
45,947,984.43
622,590.67
Cosmoplat Chuangzhi IOT Technology(Chongqing) Co., Ltd.
28,764,679.42
2,528,394.74
Cosmoplat Chuangzhi IOT Technology Co., Ltd.
23,908,824.49
13,520,000.00
Qingdao Haina Cloud Intelligent System Co., Ltd.
9,196,905.30
21,511,057.07
Other related parties
13,863,643.73
20,304,074.20
Accounts receivable:
HNR Company (Private) Limited
887,316,060.44
588,605,242.72
Controladora Mabe S.A.deC.V.
155,980,651.90
123,524,843.42
Qingdao Haier Parts Procurement Co., Ltd.
155,500,553.65
Qingdao Haier International Trading Co., Ltd.
147,208,453.41
34,284,071.61
HPZ Limited
117,899,486.73
Shanghai Zhiyu Technology Co., Ltd.
116,549,809.14
43,349,588.61
Chongqing Zhonglian Energy Technology Co.,Ltd.
48,870,443.21
45,403,951.21
Qingdao Haina Cloud Intelligent System Co., Ltd.
24,917,701.10
31,824,063.09
Other related parties
126,236,118.64
352,919,464.97
Prepayments:
HNR Company (Private) Limited
110,370,091.99
82,148,476.31
Shanghai Zhiyu Technology Co., Ltd.
40,934,511.12
Qingdao Haier New Materials R & D Co., Ltd.
8,445,024.12
Qingdao Haier International Travel Agency Co.,Ltd.
6,253,573.56
23,936,807.36
Other related parties
27,781,442.20
95,176,038.89
Other receivables:
Qingdao Blue Whale Technology Co., Ltd.
12,392,334.21
12,392,334.21
Controladora Mabe S.A.deC.V.
12,158,833.50
16,260,655.41
Dalian Haier International Trade Co., Ltd.
9,440,616.07
4,372,124.84
Qingdao Haier International Travel Agency Co.,Ltd.
5,553,777.66
5,908,061.04
Haier International Co., Ltd.
4,272,144.02
8,497,154.27
Other related parties
26,691,391.51
99,783,350.46
Bills payable:
Qingdao Haier New Materials R & D Co., Ltd.
386,075,771.04
90,348,253.59
Qingdao Haier Parts Procurement Co., Ltd.
180,719,158.83
Wolong Electric (Jinan) Motor Co., Ltd.
37,773,640.00
4,127,872.00
Other related parties
37,227,346.97
50,019,985.82
Accounts payable:
Qingdao Haier Parts Procurement Co., Ltd.
1,860,747,884.39 1,986,376,315.99
Controladora Mabe S.A.deC.V.
1,299,452,149.83
941,545,815.41
Qingdao Haier International Trading Co., Ltd.
257,531,848.99
106,344,044.12
Hongkong Gooday Supply Chain Management
Limited
250,478,107.49

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Items and name of customers
Thunderobot International (HK) Limited
Dalian Haier International Trade Co., Ltd.
Qingdao Haier New Materials R & D Co., Ltd.
Gooday Supply Chain Technologies Co., Ltd.
Cosmoplat Chuangzhi IOT Technology Co., Ltd.
Other related parties
Contract liabilities:
Wolong Electric (Jinan) Motor Co., Ltd.
Chongqing Zhonglian Energy Technology Co.,Ltd.
Mitsubishi Heavy Industry Haier (Qingdao) Air
Conditioner Co., Ltd.
HPZ Limited
Other related parties
Other payables:
Gooday Supply Chain Technologies Co., Ltd.
Gooday (Qingdao) International Supply Chain
Service Co., Ltd.
Shanghai Cotai Supply Chain Management Co.,Ltd.
Qingdao Haier Moulds Co., Ltd.
Qingdao Manniq Intelligent Technology Co., Ltd.
Qingdao Goodaymart Supply Chains Co., Ltd.
Dalian Haier International Trade Co., Ltd.
Qingdao Haier International Travel Agency Co.,Ltd.
Qingdao Blue Whale Technology Co., Ltd.
Other related parties

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Closing
Balance

Opening
Balance155,527,162.34
150,178,673.56
175,739,251.85
101,958,410.60
21,654,400.63
79,442,717.42
1,461,094.92
53,275,591.30
268,605,818.56
212,314,885.05 1,978,773,614.10
51,422,207.69

21,373,101.27

17,215,206.92

17,210,554.92

4,208,374.00
3,353,144.42
6,008,371.78

49,594.69
4,696,178.43
111,264,927.65

485,473,357.04

687,378,382.22

140,136,176.89
113,720,815.14
69,423,409.16
67,521,909.37
30,669,122.96
21,899,297.26

154,351,301.35
21,298,170.87
28,372,133.16
72,545,343.35
21,800,000.00

17,736,906.10
15,865,657.94
123,426,526.98

16,372,400.80
27,367,393.54
168,093,852.85

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4.

Other related party transactions(1)
On 29 April 2021, Haier Group Corporation and Haier Group Finance Co., Ltd.
(hereafter, the “Finance Company”) renewed the Financial Services Framework
Agreement, and the “resolution on the renewal of the Financial Services Framework
Agreement between Haier Smart Home Co., Ltd. and Haier Group Corporation andthe estimated amount of connected transaction” was considered and passed at the2020 Annual General Meeting held on 25 June 2021. The Financial Services
Framework Agreement became effective from the passing of the resolution at thegeneral meeting.
Various current balances of the Company and the Finance Company are as follows:
Items
Monetary funds depositedat the Finance Company
Interest receivable from the Finance Company
Loans of the Finance Company
Interest payable to the Finance Company
Acceptance note issued
Foreign exchange derivativesof the Finance Company

Closing Balance

Opening Balance

31,424,418,720.13
468,636,097.70
60,000,000.00
46,158.00
21,621,825,652.96

28,870,880,571.84
260,900,663.40
336,507,659.12
1,813,534.66
21,697,666,574.19–2,293,511.73

1,577,848.15

Various balances of the Company and the Finance Company are as follows:

Items
Interest income of the Finance Company
Interest expense of the Finance Company
Service fee of the Finance Company
Spot foreign exchange business (foreignexchange settlement and sale)(2)

Amount for thecurrent period

Amount for theprevious period

570,162,386.04
4,933,548.81
29,446,933.09

339,728,297.25
8,137,583.63
23,493,333.12

6,337,945,933.79 9,856,440,483.71

The lease expense of the Company and its subsidiaries for production and operationleased from related parties for the current period was RMB97 million (amount for thecorresponding period: RMB113 million).

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Related information on the guarantor of the Company’s guaranteed borrowings as arelated party at the end of period:
LenderHaier Russian Electric Co.,Ltd.
Haier Russian Industries
Ltd.
Total

(4)

Closing Balance

Opening Balance

Guarantor

304,896,830.40

Haier Group
Corporation
Haier Group
Corporation

60,000,000.00
60,000,000.00

304,896,830.40

Haier Group Corporation provided joint liability guarantee for certain bills payable ofthe subsidiaries of the Company with the guaranteed amount of RMB2,311 million at
the end of the period (amount for the corresponding period: RMB1,805 million).

(IV) Pricing Policy
1.

310

Related-party Sales
Some related parties purchase components through the independent procurement platformof the Company, purchase electrical appliances for sales from the Company, and receive
after-sales services, R&D service, housing rental and other business provided by thecompany due to their business needs. In November 2020, according to the implementationof connected transactions in the early stage and the relevant listing requirements in Hong
Kong, the Company and Haier Group Corporation revised and signed the Product andMaterials Sales Framework Agreement, the Service Provision Framework Agreement and theProperty Leasing Framework Agreement on the basis of the original execution contract,which agreed on the financial connected transactions. The pricing principle included thatboth parties should agree on the price which is not less favourable than those provided by
the Company to the Independent Third Parties on arm’s length to ensure the fairness andreasonableness of connected transactions. The valid term of the agreement commenced
from the listing date to 31 December 2022, which can be renewed for another three years
upon expire.

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Related-party Procurement
In addition to independent procurement platform, the Company entrusted Haier Group
Corporation and its subsidiaries for procurements of part of raw materials. Moreover, theCompany entrusted Haier Group Corporation and its subsidiaries to provide the Company
with logistics and distribution, energy and power, basic research and testing, equipment
leasing, house leasing and maintenance, greening and cleaning, gift procurement, design,consulting, various ticket booking and other services. In November 2020, according to theimplementation of connected transactions in the early stage and the relevant listing
requirements in Hong Kong, the Company and Haier Group Corporation revised and signed
the Product and Materials Sales Framework Agreement, the Service Provision Framework
Agreement and the Property Leasing Framework Agreement on the basis of the original
execution contract, which agreed on the financial connected transactions. The pricing
principle included that both parties should agree on the price which is not less favourable
than those provided by the Company to the Independent Third Parties on arm’s length toensure the fairness and reasonableness of connected transactions. The valid term of theagreement commenced from the listing date to 31 December 2022, which can be renewed
for another three years upon expire.

3.

Financial aspect
Some of the financial services such as deposit and loan service, discounting service andforeign exchange derivatives needed by the Company are provided by Haier Group
Corporation, its subsidiaries and other companies. According to the Financial Service
Agreement entered among the Company, Haier Group Corporation and other parties, theprice of financial services is determined by the principle of not less favourable than market
value fair. The Company is entitled to decide whether to keep cooperation relationship withthem with the knowledge of the price prevailing in the market and in combination with its
own interests. While performing the agreement, the Company could also require otherfinancial service institutions to provide related financial services basing on actual situation.
In order to meet the Company’s demands such as the avoidance of foreign exchange
fluctuation risk, the Company may choose Haier Group Finance Co., Ltd. to provide someforeign exchange derivative business after comparing with comparable companies. The
Company will uphold the safe and sound, appropriate and reasonable principle, underwhich all foreign exchange capital business shall have a normal and reasonable businessbackground to eliminate speculative operation. At the same time, the Company has
specified the examination and permission rights, management positions and responsibilities
at all levels for its foreign exchange capital business to eradicate the risks of operation by
persons and improved its response speed to risks on the premise that the risks are
effectively controlled. In June 2021, the Company and Haier Group Corporation renewed
the Financial Services Framework Agreement, which agreed on the financial connectedtransactions. The pricing principle included the deposit interest rate not lower than the
maximum interest rate of major banks listed and the loan interest rate not less favourable
than the market price to ensure the fairness and reasonableness of connected transactions.
The valid term of the agreement lasts until 31 December 2023, which can be renewed foranother three years upon expire.

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4.

OthersThe Company signed the Intellectual Property Licensing Framework Agreement with HaierGroup Corporation in November 2020. According to the agreement, Haier Group has
agreed to grant or procure its subsidiaries and contact persons to grant the license to theCompany at nil consideration to use all its intellectual property rights, including but notlimited to trademarks, patents, copyrights and logos for the products, packaging, services
and business introduction documents of the Company. The date of the Intellectual Property
Licensing Framework Agreement shall be permanently effective from the listing date. Whensuch specific intellectual property rights expire and are not renewed by Haier Group, ourright to use certain intellectual property rights under the Intellectual Property Licensing
Framework Agreement will terminate.

XIII. SHARE-BASED PAYMENTS√ Applicable(1)□ Not Applicable

Employee Stock Ownership Plan
The resolutions on the 2022 A Share Core Employee Stock Ownership Plan of Haier Smart
Home Co., Ltd. (Draft) And Its Summary (the “2022 A Share ESOP”) and the 2022 H Share Core
Employee Stock Ownership Plan of Haier Smart Home Co., Ltd. (Draft) And Its Summary (the“2022 H Share ESOP”) were considered and passed at the 28th meeting of the 10th session of
the Board of Directors and the 25th meeting of the 10th session of the Board of Supervisors
held by the Company on 28 April 2022, and it was agreed to implement the 2022 A Share
ESOP and the 2022 H Share ESOP.

312

(a)

2022 A Share ESOPThe shares of the 2022 A Share ESOP were sourced from the repurchased shares of
26,814,055 Shares transferred from the “securities account for repurchase of Haier Smart
Home Co., Ltd.” to the specific account of the 2022 A Share ESOP at a transfer price of
RMB25.33 per share.

(b)2022 H Share ESOPThe management of the 2022 H Share ESOP has been entrusted to Industrial Securities
Asset Management Co., Ltd. with the establishment of Industrial Securities AssetManagement Xinzhong Haier Smart Home No. 8 Employee Stock Ownership Single AssetManagement Plan (the “Asset Management Plan”). The Asset Management Plan purchased
2,653,200 H Shares in aggregate in the secondary market through the Hong Kong Stock
Connect, with an average transaction price of HK$25.6630 per share and a transaction
amount of approximately HK$68,089,020.00.

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Share Options
According to the Resolution on Adjustment to the 2022 A Share Option Incentive Scheme ofHaier Smart Home Co., Ltd. and the Resolution on Grant of 2022 A Share Option to Incentive
Recipients of Haier Smart Home Co., Ltd. passed on the 1st meeting of the 11th session of theBoard of Directors of the Company on 28 June 2022, it was agreed that on the date of the
grant on 28 June 2022, 104,756,896 share options would be granted to 1,834 qualifying
incentive recipients at the exercise price of RMB23.86 per Share.
Number for thecurrent period

Number for theprevious period

50,525,214.00
104,756,896.00

50,525,214.00

155,282,110.00

50,525,214.00

Number of restricted shares

Number for thecurrent period

Number for theprevious period

At the beginning of the period
Granted during the period
Vested during the period
Lapsed during the period
At the end of the period

4,438,027.00
5,636,959.00
309,451.00
999,660.00
8,765,875.00

Number of Share Options
At the beginning of the period
Granted during the period
Vested during the period
Lapsed during the period
At the end of the period

(3)

(4)

Restricted Shares

4,438,027.00

4,438,027.00

Method of determining the fair value of equity instrument on the date of grant:(a)

The Company has adopted the B-S model to determine the fair value of the share options.
The B-S model is subject to six variables: current price of the target share (S), exercise
price of the option (K), risk-free rate (r), valid term of the option (t), expected volatility of theshare price (σ), and the dividend rate of the target share (i).
Parameters selected for the calculation of the value of the option of the Company are as
follows:①

share price (S): RMB27.01 per share (closing price on the date of grant on 28 June2022).

②

exercise price (K): RMB23.86 per share.

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(b)

(5)

③

risk-free rate (r): according to the maturity yield rate of the China Government Bonds
from Bloomberg’s system, the risk-free rate for one year was 1.997%; 2.358% for
two years; 2.452% for three years; 2.561% for four years; and 2.67% for five years,
where the risk-free rate for the fourth year was calculated as the arithmetic average ofthe risk-free rate of the third and fifth year.

④

lifetime of the option (t): 1 year, 2 years, 3 years, 4 years, respectively (from the dateof grant to the deadline of the first exercisable date of each tranche).

⑤historical volatility rate (σ): 0.3677 (1 year); 0.4016 (2 years); 0.3783 (3 years); 0.3795(4 years). The interval adopted for the calculation of historical volatility was thecontinuous closing price of the Company in the preceding four years. At the sametime, the historical volatility for the preceding 1, 2, 3, 4, and 5 years was calculated,
respectively, based on the differences in waiting period.

⑥

yield rate (i) 1.7031% based on the yield rate shown in Bloomberg’s system on thevaluation date (28 June 2022), dividing the dividend per share by the closing price on
the date of grant. According to the calculation under the above pricing model, thetheoretical aggregate value of the 104,756,896 share options granted under thisincentive plan of the Company amounted to RMB777,000,000.

The fair value on the date of grant was arrived at on the basis of the share price of theCompany on the date of grant, taking into account the current value of cash dividend.

Based on the latest available subsequent information, such as change in number of vesting
employee, result condition of the Company and evaluation of personal performance appraisal of
incentive targets, the Company makes the best estimation of the number of vesting equity
instruments, based on which, the Company includes services received for the current period in
relevant costs of expenses in accordance with the fair value of the equity instrument on the dateof grant, and accordingly included in the capital reserve.
Expense recognized in respect of the share-based payment incentive plan for the period:
RMB567,000,000 for the stock ownership plan; RMB315,000,000 for the share options; andRMB47,000,000 for the restricted shares.
As at the end of the period, balance associated with the above share-based payment incentive
plans provided in the capital reserve amounted to RMB955,000,000.

XIV. CONTINGENCIES√ Applicable□ Not Applicable

As of 30 March 2023, the Company has no significant contingencies that need to be disclosed.

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XV. EVENTS AFTER THE BALANCE SHEET DATE
According to the resolution of the 4th meeting of the 11th session of the Board of Directors of theCompany held on 30 March 2023, the profit for the year is proposed to be distributed on the basis of
the total number of shares on the record date after deducting the repurchased shares from therepurchased account when the plan is implemented in the future, the Company will declare cash
dividend of RMB5.66 (including taxes) for every 10 shares to all shareholders.

XVI. RISKS RELATED TO FINANCIAL INSTRUMENTS√ Applicable□ Not Applicable

The book value of various financial instruments on the balance sheet date is as follows:

Financial assets
Items
Financial assets
measured at fairvalue andchanges of which
included incurrent profit andloss
Monetary funds
Financial assets held for trading
Derivative financial assets
Receivable
Accounts receivable
Other receivables
Other current assets
Debt investments
Long-term receivables
Other equity instruments

Closing Balance
Financial assets
measured at fairvalue andchanges of which
included in otherMeasured atcomprehensive
amortized costincome54,138,815,682.51

519,812,880.91
183,185,160.51
9,580,191,838.15
15,913,691,537.11
2,380,929,623.19
1,642,421,944.45
1,034,222,222.22
305,070,001.45
5,851,882,930.20

Total
54,138,815,682.51
519,812,880.91
183,185,160.51
9,580,191,838.15
15,913,691,537.11
2,380,929,623.19
1,642,421,944.45
1,034,222,222.22
305,070,001.45
5,851,882,930.20

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Financial assets (continued)
Items
Financial assets
measured at fairvalue andchanges of which
included incurrent profit andloss
Monetary funds
Financial assets held for trading
Derivative financial assets
Receivable
Accounts receivable
Other receivables
Other current assets
Long-term receivables
Other equity instruments
Other non-current assets

Opening Balance
Financial assets
measured at fairvalue andchanges of which
included in otherMeasured atcomprehensive
amortized costincome46,097,333,903.45

2,786,075,529.09
79,819,974.01
13,354,791,068.29
14,625,260,856.04
1,957,886,257.19
316,590,333.42
308,998,755.30
4,851,884,944.63
46,832,494.61

Total
46,097,333,903.45
2,786,075,529.09
79,819,974.01
13,354,791,068.29
14,625,260,856.04
1,957,886,257.19
316,590,333.42
308,998,755.30
4,851,884,944.63
46,832,494.61

Financial liabilities
Items
Financialliabilities
measured atfair value
Short-term borrowings
Derivative financial liabilities
Bills payable
Accounts payable
Other payables
Non-current liabilities due in one year
Long-term borrowings
Long-term payables
Other non-current liabilities

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Closing Balance
Financialliabilities
measured atamortised cost
9,643,374,732.46

104,594,040.66
25,090,945,421.28
41,883,694,299.24
17,511,771,662.70
2,854,446,929.32
13,590,866,873.43
44,240,087.94
16,916,789.10

Total
9,643,374,732.46
104,594,040.66
25,090,945,421.28
41,883,694,299.24
17,511,771,662.70
2,854,446,929.32
13,590,866,873.43
44,240,087.94
16,916,789.10

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Financial liabilities (continued)
Items
Financialliabilities
measured atfair value
Short-term borrowings
Financial liabilities held for trading
Derivative financial liabilities
Bills payable
Accounts payable
Other payables
Non-current liabilities due in one year
Long-term borrowings
Bonds payable
Long-term payables

Opening Balance
Financialliabilities
measured atamortised cost
11,226,212,134.39

6,294,014.40
80,212,433.24
25,023,238,406.72
42,363,218,840.33
17,570,339,925.76
6,745,950,334.20
3,038,573,824.53
334,730,048.82
99,602,707.76

Total
11,226,212,134.39
6,294,014.40
80,212,433.24
25,023,238,406.72
42,363,218,840.33
17,570,339,925.76
6,745,950,334.20
3,038,573,824.53
334,730,048.82
99,602,707.76

Please refer to related items in Note VII for details on each of the financial instruments of theCompany. Risks related to these financial instruments and the risk management policies taken by theCompany to mitigate these risks are summarized below. The management of the Company manages
and monitors these risk exposures to ensure the above risks are well under control.
1.

Credit risk
The credit risk of the Company mainly arises from bank deposits, bills receivable, accounts
receivable, interest receivable, other receivables and wealth management products.
(1)

The Company’s bank deposits and wealth management products are mainly deposited inHaier Finance Co., Ltd., state-owned banks and other large and medium-sized listed banks.
The interest receivables are mainly the accrued interests from fixed deposits which aredeposited in the above banks. The Group does not believe there is any significant credit
risk due to defaults of its counterparties which would cause any significant loss. (2)Accounts receivable and bills receivable: The Company only trades with approved andreputable third parties. All customers who are traded by credit are subject to credit
assessment according to the policies of the Company, and the payment terms shall be
determined on a reasonable basis. The Company monitors the balances of accounts
receivable on an ongoing basis and purchases credit insurance for receivables oflarge-amount credit customers in order to ensure the Company is free from material bad
debts risks. (3) Other receivables of the Company mainly include export tax refund,borrowings and contingency provision. The Company strengthened its management andcontinuous monitoring in respect of these receivables and relevant economic businessbased on historical data, so as to ensure that the Company’s significant risk of bad debts
is controllable and will be further reduced.

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Liquidity risk
Liquidity risk is the risk that an enterprise may encounter deficiency of funds in fulfilling
obligations associated with financial liabilities. To control such risk, the Company utilizes various
financing methods such as notes settlement and bank loans to strive for a balance between
sustainable and flexible financing. It also has obtained bank credit facilities from several
commercial banks to satisfy its needs for working capital and capital expenditures.

3.

Exchange rate risk
The Company’s businesses are based in mainland China, USA, Japan, Southeast Asia, SouthAsia, central and east Africa, Europe, and Australia, etc. and are settled in RMB, USD, and othercurrencies.
The Company’s overseas assets and liabilities denominated in foreign currencies as well astransactions to be settled in foreign currencies expose the Company to fluctuations in exchange
rates. The Company’s finance department is responsible for monitoring the size of transactions inforeign currencies and assets and liabilities denominated in foreign currencies to minimize the riskof exposure to fluctuation in exchange rate; the Company resorts the way of signing forward
foreign exchange contracts to avoid the risk of exchange fluctuation.

4.

Interest rate risk
The Company’s interest rate risk arises primarily from its long- and short- term bank loans andbonds payables which are interest-bearing debts. 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 Group determines the relative
proportion of fixed-interest rate and floating interest rate contracts in light of the prevailing market
conditions.

XVII. OTHER SIGNIFICANT EVENTSThe Company has no other significant events that need to be disclosed.

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XVIII. NOTES TO MAIN ITEMS OF FINANCIAL STATEMENTS OF THE PARENT
COMPANY1.

Accounts receivable
Aging
Within one year
1–2 years
2–3 years
Over 3 years
Accounts receivable balance
Allowance for bad debts
Net receivables

Closing
Balance

Opening
Balance379,679,227.77
533,963,843.29

546,532,442.90

913,643,071.06

546,532,442.90

913,643,071.06

546,532,442.90

Changes in bad debt provision for accounts receivable in the current period:
Opening
Balance

Items

Increase for the current
periodProvision forthe current
Other
periodincrease

Decrease for the current
periodWrite-off andothermovement
Reversal

Closing
Balance

Allowance forbad debts

2.

Other receivables√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Closing Balance

Opening Balance

Interest receivable
Dividend receivable
Other receivables
Total

29,783,516.95
1,015,840,000.00
13,341,408,140.62
14,387,031,657.57

51,632,471.99
3,615,840,000.00
12,577,807,696.42
16,245,280,168.41

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Interest receivable√ Applicable □ Not Applicable
Unit and Currency: RMB
Aging

Closing Balance

Opening Balance

29,783,516.95

51,632,471.99

29,783,516.95

51,632,471.99

Within 1 year
More than 1 year
Total
Dividend receivable√ Applicable □ Not Applicable

Unit and Currency: RMB
Aging

Closing Balance

Opening BalanceWithin 1 year
More than 1 year
Total

1,000,000,000.00
15,840,000.00
1,015,840,000.00

3,615,840,000.00
3,615,840,000.00

Other receivable①
The disclosure of other receivables by aging is as follows:

②

Aging

Closing Balance

Opening BalanceWithin one year
More than one year
Other receivables balance
Allowance for bad debts
Net other receivables

6,278,019,144.67
7,066,828,954.97
13,344,848,099.64
3,439,959.02
13,341,408,140.62

12,040,141,153.64
537,791,379.00
12,577,932,532.64
124,836.22
12,577,807,696.42

Changes in bad debt provision for other receivables in the current period:

Items
Allowance for bad
debts

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Haier Smart Home Co., Ltd. Annual Report 2022

Increase forthe current period
Provision for
Opening the current
Other
Balanceperiodincrease

124,836.22

3,315,122.8

Decrease forthe current period
Write-off andother
Reversal
movement

Closing
Balance

3,439,959.02

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Long-term equity investment√ Applicable(1)□ Not Applicable

Details of long-term equity investments:
Unit and Currency: RMB

Items
Long-term equity investment
Including: Long-term equity investments in
subsidiaries
Long-term equity investments inassociates
Total

(2)

Closing Balance
Provision forBook balance
impairment

Opening Balance
Provision forBook balance
impairment

49,632,299,728.31

7,100,000.00 49,377,425,428.31

7,100,000.00

3,228,239,799.56
52,860,539,527.87

109,300,000.00 3,252,734,849.46
116,400,000.00 52,630,160,277.77

109,300,000.00
116,400,000.00

Long-term equity investments to subsidiaries

Investee
I. Subsidiaries:
Chongqing Haier Electronics Sales Co., Ltd.
Haier Group (Dalian) Electrical Appliances
Industry Co., Ltd
Qingdao Haier Refrigerator Co., Ltd.
Qingdao Haier Special Refrigerator Co., Ltd.
Qingdao Haier Information Plastic Development
Co., Ltd.
Dalian Haier Precision Products Co., Ltd.
Hefei Haier Plastic Co., Ltd.
Qingdao Haier Technology Co., Ltd.
Qingdao Household Appliance Technology andEquipment Research Institute
Qingdao Meier Plastic Powder Co., Ltd.
Chongqing Haier Precision Plastic Co., Ltd.
Qingdao Haier Electronic Plastic Co., Ltd.
Dalian Haier Refrigerator Co., Ltd.
Dalian Haier Air-conditioning Co., Ltd.
Guizhou Haier Electronics Co., Ltd.
Hefei Haier Air-conditioning Co., Limited
Qingdao Haier Refrigerator (International) Co.,Ltd.
Qingdao Haier Air-Conditioner Electronics Co.,Ltd.
Qingdao Haier Air Conditioner Gen Corp., Ltd.
Qingdao Haier Special Freezer Co., Ltd.
Qingdao Haier Dishwasher Co., Ltd.

Opening Balance

Increase/
Decrease forthe period

Impairment
provisions at
the end of the
Closing Balance
period9,500,000.00

9,500,000.00

34,735,489.79
402,667,504.64
329,832,047.28

34,735,489.79
402,667,504.64
426,736,418.99

102,888,407.30
41,836,159.33
42,660,583.21
16,817,162.03
66,778,810.80
24,327,257.77
47,811,283.24
69,200,000.00
138,600,000.00
99,000,000.00
96,904,371.71
67,110,323.85

96,904,371.71

29,689,700.00

102,888,407.30
41,836,159.33
72,350,283.21
16,817,162.03–96,904,371.71

66,778,810.80
24,327,257.77
47,811,283.24
69,200,000.00
138,600,000.00
99,000,000.00—

12,292,800.00

79,403,123.85

238,758,240.85

238,758,240.85

1,131,107,944.51
220,636,306.02
471,530,562.76
206,594,292.82

1,131,107,944.51
220,636,306.02
471,530,562.76
206,594,292.82

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Investee
Wuhan Haier Freezer Co., Ltd.
Wuhan Haier Electronics Holding Co., Ltd.
Chongqing Haier Air-conditioning Co., Ltd
Hefei Haier Refrigerator Co., Ltd.
Qingdao Haier Whole Set Home Appliance
Service Co., Ltd.
Chongqing Haier Refrigeration Appliance Co.,Ltd.
Haier Shanghai Zhongzhi Fang Chuang Ke
Management Co., Ltd.
Qingdao Haier Special Refrigerating ApplianceCo., Ltd.
Haier Shareholdings (Hong Kong) Limited
Shenyang Haier Refrigerator Co., Ltd.
Foshan Haier Freezer Co., Ltd.
Zhengzhou Haier Air-conditioning Co., Ltd.
Qingdao Haidayuan Procurement Service Co.,Ltd.
Qingdao Haier Intelligent Technology
Development Co., Ltd.
Qingdao Haier Technology Investment Co., Ltd.
Qingdao Casarte Smart Living Appliances Co.,Ltd.
Haier Overseas Electric Appliance Co., Ltd.
Haier (Shanghai) Electronics Co., Ltd.
Haier U+smart Intelligent Technology (Beijing)Co., Ltd.
Haier Electronics Group Co., Ltd.
Flourishing Reach Limited (SPVX)
Qingdao Haidarui Procurement Service Co., Ltd.
Qingdao Haier Intelligent Household Appliances
Co., Ltd.
Qingdao Haidacheng Procurement Service Co.,Ltd.
Qingdao Haier Quality Inspection Co., Ltd.
Qingdao Haier Home AI Industry Innovation
Center Co., Ltd.
Haier Zhijia Experience Cloud EcologicalTechnology Co., Ltd.
Qingdao Ruibo Ecological Environmental
Technology Co., Ltd.
Total

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Haier Smart Home Co., Ltd. Annual Report 2022

Opening Balance

Increase/
Decrease forthe period

Impairment
provisions at
the end of the
Closing Balance
period47,310,000.00
100,715,445.04
100,000,000.00
49,000,000.00

47,310,000.00
100,715,445.04
100,000,000.00
49,000,000.00

118,000,000.00

118,000,000.00

91,750,000.00

91,750,000.00

2,000,000.00

2,000,000.00

100,000,000.00
26,022,782,526.24 157,891,800.00
100,000,000.00
100,000,000.00
100,000,000.00

100,000,000.00
26,180,674,326.24
100,000,000.00
100,000,000.00
100,000,000.00

20,000,000.00

20,000,000.00

130,000,000.00
367,505,635.00

130,000,000.00
367,505,635.00

10,000,000.00
500,000,000.00
12,500,000.00

10,000,000.00
500,000,000.00
12,500,000.00

143,000,000.00
3,979,407,602.61
12,751,300,336.02
107,800,000.00

143,000,000.00
3,979,407,602.61
12,751,300,336.02
107,800,000.00

326,400,000.00

326,400,000.00

100,000,000.00
18,657,135.49

100,000,000.00
18,657,135.49

20,000,000.00

20,000,000.00

100,000,000.00

100,000,000.00

55,000,000.00
49,377,425,428.31 254,874,300.00

55,000,000.00
49,632,299,728.31

7,100,000.00

7,100,000.00

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Section X Financial Report(3)Long-term equity investments to associates
Increase/Decrease for the current period

Name of investee

Opening Balance

Increased/

Investment

decreased

incomeImpairment

amount for the recognized underprovisions at theequity method

Others Closing Balance end of the period

current period

Wolong Electric (Jinan)
Motor Co., Ltd.

145,209,273.31

23,370,283.04

168,579,556.35

Qingdao Haier SAIF Smart
Home Industry
Investment Center
83,487,972.18–17,199,060.82–112,115,851.23

1,162,338,491.42

682,901,976.73

113,559,283.53–81,000,000.00

715,461,260.26

409,053,808.05

22,213,959.56–17,900,226.81

413,367,540.80

21,000,000.00

277,102,563.87–123,552,329.38

153,550,234.49

88,300,000.00(Limited Partnership)

393,598,372.59

Bank of Qingdao Co., Ltd.

1,051,480,863.27–57,153,662.41
139,485,507.20

319,245,649.36

Mitsubishi Heavy Industries
Haier (Qingdao)
Air-conditioners Co.,Ltd.
Qingdao Haier Carrier
Refrigeration Equipment
Co., Ltd.
Qingdao Haier Multimedia
Co., Ltd
Hefei Hegang New Material
Technology Co., Ltd.
Total

4.

293,387,991.64
3,252,734,849.46

9,482,737.24
139,485,507.20

71,408,243.76–7,173,662.00–235,388,800.86

295,697,066.88
3,228,239,799.56

109,300,000.00

Operating revenue and operating cost
√ Applicable□ Not Applicable
Unit and Currency: RMB
Amount for

Items
Primary Business
Other BusinessTotal

the current period
RevenueCost335,344,865.65
89,317,060.67
424,661,926.32

292,889,261.14
77,735,951.48
370,625,212.62

Amount forthe previous period
RevenueCost
208,799,283.50
144,998,965.02
353,798,248.52

197,653,713.44
117,703,392.70
315,357,106.14

Haier Smart Home Co., Ltd. Annual Report 2022

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Section X Financial Report

5.

Investment income
Unit and Currency: RMB

Items
Long-term equity investments income calculatedby the equity method
Investment income generated from disposal of longterm equity investment
Investment income from long-term equity investment
accounted for using cost method
Income from wealth management products
Investment income from investment in other equity
instrument during the holding period
Total

Amount for thecurrent period

Amount for theprevious period

71,408,243.76

275,575,730.42

6,328,139,259.26 3,633,540,000.00
31,888,263.12
9,015,443.80
302,249.84
269,896.34
6,431,738,015.98 3,918,401,070.56

XIX. APPROVAL OF FINANCIAL REPORTThis financial report was approved for publication by the Directors of the Company on 30 March
2023.

XX. SUPPLEMENTARY INFORMATION
1.

Basic earnings per share and diluted earnings per shareItems
Net profit attributable to ordinary
shareholders of the Company
Net profit attributable to ordinary
shareholders of the Company
after deduction of non-recurring
profit or loss

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Haier Smart Home Co., Ltd. Annual Report 2022

Amount for the current period
Amount for the previous period
Earnings per share
Earnings per share
(RMB)
(RMB)
Weighted
Weighted
average
Basic
Dilutedaverage
Basic
Dilutedreturn on
earnings
earnings return on
earnings
earnings
net assets per share per share net assets per share per share

16.81%

1.58

1.57

17.26%

1.41

1.40

15.95%

1.50

1.49

15.65%

1.27

1.27

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Section X Financial Report2.

Non-recurring profit or loss
Items
Net profit attributable to ordinary shareholders of the Parent
Company
Less: non-recurring profit or loss
Net profit attributable to ordinary shareholders of the Parent
Company after deduction of non-recurring profit or loss

Amount for thecurrent period

Amount for theprevious period

14,710,923,491.99
747,991,638.21

13,078,840,517.10
1,247,567,958.81

13,962,931,853.78

11,831,272,558.29

Breakdown of non-recurring profit and loss for the current period
Non-recurring profit and loss items

Amounts for the current period

Profit and loss from disposal of non-current assets
Government subsidies included in current profit or loss,
except for government subsidies that are closely related
to the Company’s normal business operations, to beenjoyed in a fixed amount or fixed quantity based on
the national unified standards
Profit from the excess of the fair value of the identifiable
net assets of investee companies on acquisition of theinvestment over the cost of investment in the
Company’s subsidiaries, associates and joint ventures
Profit and loss from fair value changes of financial assets
held for trading, financial liabilities held for trading, as
well as investment gains arising from disposal of
financial assets held for trading, financial liabilities held
for trading and financial assets held for sale, except theeffective hedging related to the normal operations of theCompany
Other non-operating income and expenses except the
aforementioned items
Effect of minority equity interest
Effect of income tax
Effect of profit from business combination under common
control
Total

3.

209,436,774.95

766,426,467.17–23,321,060.42–29,750,173.25–20,321,980.53–167,413,005.22
12,934,615.51
747,991,638.21

Differences in accounting data under domestic and overseas accounting
standards□ Applicable√ Not Applicable
Chairman of the Board: LI Huagang
Date of approval for publication by the Board: 30 March 2023

Information of amendment□ Applicable √ Not Applicable

Haier Smart Home Co., Ltd. Annual Report 2022

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Section XI Responsibility Statement“As the executive directors of the Board of Haier Smart Home Co., Ltd, we hereby confirm to the best of
our knowledge, and in accordance with the applicable reporting principles, that the financial statements givea true and fair view of the assets, liabilities, financial position and profit or loss of the company; and the
management report includes a fair review of the development and performance of the business including theresults and the position of the company, together with a description of the principal opportunities and risks
associated with the expected development of the company.”
Qingdao, 30 March 2023
The Board of Haier Smart Home Co., Ltd
Li Huagang
Gong Wei

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Haier Smart Home Co., Ltd. Annual Report 2022